2008-02-13 09:03:26 CET
2008-02-13 09:04:27 CET
REGULATED INFORMATION
Ixonos - Financial Statement Release
FINANCIAL STATEMENT BULLETIN FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2007
IXONOS PLC STOCK EXCHANGE RELEASE 13 FEBRUARY 2008 FINANCIAL STATEMENT BULLETIN FOR THE PERIOD 1 JANUARY - 31 DECEMBER 2007 IXONOS TURNOVER GREW STRONGLY - Turnover for the financial period was EUR 59.2 million (2006: EUR 39.2 million, turnover increase was 51.2 percent. Organic turnover growth was 34.7 percent. - Operating profit was EUR 4.7 million (2006: 3.9 MEUR), 7.9 percent of turnover, operating profit growth was 18.7 percent. - Operating profit excluding name change and depreciation of intangible rights of corporate acquisitions was EUR 6.0 million (2006: EUR 4.3 million), 10.2 percent of turnover, operating profit growth excluding name change expenses and depreciation of intangible rights of corporate acquisitions was 39.2 percent. - Net profit was EUR 3.1 million (2006: EUR 2.9 million), 5.3 percent of turnover, net profit growth was 8.1 percent. - Earnings per share were EUR 0.41 (2006: EUR 0.39). - Diluted earnings per share were EUR 0.40 (2006: EUR 0.38). - Turnover of the Systems Services Business Unit for the financial period was EUR 24.4 million (2006: EUR 14.6 million), turnover increase was 67.4 percent. Operating profit of the Business Unit was EUR 1.4 million (2006: EUR 1.6 million), 5.7 per cent of turnover, operating profit growth was - 14.6 percent. Operating profit excluding depreciation of intangible rights of corporate acquisitions was EUR 2.1 million (2006: EUR 1.7 million), 8.7 percent of turnover, operating profit growth was 24.3 percent. - Turnover of the Telecommunications Business Unit for the financial period was EUR 35.3 million (2006: EUR 24.9 million), turnover increase was 41.9 percent. Operating profit of the Unit was EUR 5.8 million (2006: EUR 3.6 million), 16.4 per cent of turnover, operating profit growth was 61.2 per cent. Operating profit before depreciation of intangible rights of corporate acquisitions was EUR 5.8 million (2006: EUR 3.7 million), 16.5 percent of turnover, operating profit growth was 56.6 percent. - The Board of Directors proposes a dividend of EUR 0.18 per share for the year 2007. - Judging from the company's order backlogs and tender prospects, the company's turnover will increase significantly in the first quarter of 2008 compared to the same period in 2007, and the turnover for the whole fiscal year will be significantly higher than in the previous fiscal year. - The Group's first-quarter operating profit percentage, excluding intangible rights of corporate acquisitions, is expected to fall slightly short of that of the previous year, due to heavy upfront recruitment. However, the operating profit percentage, excluding intangible rights of corporate acquisitions, for the fiscal year is expected to be on the level of the previous year, and the operating profit is thus expected to be clearly higher than in the previous year. President and CEO, Kari Happonen: The company's turnover continued to grow strongly in the last quarter of 2007. The turnover for the financial year exceeded that of the previous year by more than 50 percent. The growth of both Business Units clearly outpaced market growth in the financial period, and we managed to win market share from our competitors and strengthen significant customer relations. The strong organic growth of almost 35 percent was boosted by two corporate acquisitions. As expected, our operating profit percentage for the review period fell slightly short of that of the previous year, due to the EUR 0.55 million expenses related to the change of the company name and the revamping of the corporate identity in the first quarter, and the EUR 0.80 million depreciation, in the third quarter, of intangible rights of corporate acquisitions. However, excluding name change expenses and depreciation of intangible rights of corporate acquisitions, the relative profitability of our business operations was almost on the level of the previous year. The last-quarter profitability was slightly weaker than expected, which was due to the late launch of a few customer projects, as well as strong upfront recruitment. In support of our strategy, we acquired Mermit Business Applications Oy in May. Founded in 1999, Mermit is a widely valued expert company producing business-critical information system solutions and services. The acquisition significantly strengthened Ixonos' capability to deliver demanding specification, design, architecture and integration services. In September we acquired the entire share capital of Cidercone Life Cycle Solutions Oy (LCS), a company producing business-critical mobile and Internet services. The company delivers customer-specific software solutions as a comprehensive service where the customer uses the ordered solution over the Internet from LCS's servers. LCS is responsible for the maintenance of the servers and software, and for further development of the software. The acquisition strengthens Ixonos' readiness and capacity to deliver and maintain software and information systems projects and complements Ixonos' service provision with hosting services. Both acquired companies make extensive use of open source code components in their solutions. The completed corporate acquisitions reflect Ixonos' commitment to open standards. Ixonos has chosen open source code as one of the strategic technology platforms for the production of services covering the entire life cycle of software. The communal character of open source code boosts the number of potential developers of devices, subscriber connections and services, and thus speeds up the development and adoption of new features. By utilizing open source code we can offer the customers more efficient tools for managing the risks of product development and improving competitiveness, as well as cost-efficient flexibility for changing business needs. Acting in the Open Source development community is part of Ixonos' strategic skills development, and provides a communication channel to communities developing open source code and to customers utilizing it. As part of our Open Source strategy, we launched in spring a large software platform development project for smartphones and mobile computers. The platform is based on Linux operating system and open source code tools and components. The software platform comprises a large number of software and tools utilized in mobile device product development. The basic functions integrated into to the platform include, e.g. phone features and a touch screen. One of the main aims of the project is to develop an intuitive, easy-to-use and easy-to-modify touch-screen user interface for a device that integrates the functions of a mobile phone and a palmtop computer. The platform solution contains, in addition to user interface software and phone functions, calendar, web browser and email, as well as a reference device for development and test use. We believe that open source code and Linux-based solutions offer a clear and reliable platform for mobile device product development. The convergence of open source software and development environments facilitates that the tools used in software development can also be utilized to create products, services and features for traditional web environments, PC hardware and mobile terminals. During the review period we already managed to utilize the experience we had drawn from the development project in several customer projects. As another manifestation of our Open Source strategy, we launched an internal Ixonos Flow development project to develop our service production processes and methods. Ixonos Flow combines Ixonos' best practices and methods into a uniform way of operating when servicing customers. It consists of processes, methods and tools as well as reusable software components and service models. According to our strategy, the software components of Ixonos Flow make extensive use of open source code solutions. With Ixonos Flow we are able to harmonize our service production processes and practices also in our new subsidiaries, and we can guarantee that the customers get high-quality and cost-efficient services in systems architecture design, mobile software implementation or maintenance based on service level agreements for business-critical systems. According to the annual customer satisfaction survey published in June, the customers value Ixonos' reliability and capability to carry the agreed responsibilities, business segment know-how, as well as customer-specific flexibility. The customers' satisfaction with our service as a whole is on a high level and exceeds the maximum value of the reference base of the survey company, Market Visio. Our customers also expressed a stronger interest in expanding their cooperation with Ixonos. According to the survey, the customers have taken the change of the company name in February 2007 positively. Our other interest groups have also given us very positive feedback. The company's new name and new corporate identity have already had a positive impact on the company's image, facilitated recruitment and strengthened the commitment of the personnel, which can be seen, e.g. as a decrease of personnel turnover. At the end of the financial period, we launched a reorganization with the aim to enhance business growth, efficiency and profitability, internationalization, development of the skills of the personnel, as well as well-fare at work. In the new organization the operational functions are divided into Business Operations and Service Production and the supporting administration and communication services. Business Operations is responsible for selling the Group's products, management and development of customer relations, as well as running customer-specific services. The business operations are divided into three units: Mobile terminals and software, Operators and ICT, as well as Industry and Services. Service production is divided into Regional Units, two Service Product Units, as well as support functions. The Regional Units are responsible for customer project resourcing, as well as service production in cooperation with the Business Units. The Service Product Units are responsible for developing and productizing services, and for developing and harmonizing processes and methods related to service production. Once more, it's time for me to congratulate and thank all Ixonos people for a great performance! The success of the financial period of 2007 was yet another indication of the commitment of our personnel to profitable and responsible work. FUTURE PROSPECTS Market analysts estimate that the growth of the Finnish ICT service market will be 4-6 per cent in 2008. Ixonos aims to continue its strong organic growth at a clearly faster rate than market growth, and to improve profitability, if feasible. Judging from the company's order backlogs and tender prospects, the company's turnover will increase significantly in the first quarter of 2008 compared to the same period in 2007, and the turnover for the whole fiscal year will be significantly higher than in the previous fiscal year. The Group's first-quarter operating profit percentage, excluding depreciation of intangible rights of corporate acquisitions, is expected to fall slightly short of that of the previous year, due to heavy upfront recruitment. However, the operating profit percentage, excluding intangible rights of corporate acquisitions, for the fiscal year is expected to be on the level of the previous year, and the operating profit is thus expected to be clearly higher than in the previous year. BUSINESS OPERATIONS Ixonos is an information and communication technology service company providing customer-specific technology consulting, project management and software production services that promote the customers' competitiveness and risk management. Ixonos' clientele comprises leading mobile and smartphone manufacturers, mobile network suppliers and telecom carriers operating on international markets, as well as Finland-based finance, industry and service sector companies as well as public administration organizations. During the review period, before the start of the reorganization at the turn of the year, the operational business of Ixonos was organized into two Business Units: Systems Services and Telecommunications. During the review period the Systems Services Unit developed and maintained software that where part of its customer companies' information systems, and produced technology consulting and project management services. The Unit's most significant customers operate in the telecommunications, finance and public administration sectors. During the review period, the Telecommunications Unit produced hardware and software development, software integration and testing services for the telecommunications sector. The Unit's clientele comprised leading international mobile and smartphone manufacturers, mobile network suppliers and telecom carriers. The Ixonos Group comprises the following subsidiaries: Vega Technologies Oy, Ixonos Project Management Services Ltd; Ixonos Technology Consulting Ltd (formerly Mermit Business Applications Oy); Ixonos Outsourcing Services Ltd (formerly Cidercone Life Cycle Solutions Oy); Ixonos Slovakia s.r.o, which is located in Kosice, Slovakia; and Ixonos Testhouse Oy, and its subsidiary, Ixonos Testhouse Estonia OÜ, which is located in Tallinn, Estonia. Systems Services During the period under review, the turnover of Systems Services Unit grew by 67.4 percent, amounting to EUR 24.4 million (2006: EUR 14.6 million). The Unit's turnover was boosted by new customer projects launched during the review period, the strong growth of Service 4 Mobile Oy (now Ixonos Project Management Service Ltd.), acquired in June 2006, a company producing project management services, and the turnover of acquisition of Mermit Business Applications Oy (now Ixonos Technology Consulting Ltd), a company that was acquired in June. The turnover of Mermit was included in the Unit's turnover from 1 June. The turnover of Cidercone Life Cycle Solutions Oy (now Ixonos Outsourcing Services Ltd) was included in the Unit's turnover from 1 September. The operating profit of the Unit for the review period grew by - 14.6 percent, amounting to EUR 1.4 million (2006: EUR 1.6 million). Operating profit excluding depreciation of intangible rights of corporate acquisitions was EUR 2.1 million (2006: EUR 1.7 million), 8.7 percent of turnover. The Unit made strong efforts to develop its project delivery capabilities, open architecture solutions, security services for Open Source applications, as well as agile software development methods. The acquisition of Mermit Business Applications Oy further strengthened the Unit's skills and delivery capacity, especially in specification, design and architecture services, and it enhances Ixonos' competitiveness, e.g. in future projects to renew the systems of public administration organizations. The acquisition of Cidercone Life Cycle Solutions Oy strengthened the Unit's readiness and capacity in software and information system project deliveries and maintenance, and it added hosting services to the Unit's service offering. The integration of the software production capacity of the Slovakia-based subsidiary into the Unit's software production services with total responsibility was launched in early 2007. The resources of the Slovakian subsidiary were also utilized in the Unit's internal software and methods development. Throughout the year, market competition was fierce in Systems Services business segment. Telecommunications During the period under review, the turnover of Telecommunications Unit grew by 41.9 percent, amounting to EUR 35.3 million (2006: EUR 24.9 million). The Unit succeeded in further increasing its markets share among its key customers. The Unit continued to design several large customer projects that are delivered with total responsibility, and it launched a new extensive total-responsibility project to develop an entire wireless device for a key customer. Relative profitability of the Telecommunications Unit improved compared to the previous year, and operating profit grew by 61.2 percent to EUR 5.8 million (2006: EUR 3.6 million). Operating profit excluding depreciation of intangible rights of corporate acquisitions was EUR 5.8 million (2006: EUR 3.7 million), 16.5 percent of turnover. The Unit's strong smartphone competence and the lower-price services in Estonia and Slovakia supported the Unit's competitiveness in its efforts to acquire large total-responsibility customer projects and win market share on the international smartphone market. During the review period, the subsidiary Ixonos Testhouse Ltd, providing software testing and quality assurance services for smartphones, and its subsidiary Ixonos Testhouse Estonia OÜ together grew into an entity employing more than 60 people. The operations of the Telecommunications Unit's subsidiary in Kosice, Slovakia were launched during the review period, as planned. The Kosice unit carried out subprojects in software ventures for the Telecommunications Unit's key customers. At the end of the review period, over 50 experts worked in Kosice, most of them in Telecommunications Unit customer projects. In spring, the Telecommunications Unit initiated an extensive project for developing a smartphone and mobile PC software platform, based on the Linux operating system and on open source code tools and components. The know-how acquired in this project helped the unit win new Linux-based customer projects as early as during this review period. The global competition for the software ventures of the leading international mobile and smartphone manufacturers remained fierce. NEAR-FUTURE UNCERTAINTY FACTORS The aim of Ixonos Plc's risk management is to ensure undisturbed and continuous business operations and development, and to support the implementation of the company's operational targets and to increase the company's value. The risk management organization, process and recognized risks are explained on the company's website, at http://www.ixonos.com/en/investors/risk_management. Presently the biggest uncertainty factors relate to the world economy prospects and to growing international competition. Any downswing in the global economy would be likely to affect also the European and Finnish economies, and might lead to companies reducing their investments in information systems development. Still, such a weakening is not considered likely to significantly affect Ixonos' operations in developing mobile terminal and mobile software products. International competition, especially Indian and Chinese, has proliferated faster than anticipated. This may further tighten the price competition of the business and thus cut the profit margins of Finnish companies Ixonos has prepared itself for the tightening price competition by establishing offices in lower-price areas. TURNOVER Consolidated turnover was EUR 59.2 million (2006: EUR 39.2 million), or 51.2 percent more than in the previous year. Of the turnover, 59 percent was accrued by the Telecommunications Unit and 41 percent by the Systems Services Unit. TURNOVER BY SEGMENT -------------------------------------------------------------------------------- | K EURO | 1-12 2007 | 1-12 2006 | -------------------------------------------------------------------------------- | Telecommunications | 35,296 | 24,879 | -------------------------------------------------------------------------------- | Systems Services | 24,442 | 14,604 | -------------------------------------------------------------------------------- | Eliminations | - 509 | - 299 | -------------------------------------------------------------------------------- | Group total | 59,229 | 39,184 | -------------------------------------------------------------------------------- FINANCIAL RESULT Consolidated operating profit was EUR 4.7 million (2006: EUR 3.9 million), and profit before taxes was EUR 4.4 million (2006: EUR 3.8 million). Profit for the financial period was EUR 3.1 million (2006: EUR 2.9 million), which is 5.3 per cent of turnover. Diluted earnings per share were EUR 0.40 (2006: EUR 0.38). Diluted cash flow from business operations was EUR 0.43 per share (2006: EUR 0.33). The Group's result was burdened by EUR 0.55 million (2006: EUR 0.16 million reorganization expenses) name change expenses that were related to the change of the company name and the revamping of the corporate identity, as well as a EUR 0.80 million (2006: EUR 0.23 million) depreciation of intangible assets from integration of operations. Excluding the aforementioned items the consolidated operating profit was EUR 6.0 million or 10.2 percent of turnover (2006: EUR 4.3 million, 11.1 percent of turnover). OPERATING PROFIT BY SEGMENT -------------------------------------------------------------------------------- | K EURO | 1-12 2007 | 1-12 2006 | -------------------------------------------------------------------------------- | Telecommunications | 5,775 | 3,583 | -------------------------------------------------------------------------------- | Systems Services | 1,390 | 1,629 | -------------------------------------------------------------------------------- | Administration | - 2,487 | - 1,271 | -------------------------------------------------------------------------------- | Group total | 4,679 | 3,941 | -------------------------------------------------------------------------------- The administrative costs include name change expenses of EUR 0.55 million (2006: EUR 0.16 million reorganization expenses). The operating profit of the Systems Services Unit includes a EUR 0.74 million (2006: EUR 0.09 million) depreciation of intangible assets acquired thorough integration of operations. The operating profit of the Telecommunications Unit includes a EUR 0.06 million (2006: EUR 0.14 million) depreciation of intangible assets acquired thorough integration of operations. RETURN ON CAPITAL INVESTMENT Consolidated return on equity (ROE) was 19.4 per cent (2006: 29.8) and return on investment (ROI) was 19.4 per cent (2006: 28.2). BALANCE SHEET AND FINANCING The balance sheet total was EUR 46.7 million (2006: EUR 25.4 million). Shareholders' equity was EUR 21.5 million (2006: EUR 10.9 million). Equity ratio was 46.1 percent (2006: 42.7). The Group's liquid assets stood at EUR 2.3 million (2006: EUR 2.7 million) at the end of the financial period. INVESTMENTS Investments during the financial period totalled EUR 15.8 million. Of the investments EUR 14.4 million were allocated to acquisition of subsidiaries, and EUR 1.4 million to intangible and tangible assets. INTEREST-BEARING LIABILITIES The Group's interest-bearing liabilities amounted to EUR 10.0 million (2006: EUR 5.4 million). Of the interest-bearing liabilities EUR 8.2 million consisted of loans from financial institutions and EUR 1.8 million consisted of liabilities related to acquisition debts. CASH FLOW Consolidated cash flow from business operations for the review period was EUR 3.4 million (2006: EUR 2.5 million). PERSONNEL The number of personnel averaged 726 (2006: 503) during the financial period and was 874 (2006: 579) at the end of the period. The number of personnel working abroad averaged 65 (2006: 17) and was 106 (2006: 30) at the end of the period. SHARES AND SHARE CAPITAL Share turnover and price During the review period the company's highest share price quoted was EUR 8.08 (2006: EUR 5.07), the lowest EUR 4.55 (2006: EUR 3.75) and the last share price quoted on 28 December 2007 was EUR 5.97 (2006: EUR 4.63). The average quotation of the review period was EUR 5.96 (2006: EUR 4.44). The number of shares traded during the review period was 6,125,199 (2006: 3,663,151), which corresponds to 69 percent (2006: 50 percent) of the total number of shares at the end of the review period. The market value of the share capital at the final quotation on 28 December 2007 was EUR 53,056,166 (2006: EUR 34,255,981). Share capital At the beginning of the year 2007 the company's registered share capital was EUR 296,948.00, and the number of shares was 7,423,700. During 2007, 10,000 shares have been subscribed with option rights of the 2003 stock options plan BI, 11,000 shares with option rights of CI, 18,000 shares with option rights of CII, 55,000 shares with option rights of DI, and 15,500 shares with option rights of DII. The Board of Directors of Ixonos Plc decided on 7 May 2007 on a directed share issue in which 112,300 new Ixonos Plc shares were issued for subscription by the previous principal owner and present Chief Executive Officer of Ixonos Project Management Services Ltd as payment for the additional acquisition price of the share capital of Ixonos Project Management Services Ltd. With the authorization granted by the Annual General Meeting held on 22 March 2007, the Board of Directors of Ixonos Plc decided on 20 June 2007 on a directed share issue in which 391,630 new Ixonos Plc shares were issued for subscription by the owners of Mermit Business Applications Oy as payment for the acquisition price of the share capital of Mermit Business Applications Oy. With the authorization granted by the Annual General Meeting held on 22 March 2007, the Board of Directors of Ixonos Plc decided on 4 September 2007 on a directed share issue in which 850,000 new Ixonos Plc shares were issued for subscription by the owners of Cidercone Life-Cycle Solutions Oy (now Ixonos Outsourcing Services Ltd) as payment for the acquisition price of the share capital of Cidercone Life-Cycle Solutions Oy. Ixonos' share capital was EUR 355,485.20 at the end of the review period, and the total number of shares was 8,887,130. Stock options plans 2003 and 2006 Under the 2003 stock options plan, 10,000 options have been released under AI, 10,000 options under AII, 82,500 options under BI, 22,500 options under BII, 100,000 options under CI, 35,000 options under CII, 127,500 options under DI, and 112,500 options under DII. Under the 2003 options plan, 45,000 shares have been subscribed with options BI, 5,000 shares with options BII, 23,500 shares with options CI, 25,500 shares with options CII, 65,000 shares with options DI, and 15,500 shares with options DII. The maximum number of shares that can be subscribed with outstanding options under options plan 2003 is 270,000, which is equivalent to 3.0 percent of the company's total shares. The subscription price is EUR 1.88 for AI and AII options, EUR 1.56 for BI and BII options, EUR 3.32 for CI and CII options, and EUR 3.22 for DI and DII options. The subscription period for the 2003 options ends on 31 December 2008. Under the 2006 stock options plan, 140,000 options have been released under AI, 140,000 options have been released under AII, 60,000 options have been released under BI, and 60,000 options have been released under BII. Of the options of series A, 15,000 AI options and 15,000 AII options have been returned to the company based on the terms of the options. These options have been converted to options of series B in accordance with the terms of options, and they have been redistributed. The maximum number of shares that can be subscribed with outstanding options under options plan 2006 is 391,500, which is equivalent to 4.4 percent of the company's total shares. The share subscription period for 2006 options AI started on 1 October 2007.The subscription period for options AII and BI will begin on 1 October 2008, and for options BII on 1 October 2009.The subscription price is EUR 4.13 for options AI and AII and EUR 5.10 for options BI and BII. The subscription period for the 2006 options ends on 31 December 2011. Shareholders There were 2,937 shareholders on 28 December 2007 (2006: 2,190). Private persons owned 58 per cent (2006: 65) and institutions 42 per cent (2006: 35) of the company's shares. Foreign ownership was 5 per cent (2006: 5). Board authorizations The Annual General Meeting authorized the Board to decide on issuing up to 1,500,000 shares in one or more issues. The Board's decision may concern either new shares or existing shares possibly held by the company. The maximum of the authorization is equivalent to approximately 20.2 per cent of all company shares. The authorization may be used to finance or implement corporate acquisitions or other arrangements or for other purposes decided by the Board. The authorization includes the right of the Board to decide on all terms and conditions of the share issue, including the recipients of the shares and the compensation to be paid. Thus the authorization also includes the right to directed share issues, i.e. the right to deviate from the shareholders' pre-emptive right, under conditions laid down by law. The authorization will be effective until the next Annual General Meeting but not later than 30 June 2008. The Board of Directors has used the above authorization and decided, by three separate decisions, to issue a total of 1,353,930 shares to finance corporate acquisitions. The Annual General Meeting authorized the Board to decide on the acquisition of up to 742,370 of the company's own shares, provided that the company and its subsidiaries at no time hold more than 10 percent of the company's registered shares altogether. The company may acquire its own shares to develop the capital structure, to finance corporate acquisitions or other structural arrangements or to be otherwise conveyed or cancelled. The minimum purchasing price for such shares is the lowest market price quoted in public trading during the authorization period and the maximum purchasing price is the highest price quoted in public trading during the authorization period. The Board of Directors will decide on the means of acquisition of such shares and on the other terms and conditions. The acquisition may deviate from the shareholders' pre-emptive rights to acquire the Company's shares (targeted acquisition), provided that weighty financial grounds exist. Under this authorization, own shares may only be acquired using non-restricted equity. Thus such share acquisitions will reduce the company's distributable non-restricted equity. The authorization is effective until the next Annual General Meeting, but no later than 30 June 2008. The Board of Directors has not utilized the authorization to acquire the company's own shares. EXTRAORDINARY SHAREHOLDERS' MEETING An Extraordinary Shareholders' Meeting of Tieto-X Plc on 25 January 2007 approved the proposal by the Board of Directors to change the company name and the company's Articles of Association. The decision to change the company name to Ixonos Plc was made upon conditions and provided that the Trade Register registers the change of name. The Trade Register registered the change of name on 12 February 2007. ANNUAL GENERAL MEETING DECISIONS The Annual General Meeting of Ixonos Plc held on 22 March 2007 adopted the company's and Ixonos Group's financial statement for the financial period 1 January-31 December 2006 and granted discharge from liability to the Members of the Board of Directors and the CEO. The Annual General Meeting decided to distribute EUR 0.27 per share as dividend. The dividend was paid on 4 April 2007 on the shares that were registered on the balance date 27 March 2007 on the list of company shareholders maintained by the Finnish Central Securities Depository Ltd. The Annual General Meeting confirmed six as the number of Board members. Members of the Board Eero Hurme, Seppo Jaatinen, Matti Järvinen, Tero Laaksonen, Matti Makkonen and Esko Siik were re-elected. At its meeting following the Annual General Meeting, the Board of Directors elected Tero Laaksonen Chairman of the Board and Eero Hurme Deputy Chairman of the Board. The Annual General Meeting elected Peter Ramsey and Jari Kivihuhta to represent shareholders on the Nomination Committee. The Annual General Meeting authorized the Board to decide on issuing up to 1,500,000 shares in one or more issues. The Board's decision may concern either new shares or existing shares possibly held by the company. The maximum of the authorization is equivalent to approximately 20.2 per cent of all company shares. The authorization may be used to finance or implement corporate acquisitions or other arrangements or for other purposes decided by the Board. The authorization includes the right of the Board to decide on all terms and conditions of the share issue, including the recipients of the shares and the compensation to be paid. Thus the authorization also includes the right to directed share issues, i.e. the right to deviate from the shareholders' pre-emptive right, under conditions laid down by law. The authorization will be effective until the next Annual General Meeting but not later than 30 June 2008. The Annual General Meeting authorized the Board to decide on the acquisition of up to 742,370 of the company's own shares, provided that the company and its subsidiaries at no time hold more than 10 percent of the company's registered shares altogether. The company may acquire its own shares to develop the capital structure, to finance corporate acquisitions or other structural arrangements or to be otherwise conveyed or cancelled. The minimum purchasing price for such shares is the lowest market price quoted in public trading during the authorization period and the maximum purchasing price is the highest price quoted in public trading during the authorization period. The Board of Directors will decide on the means of acquisition of such shares and on the other terms and conditions. The acquisition may deviate from the shareholders' pre-emptive rights to acquire the Company's shares (targeted acquisition), provided that weighty financial grounds exist. Under this authorization, own shares may only be acquired using non-restricted equity. Thus such share acquisitions will reduce the company's distributable non-restricted equity. The authorization is effective until the next Annual General Meeting, but no later than 30 June 2008. SUMMARY OF STOCK EXCHANGE RELEASES UNDER CHAPTER 2, SECTION 7 OF THE SECURITIES MARKETS ACT On 6 March 2007 the company published a release stating the company had set up a subsidiary in Slovakia and opened a new office for it in Kosice. The Slovakia-based subsidiary will produce testing services and software development and maintenance services for customer projects run by the Group's two business units and for the company's internal software development. The purpose of the establishment of a new office is to secure the availability of skilled software development and testing personnel in order to meet the needs of strong expansion and ever-larger individual customer projects. At the same time the idea is to boost the volume of lower-price services in the Group's overall service range. On 12 March 2007 the company published a release stating that the company's turnover for the first quarter would exceed the turnover for the same period in 2006 by more than 40 per cent, amounting to approximately EUR 13.5 million. Excluding the approximately EUR 0.55 million expenses related to the name change and the new corporate identity, the first quarter operating profit percentage was expected to be about 11.5. Including the name change expenses, the operating profit percentage was estimated at 7.5. The turnover for the entire year was expected to increase by approximately 25 percent compared with 2006 and to reach EUR 48-50 million. The operating profit percentage was expected to reach at least its 2006 level. On 9 May 2007 the company published a release stating that the company had acquired the entire share capital of Mermit Business Applications Oy, a company producing business-critical information systems solutions and services. The acquisition strengthened Ixonos' capability to deliver information systems projects significantly and enhanced its capacity to deliver demanding specification, design, architecture and integration services. On 23 August 2007 the company published a release stating that it was setting up a subsidiary in Germany and would open a new office for it in Bochum. The German-based subsidiary concentrates on developing multimedia features for smartphones. The new office is geared to advance the expanding close cooperation between Ixonos and the product development teams of its clients in Germany. On 4 September 2007 the company published a release stating that the company had acquired the entire share capital of Cidercone Life Cycle Solutions Oy:n (LCS), a company producing business-critical mobile and Internet services. The acquisition strengthens Ixonos' readiness and capacity to deliver and maintain software and information systems projects and complement Ixonos' service offering with hosting services. Services provided by LCS cover the entire life-cycle of software and information systems from process modelling to customer-specific software development, hosting services and systems maintenance and support. In its software production, LCS makes extensive use of Open Source software components. On 16 November 2007 the company published a release on the decision of the Board of Directors to specify the company's dividend payment policy so that Ixonos strives to distribute as dividend half of the result for the financial period whenever the demands related to growth and investments make this possible. This specification has been considered necessary as Ixonos, in accordance with its strategy, is focusing on highly refined services, which has increased investments in a wider skills base, development of services and internationalization. On 30 November 2007 Ixonos Plc published a release concerning the publication of Ixonos Plc's listing particulars. According to the release, the Board of Directors has decided on a directed share issue for the shareholders of Ixonos Outsourcing Services Ltd (former Cidercone Life-Cycle Solutions Oy) as payment of part of the base acquisition price for the entire share capital of Ixonos Outsourcing Services Ltd. The company has prepared listing particulars for the listing of the new shares, which the Financial Supervision Authority approved on 30 November 2007. The company has prepared the listing particulars only to apply the shares subscribed in the issue for public trading. The listing particulars document is not a prospectus or tender to subscribe or purchase the company's shares. EVENTS AFTER THE REVIEW PERIOD On 29 January 2008 Ixonos published a stock exchange release stating that Timo Leinonen, Master of Administrative Sciences, age 37, has been appointed Chief Financial Officer and Vice President of Ixonos. Leinonen was also appointed member of the Management Team of Ixonos Group. On 7 February 2008 Ixonos announced that starting from the first interim report in 2008 the company would report its consolidated business operations as two segments: consulting services and software production services. The new segments are based on the company's service products, and they illustrate more accurately the character of the company's business operations and the efforts made to develop them. The rearrangement of segment reporting is related to the ongoing development of the company's organization. On 11 February 2008 Ixonos announced that it had developed a software platform for the development of smartphones and mobile computers. The platform is based on Linux operating system and open source tools and components. The software platform comprises a large number of software and tools for product development. The basic functions integrated into to the platform include, for example, phone features, touch screen and web browser. The platform solution also includes calendar and email, as well as a reference device for development and test use. BOARD OF DIRECTORS' DIVIDEND PAYMENT PROPOSAL TO THE ANNUAL GENERAL MEETING The parent company's profit for the financial period was EUR 1,956,135.43, and disposable funds on 31 December 2007 were EUR 12,321.411,74. The Board proposes that the disposable funds be used in accordance with the dividend policy specified on 16 November 2007 as follows: - dividend distribution of EUR 0.18 per share or totally EUR 1,599,683.40 - carried over in non-restricted equity EUR 10,721,728.34 The Board proposes that the dividend be paid on shares entered in the shareholders' register kept by the Finnish Central Securities Depository on the balancing date, 8 April 2008. The Board proposes that the dividend be paid on 16 April 2008. IXONOS PLC THE BOARD OF DIRECTORS Annual General Meeting The Annual General Meeting of Ixonos Plc shareholders will be held on Thursday 3 April 2008, 5.00 pm, at Opus Business Park 3, Auditorium, Hitsaajankatu 20, 00810 Helsinki. The printed Annual Report of Ixonos for the period 1 January - 31 December 2007 will be published in week 15, and it can be ordered by filling a form on the company's website or by emailing to reports@ixonos.com or by ground mail to Ixonos Plc/Annual Report, P.O. Box 284, FI-00811 Helsinki. The Annual Report can be read on the company's website under Investors at the address www.ixonos.com/en/investors. The next report The Interim Report for the period 1-3/2008 will be published on Tuesday 29 April 2008.The other interim reports will be published, as was announced in the bulletin of 17 January 2008, on Wednesday 13 August 2008 (report for 1 January - 30 June 2008) and Wednesday 20 October 2008 (report for 1 January - 30 September 2008). ADDITIONAL INFORMATION Ixonos Plc President and CEO, Kari Happonen phone +358 424 2231, mobile phone +358 400 700 761, kari.happonen@ixonos.com DISTRIBUTION OMX Nordic Exchange Helsinki Main media IXONOS GROUP ABBREVIATED FINANCIAL STATEMENTS 1 JANUARY - 31 DECEMBER 2007 Accounting principles This financial statement bulletin has been prepared following the same IFRS recognition and valuation principles as in the financial statements of 2006. This financial statement bulletin is not consistent with all standards of Interim Report accounting principles of IAS 34. The Group adopted the IFRS 7 Financial Instruments and IAS 1 Standards from the beginning of the year 2007. These standards do not have any effect on the data of this financial statement bulletin, because this is an abbreviated financial statement. The consolidated financial statements include the information of Mermit Business Applications (acquired on 20 June 2007) starting from 1 June 2007, as well as the information of Cidercone Life-Cycle Solutions Oy (acquired on 4 September 2007) starting from 1 September 2007. The preparation of the financial statements in accordance with the IFRS standards compels that the Ixonos management, when the balance sheet is prepared, utilizes such estimates and assumptions that influence the amount of assets and liabilities as well as income and expenses of the financial period. In addition, when preparing the financial statements, the financial reporting principles have to be applied with consideration. The actual figures may deviate from the estimates and assumptions. The interim report is unaudited. The figures in the income statement and balance sheet have been consolidated. All group companies are included in the consolidated balance sheet. The original financial statement bulletin is in Finnish. The English version is a translation. CONSOLIDATED PROFIT AND LOSS ACCOUNT, K EURO -------------------------------------------------------------------------------- | | 1.1.- | 1.1.- | Change | | | 31.12.2007 | 31.12.2006 | | -------------------------------------------------------------------------------- | Turnover | 59,229 | 39,184 | 51.2 % | -------------------------------------------------------------------------------- | Materials and services | - 7,230 | - 4,554 | 58.8 % | -------------------------------------------------------------------------------- | Personnel costs | - 36,735 | - 24,676 | 48.9 % | -------------------------------------------------------------------------------- | Depreciation and impairment | - 424 | - 186 | 128.6 % | -------------------------------------------------------------------------------- | Other operating costs | - 8,806 | - 5,432 | 62.1 % | -------------------------------------------------------------------------------- | OPERATING PROFIT BEFORE NAME | 6,033 | 4,335 | 39.2 % | | CHANGE AND REORGANIZATION | | | | | COSTS AND DEPRECIATION OF | | | | | INTANGIBLE RIGHTS OF | | | | | CORPORATE ACQUISITIONS | | | | -------------------------------------------------------------------------------- | % of turnover | 10.2 | 11.1 | | -------------------------------------------------------------------------------- | Name change and | - 553 | - 164 | 237.7 % | | reorganization costs | | | | -------------------------------------------------------------------------------- | Depreciation of intangible | - 802 | - 231 | 247.4 % | | rights of corporate | | | | | acquisitions | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT | 4,679 | 3,941 | 18.7 % | -------------------------------------------------------------------------------- | % of turnover | 7.9 | 10.1 | | -------------------------------------------------------------------------------- | Financial income and expenses | - 303 | - 174 | 73.5 % | -------------------------------------------------------------------------------- | Profit before taxes | 4,376 | 3,766 | 16.2 % | -------------------------------------------------------------------------------- | Taxes | - 1,229 | - 855 | 43.7 % | -------------------------------------------------------------------------------- | NET PROFIT FOR THE PERIOD | 3,147 | 2,911 | 8.1 % | -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET, K EURO -------------------------------------------------------------------------------- | ASSETS | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | FIXED ASSETS | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 1,423 | 399 | -------------------------------------------------------------------------------- | Goodwill | 21,067 | 11,190 | -------------------------------------------------------------------------------- | Other intangible assets | 6,282 | 450 | -------------------------------------------------------------------------------- | Deferred tax claim | 43 | 49 | -------------------------------------------------------------------------------- | Long-term receivables | 12 | 12 | -------------------------------------------------------------------------------- | Other financial assets | 19 | 19 | -------------------------------------------------------------------------------- | FIXED ASSETS TOTAL | 28,846 | 12,120 | -------------------------------------------------------------------------------- | CURRENT ASSETS | | | -------------------------------------------------------------------------------- | Accounts receivable and other | 15,411 | 9,945 | | receivables | | | -------------------------------------------------------------------------------- | Financial assets | 151 | 695 | -------------------------------------------------------------------------------- | Liquid assets | 2,331 | 2,689 | -------------------------------------------------------------------------------- | CURRENT ASSETS TOTAL | 17,893 | 13,330 | -------------------------------------------------------------------------------- | TOTAL ASSETS | 46,740 | 25,449 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND LIABILITIES | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | | | -------------------------------------------------------------------------------- | Share capital | 355 | 297 | -------------------------------------------------------------------------------- | Premium fund | 4,512 | 4,176 | -------------------------------------------------------------------------------- | Share issue | 77 | 0 | -------------------------------------------------------------------------------- | Invested non-restricted equity fund | 8,869 | 0 | -------------------------------------------------------------------------------- | Retained earnings | 4,588 | 3,495 | -------------------------------------------------------------------------------- | Net profit for the period | 3,147 | 2,911 | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY TOTAL | 21,548 | 10,879 | -------------------------------------------------------------------------------- | LIABILITIES | | | -------------------------------------------------------------------------------- | Long-term liabilities | 8,681 | 4,733 | -------------------------------------------------------------------------------- | Current liabilities | 16,511 | 9,837 | -------------------------------------------------------------------------------- | TOTAL LIABILITIES | 25,192 | 14,570 | -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND LIABILITIES | 46,740 | 25,449 | | TOTAL | | | -------------------------------------------------------------------------------- CHANGES IN EQUITY, K EURO -------------------------------------------------------------------------------- | | Share | Premium| Share | Inv. non- |Accumulated | Total | | | capital| fund | issue | restricted | profit | | | | | | | equity | funds | | | | | | | fund | | | -------------------------------------------------------------------------------- | Shareholders' | 292 | 3,746 | 0 | 0 | 4,604 | 8,643 | | equity | | | | | | | | 1.1.2006 | | | | | | | -------------------------------------------------------------------------------- | Options | | | | | 207 | 207 | | expense | | | | | | | | write-off | | | | | | | -------------------------------------------------------------------------------- | Share issue | 4 | 430 | | | | 434 | -------------------------------------------------------------------------------- | Dividend | | | | | - 1,316 | - 1,316 | -------------------------------------------------------------------------------- | Profit for | | | | | 2,911 | 2,911 | | the period | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 297 | 4,176 | 0 | 0 | 6,406 | 10,879 | | equity | | | | | | | | 31.12.2006 | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 297 | 4,176 | 0 | 0 | 6,406 | 10,879 | | equity | | | | | | | | 1.1.2007 | | | | | | | -------------------------------------------------------------------------------- | Options | | | | | 186 | 186 | | expense | | | | | | | | write-off | | | | | | | -------------------------------------------------------------------------------- | Share issue | 59 | 336 | 77 | 8,869 | | 9,340 | -------------------------------------------------------------------------------- | Dividend | | | | | - 2,004 | - 2,004 | -------------------------------------------------------------------------------- | Profit for | | | | | 3,147 | 3,147 | | the period | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 355 | 4,512 | 77 | 8,869 | 7,734 | 21,548 | | equity | | | | | | | | 31.12.2007 | | | | | | | -------------------------------------------------------------------------------- CONSOLIDATED SOURCES AND APPLICATION OF FUNDS, K EURO -------------------------------------------------------------------------------- | | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Cash flow from business operations | | | -------------------------------------------------------------------------------- | Net profit for the period | 3,147 | 2,911 | -------------------------------------------------------------------------------- | Adjustments to cash flow from | | | | operations | | | -------------------------------------------------------------------------------- | Taxes | 1,229 | 855 | -------------------------------------------------------------------------------- | Depreciation and impairment | 1,226 | 416 | -------------------------------------------------------------------------------- | Financial income and expenses | 303 | 174 | -------------------------------------------------------------------------------- | Other adjustments | 105 | 178 | -------------------------------------------------------------------------------- | Income financing before change in net | 6,010 | 4,535 | | working capital | | | -------------------------------------------------------------------------------- | Change in net working capital | - 1,077 | - 803 | -------------------------------------------------------------------------------- | Interest received | 68 | 61 | -------------------------------------------------------------------------------- | Interest paid | - 332 | - 211 | -------------------------------------------------------------------------------- | Transfer income from fixed assets | 0 | 1 | -------------------------------------------------------------------------------- | Taxes paid | - 1,297 | - 1,049 | -------------------------------------------------------------------------------- | Net cash flow from business | 3,371 | 2,532 | | operations | | | -------------------------------------------------------------------------------- | Cash flow from investments | | | -------------------------------------------------------------------------------- | Investments in tangible and | - 1,357 | - 315 | | intangible assets | | | -------------------------------------------------------------------------------- | Change in financial assets | 544 | 1,298 | -------------------------------------------------------------------------------- | Transfer income from fixed assets | 0 | 248 | -------------------------------------------------------------------------------- | Acquisition of subsidiaries | - 4,136 | - 5,186 | -------------------------------------------------------------------------------- | Net cash flow from invstments | - 4,949 | - 3,954 | -------------------------------------------------------------------------------- | Net cash flow before financing | - 1,578 | - 1,422 | -------------------------------------------------------------------------------- | Cash flow from financing | | | -------------------------------------------------------------------------------- | Dividend paid | - 2,004 | - 1,316 | -------------------------------------------------------------------------------- | Increase of long-term loans | 3,800 | 3,000 | -------------------------------------------------------------------------------- | Repayment of long-term loans | - 993 | - 658 | -------------------------------------------------------------------------------- | Share issue | 417 | 117 | -------------------------------------------------------------------------------- | Net cash flow from financing | 1,220 | 1,144 | -------------------------------------------------------------------------------- | Change in funds | - 359 | - 279 | -------------------------------------------------------------------------------- | Liquid assets at start of period | 2,689 | 2,968 | -------------------------------------------------------------------------------- | Liquid assets at end of period | 2,331 | 2,689 | -------------------------------------------------------------------------------- CONSOLIDATED PROFIT AND LOSS ACCOUNT, QUARTERLY, K EURO -------------------------------------------------------------------------------- | | Q4/2007 | Q3/2007 | Q2/2007 | Q1/2007 | Q4/2006 | | | 1.10.07 | 1.7.07- | 1.4.07- | 1.1.07- | 1.10.06- | | | 31.12.07| 30.9.07 | 30.6.07 | 31.3.07 | 31.12.06 | | | | | | | | | | | | | | | -------------------------------------------------------------------------------- | Turnover | 18,011 | | 14,125 | 13,224 | 12,141 | | | | 13,868 | | | | -------------------------------------------------------------------------------- | Operating costs | - 16,515| - 12,349 | - 12,678 | - 11,654 | - 10,927 | | | | | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT | 1,497 | 1,520 | 1,447 | 1,570 | 1,215 | | BEFORE NAME CHANGE | | | | | | | AND REORGANIZATION | | | | | | | COSTS AND | | | | | | | DEPRECIATION OF | | | | | | | INTANGIBLE RIGHTS | | | | | | | OF CORPORATE | | | | | | | ACQUISITIONS | | | | | | -------------------------------------------------------------------------------- | % of turnover | 8.3 | 11.0 | 10.2 | 11.9 | 10.0 | -------------------------------------------------------------------------------- | Name change costs | 0 | 0 | 0 | - 553 | 0 | -------------------------------------------------------------------------------- | Depreciation of | - 417 | - 240 | - 91 | - 54 | - 37 | | intangible rights | | | | | | | of corporate | | | | | | | acquisitions | | | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT | 1,080 | 1,280 | 1,356 | 963 | 1,178 | -------------------------------------------------------------------------------- | % of turnover | 6.0 | 9.2 | 9.6 | 7.3 | 9.7 | -------------------------------------------------------------------------------- | Financing income | - 173 | - 28 | - 50 | - 52 | 0 | | and | | | | | | | -expenses | | | | | | -------------------------------------------------------------------------------- | Profit before | 908 | 1,252 | 1,305 | 911 | 1,178 | | taxes | | | | | | -------------------------------------------------------------------------------- | Taxes | - 294 | - 345 | -348 | - 242 | - 179 | -------------------------------------------------------------------------------- | PROFIT FOR THE | 614 | 906 | 957 | 669 | 999 | | PERIOD | | | | | | -------------------------------------------------------------------------------- SEGMENT REPORTING, K EURO -------------------------------------------------------------------------------- | | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Turnover by segment | | | -------------------------------------------------------------------------------- | Telecommunications | 35,296 | 24,879 | -------------------------------------------------------------------------------- | Systems Services | 24,442 | 14,604 | -------------------------------------------------------------------------------- | Eliminations | - 509 | - 299 | -------------------------------------------------------------------------------- | Turnover total | 59,229 | 39,184 | -------------------------------------------------------------------------------- | Operating profit before name change and | | | | reorganization costs and depreciation of | | | | intangible rights of corporate | | | | acquisitions | | | -------------------------------------------------------------------------------- | Telecommunications | 5,833 | 3,726 | -------------------------------------------------------------------------------- | Systems Services | 2,135 | 1,717 | -------------------------------------------------------------------------------- | Administration | -1,934 | - 1,108 | -------------------------------------------------------------------------------- | Total | 6,033 | 4,335 | -------------------------------------------------------------------------------- | % of turnover | 10.2 | 11.1 | -------------------------------------------------------------------------------- | Operating profit by segment | | | -------------------------------------------------------------------------------- | Telecommunications | 5,775 | 3,583 | -------------------------------------------------------------------------------- | Systems Services | 1,390 | 1,629 | -------------------------------------------------------------------------------- | Administration | - 2,487 | - 1,271 | -------------------------------------------------------------------------------- | Total operating profit | 4,679 | 3,941 | -------------------------------------------------------------------------------- | Operating profit of turnover % | 7.9 | 10.1 | -------------------------------------------------------------------------------- | Interest and financial income | - 303 | - 174 | -------------------------------------------------------------------------------- | Profit before taxes | 4,376 | 3,766 | -------------------------------------------------------------------------------- | Taxes | - 1,229 | - 855 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD | 3,147 | 2,911 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets by segment | | | -------------------------------------------------------------------------------- | Telecommunications | 19,422 | 18,094 | -------------------------------------------------------------------------------- | Systems Services | 25,642 | 6,984 | -------------------------------------------------------------------------------- | Other | 1,675 | 371 | -------------------------------------------------------------------------------- | Total assets | 46,740 | 25,449 | -------------------------------------------------------------------------------- | Liabilities by segment | | | -------------------------------------------------------------------------------- | Telecommunications | 8,825 | 8,592 | -------------------------------------------------------------------------------- | Systems Services | 12,560 | 3,822 | -------------------------------------------------------------------------------- | Other | 3,807 | 2,156 | -------------------------------------------------------------------------------- | Total liabilities | 25,192 | 14,570 | -------------------------------------------------------------------------------- | Depreciation by segment | | | -------------------------------------------------------------------------------- | Telecommunications | 157 | 211 | -------------------------------------------------------------------------------- | Systems Services | 934 | 97 | -------------------------------------------------------------------------------- | Other | 136 | 109 | -------------------------------------------------------------------------------- | Total depreciation | 1,226 | 416 | -------------------------------------------------------------------------------- | Investments per segment | | | -------------------------------------------------------------------------------- | Telecommunications | 683 | 131 | -------------------------------------------------------------------------------- | Systems Services | 14,882 | 3,707 | -------------------------------------------------------------------------------- | Administration | 201 | 210 | -------------------------------------------------------------------------------- | Investments total | 15,766 | 4,048 | -------------------------------------------------------------------------------- CHANGES IN FIXED ASSETS, K EURO -------------------------------------------------------------------------------- | | Intan | Good | Real | Machinery | Other | Total | | | gible | will | estate| and | tangible | | | | assets | | | equipment | assets | | -------------------------------------------------------------------------------- | Carrying amount | 473 | 8,621 | 91 | 149 | 35 | 9,369 | | 1.1.2006 | | | | | | | -------------------------------------------------------------------------------- | Additions | 105 | 2,568 | | 267 | 7 | 2,947 | -------------------------------------------------------------------------------- | Additions from | 6 | | 237 | 12 | | 254 | | corporate | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | From corporate | 217 | | | | | 217 | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Disposals | 0 | | - 237 | - 65 | - 11 | - 312 | -------------------------------------------------------------------------------- | Depreciation | - 350 | | | - 66 | | - 416 | | during the | | | | | | | | financial period | | | | | | | -------------------------------------------------------------------------------- | Carrying amount | 450 | 11,190 | 91 | 297 | 31 | 12,059 | | 31.12.2006 | | | | | | | -------------------------------------------------------------------------------- | Carrying amount | 450 | 11,190 | 91 | 297 | 31 | 12,059 | | 1.1.2007 | | | | | | | -------------------------------------------------------------------------------- | Additions | 834 | 9,877 | | 523 | | 11,234 | -------------------------------------------------------------------------------- | Additions from | 34 | | | 789 | | 823 | | corporate | | | | | | | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | From corporate | 5,901 | | | | | 5,901 | | acquisitions | | | | | | | -------------------------------------------------------------------------------- | Disposals | | | | | | | -------------------------------------------------------------------------------- | Depreciation | - 937 | | | - 289 | | - 1,226 | | during the | | | | | | | | financial period | | | | | | | -------------------------------------------------------------------------------- | Carrying amount | 6,282 | 21,067 | 91 | 1,321 | 31 | 28,791 | | 31.12.2007 | | | | | | | -------------------------------------------------------------------------------- ACQUIRED BUSINESS OPERATIONS When business operations are merged, tangible assets are measured at fair value based on the market price of equivalent assets, taking their age, wear and other similar factors into account. Tangible assets are depreciated based on the management's estimation of their economic lifespan, taking the Groups' depreciation principles into account. Intangible assets acquired through business combinations are recognized separate from goodwill based on their fair value at the time of acquisition, provided that the fair value of the assets can be determined reliably. The business operations that the Group has acquired comprise primarily customerships, customer contracts, tender prospects and covenants in restraint of competition. The fair value of customer contracts and the accompanying customerships, tender prospects and covenants in restraint of competition have been defined using the MEEM model (Multi-Earning-Excess model). Other intangible asset items are depreciated based on the management's evaluation of their economic lifespan. In addition to the skills of the personnel, the goodwill arising from business combinations in 2007 comprises other intangible assets that cannot be identified in accordance with IAS 38. Such items include the potential within an acquired company for acquiring new customers, the development prospects of new services and the strong geographical position of the acquired business operations. These items do not fulfill the IAS 38 criteria in any respect: they are not identifiable, they are not based on a contract or legal right, and it is not possible to determine their value reliably. In addition, all business combinations create synergy benefits that primarily consist of the cross-selling of existing services and savings in fixed costs. The goodwill/acquisition cost of acquired business operations may change based on the contract terms relating to the acquisition price. Part of the acquisition price is tied to short-term (under 12 months) future events and part to long-term (over 12 months) future events. Apart from this, the allocation calculations are final. The consolidated turnover for 2007 would have been EUR 63.9 million and the profit for the period EUR 3.0 million if the companies acquired during the review period had been acquired on 1 January 2007.The above consolidated turnover includes the actual turnovers of the acquired companies, and the consolidated financial result includes the actual profits of the acquired companies based on the interim financial statements at the time of the acquisition. The intangible and tangible asset items in the merger have been measured at fair value, and the depreciation on these items has been deducted from the profit for the financial period. Synergy benefits have not been taken into account. EFFECT OF ACQUIRED BUSINESS OPERATIONS ON BALANCE SHEET ASSETS AND LIABILITIES, K EURO -------------------------------------------------------------------------------- | Mermit Business Applications Oy | Carrying | Change | Fair value | | (now Ixonos Technology Consulting | amount | | | | Ltd) | before | | | | | merger | | | | | | | | -------------------------------------------------------------------------------- | Intangible fixed assets | 14 | 737 | 751 | -------------------------------------------------------------------------------- | Tangible assets | 94 | 0 | 94 | -------------------------------------------------------------------------------- | Receivables | 910 | 0 | 910 | -------------------------------------------------------------------------------- | Liquid assets | 45 | 0 | 45 | -------------------------------------------------------------------------------- | Total assets | 1,064 | 737 | 1,800 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liabilities | 1,019 | 0 | 1,019 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 0 | 191 | 191 | -------------------------------------------------------------------------------- | Total liabilities | 1,019 | 191 | 1,210 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 45 | 545 | 590 | -------------------------------------------------------------------------------- | Total payments | | | 4,489 | -------------------------------------------------------------------------------- | Goodwill | | | 3,899 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effect on cash flow: | | | |-------------------------------------------------------------------------------- | Cash payments | | | - 107 | -------------------------------------------------------------------------------- | Funds of acquired company | | | 45 | -------------------------------------------------------------------------------- | Cash flow of acquisitions | | | - 62 | -------------------------------------------------------------------------------- EUR 2,713,996 of the entire compensation was paid in Ixonos shares. The estimated additional acquisition price payable (EUR 1,609,930), to be determined on the basis of the future performance of the acquired company, is taken into account under current liabilities. The accuracy of the estimation is reviewed whenever there is indication that its has changed. -------------------------------------------------------------------------------- | Cidercone Life-Cycle Solutions Oy | Carrying | Change | Fair value | | (now Ixonos Outsourcing Services | amount | | | | Ltd) | before | | | | | merger | | | | | | | | -------------------------------------------------------------------------------- | Intangible fixed assets | 19 | 5,165 | 5,184 | -------------------------------------------------------------------------------- | Tangible assets | 188 | 507 | 695 | -------------------------------------------------------------------------------- | Receivables | 614 | 4 | 618 | -------------------------------------------------------------------------------- | Liquid assets | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total assets | 821 | 5,675 | 6,497 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other liabilities | 555 | 521 | 1,077 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 0 | 1,343 | 1,343 | -------------------------------------------------------------------------------- | Total liabilities | 555 | 1,864 | 2,419 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 266 | 3,811 | 4,077 | -------------------------------------------------------------------------------- | Total payments | | | 9,880 | -------------------------------------------------------------------------------- | Goodwill | | | 5,802 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Effect on cash flow: | | | | -------------------------------------------------------------------------------- | Cash payments | | | - 3,861 | -------------------------------------------------------------------------------- | Funds of acquired company | | | 0 | -------------------------------------------------------------------------------- | Cash flow of acquisitions | | | - 3,861 | -------------------------------------------------------------------------------- EUR 5,635,500 of the entire compensation was paid in Ixonos shares. The estimated additional acquisition price payable (EUR 234,906), to be determined on the basis of the future performance of the acquired company, is taken into account under long-term liabilities. The accuracy of the estimation is reviewed whenever there is indication that its has changed. FINANCIAL RATIOS -------------------------------------------------------------------------------- | | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Earnings per share, EUR diluted | 0.40 | 0.38 | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.41 | 0.39 | -------------------------------------------------------------------------------- | Equity per share, EUR | 2.42 | 1.47 | -------------------------------------------------------------------------------- | Operating cash flow per share, EUR diluted | 0.43 | 0.33 | -------------------------------------------------------------------------------- | Return on investment, % | 19.4 | 28.2 | -------------------------------------------------------------------------------- | Return on equity, % | 19.4 | 29.8 | -------------------------------------------------------------------------------- | Operating profit/turnover % | 7.9 | 10.1 | -------------------------------------------------------------------------------- | Net gearing | 33.8 | 18.1 | -------------------------------------------------------------------------------- | Dividend per share | 0.18 | 0.27 | -------------------------------------------------------------------------------- | Effective dividend yield, % | 3.02 | 5.83 | -------------------------------------------------------------------------------- OTHER INFORMATION -------------------------------------------------------------------------------- | | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | PERSONNEL | 726 | 503 | | Average number of personnel | | | -------------------------------------------------------------------------------- | Personnel at the end of the period | 874 | 579 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMMITMENTS, k EUR | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Securities to guarantee own commitments | | | -------------------------------------------------------------------------------- | Corporate mortgages | 9,800 | 6,000 | -------------------------------------------------------------------------------- | Other securities | 273 | 148 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Leasing and other rental commitments | | | -------------------------------------------------------------------------------- | Falling due within 1 year* | 3,283 | 1,605 | -------------------------------------------------------------------------------- | Falling due within 1-5 years * | 7,490 | 1,640 | -------------------------------------------------------------------------------- | Falling due within 5 years * | 616 | 0 | -------------------------------------------------------------------------------- | Total | 11,390 | 3,245 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Nominal value of interest rate swap | | | | agreement | | | -------------------------------------------------------------------------------- | Falling due within 1 year | 1,400 | 857 | -------------------------------------------------------------------------------- | Falling due within 1-5 year | 2,450 | 2,357 | -------------------------------------------------------------------------------- | Falling due within 5 years | 0 | 0 | -------------------------------------------------------------------------------- | Total | 3,850 | 3,214 | -------------------------------------------------------------------------------- | Fair value | 26 | 14 | -------------------------------------------------------------------------------- CALCULATION OF FINANCIAL RATIOS Return on equity (ROE) = 100 x Net profit / Shareholders' equity (average) Return on investment (ROI) = 100 x (profit before taxes + interest + other financial expenses) / Balance sheet total - non-interest bearing liabilities (average) Diluted result per share = Net profit for the period / Average number of share-issue adjusted shares (adjusted with dilution effect) Diluted result per share = Net profit for the period / Average number of share-issue adjusted shares Shareholders' equity per share = Shareholders' equity / Share-issue adjusted number of shares on the balance sheet date Gearing = Interest-bearing liabilities - Liquid assets / Shareholders' equity x 100 Effective dividend yield, % = Dividend per share / Last trading price of the financial period x 100
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