TIETOENATOR S interim report 2/2006 (January June 2006)

Transcription

1 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 1 (18) TIETOENATOR S interim report 2/2006 (January June 2006) Second-quarter net sales grew 4% to EUR (427.7) million. Half-year net sales totalled EUR (834.6) million with 6% growth. Second-quarter operating profit totalled EUR 28.3 (56.3) million and included capital gains of EUR 3.5 (14.7) million. Operating margin excluding capital gains was 5.6% (9.7). Half-year operating profit totalled EUR 63.2 (92.3) million. Profit before taxes EUR 24.4 (57.7) million in the second quarter, EUR 56.3 (92.7) million in the first half. Six-month profit after taxes EUR 40.0 (68.1) million. Second-quarter EPS EUR 0.23 (0.57), six-month EPS EUR 0.51 (0.87) Full-year guidance is unchanged General market overview Overall demand for IT services and solutions is healthy and market activity is at a high level. Cost cutting and business process efficiency improvement continue to drive investments. However, new revenue growth, time-tomarket and better customer service are increasingly important investment drivers. Pricing trends remain diverse. Local businesses are enjoying improving pricing conditions whereas in the big customer segment price pressure persists. Global sourcing is pressing average prices down in more and more customer industries. Prices were stable compared with the first quarter, however. Local market players are actively recruiting new staff. Competition for the most experienced professionals is heating up. There is however no material acceleration in general wage inflation. Development of customer industries The slowdown of growth in the second quarter is mainly related to seasonality and not to a change in the underlying business performance. Growth varies strongly among the different business areas due to differences in the current business environment and the impact of seasonality. The overall good level of volume growth has continued but total growth is being reduced by declining prices. Q2 net sales growth% Q2 EBIT% excl. capital gain Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group The positive investment sentiment among banks has continued. Both partnership services and banking solutions are experiencing good demand, although the increased market activity is also being reflected in more aggressive competition and price pressure. TietoEnator s systems integration business is stable and the insurance sector business in Finland continues to perform very well. A specific area of great interest in the Nordic countries is electronic invoicing, where several new co-operation agreements with banks were closed. In Finland electronic invoicing is now expanding from business-to-business to business-to-consumer segment. Measures to improve the business performance of TietoEnator Financial Solutions UK (former AttentiV) were continued and the company returned to profit in the second quarter. The utilization in the business is improving and the sales pipeline is continuously increasing. The company contributed EUR 8.6 million of net sales and EUR +0.6 million of operating profit in the second quarter, and EUR 17.0 million and EUR -0.6 million in the first half. In the first half of 2005 AttentiV s net sales totalled EUR 16.7 million and comparable operating profit EUR -2.2 million (at 2006 exchange rates).

2 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 2 (18) The latest joint venture in the insurance sector in Finland, TietoEnator Esy, started operations at the beginning of The joint venture company employs around 180 people. Price pressure is impacting TietoEnator s telecom business but prices have not deteriorated compared with the first quarter. R&D budgets are tight among telecom equipment vendors and operator customers are focusing on cost cutting. Competitiveness requires an attractive on-site/off-site mix and TietoEnator s Telecom & Media business area is making consistent progress in this area. Growth opportunities come from new potential outsourcing contracts. At the end of the second quarter TietoEnator and Siemens Communications signed the agreement announced in March to deepen their co-operation and to transfer Siemens switching and migration to next-generation networks to TietoEnator. The transition meant that around 250 employees from Siemens moved to TietoEnator Telecom & Media at the beginning of July. The transaction is expected to increase TietoEnator s net sales by about EUR 15 million in the second half of The commitment for the whole contract period is approximately EUR 100 million. In June TietoEnator agreed to acquire 51% of the share capital in Polish RTS Networks Ltd, a provider of telecom R&D services. The main customer of RTS Networks is Siemens. The acquisition strengthened TietoEnator s R&D expertise and added 110 employees. RTS networks will be consolidated from the beginning of July In July TietoEnator and DNA, a Finnish mobile operator, signed a Letter of Intent regarding outsourcing of value-added content and IP-based services. The agreement includes a three-year service contract estimated at EUR 5-7 million and services will be performed in a new service centre with resources from both companies. In the government sector market demand is good in all Nordic countries. Price competition, especially in the project business, continues to be tough. In May Tietokarhu Oy, the joint venture between TietoEnator and the Finnish Government, and The Finnish National Board of Taxes revised their service agreement. The service agreement is a fixed-term agreement to expire in 2016 and includes the development and maintenance of the complex core IT systems underlying Finnish taxation. Its annual impact on TietoEnator s net sales will remain unchanged and the total value for the remaining term of the agreement is estimated at EUR 300 million. TietoEnator s manufacturing business is performing well. Demand in this business is driven by customers focus on process harmonization and business transparency. In the retail business companies are interested in investments that improve customer service and support cost-saving programmes. The situation in the different Nordic healthcare markets depends on their local healthcare IT programmes. In Finland the national health projects are progressing and create business opportunities. In Norway the development has slowed down. Sweden is now somewhat later in starting its national IT initiative in the area, while Denmark is reorganizing its healthcare sector. In Germany vendor consolidation is creating opportunities for new suppliers. In the forest sector growth opportunities are increasing as many customers are finalizing their restructuring programmes and planning to use more external vendors. Forest sector customers are increasingly requiring that part of the services offered are produced in low-cost environments. In the energy sector customer investments mostly relate to consolidating existing systems and automatic meter reading. In TietoEnator s utility business some big customer projects are at the ending phase. The oil and gas business is performing well. In May TietoEnator and Ericsson Enterprise announced co-operation in Automatic Meter Reading and Automatic Meter Management. The plan is to create a full end-to-end provider of solutions for the area. The processing and network services market continues to be active. In June TietoEnator and SEB Eesti Ühispank agreed on the outsourcing of on-site services and resources in Estonia. The agreement, which includes services such as PC support, ATM support and PC banking services support, added 17 persons to TietoEnator Processing & Network. In Personec Group s businesses - HR and financial systems and services - customers are very interested in outsourcing and ASP services at the expense of the traditional licensing model. Consulting services are in high demand as well. In June Personec signed a contract with the City of Gothenburg for the supply of an IT system to manage the city s HR administration. The first stage includes implementation of the system and is valued at around EUR 5.3 million. Personec s acquisition of Manpower s payroll and Human Resources outsourcing business in Sweden became effective in February 2006 and added 178 employees.

3 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 3 (18) Net sales Second-quarter net sales grew 4% to EUR (427.7) million. Growth in local currencies was also 4%. Organic growth was -1% in euros and in local currencies. Organic growth was lower than in the first quarter because Easter fell in the second quarter this year and because the performance based rewards from partnership contracts in Telecom & Media were lower than a year ago. The impact of fewer working days on net sales growth is estimated to be around two percentage points. Six-month net sales grew 6% to EUR (834.6) million. Growth in local currencies was 6% and organic growth 1%. Organic growth % Q H Banking & Insurance Telecom & Media Government, Manufacturing & Retail -1 5 Healthcare & Welfare 9 8 Forest & Energy -3-2 Processing & Network 9 7 Personec Group 4 5 The impact of Easter is the highest in the business areas with most exposure to professional services: Telecom & Media and Government, Manufacturing & Retail. Telecom & Media s performance-based rewards from partnership contracts totalled EUR 0.5 million (EUR 6 million). First-half growth was 15% in Norway (13% in local currency), 4% in Finland, -4% in Sweden (-2% in local currency) and 2% in Germany. In Sweden the decline was mostly due to Telecom & Media. TietoEnator adopted IFRIC 4 (Financial Reporting Interpretations Committee s interpretation on accounting of leasing contracts) from the beginning of As a result a total of EUR 2.8 million of invoicing from customers was recognized as leasing contracts and not as net sales mostly in Processing & Network during the first half. The interpretation has been applied retroactively for 2005 and the half-year 2005 impact was EUR 2.5 million. IFRIC 4 also lowered depreciation by EUR 2.6 (2.3) million and increased the Group s interest income by EUR 0.2 (0.2) million. The banking and insurance sector increased its share to 21% (16) of Group net sales in the first half with the help of acquisitions, good organic growth in the Banking & Insurance business area and extended contracts in Processing & Network. Telecom and media s share fell to 29% (35). The public sector contributed 20% (19) of sales, the forest sector 5% (5) and the energy sector 5% (5). The order backlog, which comprises only services ordered with binding contracts, amounted to EUR million (984) at the end of the period, 32% higher than a year before. Approximately 39% (45) is expected to be invoiced in the current year. Processing & Network s share of the order backlog is about 34%. Profitability Second-quarter operating profit amounted to EUR 28.3 (56.3) million representing a margin of 6.4% (13.1). EBIT includes capital gains of EUR 3.5 (14.7) million. The divestment of 51% of the shares of TietoEnator 121 Oy to the publisher Kauppalehti contributed a gain of EUR 3.0 million, which was allocated to all vertical business areas equally. Additionally there were some smaller gains in Processing & Network and at the Group level. Excluding capital gains the operating profit totalled EUR 24.8 (41.7) million representing a margin of 5.6% (9.7). Second quarter profitability was burdened by seasonality due to Easter, lower performance-based rewards from the partnership contracts and restructuring expenses in Telecom & Media. It is estimated that the negative impact of Easter falling in the second quarter this year compared to 2005 was about EUR 5 million on operating profit for the Group with biggest impacts on Telecom & Media and Government, Manufacturing & Retail. Telecom & Media s performance-based rewards from partnership contracts had EUR 4.5 million lower impact on operating profit in the second quarter of 2006 compared to

4 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 4 (18) In the second quarter restructuring expenses totalled EUR 4.6 (2) million. This included EUR 3.6 million in Telecom & Media s R&D infrastructure unit in Sweden, where 56 jobs were reduced. Smaller restructuring expenses took place in Processing & Network (EUR 0.6 million) and Personec (EUR 0.4 million). Most of the projects that were underperforming in the first quarter proceeded according to plan in the second quarter. The costs for project overruns totalled EUR 1.9 million, substantially lower than the EUR 6.2 million in the first quarter. The underlying decline in profitability is related to some parts of the business having sub-optimal utilization, temporary increases in investments and lower license sales than the year before. First-half operating profit totalled EUR 63.2 (92.2) million. Capital gains totalled EUR 8.2 (15.6) million and operating profit excluding capital gains EUR 54.9 (76.6) million. This represented a margin of 6.2% (9.2). Firsthalf operating profit was burdened by restructuring costs of EUR 11.4 million and costs for underperforming projects of EUR 8.2 million. Operating profit (EBIT) included EUR 2.4 (1.0) million from amortization on acquired intangible assets in the second quarter and EUR 4.4 (3.1) million in the first half. Costs for share-based payments of EUR 1.1 (0.4) million in the second quarter, and EUR 1.9 (0.8) million in the first half were included in employee benefit expenses. Net financial expenses were EUR 3.9 (+1.5) million in the quarter. Net interest expenses were EUR 3.1 (1.1) million and one-time net losses from foreign exchange transactions EUR 0.5 (+3.8) million. EUR 1.7 million of net interest expenses were in the Personec Group. Second-quarter earnings per share (EPS) totalled EUR 0.23 (0.57). EPS was affected by capital gains of EUR 0.05 (0.17) per share, amortization on intangibles of EUR (-0.01) per share and stock option expenses of EUR (-0.01) per share. Excluding these items EPS amounted to EUR 0.23 (0.42). Six-month EPS totalled EUR 0.51 (0.87). The 12-month rolling return on capital employed (ROCE) was 21.0% and the return on shareholders equity (ROE) 22.8%. Financing and investments Cash flow from operations amounted to EUR 65.0 (67.3) million for the first half. Operating profit contributed EUR 86.7 (103.7) million and the increase in working capital consumed EUR 4.4 (30.8) million. Tax payments were higher at EUR 15.0 (9.8) million. The increase is mostly due to the payment of previously recognized deferred taxes in Sweden. The deferred tax asset was further employed in Finland. Payments for new acquisitions totalled EUR 37.3 million, which included around EUR 25 million for Manpower s payroll and Human Resources outsourcing business. Divestments generated cash totalling EUR 9.4 million. The total dividend payment of EUR 64.6 million was made in April. The equity ratio was 35.0% (40.2). Gearing increased to 61.6% (43.3), which mostly reflected the dividend payment and the acquisition payment in Personec. Net debt totalled EUR (218.1) million including EUR million in interest-bearing debt, EUR 17.1 million in finance lease liabilities, EUR 9.0 million in finance lease receivable and EUR million in cash and cash equivalents. EUR million of the debt belonged to Personec Group. The other interest-bearing debt consists of a three-year EUR 50 million bilateral credit facility, a seven-year EUR 50 million private placement bond and usage of EUR 145 million from the short-term commercial paper programme. At the end of the quarter unused credit facilities totalled EUR 260 million. Accrual-based investments totalled EUR 70.7 (143.3) million for the period. Capital expenditure including financial leasing accounted for EUR 31.2 (49.6) million, investments in business activities for EUR 5.3 (7.2) million, and investments in subsidiary and associated company shares for EUR 34.2 (86.5) million. Personnel The number of full-time employees totalled (14 053) at the end of the second quarter. Acquisitions and new outsourcing contracts added around 620 employees during the six months. Recruitment was slightly stronger than in the year before: a total of 974 (863) employees were hired. The highest recruitment numbers were in Finland, Czech, Latvia and Sweden. Most of the net recruitment took place in low-cost countries.

5 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 5 (18) In total 167 employees were affected by personnel adjustments during the first half mostly in Banking & Insurance, Processing & Network and Telecom & Media. Personnel negotiations in Telecom & Media s unit Telecom R&D Infrastructure were completed during the second quarter. The process affected 56 employees. Employee turnover has continued to increase. The 12-month rolling figure stood at 8% (6) at the end of June. On average the number of employees totalled (13 832) in the second quarter. At the end of the second quarter the number of people in low-cost countries totalled about The acquisition of RTS Network in Poland will increase the number by 110 people. TietoEnator is planning to increase its staff in favourable cost environments to roughly by the end of Board of Directors TietoEnator Corporation s Annual General Meeting on 23 March 2006 re-elected the previous Board members: Mariana Burenstam Linder, Bengt Halse, Kalevi Kontinen, Matti Lehti, Olli Martikainen, Olli Riikkala and Anders Ullberg. In April the personnel of TietoEnator chose Jari Länsivuori with Esa Koskinen as his deputy to be the new representative of the personnel organizations on the TietoEnator Board of Directors. Jari Länsivuori replaces Pirjo Salo. Elisabeth Eriksson and her deputy Bo Persson will continue as the personnel representatives on the Board. Shares and options The outstanding number of shares excluding the shares in the company s possession was at the end of June. The shares the company had repurchased in 2005 were nullified in April. Also in April the Board of Directors decided to start a share repurchase programme. Under the 2006 AGM authorization shares were purchased for the three-year share-based incentive plan that the Board of Directors decided in December A total of shares were purchased between 4 May and 9 May. The cost of the shares was EUR 12.4 million or an average share price of EUR The company now holds 0.6% of its shares, which represents 0.6% of the voting power. In July TietoEnator s Board of Directors decided to start a new share repurchase programme totalling EUR 40 million. Under the 2006 AGM authorization the shares will be purchased to develop the company s long-term capital structure. The repurchases will start on 1 September at the earliest. A total of new shares were registered as a result of subscriptions by options under the Stock Option Programme 2002 A during the second quarter. The subscription period for the 2000 A/B/C/D warrants ended on 31 May No shares were subscribed with these warrants. In March the Board of Directors of TietoEnator decided to allocate approximately stock options 2006 A each entitling to subscribe for one share to about 300 key employees. A total of stock options were subscribed by 258 employees. The subscription period of the 2006 A options is 1 March March Full dilution (assuming all options were excercised fully) amounted to 4.1% compared to 6.4% at the end of The Board has not exercised its authorizations to issue share and option rights or raise convertible bond loans during the period. Some items affecting the 2006 full-year accounts The net of acquisitions and divestments finalized up to this date is expected to contribute around 3% of net sales growth in the full year, thus lower than in the first half. TietoEnator Financial Solutions UK is not expected to reach the exceptionally high level of sales and operating profit recorded in the third quarter of 2005 (EUR 16 million and EUR 6.4 million). This will impact Banking & Insurance s growth and profit development compared with The amount of performance-based rewards from partnership contracts in Telecom & Media is not expected to be material in the fourth quarter of In 2005 they totalled EUR 4 million. In the first half restructuring expenses totalled EUR 11.4 million and for the full year they are expected to amount to around EUR 12 million.

6 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 6 (18) TietoEnator expects amortization of intangible assets of around EUR 9 (6.9) million and stock option expenses and costs related to the share-based incentive programme of around EUR 5 (3.0) million in These are included in the Group s operating profit. Prospects for 2006 In 2006 organic growth is expected to increase from 2005, but will be affected by the low growth prospects of the Telecom & Media business area and the increase in global sourcing. TietoEnator will further invest in its lowcost sites and continue its cost-cutting programmes. Performance is expected to improve in the second half. It is based on signed contracts bringing higher organic growth, lower restructuring expenses, higher utilization of staff, low impact from underperforming projects and the recovery of Banking & Insurance s business in the UK. The fourth quarter is expected to be clearly better than the third as it traditionally is the best quarter of the year with a high level of licence sales. For the full year 2006 TietoEnator expects total net sales growth to be 5-9% excluding potential new acquisitions. The EBIT margin excluding capital gains but including restructuring of around EUR 12 million is expected to range between 8% and 10%. Financial calendar in 2006 Interim report for January September 2006 on 20 October 2006 The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2005 and as described in the annual financial statements. All changes in standards, amendments to standards and interpretations have been applied, but of these only IFRIC 4 is relevant for the Group. The figures in this report are unaudited. Key figures Earnings per share, EUR - basic diluted Earnings per share, EUR a) Equity per share, EUR Return on equity rolling 12 month, % Return on capital employed rolling 12 month, % Equity ratio % Net interest-bearing liabilities, EUR million Gearing, % Investments, EUR million a) Excluding goodwill impairments, amortisation on allocated intangible assets from acquisitions, stock option expenses and one-time capital gains.

7 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 7 (18) Income statement, EUR million change % 1-12 Net sales Other operating income Employee benefit expenses Depreciation and amortisation Impairment of goodwill Other operating expenses Share of associated companies result Operating profit (EBIT) Net interest expenses Net exchange losses Other financial income and expenses Profit before taxes Income taxes Net profit for the period Net profit for the period attributable to Shareholders of the parent company Minority interest Earnings attributable to the shareholders of the parent company per share, EUR Basic Diluted Employee benefit expenses include rental payments on company cars and non-statutory employee benefits, such as meals, healthcare and leisure time activities. The provision for bonuses was EUR 7.7 million (6.6 previous year) and the stock option expenses (share based payments) were EUR 1.9 million (0.8). Number of shares Outstanding shares, end of period Basic Diluted Outstanding shares, average Basic Diluted Company's possession of its own shares, end of period Company's possession of its own shares, average

8 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 8 (18) Balance sheet, EUR million change June 30 June % 31 Dec Intangible assets Goodwill Tangible assets Deferred tax assets Investments in associated companies Other non-current assets Total non-current assets Interest-bearing Trade and other receivables Cash and cash equivalents Total current assets Total assets Share capital, share issue premiums and other reserves Retained earnings Parent shareholders equity Minority interest Total Equity Finance lease liability Shareholders' loan Other interest-bearing loans Deferred tax liabilities Pension obligations Provisions Other non-current liabilities Total non-current liabilities Trade and other payables Interest-bearing loans Total current liabilities Total equity and liabilities The group has a 3-year EUR 150 million credit facility signed in June 2004, 3-year bi-lateral EUR 50 million loan agreement signed in June 2005, 7-year EUR 50 million private placement programme also signed in June 2005 and commercial paper programme for EUR 250 million. End of June both 3-year bi-lateral and 7-year private placement agreements were in use. In addition EUR 145 million was in use from the commercial paper programme. Group has also uncommitted credit limits of about EUR 5 million that were not in use end of June. Deferred tax assets end of June 2006 include the remaining EUR 47 million, which rose from the loss incurred in the parent company related to the intra-group transaction carried out in April 2004.

9 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 9 (18) Net working capital in the balance sheet, change 2005 EUR million 30 June 30 June % 31 Dec Accounts receivable Other working capital receivables Working capital receivables included in assets Operative accruals Other working capital liabilities Working capital liabilities included in current liabilities Net working capital in the balance sheet Working capital excludes pension liabilities and provisions. The change in net working capital in the balance sheet does not equal to that in the cash flow due to acquisitions and disposals.

10 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 10 (18) Cash flow, EUR million Cash flow from operations Operating profit Adjustments to operating profit Depreciation and amortisation Profit/loss on sale of fixed assets and shares Share of associated companies' result Other adjustments Change in net working capital Cash generated from operations Net financial items Income taxes paid Net cash flow from operations Cash flow from investing activities Acquisition of Group companies and business operations, net of cash acquired Capital expenditures Disposal of business operations and associated company Other investing activities Net cash used in investing activities Dividends and donations Repurchase of own shares Proceeds from finance lease liabilities Payment of finance lease liabilities Net cash change in other financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period Foreign exchange differences Cash and cash equivalents at end of period

11 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 11 (18) Statement of changes in Shareholders equity Parent shareholders equity Minority Total interest equity Share issue Trans- Retai- Share premiums lation ned capi- and other diffe- ear- EUR million tal reserves rences nings Balance at 31 Dec Translation difference Minority interest Transfer between restricted and non-restricted equity Share based payments recognised against equity Dividend Own shares purchased 0.0 Other changes Net profit for the period At 30 June Balance at 31 Dec Translation difference Minority interest Cancellation of own shares Transfer between restricted and non-restricted equity Share based payments recognised against equity Dividend Own shares purchased Exercise of share options 0.0 Other changes Net profit for the period At 30 June

12 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 12 (18) SEGMENT INFORMATION Net sales by business area, EUR million Change Change % % 1-12 Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Group elimination incl other Group total Country Sales, EUR million 2006 Change Share 2005 Share 2005 Change 1-6 % % 1-6 % 1-12 % Finland Sweden Norway Germany Denmark Great Britain Netherlands France Other Group total Net sales by industry segment, EUR million 2006 Change Share 2005 Share 2005 Change 1-6 % % 1-6 % 1-12 % Banking and insurance Public Telecom and media Forest Energy Manufacturing Retail & Logistics Other Group total

13 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 13 (18) Operating profit (EBIT), EUR million Change Change % % 1-12 Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Business areas Group Operation incl other Associated companies outside BA Group capital gains Operating profit (EBIT) Operating profit, EUR million, excl capital gains and impairment losses Change Change % % 1-12 Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Business areas Group Operation incl other Associated companies outside BA Operating profit (EBIT excl capital gains and impairment losses) Operating margin (EBIT), % Change Change Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Business areas Operating margin (EBIT)

14 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 14 (18) Operating margin (EBIT) excl capital gains and impairment losses, % Change Change Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Business areas Operating margin (EBIT), excl capital gains and impairment losses Personnel End of period Average 2006 Change Share By business area 1-6 % % Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Group Operation Group total End of period Average 2006 Change Share By country 1-6 % % Finland Sweden Norway Germany Czech Latvia Denmark Great Britain India Italy Estonia France USA Other Group total The personnel figures for the associated companies under TietoEnators management responsibility are reported according to our holding. Personnel figures including these associated companies to 100% give a total of (14 468) at the end of the period.

15 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 15 (18) Total assets, Change 2005 EUR million 30 June 30 June % 31 Dec Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Group elimination Business areas Group Operation Group total Total liabilities, Change 2005 EUR million 30 June 30 June % 31 Dec Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network Personec Group Group elimination Business areas Group Operation Group total Segment assets by country, Change 2005 EUR million 30 June 30 June % 31 Dec Finland Sweden Norway Germany Great Britain Other Business areas

16 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 16 (18) Depreciation, Change Change 2005 EUR million % % 1-12 Processing & Network Other Group total Amortisation on allocated intangible assets from acquisitions, EUR million Change Change % % 1-12 Telecom & Media Other Group total Impairment losses, EUR million No impairment losses have been recognised during 2006 and Capital expenditure by business area, EUR million Change Change % % 1-12 Processing & Network Other Group total Commitments and contingencies, EUR million 30 June 31 Dec change % For TietoEnator obligations Pledges On behalf of associated companies Guarantees Other TietoEnator obligations Rent commitments due in one year Rent commitments due in 1-5 years Rent commitments due after 5 years Operating lease commitments due in one year Operating lease commitments due in 1-5 years Operating lease commitments due after 5 years Other commitments *) Operating lease commitments are principally three-year lease agreements that do not include buyout clauses. *) Including EUR 54.9 (62.9 year 2005) million commitment mainly for purchase of hardware.

17 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 17 (18) Notional amounts of derivative financial instruments, EUR million June 31 Dec Foreign exchange forward contracts Interest rate swap 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 that of other contracts. Fair values of derivatives, EUR million The net fair values of derivative financial instruments at the balance sheet date were: 30 June 31 Dec Forward foreign exchange contracts Interest rate swap Derivatives are used for hedging purposes only. Major shareholders, 30 June 2006 Shares % 1 Didner & Gerge Aktiefond % 2 Roburs fonder % 3 Mutual Pension Insurance Co. Ilmarinen % 4 Svenska Litteratursällskapet i Finland % 5 Varma Mutual Pension Insurance Co % 6 Tapiola % 7 Nordea funds % 8 AMF Pensionsförsäkrings AB % 9 Suomi Mutual Life Assurance Company % 10 OP funds % Remaining Nominee registered % Others % Total % Based on ownership records of the Finnish and Swedish central security depositories. On 30 June TietoEnator held million of its own shares.

18 TietoEnator Corporation STOCK EXCHANGE RELEASE 21 July 2006, 8.00 am EET 18 (18) Press conference for analysts and media will be held in Helsinki, Radisson SAS Royal Hotel, cabinet Finland, Runeberginkatu 2, 9.00 am CET, (10.00 am EET, 8.00 am UK time). The conference will be hosted in English by President and CEO Pentti Heikkinen, Deputy CEO Åke Plyhm, CFO Timo Salmela, SVP Communications and Investor Relations Päivi Lindqvist and Investor Relations Manager Paula Liimatta. Notification of attendance to Marja Kortesalo, tel The conference will be webcast and published live on the Internet at TietoEnator s website and there will be a possibility to present questions on-line. An on-demand video will be available after the conference. Conference call starting at 1.00 pm CET, (2.00 pm EET, pm UK time) will also be available as live audio webcast on The call will be hosted by Timo Salmela and Päivi Lindqvist. Callers may access the conference directly at the following telephone numbers: US callers: , non-us callers: , code 'TietoEnator'. Lines to be reserved ten minutes before start of conference call. A replay will be available until 28 July 2006 in the following numbers: US callers: , non-us callers: , access code: An on-demand audiocast of the conference will also be published at TietoEnator s website later during the same day. TietoEnator publishes financial information in English, Finnish and Swedish. All releases are posted in full on TietoEnator s website as soon as they are published. TIETOENATOR CORPORATION For further information: Åke Plyhm, Deputy CEO, TietoEnator, tel , ake.plyhm@tietoenator.com, Timo Salmela, CFO, TietoEnator, tel , , timo.salmela@tietoenator.com, Päivi Lindqvist, SVP, Communications and Investor Relations, TietoEnator, tel , , paivi.lindqvist@tietoenator.com or Paula Liimatta, IR Manager, TietoEnator, tel , , paula.liimatta@tietoenator.com TietoEnator is among the leading architects in building a more efficient information society and one of the largest IT services providers in Europe. TietoEnator specializes in consulting, developing and hosting its customers business operations in the digital economy. The Group s services are based on a combination of deep industry-specific expertise and the latest information technology. TietoEnator has over experts in more than 25 countries. DISTRIBUTION Helsinki Stock Exchange Stockholmsbörsen Principal Media TietoEnator Corporation Business ID: Kutojantie 10 PO Box 33 FI ESPOO, FINLAND Tel Fax Registered office: Espoo Kronborgsgränd 1 SE KISTA, SWEDEN Tel Fax info@tietoenator.com