2010-10-27 07:23:13 CEST
2010-10-27 07:24:11 CEST
REGULATED INFORMATION
Tieto Oyj - Interim report (Q1 and Q3)
TIETO's interim report 3/2010 (January-September): Solid performance in the third quarter - profit guidance for 2010 lowered due to one-off costs in the fourth quarter
TIETO's interim report 3/2010 (January-September): Solid performance in the third quarter - profit guidance for 2010 lowered due to one-off costs in the fourth quarter Highlights: July-September Net sales totalled EUR 387.1 (382.9) million, an increase of 1%. Order intake at EUR 486 (406) million. Operating profit (EBIT) amounted to EUR 27.7 (26.3) million, representing an operating margin of 7.2% (6.9). Operating profit excluding one-off items was EUR 28.5 (30.1) million, representing an operating margin of 7.4% (7.9). Profit after taxes was EUR 24.4 (18.4) million. Net cash flow from operations amounted to EUR 15.1 (28.6) million. To improve its performance, the company plans to strengthen and reorganize its operations in Tieto International. These actions will create one-off costs that will have a negative impact on the company's profitability in the fourth quarter of 2010. As a result, Tieto lowers its profit guidance. According to the company's latest estimate, operating profit is now expected to be approximately on the same level as in 2009. Earlier, the company anticipated that operating profit including one-off items would be higher than in 2009. January-September highlights Net sales totalled EUR 1 241.5 (1 265.7) million, down 2%. Order intake was EUR 1 448 (1 287) million. Operating profit (EBIT) amounted to EUR 66.0 (41.6) million, representing an operating margin of 5.3% (3.3). Operating profit, excluding one-off items, amounted to EUR 76.5 (69.5) million, 6.2% (5.5) of net sales. Profit after taxes was EUR 48.1 (29.4) million. Net cash flow from operations amounted to EUR 70.5 (54.7) million. -------------------------------------------------------------------------------- | | Q3/2010 | Q3/2009 | Jan-Sep/ | Jan-Sep/ | | | | | 2010 | 2009 | -------------------------------------------------------------------------------- | Net sales, EUR million | 387.1 | 382.9 | 1 241.5 | 1 265.7 | -------------------------------------------------------------------------------- | Change in net sales, % | 1 | -10 | -2 | -8 | -------------------------------------------------------------------------------- | Operating profit (EBIT), EUR | 27.7 | 26.3 | 66.0 | 41.6 | | million | | | | | -------------------------------------------------------------------------------- | Operating margin, % | 7.2 | 6.9 | 5.3 | 3.3 | -------------------------------------------------------------------------------- | Operating profit excl. one-off | 28.5 | 30.1 | 76.5 | 69.5 | | items, EUR million | | | | | -------------------------------------------------------------------------------- | Operating margin excl. one-off | 7.4 | 7.9 | 6.2 | 5.5 | | items, % | | | | | -------------------------------------------------------------------------------- | Profit after taxes, EUR million | 24.4 | 18.4 | 48.1 | 29.4 | -------------------------------------------------------------------------------- | Net cash flow from operations, | 15.1 | 28.6 | 70.5 | 54.7 | | EUR million | | | | | -------------------------------------------------------------------------------- | EPS, EUR | 0.34 | 0.25 | 0.67 | 0.40 | -------------------------------------------------------------------------------- Hannu Syrjälä, President and CEO: “Tieto delivered solid performance in the third quarter. As anticipated earlier this year, sales to many of our strategic customers have started to grow gradually. Growth, if modest, is evident in most of the industries. Order intake continued on a good level and the book-to-bill ratio reached 1.3. In Sweden, we have won a number of important new customers under the Kammarkollegiet frame agreement, which is a clear indication of our competitiveness and competences in the public sector. Our 7.2% operating margin is not yet satisfactory. During the fourth quarter, we will take actions to strengthen Tieto's International operations and build a stronger foundation for our future success. These actions will result in one off costs that will strain our profitability in the fourth quarter of 2010. Tieto's strategy has been reviewed by the management and the Board during the summer months. During the past years, we have focused heavily on improving our quality and efficiency, but along continuing activities in these areas, more focus will be put on differentiation and specialization. We want to become the leading service integrator creating the best service experience in IT for our customers. We believe that the future is in IT as a service. This reflects a fundamental change in the way IT is packaged and consumed - customers want to buy service and functionality, not technology or tie up their capital on IT investments. As a consequence, Tieto will increasingly drive its activities to a direction where our offerings are productized and consumed as a service. During 2010, we have made substantial investments on new data centres in Finland, Sweden and Russia. In these new centres, a lot of attention has been paid on efficiency - both from financial as well as from the environmental point of view. Modern data centre technology also enables full-scale production of the growing cloud services and energy-saving virtualization of servers. Through the new data centres, Tieto is ready to capture the future growth in the IT services market.” MARKET DEVELOPMENT Growth in the IT market was modest in the third quarter of 2010. Customers are in a waiting mode as concerns over the world economy have risen again. However, it is expected that in 2010 buying patterns in the IT sector will be back-end loaded as usual, supporting year-end sales of hardware and new software licenses. Tieto anticipates the full-year growth of IT services to be at the lower end of the 0% to 2% range estimated by market analysts. Improvements in productivity and efficiency remain the primary business drivers for customers. However, there are also signs of interest in investments aiming at growth or enhanced customer services, for example in the finance, industrial manufacturing, media and telecom sectors. Outsourcing of ICT infrastructure and application management as well as business process outsourcing are the strongest growth areas in 2010. The outsourcing trend is now extending from large companies to small and medium-sized companies. Additionally, offshoring is emphasized in customers' sourcing strategies, putting pressure on prices. During 2011 and going forward, new service models have a key role in customers' IT strategies. The transition from traditional IT projects to models where customers buy IT, or functionality, as a service is accelerating. Companies worldwide indicate that service-based IT - or cloud services - is a key initiative for them, and budgets for 2011 are expected to grow by double-digit numbers, albeit from low levels. In 2015, cloud services are forecast to account for 20% of the IT market. At Tieto, cloud services currently account for less than 5% of net sales. The benefits of cloud services come from scalability, standardization and elasticity. As customers are now choosing to have IT delivered as a service via the internet instead of investing their own IT systems, IT ties up less capital. Thanks to its scalability, this service is more affordable, attracting new user groups to utilize IT. Customers are billed on a pay as you go basis, e.g. based on time consumed or number of transactions or users. As cloud applications need only an internet connection and they also work on mobile devices, they are expected to attract more users and lead to higher business volumes. In the telecom sector, the strongest companies have gradually started investing. Both the operator segment and the mobile device manufacturers segment picked up in the first half of 2010, boosted by new technologies. Positive development is now visible also in the network equipment manufacturers segment. Offshore-based operations are a crucial part of service provision in the telecom sector. In the finance sector, the market is stable, but competition is fierce. The IT outsourcing market has remained strong, but banks are also starting to invest in the existing IT systems by consolidating their current ones. Banks are expected to start investing in new applications as they are seeking to transfer more services to the internet. In Finland, the pension insurance segment has remained weak. In the UK, the mortgages market has slowly begun to recover. Market development by country In Finland, the outsourcing market continues to grow, but project business has remained at a modest level. Demand for IT services is expected to continue at a good level in the energy, healthcare and welfare sectors. The market has clearly picked up also in the industrial manufacturing sector. In the public sector, the signals are twofold. IT budgets have been cut and the plan is to reallocate parts of the budget from ministries to centralized IT procurement units in 2010. On the other hand, the new procurement structure is expected to give an advantage to bigger players. In Sweden, demand for IT services, especially the outsourcing of IT, is at a healthy level, but price competition remains hard in agreement renewals. The total value of the Swedish IT services market is not expected to grow in 2010. Vendors in Sweden are facing skill shortages within some key competence areas, such as project management. In Russia, the IT market is gradually starting to recover. Cost reductions and efficiency are the key drivers for IT investments and price is emphasized in purchasing IT services. Due to cultural differences, it will take some time for IT service providers to become trusted partners to Russian companies and many customers are unfamiliar with procurement of IT services such as outsourcing. Demand for operations management, capacity on demand and cloud services is growing, but slowly. Retail and energy sectors are the fastest growing sectors, but there are attractive opportunities in the public, finance, manufacturing and telecom sectors as well. In Germany, the IT market has started to recover in the second half of 2010. The markets for local automotive and telecom R&D have remained weak, but demand in the healthcare sector is brisk. The manufacturing market has recovered and investment planning has been started. In Norway, demand is gradually picking up and interest in restarting IT projects has increased. A strong outlook is indicated by companies in the oil & gas segment. The utilities segment is stable, automatic meter reading being one of the future drivers. BUSINESS TRANSACTIONS AND MAJOR AGREEMENTS IN JANUARY-SEPTEMBER In January, the Legal, Financial and Administrative Services Agency in Sweden, Kammarkollegiet, chose Tieto as one of its ten IT-suppliers. The framework agreements with the chosen suppliers cover IT management services in the public sector and will affect all government agencies, 232 municipalities as well as 19 county councils and regions. In March, Tieto acquired T&T Telecom, an IT and consultancy company specializing in services for telecom operators. The company employs approximately 70 people and has offices in St. Petersburg and Moscow. In March, Tieto divested the shares of TietoEnator Majiq, previously responsible for the company's pulp and paper operations in North America. The company employed close to 60 people. In the forest sector, Tieto now focuses on Europe and the growth markets in China and Russia. In March, Tieto and Yleisradio (YLE) agreed that Tieto will acquire 20% of Tieto Broadcasting IT Oy's share capital. Tieto Broadcasting IT was previously owned by Tieto (80%) and YLE (20%). In 2009, Tieto Broadcasting IT's net sales amounted to EUR 22.7 million. The transaction was completed at the beginning of June. In April, Tieto agreed to sell its French subsidiary to the French IT company Devoteam. In 2009, net sales from the sold entity were EUR 28.5 million. Altogether Tieto has booked EUR 7.3 million in impairment losses and EUR 0.4 million in restructuring costs related to the divestment. In June, Tieto and the City of Stockholm decided to continue cooperation in IT and telephony services and concluded an agreement that runs from August 2012 until July 2014. The order value during the extension period is more than SEK 600 million (approximately EUR 60 million), of which Tieto's proportion is about SEK 300 million (approximately EUR 30 million). The delivery will be made in cooperation with SiriusIT, Aditro, Agresso and TeliaSonera. In June, Skåne Regional Council chose Tieto as its outsourcing partner. The deal is valued at SEK 516 million (approximately EUR 50 million) during five years. In June, Tieto and the Finnish State Treasury concluded an agreement on operating services. Tieto delivers IT operating services to the Finnish State Treasury and the related Government IT Shared Service Centre until 2016. The delivery also includes an extensive operating service development plan for the whole contract period. The value of the contract is approximately EUR 20 million. In June, If P&C Insurance concluded a new five-year IT services agreement with Tieto as a one-stop supplier. The contract includes operations management services for If's IT systems in the Nordic countries. The total value of the contract is approximately EUR 160 million. In June, Tieto acquired the business of the Finnish healthcare IT solutions provider Intensium Oy to strengthen its position in the healthcare market. The business was transferred to Tieto on 1 July 2010. Intensium's 17 employees joined Tieto under their existing terms of employment on the same day. In September, Tieto announced the signing of a share purchase agreement concerning a majority ownership in TrustInfo, a Russian company currently providing a full range of data center services in Russia. Provided that the Russian Federal Antimonopoly Service approves the transaction, a holding company fully owned by Tieto will own 70% of the shares in TrustInfo, and I-Teco, a leading Russian IT service and consulting company, will own the remaining 30%. The initial investment will amount to approximately EUR 17 million. In September, Tieto and Sanoma signed a significant agreement on centralizing administrative IT services to Tieto starting from 2 September 2010. The agreement covers among others the financial systems, e-mail and intranet solutions of the Sanoma Group in Finland and as an option, partially in the Baltic countries. ORDER BACKLOG The order backlog, which only comprises services ordered with binding contracts, amounted to EUR 1 465 (1 145) million at the end of the period. In total, 26% (29) of the backlog is expected to be invoiced during the current year. Order intake in the third quarter saw the strongest growth in Sweden, especially in the telecom sector. FINANCIAL PERFORMANCE IN JULY-SEPTEMBER Third-quarter net sales rose by 1% and amounted to EUR 387.1 (382.9) million. The increase in net sales was curbed by the divestments of the pulp and paper operations in North America and Tieto's French subsidiary in 2010. The divestments had a negative EUR 8.4 million impact on net sales in the third quarter. On the other hand, the stronger currencies, especially the Swedish krona, had a positive EUR 12 million impact on net sales. When eliminating the impacts of the divestments and currency effects, net sales of the underlying business remained flat. In the telecom sector, Tieto's net sales of the underlying business remained flat, whereas net sales in the finance sector continued to slide, mainly due to the drop in Finland. In other sectors, net sales of the underlying business were growing, healthcare and welfare being the strongest sector. Outsourcing of IT operations remained brisk in all sectors. Volumes in terms of manhours are up by around 7% but that has not fully translated into net sales growth. The changing delivery mix - which makes greater use of offshore resources - is leading to lower average unit prices. At the same time, however, average unit costs are down. Expenses are declining at a somewhat faster rate than the gross margin of the underlying business. In this calculation, the impact of one-off items and currency effects is eliminated. Third-quarter operating profit (EBIT) amounted to EUR 27.7 (26.3) million, representing a margin of 7.2% (6.9). Operating profit includes a net amount of EUR 0.8 million (negative) in one-off items. Operating profit excluding one-off items stood at EUR 28.5 (30.1) million, or 7.4% (7.9) of net sales. The company continues to drive its structural improvements and transfer of operations to offshore countries. In the third quarter, Tieto booked EUR 0.8 million in restructuring costs. In January-September, Tieto booked a net amount of EUR 3.4 million (negative) in restructuring costs and impairment losses of EUR 7.6 million related to the divestment of its operatios in France and the USA. Net financial expenses stood at EUR 3.4 (positive 0.9) million in the third quarter. Net interest expenses were EUR 1.5 (1.9) million and net losses from foreign exchange transactions EUR 1.6 (positive 2.8) million. Other financial income and expenses amounted to EUR 0.3 (0.0) million. The Supreme Administrative Court in Finland has ruled that a merger loss of EUR 27.6 million related to the merger of Tieto Financial Solutions Oy in 2003 is tax-deductible. Recognition of a deferred tax asset related to this item will have a positive net profit effect of EUR 7.2 million in 2010, of which EUR 5.6 million materialized in the third quarter. Third-quarter earnings per share (EPS) totalled EUR 0.34 (0.25). The 12-month rolling return on capital employed (ROCE) was 18.6% and the return on shareholders' equity (ROE) 14.2%. Financial performance by country -------------------------------------------------------------------------------- | | Net sales | Net sales | Change, % | Operating | Operating | | | in | in | | margin in | margin in | | | Q3/2010, | Q3/2009, | | Q3/2010, % | Q3/2009, % | | | EUR | EUR | | | | | | million | million | | | | -------------------------------------------------------------------------------- | Finland | 199 | 199 | 0 | 12.0 | 14.1 | -------------------------------------------------------------------------------- | Sweden | 113 | 103 | 10 | 8.0 | 4.0 | -------------------------------------------------------------------------------- | Internationa | 128 | 130 | -1 | 3.6 | 0.7 | | l | | | | | | -------------------------------------------------------------------------------- | Group | -53 | -48 | | | | | elimination | | | | | | -------------------------------------------------------------------------------- | Total | 387 | 383 | 1 | 7.2 | 6.9 | -------------------------------------------------------------------------------- In Finland, net sales remained flat. The drop in the finance sector offset the growth in other sectors. Third-quarter operating profit amounted to EUR 24.0 (28.1) million, or EUR 24.7 (26.8) million excluding one-off items. Operating margin was 12.0% (14.1), or 12.4% (13.4) excluding one-off items. Profitability weakened partly due to lower prices coupled with somewhat higher personnel expenses. In Sweden, net sales grew by 10%. In local currency, net sales were flat. The public and healthcare and welfare sectors were the strongest performers, but Tieto also posted growth in the telecom and finance sectors. In the manufacturing industry, Tieto's net sales continued to slide. Operating profit amounted to EUR 9.0 (4.1) million, or 8.0% (4.0) of net sales. Operating profit excluding one-off items declined to EUR 8.8 (8.9) million, or 7.8% (8.6) of net sales. In 2009, the third-quarter operating profit included a positive non-recurring internal adjustment of approximately EUR 2 million. In International, net sales declined by 1%. The decline was impacted by the divestments of operations in North America and France which had a negative EUR 8.4 million impact on net sales. On the other hand, the stronger currencies had a positive impact. When eliminating divestments and changes in currencies, net sales grew by 3%. Growth is mainly attributable to growing operations in Asia and Eastern Europe, e.g. China, India, Poland and the Czech Republic. The strongest growth was posted in China. The country serves both as a delivery country and a go-to-market country. Despite cost savings and good performance in delivery countries, operating profit was unsatisfactory partly due to continued business development costs in Russia. Third-quarter operating profit of Tieto International amounted to EUR 4.6 (0.9) million and included EUR 0.3 million in restructuring costs. Operating profit excluding one-off items rose to EUR 4.9 (1.3) million. Operating margin was 3.6% (0.7), or 3.8% (1.0) excluding one-off items. Net sales by customer sector -------------------------------------------------------------------------------- | | Net sales in | Net sales in | Change, % | | | Q3/2010, | Q3/2009, | | | | EUR million | EUR million | | -------------------------------------------------------------------------------- | Telecom | 131 | 132 | 0 | -------------------------------------------------------------------------------- | Finance | 82 | 87 | -5 | -------------------------------------------------------------------------------- | Industry sectors | 173 | 165 | 5 | -------------------------------------------------------------------------------- | Total | 387 | 383 | 1 | -------------------------------------------------------------------------------- In the telecom sector, Tieto's net sales remained flat. The positive currency effect offsets the negative impact of the divestment in France. Positive development in the operators segment and the mobile device manufacturers segment continued. Business in the network equipment manufacturers segment has balanced out, but net sales are at a lower level than in the third quarter of 2009. Profitability improved due to lower costs and improved efficiency. In the finance sector, net sales fell by 5%. Excluding the positive currency effect, net sales declined by around 9% mainly due to the drop in Finland where net sales in the pension insurance segment continued to shrink. In Sweden, net sales in local currency remained flat. Profitability weakened somewhat, partly due to lower demand in Finland. In the industry sectors, net sales rose by 5%. Excluding currency effects and the divestment of the pulp and paper operations in North America, net sales rose by around 3%. Growth was strongest in the healthcare and welfare and the energy sectors. In the industrial manufacturing sector, net sales in Finland were growing, but in Sweden, the market is still weak. In Tieto's reporting, the industry sectors cover customers in healthcare and welfare, forest, energy, manufacturing, automotive, public, retail and logistics. FINANCIAL PERFORMANCE IN JANUARY-SEPTEMBER Net sales declined by 2% and amounted to EUR 1 241.5 (1 265.7) million. In local currencies, net sales declined by 5%. Nine-month operating profit (EBIT) amounted to EUR 66.0 (41.6) million, representing a margin of 5.3% (3.3). Operating profit includes a net amount of EUR 3.4 million (negative) in one-off restructuring costs, impairment losses of EUR 7.6 million related to the divestments, and a capital gain of EUR 0.5 million. Operating profit excluding one-off items amounted to EUR 76.5 (69.5) million, or 6.2% (5.5) of net sales. Financial performance by country -------------------------------------------------------------------------------- | | Net sales | Net sales | Change, | Operating | Operating | | | in | in | % | margin in | margin in | | | Jan-Sep/20 | Jan-Sep/200 | | Jan-Sep/20 | Jan-Sep/20 | | | 10, | 9, | | 10, % | 09, % | | | EUR | EUR million | | | | | | million | | | | | -------------------------------------------------------------------------------- | Finland | 648 | 655 | -1 | 11.2 | 11.7 | -------------------------------------------------------------------------------- | Sweden | 358 | 337 | 6 | 6.3 | -3.2 | -------------------------------------------------------------------------------- | Internationa | 399 | 414 | -4 | 0.9 | -2.2 | | l | | | | | | -------------------------------------------------------------------------------- | Group | - 163 | - 141 | | | | | elimination | | | | | | -------------------------------------------------------------------------------- | Total | 1 242 | 1 266 | -2 | 5.3 | 3.3 | -------------------------------------------------------------------------------- Net sales by customer sector -------------------------------------------------------------------------------- | | Net sales in | Net sales in | Change, % | | | Jan-Sep/2010, | Jan-Sep/2009, | | | | EUR million | EUR million | | -------------------------------------------------------------------------------- | Telecom | 422 | 434 | -3 | -------------------------------------------------------------------------------- | Finance | 261 | 270 | -3 | -------------------------------------------------------------------------------- | Industry sectors | 560 | 563 | -1 | -------------------------------------------------------------------------------- | Total | 1 242 | 1 266 | -2 | -------------------------------------------------------------------------------- Net financial expenses stood at EUR 5.6 (3.5) million in the nine-month period. Net interest expenses were EUR 4.3 (5.4) million and net losses from foreign exchange transactions EUR 0.6 (positive 2.3) million. Other financial income and expenses amounted to EUR 0.7 (0.4) million. Nine-month earnings per share (EPS) totalled EUR 0.67 (0.40). CASH FLOW AND FINANCING Third-quarter net cash flow from operations, including the increase of EUR 28.1 (26.4) million in net working capital, amounted to EUR 15.1 million (28.6). Nine-month net cash flow from operations increased to EUR 70.5 (54.7) million. Net cash flow from operations includes the increase of EUR 47.2 (27.9) million in net working capital. Tax payments amounted to EUR 9.6 (10.9) million in the nine-month period. Payments for acquisitions totalled EUR 2.6 (2.1) million in the nine-month period. Divestments amounted to EUR 3.6 (5.7) million. The equity ratio was 51.1% (43.2). Gearing decreased to 17.5% (24.4). Net debt totalled EUR 96.4 (118.9) million, including EUR 151.2 million in interest-bearing debt, EUR 5.6 million in finance lease liabilities, EUR 8.7 million in finance lease receivables and EUR 51.7 million in cash and cash equivalents. The interest-bearing long-term debt consists of EUR 150 million in bonds, of which EUR 100 million will mature in December 2013 and EUR 50 million (private placement) in July 2012. The EUR 250 million syndicated revolving credit facility maturing in November 2011 was not in use and there were no commercial papers issued under the EUR 250 million Commercial Paper Programme at the end of September. Other short-term credit lines were utilized for EUR 1.2 million. INVESTMENTS Investments totalled EUR 72.1 (43.2) million for the nine-month period. This comprises EUR 70.3 (41.7) million in capital expenditure including financial leasing, and EUR 1.8 (1.5) million in investments in shares. The share of investments in new data centres in Finland, Sweden and Russia was EUR 19.8 million. PERSONNEL The number of full-time employees rose to 17 313 (16 215) at the end of September. Tieto has actively been increasing its capacity in global delivery centres. At the end of September, the number of full-time employees in the global delivery centres totalled 6 121 (4 544), or 35% (28) of personnel. Global operations have grown fast, especially in China and India. In onshore locations, the number of personnel has decreased by around 700 employees year-on-year. There is a lack of resources and rising attrition in some specialist areas. The 12-month rolling employee turnover stood at 8.7% at the end of September. Employee turnover in Finland and Sweden was well below the Group average. The average number of full-time employees was 16 934 (16 577) in the nine-month period. Based on the national salary raises agreed in collective labour agreements in Finland and Sweden, wages will increase by around 2% in 2010. SHARES AND SHARE-BASED INCENTIVES At the end of September, the total number of shares amounted to 72 023 173 and the share capital to EUR 75 841 523. On 30 September 2010, a total of 1 200 Tieto shares were returned free of consideration to the company as the terms regarding the service conditions of the holders were not fully met. The transaction was related to the company's Share Ownership Plan 2006−2008. At the end of the quarter, the number of shares in the company's possession totalled 550 100, representing 0.8% of the total number of shares and voting rights. The number of shares, excluding the shares in the company's possession, was 71 473 073. EVENTS AFTER THE PERIOD Shareholders' Nomination Committee was formed in line with the decision of the AGM 2010. The four largest shareholders of the company were determined on the basis of the shareholdings registered in the Finnish and Swedish book-entry systems on 30 September 2010. The composition of the Shareholders' Nomination Committee is the following: Kari Järvinen, Solidium Oy, Jonas Synnergren, Cevian Capital II Master Fund L.P., Heikki Vitie, OP-Pohjola Group Central Cooperative, Marianne Nilsson, Swedbank Robur Fonder AB, and Markku Pohjola, Chairman of the Board of Directors of Tieto Corporation. NEAR-TERM RISKS AND UNCERTAINTIES In some specialist areas, there are signs of a lack of resources and rising attrition. Therefore, the rise in personnel expenses might be higher than agreed in the collective labour agreements. In Asia, salaries are on the rise, in some areas even at a double-digit rate. New economic slowdown might affect demand for IT services. Weak demand would lead to lower utilization of resources and hence lower profitability if the company is not able to adjust its cost base fast enough to new negative changes in the market. The ongoing transformation of the IT sector towards offshore production might create uncertainty among the company's personnel and poses risks related to the company's market position, prices and quality of deliveries. On the other hand, Tieto has steadily increased its offshore resources during the past several years, and is currently the leading European based company providing substantial offshore capabilities. The company expects the growing offshore operations to lead to lower average costs as well, offsetting negative price effects. Special attention has been placed on ensuring the quality of deliveries. A comprehensive description of the major long-term risks is available on the company's website. OUTLOOK FOR 2010 To improve its performance, the company plans to strengthen and reorganize its operations in Tieto International. These actions will create one-off costs that will have a negative impact on the company's profitability in the fourth quarter of 2010. As a result, Tieto lowers its profit guidance. Sales guidance remains unchanged. In 2010, the company expects its net sales to develop in line with the IT services market relevant to Tieto. According to the company's latest estimate, operating profit is now expected to be approximately on the same level as in 2009. Earlier, the company anticipated that operating profit including one-off items would be higher than in 2009. Financial calendar Capital Market Day on 25 November 2010 Fourth-quarter interim report and financial statements bulletin for 2010 on 10 February 2011 Accounting policies in 2010 The interim report has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. Tieto has started to apply hedge accounting for selected hedging transactions, such as foreign exchange hedging transactions between EUR and CZK after 1 March 2010. Excluding this change, the accounting policies adopted are consistent with those used in the annual financial statements for the year ended on 31 December 2009. The accounting policies as well as the effect of changes required by the adoption of standards, interpretations and amendments taken into use in 2010 are described in the annual financial statements. The figures in this report are unaudited. Key figures -------------------------------------------------------------------------------- | | 201 | 2009 | 2010 | 2010 | 2010 | 2009 | 2009 | | | 0 | | | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | 4-6 | 1-3 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- | Earnings per share, EUR | | | | | | | | -------------------------------------------------------------------------------- | - basic | 0.3 | 0.25 | 0.17 | 0.17 | 0.67 | 0.40 | 0.77 | | | 4 | | | | | | | -------------------------------------------------------------------------------- | - diluted | 0.3 | 0.25 | 0.17 | 0.17 | 0.67 | 0.40 | 0.77 | | | 4 | | | | | | | -------------------------------------------------------------------------------- | Equity per share, EUR | 7.7 | 6.82 | 7.33 | 7.10 | 7.72 | 6.82 | 7.25 | | | 2 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on equity rolling 12 | 14. | 6.3 | 13.8 | 13.6 | 14.2 | 6.3 | 11.0 | | month, % | 2 | | | | | | | -------------------------------------------------------------------------------- | Return on capital employed | 18. | 18.6 | 21.1 | 19.6 | 18.6 | 18.6 | 16.8 | | rolling 12 month, % | 6 | | | | | | | -------------------------------------------------------------------------------- | Equity ratio % | 51. | 43.2 | 48.0 | 45.8 | 51.1 | 43.2 | 46.0 | | | 1 | | | | | | | -------------------------------------------------------------------------------- | Net interest-bearing | 96. | 118. | 89.6 | 51.9 | 96.4 | 118.9 | 66.0 | | liabilities, EUR million | 4 | 9 | | | | | | -------------------------------------------------------------------------------- | Gearing, % | 17. | 24.4 | 17.1 | 10.2 | 17.5 | 24.4 | 12.7 | | | 5 | | | | | | | -------------------------------------------------------------------------------- | Investments, EUR million | 23. | 12.7 | 25.2 | 23.3 | 72.1 | 43.2 | 58.9 | | | 6 | | | | | | | -------------------------------------------------------------------------------- Number of shares -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2010 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 1-9 | 7-9 | 1-12 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Outstanding shares, end of period | | | | | -------------------------------------------------------------------------------- | Basic | 71 408 | 71 408 | 71 408 | 71 408 9 | 71 481 6 | 71 408 9 | | | 913 | 913 | 913 | 13 | 73 | 13 | -------------------------------------------------------------------------------- | Diluted | 71 534 | 71 612 | 71 684 | 71 649 4 | 71 555 9 | 71 481 6 | | | 374 | 101 | 967 | 25 | 33 | 73 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Outstanding shares, average | | | | | -------------------------------------------------------------------------------- | Basic *) | 71 408 | 71 408 | 71 408 | 71 408 9 | 71 481 9 | 71 499 8 | | | 913 | 913 | 913 | 13 | 34 | 88 | -------------------------------------------------------------------------------- | Diluted | 71 535 | 71 615 | 71 689 | 71 654 0 | 71 556 1 | 71 574 5 | | | 561 | 068 | 318 | 33 | 94 | 07 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Company's possession of its own | | | | | | shares | | | | | | | | | | | -------------------------------------------------------------------------------- | End of period | 550 100 | 548 900 | 545 900 | 550 100 | 541 500 | 541 500 | -------------------------------------------------------------------------------- | Average | 548 913 | 545 933 | 541 549 | 545 492 | 541 239 | 473 315 | -------------------------------------------------------------------------------- *) Number of shares included in the calculation of basic Earnings per share. Shares conveyed in 2009 are excluded as they can be returned until the end of 2010. Income statement, EUR million -------------------------------------------------------------------------------- | | 201 | 2009 | 2010 | 2009 | Change | 2009 | | | 0 | | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Net sales | 387 | 382.9 | 1 | 1 | -2 | 1 | | | .1 | | 241.5 | 265.7 | | 706.3 | -------------------------------------------------------------------------------- | Other operating income | 3.8 | 2.8 | 13.3 | 12.8 | 4 | 17.5 | -------------------------------------------------------------------------------- | Employee benefit expenses | 219 | 210.7 | 729.5 | 743.4 | -2 | 986.7 | | | .2 | | | | | | -------------------------------------------------------------------------------- | Depreciation, amortization | 17. | 16.9 | 59.1 | 53.2 | 11 | 70.7 | | and | 9 | | | | | | | impairment charges | | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | 126 | 131.8 | 400.2 | 440.3 | -9 | 591.1 | | | .1 | | | | | | -------------------------------------------------------------------------------- | Operating profit (EBIT) | 27. | 26.3 | 66.0 | 41.6 | 59 | 75.3 | | | 7 | | | | | | -------------------------------------------------------------------------------- | Interest and other | 1.7 | 2.1 | 8.8 | 3.7 | 138 | 5.8 | | financial income | | | | | | | -------------------------------------------------------------------------------- | Interest and other | -3. | -4.0 | -13.8 | -9.5 | 45 | -13.7 | | financial expenses | 5 | | | | | | -------------------------------------------------------------------------------- | Net exchange losses/gains | -1. | 2.8 | -0.6 | 2.3 | - | 2.9 | | | 6 | | | | | | -------------------------------------------------------------------------------- | Profit before taxes | 24. | 27.2 | 60.4 | 38.1 | 59 | 70.3 | | | 3 | | | | | | -------------------------------------------------------------------------------- | Income taxes | 0.1 | -8.8 | -12.3 | -8.7 | 41 | -15.2 | -------------------------------------------------------------------------------- | Net profit for the period | 24. | 18.4 | 48.1 | 29.4 | 64 | 55.1 | | | 4 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net profit for the period | | | | | | | | attributable to | | | | | | | -------------------------------------------------------------------------------- | Shareholders of the Parent | 24. | 18.2 | 48.1 | 28.9 | 66 | 54.8 | | company | 6 | | | | | | -------------------------------------------------------------------------------- | Non-controlling interest | -0. | 0.2 | 0.0 | 0.5 | -100 | 0.3 | | | 2 | | | | | | -------------------------------------------------------------------------------- | | 24. | 18.4 | 48.1 | 29.4 | 64 | 55.1 | | | 4 | | | | | | -------------------------------------------------------------------------------- Earnings per share attributable to the shareholders of the Parent company per share, EUR -------------------------------------------------------------------------------- | Basic | 0.34 | 0.25 | 0.67 | 0.40 | 68 | 0.77 | -------------------------------------------------------------------------------- | Diluted | 0.34 | 0.25 | 0.67 | 0.40 | 68 | 0.77 | -------------------------------------------------------------------------------- Statement of comprehensive income, EUR million -------------------------------------------------------------------------------- | Net profit for the period | 24.4 | 18.4 | 48.1 | 29.4 | 64 | 55.1 | -------------------------------------------------------------------------------- | Tax impact on share-based | - | 0.0 | - | 0.2 | - | - | | payments | | | | | | | -------------------------------------------------------------------------------- | Translation difference | 6.5 | 7.8 | 17.5 | 8.5 | 106 | 8.2 | | from the net investment | | | | | | | | in | | | | | | | | Swedish subsidiaries (net | | | | | | | | of tax) | | | | | | | -------------------------------------------------------------------------------- | Translation differences | -5.2 | -1.4 | -0.2 | 1.8 | - | 7.2 | -------------------------------------------------------------------------------- | Cash flow hedges | 0.6 | - | 0.5 | - | - | - | -------------------------------------------------------------------------------- | Total comprehensive income | 26.3 | 24.8 | 65.9 | 39.9 | 65 | 70.5 | -------------------------------------------------------------------------------- | | | | | | | | -------------------------------------------------------------------------------- | Total comprehensive income | | | | | | | | attributable to | | | | | | | -------------------------------------------------------------------------------- | Shareholders of the Parent | 26.3 | 24.6 | 65.9 | 39.4 | 67 | 70.2 | | company | | | | | | | -------------------------------------------------------------------------------- | Non-controlling interest | 0.0 | 0.2 | 0.0 | 0.5 | -100 | 0.3 | -------------------------------------------------------------------------------- | | 26.3 | 24.8 | 65.9 | 39.9 | 65 | 70.5 | -------------------------------------------------------------------------------- Balance sheet, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Change | 2009 | -------------------------------------------------------------------------------- | | 30 Sep | 30 Sep | % | 31 Dec | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Goodwill | 419.3 | 398.2 | 5 | 402.0 | -------------------------------------------------------------------------------- | Other intangible assets | 52.7 | 44.1 | 20 | 42.8 | -------------------------------------------------------------------------------- | Property, plant and | 111.5 | 99.0 | 13 | 100.1 | | equipment | | | | | -------------------------------------------------------------------------------- | Deferred tax assets | 68.7 | 67.8 | 1 | 66.9 | -------------------------------------------------------------------------------- | Loan receivables | 5.0 | 5.0 | 0 | 5.0 | -------------------------------------------------------------------------------- | Other non-current assets | 0.8 | 0.9 | -11 | 0.8 | -------------------------------------------------------------------------------- | Total non-current assets | 658.0 | 615.0 | 7 | 617.6 | -------------------------------------------------------------------------------- | Trade and other | 441.2 | 474.1 | -7 | 444.1 | | receivables | | | | | -------------------------------------------------------------------------------- | Loan receivables | 3.7 | 5.2 | -29 | 3.9 | -------------------------------------------------------------------------------- | Current income tax | 6.7 | 10.7 | -37 | 6.4 | | receivables | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 51.7 | 105.6 | -51 | 123.3 | -------------------------------------------------------------------------------- | Total current assets | 503.3 | 595.6 | -15 | 577.7 | -------------------------------------------------------------------------------- | Assets classified as held | - | - | - | - | | for sale | | | | | -------------------------------------------------------------------------------- | Total assets | 1 161.3 | 1 210.6 | -4 | 1 195.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share capital, share | 114.0 | 110.7 | 3 | 110.6 | | issue | | | | | | premiums and other | | | | | | reserves | | | | | -------------------------------------------------------------------------------- | Retained earnings | 436.8 | 375.4 | 16 | 407.0 | -------------------------------------------------------------------------------- | Parent shareholders' | 550.8 | 486.1 | 13 | 517.6 | | equity | | | | | -------------------------------------------------------------------------------- | Non-controlling interest | 0.1 | 1.7 | -94 | 0.7 | -------------------------------------------------------------------------------- | Total equity | 550.9 | 487.8 | 13 | 518.3 | -------------------------------------------------------------------------------- | | | | | | -------------------------------------------------------------------------------- | Finance lease liability | 5.6 | 10.6 | -47 | 9.5 | -------------------------------------------------------------------------------- | Loans | 150.0 | 150.0 | 0 | 150.0 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 40.0 | 28.9 | 38 | 33.6 | -------------------------------------------------------------------------------- | Pension obligations | 21.0 | 18.5 | 14 | 18.9 | -------------------------------------------------------------------------------- | Other non-current | 2.0 | 1.5 | 33 | 1.4 | | liabilities | | | | | -------------------------------------------------------------------------------- | Total non-current | 218.6 | 209.5 | 4 | 213.4 | | liabilities | | | | | -------------------------------------------------------------------------------- | Trade and other payables | 350.1 | 376.4 | -7 | 370.1 | -------------------------------------------------------------------------------- | Current income tax | 17.3 | 13.6 | 27 | 8.2 | | liabilities | | | | | -------------------------------------------------------------------------------- | Provisions | 23.2 | 49.3 | -53 | 46.5 | -------------------------------------------------------------------------------- | Loans | 1.2 | 74.0 | -98 | 38.8 | -------------------------------------------------------------------------------- | Total current liabilities | 391.8 | 513.3 | -24 | 463.6 | -------------------------------------------------------------------------------- | Liabilities classified as | - | - | - | - | | held for sale | | | | | -------------------------------------------------------------------------------- | Total equity and | 1 161.3 | 1 210.6 | -4 | 1 195.3 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net working capital in the balance sheet, EUR million | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2010 | 2009 | | | | | e | | | | -------------------------------------------------------------------------------- | | 30 | 30 | % | 31 | 30 | 31 Dec | | | Sep | Sep | | Mar | Jun | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Accounts receivable | 292.7 | 301.4 | -3 | 296.5 | 304.2 | 313.9 | -------------------------------------------------------------------------------- | Other working capital | 141.9 | 171.8 | -17 | 149.7 | 152.4 | 129.4 | | receivables | | | | | | | -------------------------------------------------------------------------------- | Working capital receivables | 434.6 | 473.2 | -8 | 446.2 | 456.6 | 443.3 | | included in assets | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operative accruals | 142.0 | 136.3 | 4 | 154.3 | 157.6 | 149.1 | -------------------------------------------------------------------------------- | Other working capital | 198.2 | 232.8 | -15 | 224.9 | 229.5 | 219.6 | | liabilities | | | | | | | -------------------------------------------------------------------------------- | Pension obligations and | 44.2 | 67.8 | -35 | 57.0 | 47.4 | 65.4 | | provisions | | | | | | | -------------------------------------------------------------------------------- | Working capital liabilities | 384.4 | 436.9 | -12 | 436.2 | 434.5 | 434.1 | | included in | | | | | | | | current | | | | | | | | liabilities | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net working capital in the | 50.2 | 36.3 | 38 | 10.0 | 22.1 | 9.2 | | balance sheet | | | | | | | -------------------------------------------------------------------------------- Cash flow, EUR million -------------------------------------------------------------------------------- | | | | 201 | 2009 | 2010 | 2010 | 2010 | 2009 | 2009 | | | | | 0 | | | | | | | -------------------------------------------------------------------------------- | | | | 7-9 | 7-9 | 4-6 | 1-3 | 1-9 | 1-9 | 1-12 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operations | | | | | | | | -------------------------------------------------------------------------------- | | Net profit | 24. | 18.4 | 11.7 | 12.0 | 48.1 | 29.4 | 55.1 | | | | 4 | | | | | | | -------------------------------------------------------------------------------- | | Adjustments | | | | | | | | -------------------------------------------------------------------------------- | | | Depreciation. | 17. | 16.9 | 18.2 | 23.0 | 59.1 | 53.2 | 70.7 | | | | amortization | 9 | | | | | | | | | | and | | | | | | | | | | | impairment | | | | | | | | | | | charges | | | | | | | | -------------------------------------------------------------------------------- | | | Share-based payments | 0.9 | 1.0 | 1.3 | 1.2 | 3.4 | 3.1 | 3.8 | -------------------------------------------------------------------------------- | | | Profit/loss on sale | 0.3 | 0.3 | 0.1 | -0.5 | -0.1 | -5.8 | -6.1 | | | | of fixed assets | | | | | | | | | | | and | | | | | | | | | | | shares | | | | | | | | -------------------------------------------------------------------------------- | | | Other adjustments | 1.4 | -0.2 | -0.6 | 0.0 | 0.8 | 0.7 | 0.2 | -------------------------------------------------------------------------------- | | | Net financial | 3.4 | -0.9 | 1.1 | 1.1 | 5.6 | 3.5 | 5.0 | | | | expenses | | | | | | | | -------------------------------------------------------------------------------- | | | Income taxes | -0. | 8.8 | 6.7 | 5.7 | 12.3 | 8.7 | 15.2 | | | | | 1 | | | | | | | -------------------------------------------------------------------------------- | | Change in net working | -28 | -26. | -9.2 | -9.9 | -47. | -27. | -3.9 | | | capital | .1 | 4 | | | 2 | 9 | | -------------------------------------------------------------------------------- | | Cash generated from | 20. | 17.9 | 29.3 | 32.6 | 82.0 | 64.9 | 140. | | | operations | 1 | | | | | | 0 | -------------------------------------------------------------------------------- | | Net financial expenses | -3. | 5.0 | -0.8 | 1.9 | -1.9 | 0.7 | 0.8 | | | paid | 0 | | | | | | | -------------------------------------------------------------------------------- | | Income taxes paid | -2. | 5.7 | -1.0 | -6.6 | -9.6 | -10. | -14. | | | | 0 | | | | | 9 | 4 | -------------------------------------------------------------------------------- | Net cash flow from | 15. | 28.6 | 27.5 | 27.9 | 70.5 | 54.7 | 126. | | operations | 1 | | | | | | 4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | | Acquisition of Group | -1. | 0.2 | -1.2 | -0.4 | -2.6 | -2.1 | -4.6 | | | companies and | 0 | | | | | | | | | business | | | | | | | | | | operations, net | | | | | | | | | | of cash acquired | | | | | | | | -------------------------------------------------------------------------------- | | Capital expenditures | -21 | -12. | -24. | -21. | -67. | -41. | -58. | | | | .2 | 0 | 6 | 4 | 2 | 3 | 0 | -------------------------------------------------------------------------------- | | Advance payment for | - | 1.0 | - | - | - | 0.0 | - | | | acquisition of shares | | | | | | | | -------------------------------------------------------------------------------- | | Disposal of business | 0.7 | 0.0 | -2.2 | 5.1 | 3.6 | 5.7 | 5.7 | | | operations | | | | | | | | -------------------------------------------------------------------------------- | | Sales of fixed assets | -0. | 1.2 | -0.1 | 0.3 | 0.1 | 2.9 | 2.9 | | | | 1 | | | | | | | -------------------------------------------------------------------------------- | | Change in loan | 0.3 | 1.3 | -0.7 | 0.7 | 0.3 | -0.5 | 0.8 | | | receivables | | | | | | | | -------------------------------------------------------------------------------- | Net cash used in investing | -21 | -8.3 | -28. | -15. | -65. | -35. | -53. | | activities | .3 | | 8 | 7 | 8 | 3 | 2 | | from operations | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | | Dividends paid | 0.0 | 0.0 | -35. | -0.3 | -36. | -36. | -36. | | | | | | 7 | | 0 | 3 | 3 | -------------------------------------------------------------------------------- | | Repurchase of own shares | - | 0.0 | - | - | - | -2.6 | -2.6 | -------------------------------------------------------------------------------- | | Payment of finance lease | -1. | -1.3 | -1.3 | -1.3 | -3.9 | -3.9 | -5.1 | | | liabilities | 3 | | | | | | | -------------------------------------------------------------------------------- | | Change in | 0.6 | -16. | 0.2 | -38. | -37. | 7.3 | -27. | | | interest-bearing | | 5 | | 4 | 6 | | 9 | | | liabilities | | | | | | | | -------------------------------------------------------------------------------- | Net cash used in financing | -0, | -17. | -36. | -40. | -77. | -35. | -71. | | activities | 7 | 8 | 8 | 0 | 5 | 5 | 9 | | from operations | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in cash and cash | -6, | 2.5 | -38. | -27. | -72. | -16. | 1.3 | | equivalents | 9 | | 1 | 8 | 8 | 1 | | -------------------------------------------------------------------------------- | | | | | | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | -58 | -101 | -98. | -123 | -123 | -120 | -120 | | beginning | ,9 | .7 | 4 | .3 | .3 | .2 | .2 | | of period | | | | | | | | -------------------------------------------------------------------------------- | Foreign exchange differences | 0,3 | -1.4 | 1.4 | -2.9 | -1.2 | -1.5 | -1.8 | | | | | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 51, | 105. | 58.9 | 98.4 | 51.7 | 105. | 123. | | end of period | 7 | 6 | | | | 6 | 3 | -------------------------------------------------------------------------------- | | | | -6. | 2.5 | -38. | -27. | -72. | -16. | 1.3 | | | | | 9 | | 1 | 8 | 8 | 1 | | -------------------------------------------------------------------------------- Statement of changes in shareholders' equity, EUR million -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Parent shareholders' equity | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | | Non- | Tota | | | contr | l | | | ol- | eq | | | l | uity | | | ing | | | | i | | | | ntere | | | | st | | -------------------------------------------------------------------------------- | | Sha | Shar | Own | Tran | Cash | Re- | Tota | | | | | re | e | sh | s- | flow | tain | l | | | | | cap | is | are | l | hedge | ed | | | | | | i- | sue | s | atio | s | e | | | | | | tal | prem | | n | | arn- | | | | | | | i- | | di | | ing | | | | | | | u | | ffer | | s | | | | | | | ms | | - | | | | | | | | | and | | en | | | | | | | | | othe | | cies | | | | | | | | | r | | | | | | | | | | | re | | | | | | | | | | | serv | | | | | | | | | | | es | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 31 | 75. | 33.2 | -9. | -76. | 0.0 | 458. | 482. | 1.6 | 483. | | Dec 2008 | 8 | | 0 | 1 | | 1 | 0 | | 6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- | Net profit | | | | | | 28.9 | 28.9 | 0.5 | 29.4 | | for the | | | | | | | | | | | period | | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | | | | | | | comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | | | | | 8.5 | 8.5 | | 8.5 | | difference | | | | | | | | | | | from | | | | | | | | | | | the net | | | | | | | | | | | investment | | | | | | | | | | | in | | | | | | | | | | | Swedish | | | | | | | | | | | subsidiaries | | | | | | | | | | | (net of tax) | | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | 1.6 | | 25.5 | | -25. | 2.0 | | 2.0 | | difference | | | | | | 1 | | | | -------------------------------------------------------------------------------- | Total | | 1.6 | | 25.5 | 0.0 | 12.3 | 39.4 | 0.5 | 39.9 | | comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Transactions | | | | | | | | | | | with owners | | | | | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | 3.1 | 3.1 | | 3.1 | | payments | | | | | | | | | | | reco | | | | | | | | | | | gnized | | | | | | | | | | | against | | | | | | | | | | | equity | | | | | | | | | | -------------------------------------------------------------------------------- | Dividend | | | | | | -35. | -35. | | -35. | | | | | | | | 8 | 8 | | 8 | -------------------------------------------------------------------------------- | Own shares | | | -2. | | | | -2.6 | | -2.6 | | purchased | | | 6 | | | | | | | -------------------------------------------------------------------------------- | Transfer | | 0.1 | | | | -0.1 | 0.0 | | 0.0 | | between | | | | | | | | | | | restricted | | | | | | | | | | | an | | | | | | | | | | | d | | | | | | | | | | | non-restricte | | | | | | | | | | | d reserves | | | | | | | | | | -------------------------------------------------------------------------------- | Non-controlli | | | | | | | | -0.4 | -0.4 | | ng interest | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | 0.1 | -2. | | | -32. | -35. | -0.4 | -35. | | transactions | | | 6 | | | 8 | 3 | | 7 | | with | | | | | | | | | | | owners | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 30 | 75. | 34.9 | -11 | -50. | 0.0 | 437. | 486. | 1.7 | 487. | | Sep 2009 | 8 | | .6 | 6 | | 6 | 1 | | 8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | Parent shareholders' equity | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | | Non- | Tota | | | contr | l | | | ol- | eq | | | l | uity | | | ing | | | | i | | | | ntere | | | | st | | -------------------------------------------------------------------------------- | | Sha | Shar | Own | Tran | Cash | Re- | Tota | | | | | re | e | sh | s- | flow | tain | l | | | | | cap | is | are | l | hedge | ed | | | | | | i- | sue | s | atio | s | e | | | | | | tal | prem | | n | | arn- | | | | | | | i- | | di | | ing | | | | | | | u | | ffer | | s | | | | | | | ms | | - | | | | | | | | | and | | en | | | | | | | | | othe | | cies | | | | | | | | | r | | | | | | | | | | | re | | | | | | | | | | | serv | | | | | | | | | | | es | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 31 | 75. | 34.8 | -11 | -44. | 0.0 | 463. | 517. | 0.7 | 518. | | Dec 2009 | 8 | | .6 | 8 | | 4 | 6 | | 3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- | Net profit | | | | | | 48.1 | 48.1 | 0.0 | 48.1 | | for the | | | | | | | | | | | period | | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | | | | | | | comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | 3.4 | | 51.0 | | -54. | -0.2 | | -0.2 | | difference | | | | | | 6 | | | | -------------------------------------------------------------------------------- | Cash flow | | | | | 0.5 | | 0.5 | | 0.5 | | hedges | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | 3.4 | | 51.0 | 0.5 | 11.0 | 65.9 | 0.0 | 65.9 | | comprehensive | | | | | | | | | | | income | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Transactions | | | | | | | | | | | with owners | | | | | | | | | | -------------------------------------------------------------------------------- | Share-based | | | | | | 3.5 | 3.5 | | 3.5 | | payments | | | | | | | | | | | reco | | | | | | | | | | | gnized | | | | | | | | | | | against | | | | | | | | | | | equity | | | | | | | | | | -------------------------------------------------------------------------------- | Dividend | | | | | | -35. | -35. | | -35. | | | | | | | | 7 | 7 | | 7 | -------------------------------------------------------------------------------- | Changes due | | | | | | -0.5 | -0.5 | -0.2 | -0.7 | | to | | | | | | | | | | | business | | | | | | | | | | | comb | | | | | | | | | | | inations | | | | | | | | | | -------------------------------------------------------------------------------- | Non-controlli | | | | | | | | -0.4 | -0.4 | | ng interest | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | 0.0 | 0.0 | | | -32. | -32. | -0.6 | -33. | | transactions | | | | | | 7 | 7 | | 3 | | with | | | | | | | | | | | owners | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance at 30 | 75. | 38.2 | -11 | 6.2 | 0.5 | 441. | 550. | 0.1 | 550. | | Sep 2010 | 8 | | .6 | | | 7 | 8 | | 9 | -------------------------------------------------------------------------------- Net sales by country, EUR million -------------------------------------------------------------------------------- | | 201 | 200 | Chang | 2010 | 2009 | Change | 2009 | | | 0 | 9 | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 199 | 199 | 0 | 648 | 655 | -1 | 888 | -------------------------------------------------------------------------------- | Sweden | 113 | 103 | 10 | 358 | 337 | 6 | 462 | -------------------------------------------------------------------------------- | International | 128 | 130 | -1 | 399 | 414 | -4 | 553 | -------------------------------------------------------------------------------- | Group elimination | -53 | -48 | 10 | -163 | -141 | 16 | -197 | -------------------------------------------------------------------------------- | Group total | 387 | 383 | 1 | 1 242 | 1 266 | -2 | 1 706 | -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | Internal sales by | | | | | | | | | country, EUR million | | | | | | | | -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | | 201 | 200 | Chang | 2010 | 2009 | Change | 2009 | | | 0 | 9 | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 15 | 20 | -25 | 50 | 55 | -9 | 73 | -------------------------------------------------------------------------------- | Sweden | 6 | 5 | 20 | 18 | 19 | -4 | 27 | -------------------------------------------------------------------------------- | International | 32 | 24 | 37 | 96 | 67 | 43 | 96 | -------------------------------------------------------------------------------- | Group total | 53 | 48 | 10 | 163 | 141 | 16 | 197 | -------------------------------------------------------------------------------- Sales between segments are carried out at arm's length. Net sales according to customer location, EUR million -------------------------------------------------------------------------------- | | 2010 | Chang | Share | 2009 | Share | 2009 | | | | e | | | | | -------------------------------------------------------------------------------- | | 1-9 | % | % | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 596 | 0 | 48 | 596 | 47 | 806 | -------------------------------------------------------------------------------- | Sweden | 335 | 7 | 27 | 313 | 25 | 431 | -------------------------------------------------------------------------------- | Other | 312 | -13 | 25 | 357 | 28 | 470 | -------------------------------------------------------------------------------- | Group total | 1 242 | -2 | 100 | 1 266 | 100 | 1 706 | -------------------------------------------------------------------------------- Net sales by customer sector, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Telecom | 131 | 132 | 0 | 422 | 434 | -3 | 582 | -------------------------------------------------------------------------------- | Finance | 82 | 87 | -5 | 261 | 270 | -3 | 359 | -------------------------------------------------------------------------------- | Industry sectors | 173 | 165 | 5 | 560 | 563 | -1 | 766 | -------------------------------------------------------------------------------- | Group total | 387 | 383 | 1 | 1 242 | 1 266 | -2 | 1 706 | -------------------------------------------------------------------------------- Revenues of EUR 168.8 million (EUR 166.7 million in 2009) are derived from a single external customer. These revenues are attributable to all reportable segments. Operating profit (EBIT) by country, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 24.0 | 28.1 | -14.5 | 72.6 | 76.4 | -5.0 | 110.3 | -------------------------------------------------------------------------------- | Sweden | 9.0 | 4.1 | 118.8 | 22.5 | -10.9 | pos | -3.1 | -------------------------------------------------------------------------------- | International | 4.6 | 0.9 | 426.2 | 3.5 | -9.0 | pos | -6.7 | -------------------------------------------------------------------------------- | Group operations | -9.9 | -6.8 | -46.7 | -32.5 | -14.9 | -118.6 | -25.4 | -------------------------------------------------------------------------------- | Operating profit | 27.7 | 26.3 | 5.3 | 66.0 | 41.6 | 58.8 | 75.3 | | (EBIT) | | | | | | | | -------------------------------------------------------------------------------- Operating margin (EBIT) by country, % -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | | 1-9 | 1-9 | | 1-12 | -------------------------------------------------------------------------------- | Finland | 12.0 | 14.1 | -2.1 | 11.2 | 11.7 | -0.5 | 12.4 | -------------------------------------------------------------------------------- | Sweden | 8.0 | 4.0 | 4.0 | 6.3 | -3.2 | 9.5 | -0.7 | -------------------------------------------------------------------------------- | International | 3.6 | 0.7 | 2.9 | 0.9 | -2.2 | 3.1 | -1.2 | -------------------------------------------------------------------------------- | Operating margin | 7.2 | 6.9 | 0.3 | 5.3 | 3.3 | 2.0 | 4.4 | | (EBIT) | | | | | | | | -------------------------------------------------------------------------------- Personnel by country -------------------------------------------------------------------------------- | | End of period | | Average | -------------------------------------------------------------------------------- | | 2010 | Change | Shar | 2009 | 2009 | 2010 | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 1-9 | % | % | 1-9 | 1-12 | 1-9 | 1-9 | -------------------------------------------------------------------------------- | Finland | 5 807 | 1 | 34 | 5 772 | 5 758 | 5 779 | 5 976 | -------------------------------------------------------------------------------- | Sweden | 2 948 | -4 | 17 | 3 086 | 3 102 | 2 946 | 3 230 | -------------------------------------------------------------------------------- | Czech | 1 841 | 19 | 11 | 1 544 | 1 656 | 1 757 | 1 521 | -------------------------------------------------------------------------------- | India | 1 324 | 58 | 8 | 837 | 1 009 | 1 153 | 797 | -------------------------------------------------------------------------------- | Germany | 1 040 | -2 | 6 | 1 062 | 1 047 | 1 033 | 1 086 | -------------------------------------------------------------------------------- | China | 942 | 106 | 5 | 457 | 590 | 818 | 389 | -------------------------------------------------------------------------------- | Poland | 857 | 36 | 5 | 629 | 676 | 766 | 592 | -------------------------------------------------------------------------------- | Latvia | 594 | -2 | 3 | 608 | 588 | 594 | 625 | -------------------------------------------------------------------------------- | Norway | 511 | -12 | 3 | 581 | 561 | 524 | 614 | -------------------------------------------------------------------------------- | Italy | 234 | -11 | 1 | 262 | 266 | 267 | 261 | -------------------------------------------------------------------------------- | Great Britain | 214 | -22 | 1 | 275 | 274 | 238 | 298 | -------------------------------------------------------------------------------- | Denmark | 197 | -8 | 1 | 214 | 226 | 209 | 274 | -------------------------------------------------------------------------------- | Lithuania | 176 | -2 | 1 | 179 | 177 | 179 | 184 | -------------------------------------------------------------------------------- | Russia | 133 | 177 | 1 | 48 | 50 | 121 | 43 | -------------------------------------------------------------------------------- | Netherlands | 129 | -3 | 1 | 133 | 133 | 131 | 142 | -------------------------------------------------------------------------------- | Estonia | 112 | -5 | 1 | 118 | 118 | 118 | 121 | -------------------------------------------------------------------------------- | Other | 255 | -38 | 1 | 410 | 433 | 302 | 423 | -------------------------------------------------------------------------------- | Group total | 17 31 | 7 | 100 | 16 215 | 16 663 | 16 934 | 16 577 | | | 3 | | | | | | | -------------------------------------------------------------------------------- Total assets by country, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Change | 2010 | -------------------------------------------------------------------------------- | | 30 Sep | 30 Sep | % | 31 Dec | -------------------------------------------------------------------------------- | Finland | 452.5 | 463.6 | -2 | 442.1 | -------------------------------------------------------------------------------- | Sweden | 293.1 | 255.8 | 15 | 261.3 | -------------------------------------------------------------------------------- | International | 301.4 | 320.4 | -6 | 310.8 | -------------------------------------------------------------------------------- | Country elimination | -24.3 | -18.5 | 31 | -21.4 | -------------------------------------------------------------------------------- | Countries total | 1 022.7 | 1 021.2 | 0 | 992.7 | -------------------------------------------------------------------------------- | Group Operations | 138.6 | 189.3 | -27 | 202.5 | -------------------------------------------------------------------------------- | Total assets | 1 161.3 | 1 210.6 | -4 | 1 195.3 | -------------------------------------------------------------------------------- Non-current assets according to asset location, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Change | 2009 | -------------------------------------------------------------------------------- | | 30 Sep | 30 Sep | % | 31 Dec | -------------------------------------------------------------------------------- | Finland | 263.8 | 251.1 | 5 | 252.0 | -------------------------------------------------------------------------------- | Sweden | 162.1 | 139.6 | 16 | 138.6 | -------------------------------------------------------------------------------- | Other | 157.6 | 150.6 | 5 | 154.4 | -------------------------------------------------------------------------------- | Total non-current assets | 583.5 | 541.2 | 8 | 545.0 | -------------------------------------------------------------------------------- Capital expenditure by country, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 16.1 | 6.9 | 133 | 41.1 | 25.9 | 59 | 41.2 | -------------------------------------------------------------------------------- | Sweden | 4.0 | 2.8 | 43 | 16.7 | 7.5 | 122 | 9.4 | -------------------------------------------------------------------------------- | International | 2.1 | 2.1 | 0 | 7.1 | 2.8 | 153 | 4.2 | -------------------------------------------------------------------------------- | Group Operations | 1.4 | 0.6 | 133 | 5.4 | 5.5 | -1 | 2.8 | -------------------------------------------------------------------------------- | Group total | 23.6 | 12.4 | 90 | 70.3 | 41.7 | 69 | 57.5 | -------------------------------------------------------------------------------- Depreciation by country, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 11.2 | 10.4 | 7 | 32.7 | 30.9 | 6 | 41.7 | -------------------------------------------------------------------------------- | Sweden | 2.5 | 2.0 | 26 | 6.9 | 6.1 | 14 | 8.3 | -------------------------------------------------------------------------------- | International | 1.7 | 1.5 | 15 | 4.7 | 7.2 | -35 | 8.8 | -------------------------------------------------------------------------------- | Group Operations | 0.6 | 0.6 | -11 | 1.4 | 2.0 | -32 | 2.6 | -------------------------------------------------------------------------------- | Group total | 16.0 | 14.6 | 10 | 45.8 | 46.3 | -1 | 61.4 | -------------------------------------------------------------------------------- Amortization on allocated intangible assets from acquisitions, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 0.1 | 0.1 | 5 | 0.4 | 0.4 | -4 | 0.5 | -------------------------------------------------------------------------------- | Sweden | 0.8 | 0.7 | 10 | 2.3 | 2.2 | 5 | 2.9 | -------------------------------------------------------------------------------- | International | 1.0 | 1.5 | -32 | 3.0 | 4.4 | -30 | 5.9 | -------------------------------------------------------------------------------- | Group Operations | 0.0 | 0.0 | 0 | 0.0 | 0.0 | 0 | 0.0 | -------------------------------------------------------------------------------- | Group total | 1.9 | 2.3 | -17 | 5.7 | 6.9 | -17 | 9.3 | -------------------------------------------------------------------------------- Impairment losses, EUR million -------------------------------------------------------------------------------- | | 2010 | 2009 | Chang | 2010 | 2009 | Change | 2009 | | | | | e | | | | | -------------------------------------------------------------------------------- | | 7-9 | 7-9 | % | 1-9 | 1-9 | % | 1-12 | -------------------------------------------------------------------------------- | Finland | 0.0 | 0.0 | 0 | 0.0 | 0.0 | 0 | 0.0 | -------------------------------------------------------------------------------- | Sweden | 0.0 | 0.0 | 0 | 0.0 | 0.0 | 0 | 0.0 | -------------------------------------------------------------------------------- | International | 0.0 | 0.0 | 0 | 7.6 | 0.0 | - | 0.0 | -------------------------------------------------------------------------------- | Group Operations | 0.0 | 0.0 | 0 | 0.0 | 0.0 | 0 | 0.0 | -------------------------------------------------------------------------------- | Group total | 0.0 | 0.0 | 0 | 7.6 | 0.0 | - | 0.0 | -------------------------------------------------------------------------------- Commitments and contingencies, EUR million -------------------------------------------------------------------------------- | | 30 Sep | | 31 Dec 2009 | Change % | | | 2010 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | For Tieto obligations | | | | | -------------------------------------------------------------------------------- | Pledges | 0.0 | | 0.0 | 0 | -------------------------------------------------------------------------------- | On behalf of joint ventures | 0.5 | | 0.0 | 0 | -------------------------------------------------------------------------------- | Other Tieto obligations | | | | | -------------------------------------------------------------------------------- | Rent commitments due in one | 48.7 | | 52.1 | -6 | | year | | | | | -------------------------------------------------------------------------------- | Rent commitments due in 1-5 | 116.1 | | 86.9 | 34 | | years | | | | | -------------------------------------------------------------------------------- | Rent commitments due after 5 | 37.5 | | 21.4 | 75 | | years | | | | | -------------------------------------------------------------------------------- | Operating lease commitments due | 9.5 | | 11.3 | -16 | | in one year | | | | | -------------------------------------------------------------------------------- | Operating lease commitments due | 5.8 | | 8.8 | -34 | | in 1-5 years | | | | | -------------------------------------------------------------------------------- | Operating lease commitments due | 0.0 | | 0.0 | 0 | | after 5 years | | | | | -------------------------------------------------------------------------------- | Other commitments | 45.3 | | 35.8 | 27 | -------------------------------------------------------------------------------- Operating lease commitments are principally three-year lease agreements that do not include buyout clauses. Derivatives, EUR million -------------------------------------------------------------------------------- | Notional amounts of derivatives | 30 Sep 2010 | | 31 Dec 2009 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Foreign exchange forward contracts | 216.8 | | 196.5 | -------------------------------------------------------------------------------- | Interest rate swap | 250.0 | | 250.0 | -------------------------------------------------------------------------------- | Currency options | 7.3 | | 0.0 | -------------------------------------------------------------------------------- Includes the gross amount of all notional values for contracts, that have not yet been settled or closed. The amount of notional value outstanding is not necessarily a measure or indication of market risk, as the exposure of certain contracts may be offset by other contracts. -------------------------------------------------------------------------------- | Fair values of derivatives | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 30 Sep 2010 | | 31 Dec 2009 | -------------------------------------------------------------------------------- | The net fair values of financial | | | derivative instruments at the balance | | | sheet date were: | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Foreign exchange forward contracts | 1.8 | | -0.6 | -------------------------------------------------------------------------------- | Interest rate swaps | -1.6 | | -1.4 | -------------------------------------------------------------------------------- | Currency options | 0.1 | | 0.0 | -------------------------------------------------------------------------------- Derivatives are used for economic hedging purposes only. QUARTERLY FIGURES Key figures -------------------------------------------------------------------------------- | | 201 | 201 | 201 | 2009 | 2009 | 2009 | 2009 | | | 0 | 0 | 0 | | | | | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Earnings per share, EUR | | | | | | | | -------------------------------------------------------------------------------- | - basic | 0.3 | 0.1 | 0.1 | 0.36 | 0.25 | 0.14 | 0.01 | | | 4 | 7 | 7 | | | | | -------------------------------------------------------------------------------- | - diluted | 0.3 | 0.1 | 0.1 | 0.36 | 0.25 | 0.14 | 0.01 | | | 4 | 7 | 7 | | | | | -------------------------------------------------------------------------------- | Equity per share, EUR | 7.7 | 7.3 | 7.1 | 7.25 | 6.82 | 6.46 | 6.31 | | | 2 | 3 | 0 | | | | | -------------------------------------------------------------------------------- | Return on equity rolling 12 | 14. | 13. | 13. | 11.0 | 6.3 | 7.8 | 10.2 | | month, % | 2 | 8 | 6 | | | | | -------------------------------------------------------------------------------- | Return on capital employed | 18. | 21. | 19. | 16.8 | 18.6 | 18.5 | 25.3 | | rolling 12 month, % | 6 | 1 | 6 | | | | | -------------------------------------------------------------------------------- | Equity ratio % | 51. | 48. | 45. | 46.0 | 43.2 | 40.7 | 40.0 | | | 1 | 0 | 8 | | | | | -------------------------------------------------------------------------------- | Net interest-bearing | 96. | 89. | 51. | 66.0 | 118.9 | 139.2 | 79.2 | | liabilities, EUR million | 4 | 6 | 9 | | | | | -------------------------------------------------------------------------------- | Gearing, % | 17. | 17. | 10. | 12.7 | 24.4 | 30.1 | 17.5 | | | 5 | 1 | 2 | | | | | -------------------------------------------------------------------------------- | Investments, EUR million | 23. | 25. | 23. | 15.7 | 12.7 | 14.4 | 16.1 | | | 6 | 2 | 3 | | | | | -------------------------------------------------------------------------------- Income statement, EUR million -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Net sales | 387. | 431. | 422.9 | 440.6 | 382.9 | 444.8 | 438.0 | | | 1 | 5 | | | | | | -------------------------------------------------------------------------------- | Other operating income | 3.8 | 2.5 | 7.0 | 4.7 | 2.8 | 7.1 | 2.9 | -------------------------------------------------------------------------------- | Employee benefit | 219. | 255. | 254.5 | 243.3 | 210.7 | 265.8 | 266.9 | | expenses | 2 | 8 | | | | | | -------------------------------------------------------------------------------- | Depreciation, | 17.9 | 18.2 | 23.0 | 17.5 | 16.9 | 19.0 | 17.3 | | amortization and | | | | | | | | | impairment charges | | | | | | | | -------------------------------------------------------------------------------- | Other operating | 126. | 140. | 133.6 | 150.8 | 131.8 | 156.7 | 151.8 | | expenses | 1 | 5 | | | | | | -------------------------------------------------------------------------------- | Operating profit | 27.7 | 19.5 | 18.8 | 33.7 | 26.3 | 10.4 | 4.9 | | (EBIT) | | | | | | | | -------------------------------------------------------------------------------- | Financial income and | -3.4 | -1.1 | -1.1 | -1.5 | 0.9 | -1.6 | -2.8 | | expenses | | | | | | | | -------------------------------------------------------------------------------- | Profit before taxes | 24.3 | 18.4 | 17.7 | 32.2 | 27.2 | 8.8 | 2.1 | -------------------------------------------------------------------------------- | Income taxes | 0.1 | -6.7 | -5.7 | -6.5 | -8.8 | 1.2 | -1.1 | -------------------------------------------------------------------------------- | Net profit for the | 24.4 | 11.7 | 12.0 | 25.7 | 18.4 | 10.0 | 1.0 | | period | | | | | | | | -------------------------------------------------------------------------------- Balance sheet, EUR million -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 30 | 30 | 31 | 31 | 30 | 30 | 31 | | | Sep | Jun | Mar | Dec | Sep | Jun | Mar | -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | Goodwill | 419.3 | 416.2 | 411.5 | 402.0 | 398.2 | 392.7 | 391.4 | -------------------------------------------------------------------------------- | Other intangible | 52.7 | 53.4 | 45.0 | 42.8 | 44.1 | 46.1 | 49.2 | | assets | | | | | | | | -------------------------------------------------------------------------------- | Property, plant and | 111.5 | 106.3 | 104.7 | 100.1 | 99.0 | 100.8 | 103.2 | | equipment | | | | | | | | -------------------------------------------------------------------------------- | Other non-current | 74.5 | 63.6 | 66.1 | 72.7 | 68.7 | 75.3 | 68.7 | | assets | | | | | | | | -------------------------------------------------------------------------------- | Total non-current | 658.0 | 639.5 | 627.3 | 617.6 | 610.0 | 614.9 | 612.5 | | assets | | | | | | | | -------------------------------------------------------------------------------- | Trade receivables | 451.6 | 473.4 | 461.4 | 454.4 | 495.0 | 495.5 | 514.1 | | and other current | | | | | | | | | assets | | | | | | | | -------------------------------------------------------------------------------- | Cash and cash | 51.7 | 58.9 | 98.4 | 123.3 | 105.6 | 101.7 | 94.6 | | equivalents | | | | | | | | -------------------------------------------------------------------------------- | Total current assets | 503.3 | 532.3 | 559.8 | 577.7 | 600.6 | 597.2 | 608.7 | -------------------------------------------------------------------------------- | Assets classified as | - | - | 4.4 | - | - | - | - | | held for sale | | | | | | | | -------------------------------------------------------------------------------- | Total assets | 1 | 1 | 1 | 1 | 1 | 1 | 1 | | | 161.3 | 171.8 | 191.5 | 195.3 | 210.6 | 212.1 | 221.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity | 550.9 | 523.6 | 507.2 | 518.3 | 487.8 | 462.0 | 452.1 | -------------------------------------------------------------------------------- | Non-current loans | 155.6 | 156.8 | 158.2 | 159.5 | 160.6 | 161.9 | 163.2 | -------------------------------------------------------------------------------- | Other non-current | 63.0 | 58.5 | 58.0 | 53.9 | 48.9 | 46.9 | 42.5 | | liabilities | | | | | | | | -------------------------------------------------------------------------------- | Total non-current | 218.6 | 215.3 | 216.2 | 213.4 | 209.5 | 208.8 | 205.7 | | liabilities | | | | | | | | -------------------------------------------------------------------------------- | Trade payables and | 367.4 | 404.4 | 427.5 | 378.3 | 390.0 | 396.3 | 506.1 | | other | | | | | | | | | current | | | | | | | | | liabilities | | | | | | | | -------------------------------------------------------------------------------- | Provisions | 23.2 | 27.9 | 36.6 | 46.5 | 49.3 | 54.5 | 37.2 | -------------------------------------------------------------------------------- | Current loans | 1.2 | 0.6 | 0.3 | 38.8 | 74.0 | 90.5 | 20.1 | -------------------------------------------------------------------------------- | Total current | 391.8 | 432.9 | 464.4 | 463.6 | 513.3 | 541.3 | 563.4 | | liabilities | | | | | | | | -------------------------------------------------------------------------------- | Liabilities | - | - | 3.7 | - | - | - | - | | classified as held | | | | | | | | | for sale | | | | | | | | -------------------------------------------------------------------------------- | Total equity and | 1 | 1 | 1 | 1 | 1 | 1 | 1 | | liabilities | 161.3 | 171.8 | 191.5 | 195.3 | 210.6 | 212.1 | 221.2 | -------------------------------------------------------------------------------- Cash flow, EUR million -------------------------------------------------------------------------------- | | 201 | 201 | 2010 | 2009 | 2009 | 2009 | 2009 | | | 0 | 0 | | | | | | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operations | | | | | | | | -------------------------------------------------------------------------------- | Net profit | 24. | 11. | 12.0 | 25.7 | 18.4 | 10.0 | 1.0 | | | 4 | 7 | | | | | | -------------------------------------------------------------------------------- | Adjustments | 23. | 26. | 30.5 | 25.4 | 25.9 | 15.2 | 22.3 | | | 8 | 8 | | | | | | -------------------------------------------------------------------------------- | Change in net working | -28 | -9. | -9.9 | 24.0 | -26.4 | -26.3 | 24.8 | | capital | .1 | 2 | | | | | | -------------------------------------------------------------------------------- | Cash generated from | 20. | 29. | 32.6 | 75.1 | 17.9 | -1.1 | 48.1 | | operations | 1 | 3 | | | | | | -------------------------------------------------------------------------------- | Net financial expenses | -3. | -0. | 1.9 | 0.1 | 5.0 | -1.3 | -3.0 | | paid | 0 | 8 | | | | | | -------------------------------------------------------------------------------- | Income taxes paid | -2. | -1. | -6.6 | -3.5 | 5.7 | -10.2 | -6.4 | | | 0 | 0 | | | | | | -------------------------------------------------------------------------------- | Net cash flow from | 15. | 27. | 27.9 | 71.7 | 28.6 | -12.6 | 38.7 | | operations | 1 | 5 | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in | -21 | -28 | -15. | -17.9 | -8.3 | -8.8 | -18.2 | | investing activities | .3 | .8 | 7 | | | | | | from | | | | | | | | | operations | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash used in | -0. | -36 | -40. | -36.4 | -17.8 | 27.6 | -45.3 | | financing activities | 7 | .8 | 0 | | | | | | from | | | | | | | | | operations | | | | | | | | -------------------------------------------------------------------------------- | Change in cash and cash | -6. | -38 | -27. | 17.4 | 2.5 | 6.2 | -24.8 | | equivalents | 9 | .1 | 8 | | | | | -------------------------------------------------------------------------------- | | | | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | -58 | -98 | -123 | -105. | -101. | -94.6 | -120. | | at beginning of period | .9 | .4 | .3 | 6 | 7 | | 2 | -------------------------------------------------------------------------------- | Foreign exchange | 0.3 | 1.4 | -2.9 | -0.3 | -1.4 | -0.9 | 0.8 | | differences | | | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 51. | 58. | 98.4 | 123.3 | 105.6 | 101.7 | 94.6 | | at end of period | 7 | 9 | | | | | | -------------------------------------------------------------------------------- | | -6. | -38 | -27. | 17.4 | 2.5 | 6.2 | -24.8 | | | 9 | .1 | 8 | | | | | -------------------------------------------------------------------------------- QUARTERLY FIGURES BY SEGMENTS -------------------------------------------------------------------------------- | Net sales by country, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Finland | 199 | 228 | 222 | 233 | 199 | 230 | 227 | -------------------------------------------------------------------------------- | Sweden | 113 | 126 | 119 | 125 | 103 | 116 | 119 | -------------------------------------------------------------------------------- | International | 128 | 136 | 135 | 139 | 130 | 143 | 141 | -------------------------------------------------------------------------------- | Group elimination | -53 | -58 | -52 | -56 | -48 | -45 | -48 | -------------------------------------------------------------------------------- | Group total | 387 | 431 | 423 | 441 | 383 | 445 | 438 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net sales by customer sector, EUR million -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Telecom | 131 | 146 | 142 | 149 | 132 | 149 | 153 | -------------------------------------------------------------------------------- | Finance | 82 | 90 | 88 | 89 | 87 | 94 | 89 | -------------------------------------------------------------------------------- | Industry sectors | 173 | 194 | 193 | 203 | 165 | 201 | 197 | -------------------------------------------------------------------------------- | Group total | 387 | 431 | 423 | 441 | 383 | 445 | 438 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit (EBIT) by country, | | | | | | | EUR million | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Finland | 24.0 | 25.9 | 22.6 | 33.9 | 28.1 | 25.6 | 22.7 | -------------------------------------------------------------------------------- | Sweden | 9.0 | 7.7 | 5.8 | 7.9 | 4.1 | - 6.2 | - 8.8 | -------------------------------------------------------------------------------- | International | 4.6 | 0.3 | - 1.4 | 2.4 | 0.9 | - 6.2 | - 3.7 | -------------------------------------------------------------------------------- | Group operations | - 9.9 | - | - 8.2 | - | - 6.8 | - 2.8 | - 5.3 | | | | 14.4 | | 10.5 | | | | -------------------------------------------------------------------------------- | Operating profit | 27.7 | 19.5 | 18.8 | 33.7 | 26.3 | 10.4 | 4.9 | | (EBIT) | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating margin (EBIT) by | | | | | | | | country, % | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | 2010 | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 | -------------------------------------------------------------------------------- | | 7-9 | 4-6 | 1-3 | 10-12 | 7-9 | 4-6 | 1-3 | -------------------------------------------------------------------------------- | Finland | 12.0 | 11.4 | 10.2 | 14.6 | 14.1 | 11.1 | 10.0 | -------------------------------------------------------------------------------- | Sweden | 8.0 | 6.1 | 4.9 | 6.3 | 4.0 | -5.3 | -7.4 | -------------------------------------------------------------------------------- | International | 3.6 | 0.2 | -1.0 | 1.7 | 0.7 | -4.3 | -2.6 | -------------------------------------------------------------------------------- | Operating margin | 7.2 | 4.5 | 4.5 | 7.7 | 6.9 | 2.3 | 1.1 | | (EBIT) | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Major shareholders 30 September 2010 | | | -------------------------------------------------------------------------------- | | Shares | % | -------------------------------------------------------------------------------- | Solidium Oy | 7 415 4 | 10.3 | | | 18 | | -------------------------------------------------------------------------------- | Cevian Capital AB | 5 546 191 | 7.7 | -------------------------------------------------------------------------------- | Swedbank Robur fonder | 3 688 514 | 5.1 | -------------------------------------------------------------------------------- | OP-Pohjola Group | 3 430 504 | 4.8 | -------------------------------------------------------------------------------- | Ilmarinen Mutual Pension Insurance Co. | 2 562 367 | 3.6 | -------------------------------------------------------------------------------- | Svenska Litteratursällskapet i Finland | 1 737 000 | 2.4 | -------------------------------------------------------------------------------- | Tapiola Pension | 1 530 000 | 2.1 | -------------------------------------------------------------------------------- | Varma Mutual Pension Insurance Co. | 1 249 749 | 1.7 | -------------------------------------------------------------------------------- | The State Pension Fund | 1 163 744 | 1.6 | -------------------------------------------------------------------------------- | SEB Investment Management | 791 033 | 1.1 | -------------------------------------------------------------------------------- | | 29 114 520 | 40.4 | -------------------------------------------------------------------------------- | Nominee registered | 27 701 97 | 38.5 | | | 9 | | -------------------------------------------------------------------------------- | Others | 15 206 67 | 21.1 | | | 4 | | -------------------------------------------------------------------------------- | Total | 72 023 17 | 100.0 | | | 3 | | -------------------------------------------------------------------------------- Based on the ownership records of Euroclear Finland Oy and Euroclear Sweden AB. For further information, please contact: Hannu Syrjälä, President and CEO, tel. +358 207 2010, hannu.syrjala@tieto.com Seppo Haapalainen, CFO, tel. +358 2072 63500, +358 400 455587, seppo.haapalainen@tieto.com Reeta Kaukiainen, VP, Communications and Investor Relations, tel. +358 2072 68711, +358 50 522 0924, reeta.kaukiainen@tieto.com Pasi Hiedanpää, Manager, Investor Relations, tel. +358 2072 68088, +358 50 378 2228, pasi.hiedanpaa@tieto.com Press conference for analysts and media will be held at Tieto's premises in Helsinki, address: Aku Korhosen tie 2‑6, at 10.00 am EET (9.00 am CET, 8.00 am UK time). The results will be presented in English by Hannu Syrjälä, President and CEO. Notification of attendance to sirpa.salo@tieto.com, tel. +358 2072 68714. The conference will be webcasted and published live on Tieto's website www.tieto.com and there will be a possibility to present questions online. An on-demand video will be available after the conference. Conference call hosted by the management starting at 2.30 pm EET (1.00 pm CET, 12.00 am UK time), will also be available as live audio webcast at www.tieto.com. Callers may access the conference directly at the following telephone numbers: US callers +1 212 444 0413, non-US callers +44 20 7806 1955, no code. Lines are to be reserved ten minutes before the start of conference call. An on-demand audiocast of the conference will also be published on Tieto's website later during the day. A replay will be available until 3 November 2010 in the following numbers: US callers: +1 347 366 9565, non-US callers: +44 20 7111 1244, access code: 9677644#. Tieto publishes financial information in English, Finnish and Swedish. All releases are posted in full on Tieto's website as soon as they are published. TIETO CORPORATION DISTRIBUTION NASDAQ OMX Helsinki NASDAQ OMX Stockholm Principal Media Tieto is an IT service company providing IT, R&D and consulting services. With approximately 17 000 experts, we are among the leading IT service companies in Northern Europe and the global leader in selected segments. We specialize in areas where we have the deepest understanding of our customers' businesses and needs. Our superior customer centricity and expertise in digital services set us apart from our competitors. www.tieto.com Tieto Corporation Business ID: 0101138-5 Aku Korhosentie 2−6 PO Box 38 FI-00441 HELSINKI, FINLAND Tel +358 207 2010 Fax +358 2072 68898 Registered office: Helsinki E-mail: info@tieto.com www.tieto.com
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