TIETOENATOR CORPORATION STOCK EXCHANGE RELEASE 18 JULY AM 1 (10)

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1 TIETOENATOR CORPORATION STOCK EXCHANGE RELEASE 18 JULY AM 1 (10) TietoEnator Interim Report 2/2003 Net sales grew by 10% to EUR million (627.8) for the first half of the year and by 8% to EUR million (317.7) for the quarter isolated. Operating profit before goodwill amortisation (EBITA) amounted to EUR 62.5 million (63.1), corresponding to a margin of 9.0% (10.1) for the first half of the year and to EUR 29.2 million (28.7), and a margin of 8.5% (9.0) for the quarter isolated. The six-month profit after tax amounted to EUR 25.3 million (34.5) and for the quarter to EUR 10.8 million (13.3). Six-month earnings per share, excluding goodwill amortisation totalled EUR 0.54 (0.55), after goodwill amortisation EUR 0.30 (0.41). New outsourcing deal signed with TeliaSonera Sweden. General market overview There were no visible signs of general market recovery during the second quarter. Customers have focused on costcutting actions. Demand for high-value-added services was stable, but slack for low-value-added services and products and for licence-based sales of systems and solutions. Large hardware vendors are aggressively trying to increase market share in traditional infrastructure outsourcing services. Price pressure remained unchanged. TietoEnator market overview TietoEnator s strong market position is based on a proven mix of partnerships and solutions in specific industry segments. Customers in all markets are interested in partnerships due to growing technical complexity and rising IT costs. Some larger outsourcing cases took place, mainly in Sweden. For TietoEnator this resulted in the agreement with TeliaSonera, signed in late June, under which TietoEnator takes over the TeliaSonera mainframe data processing activities in Sweden, comprising over 100 employees. TietoEnator is striving to take the role as the leading provider of customer-specific, high-value-added outsourcing services, combining its sector expertise and proven processing abilities. The aim of this strategy is to counter the trend of decreasing margins evident in the traditional processing services market. Development Market conditions in the main addressable markets did not change. The need to digitalise and harmonise processes is increasing as old legacy systems reach the end of their lifecycle. Customers overall are carefully searching for sound partners to team up with. Sales cycles are growing longer and planned and discussed projects have a tendency to slide in time. The TietoEnator model of partnerships in R&D and product development services within telecom continued to develop positively, in spite of the rather negative overall market for this sector. Ti etoenator is now working to take advantage of the synergies offered by its existing partnerships in this area, and to build a platform for international leverage of its expertise. An example of this is the agreement signed with Siemens Mobile regarding the takeover of R&D activities in Finland. The development of government services remained stable in Finland but was weak in the remaining Nordic countries.

2 The demand for repeatable and tailor-made solutions stayed on a low level in all markets. This mainly affected the licence-based business within the banking and finance segment as well as the sales of generic systems, especially for financial administration and information management. An exception was the steadily growing sales of healthcarerelated systems and solutions to the entire Nordic public sector market. The forest industry segment noted good development in Europe and improvements in the North American market, partly due to the current rise in prices of pulp and paper products. TietoEnator is now aiming to form more global partnerships with pulp & paper companies. In the Energy sector, sales to the Nordic market increased as a result of consolidation in the market. Net sales The half-year net sales grew by 10% to EUR million (627.8). Net sales during the second quarter isolated amounted to EUR million (317.7), an increase of 8%. In local currencies the growth for the second quarter totalled 8 %. Organic growth amounted to 5 %, while for the half year the corresponding numbers were 11 % in local currencies and in organic growth 7%. Geographically the growth was 7% in Finland, 19% in Sweden and -8% in Norway for the first half of Among the industry segments, banking and finance accounted for 20% (21) of sales, telecom and media for 21% (14) and public sector for 21% (24). The forest industry segment contributed 6% (6) of sales and the energy segment 5% (5). The order backlog, defined as services ordered with binding contracts, amounted to EUR 951 million (904) at 30 June 2003, a year-on-year increase of 5%. Approximately 40% of this backlog is expected to be invoiced during Profitability For the half year accumulated the operating profit before goodwill amortisation (EBITA) was EUR 62.5 million (63.1), corresponding to a margin of 9.0% (10.1). Operating profit after goodwill amortisation (EBIT) amounted to EUR 42.6 million (51.0), corresponding to a margin of 6.1% (8.1). For the quarter isolated operating profit before goodwill amortisation (EBITA) increased 2% to EUR 29.2 million (28.7), corresponding to a margin of 8.5% (9.0). Operating profit after goodwill amortisation (EBIT) amounted to EUR 19.3 million (21.6), corresponding to a margin of 5.6% (6.8). Cash flow from operations for the first six months amounted to EUR 88.6 million (48.2) and cash used for investment activities totalled EUR 52.8 million (124.9). Six-month earnings per share, excluding goodwill amortisation, were EUR 0.54 (0.55) and after goodwill amortisation EUR 0.30 (0.41). The rolling 12-month return on capital employed (ROCE) was 24.8% and on shareholders equity (ROE) 12.8%. Personnel adjustments are expected to continue at the same level as during the beginning of Personnel costs related to employees subject to the notice period amounted to approximately EUR 5 million for the quarter isolated (approximately EUR 10 million for the period accumulated), and are estimated to stay at approximately the same level during the two remaining quarters of 2003 resulting in a cost of about EUR 20 million for the full year.

3 Personnel The number of employees decreased modestly during the second quarter. The net change in personnel amounted to -82 (334), mainly as a result of the ongoing adjustments. Recruitment was on a low level and a total of 137 (213) new employees were taken on. For the first half of 2003 accumulated altogether 340 (419) new employees were hired to the Group and the net change amounted to -109 (743). The Group had (11 117) full-time employees at the end of the period and (10 879) on average during the first six months. Employee turnover went down to 5% on a rolling 12-month basis. Prospects for 2003 The economic slowdown and uncertainty in the market are dampening overall IT spending. Services with a strong contribution to added value and productivity are of larger interest to customers than low-value-added services and will continue to be so. Outsourcing services are in solid demand in all customer segments. Demand for tailor-made projects and repeatable solutions will most likely stay modest during the rest of At the same time the partnership business provides opportunities and is expected to generate most of the Group s revenue growth in No major changes in demand are expected during the coming quarter and the sales for the third quarter 2003 are forecast to grow in the range of 6-8% compared with the third quarter last year. Should the weak economic conditions persist and planned projects slide in time, full-year growth could be under 10%. The third-quarter EBITA margin is expected to range between 9-10%. Full-year absolute EBITA is expected to be higher than in The annual goodwill amortisation for all transactions closed or announced is calculated to amount to EUR 41 million. Regarding the annual effective tax rate on the pre-tax profit after goodwill amortisation, no material changes compared to 2002 are expected. The full-year cash flow from operations is expected to develop positively and to exceed the 2002 level. Shares and options In April TietoEnator s Board of Directors made the first allocation from the stock options of the 2002 programme and offered options to approximately 500 employees. A total of options were subscribed for by 469 employees. Listing of the warrants under the bonds with warrants 2000 programmes was started on the Helsinki and Stockholm Exchanges on 2 May The subscription period for the 1999/2003 warrants ( ) ended on 30 May The Board authorisations to issue or repurchase shares have not been used during the period. Interim Report 3/2003 The interim report for January September will be published on 23 October 2003.

4 Stockholm 17 July 2003 TietoEnator Corporation Board of Directors The figures in this Interim Report are unaudited. Key figures change % 1-12 Earnings per share, EUR a) , Earnings excl. amortisation of goodwill per share, EUR Equity per share, EUR Average number of shares (1000 shares) Number of shares at end of period (1000 shares) Return on equity rolling 12 month, % Return on capital employed rolling 12 month, % Equity ratio % Interest-bearing net debt, EUR million Gearing, % Investments, EUR million Personnel at end of period Personnel on average Per employee, EUR 1000 a) Net sales Personnel expenses b) Operating profit before amortisation of goodwill excl. social costs on personnel warrants a) There is no dilutive effect from warrants and stock-options, because the average share price has been below all subscription prices during 2002 and b) Personnel expenses include salaries, pension costs and other pay-related social costs but exclude social costs for personnel warrants. Currency rate 30 June EUR = 9,2488 SEK Net sales and profit by quarter, EUR million / /2003 Net sales , Operating profit (EBIT) Net financial items Profit before taxes

5 Net sales by business area, EUR million hange change % % 1-12 Banking & Finance Telecom & Media Public & Healthcare Production & Logistics Processing & Network Resource Management Group elimination incl. other Operating profit, EUR million change change % % 1-12 Banking & Finance Telecom & Media Public & Healthcare Production & Logistics Processing & Network Resource Management Business areas Group function incl. other Associated companies outside BA Operating profit (EBITA) before goodwill amortisation and social costs on personnel warrants Social costs on personnel warrants Operating profit (EBITA) before goodwill amortisation Amortisation of goodwill Operating profit (EBIT) Operating margin, % change change Banking & Finance Telecom & Media Public & Healthcare Production & Logistics Processing & Network Resource Management Business areas Operating margin (EBITA) before goodwill amortisation and social costs on personnel warrants Operating margin (EBITA) before goodwill amortisation Operating margin (EBIT)

6 Net sales by country, EUR million 2003 change share 2002 share 2002 change 1-6 % % 1-6 % 1-12 % Finland Sweden Norway Denmark Germany USA 8 > >100 Great Britain >100 Other Net sales by industry segment, EUR million 2003 change share 2002 share 2002 change 1-6 % % % Banking and finance Public Telecom and media Forest Energy Manufacturing Retail Logistics Non-allocated The industry segment figures for the associated companies under TietoEnator s management responsibility are reported according to our holding. Personnel End of period Average 2003 change share By business area 1-6 % % Banking & Finance Telecom & Media Public & Healthcare Production & Logistics Processing & Network Resource Management Group function incl. other change share By country 1-6 % % Finland Sweden Norway Denmark Germany Czech Latvia USA 105 > Other

7 The personnel figures for the associated companies under TietoEnator s management responsibility are from 2003 reported according to our holding. Personnel figures including these associated companies to 100% give a total of (11 567) at the end of period. Income statement, EUR million change 2003 rolling % 4-6 7/02-6/ Net sales , , Other operating income Personnel expenses Other operating expenses Share of associated companies' results Depreciation according to plan excl. amortisation of goodwill Operating profit before amortisation of goodwill Amortisation of goodwill 19.9 *) Operating profit Financial income and expenses -1, Profit before extraordinary items and taxes Extraordinary items Income tax Minority interest Profit for the period The provision for bonuses is EUR 6.1 million (8.6 in previous year). Income tax consists of EUR million in direct taxes, EUR 0.3 million in taxes for previous years and EUR 1.4 million change in deferred taxes. *) of which EUR 11.2 million not tax deductible. Balance sheet, EUR million change June 30 June % 31 Dec Intangible assets Goodwill Tangible assets Non-current assets Current assets, interest-bearing Current assets, non-interest bearing , Securities and cash in hand and bank Share capital Other shareholders' equity Minority interest Provisions for liabilities and charges

8 Non-current liabilities Current liabilities Interest-bearing loans Finance lease liability The group has a 364 day EUR 150 million credit facility out of which EUR 40 million was in use end of June and a commercial paper programme for EUR 250 million out of which EUR 19 million was in use. In addition the group has uncommitted credit limits of EUR 13 million that were not in use end of June. Net working capital in the balance sheet, EUR million change June 30 June % 31 Dec Accounts receivable Other working capital receivables Working capital receivables included in current assets Operative accruals Other working capital liabilities Working capital liabilities included in current liabilities Net working capital in the balance sheet The change in net working capital in the balance sheet does not equal to that in the cash flow due to acquisitions and disposals. Cash flow, EUR million Cash flow from operations Operating profit Adjustments to operating profit Depreciation and amortisation on goodwill 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 received Income taxes paid -4.0 *) Net cash flow from operations Cash flow from investing activities Acquisition of Group companies and business

9 operations net of acquired cash **) Capital expenditures Disposed Group companies, net of disposed cash Sale of other shares Other investing activities Net cash used in investing activities Paid dividend Net cash used in other financing activities Change in cash flows Liquid assets at beginning of period , Exchange differences Liquid assets at end of period *) includes tax refund from previous year **) of which EUR 13 million remaining payment relat ed to Ericsson paid in January 2003 Contingent liabilities, EUR million change 30 June 31 Dec % For TietoEnator obligations Pledges Mortgages - - On behalf of associated companies Guarantees Other TietoEnator obligations Rent commitments Lease commitments Other contingent liabilities Lease commitments are principally three-year lease agreements which do not have redemption clauses. Derivative contracts Currency derivatives Forward contracts Value of underlying instruments Market value of currency forward contracts Derivatives are only used for hedging. TietoEnator Corporation/Major shareholders 30 June 2003 Shares % 1 Robur Mutual Funds ,6 2 Varma-Sampo ,3 3 Svenska Litteratursällskapet i Finland ,6

10 4 Tapiola insurance group ,4 5 Handelsbanken Funds ,2 6 Ilmarinen Mutual Pension Insurance Company ,0 7 Didner & Gerge Mutual Fund ,0 8 The Local Government Pensions Institution ,9 9 OP Mutual Funds ,9 10 The State Pension Fund ,9 Remaining Nominee registered ,0 Others ,3 Total ,0 Based on ownership records of the Finnish and Swedish central security depositories Press conference for analysts and media in Helsinki, at Finlandia Hall, meeting room Aurora, Mannerheimintie 13 e, Helsinki, at 9.00 am (EET). The conference will be hosted in English by CEO Matti Lehti, Deputy CEO Åke Plyhm, CFO Tuija Soanjärvi, Investor Relations Manager Päivi Lindqvist and SVP Corporate Communications Eric Österberg. Notification of attendance to Anne Sämpi, anne.sampi@tietoenator.com, 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 also be available after the conference. Conference call starting at 4.00 pm (EET), (2.00 UK time). The call will be hosted by CEO Matti Lehti, Deputy CEO Åke Plyhm, CFO Tuija Soanjärvi, Investor Relations Manager Päivi Lindqvist and SVP Corporation Communications Eric Österberg. Call lines to be reserved ten minutes before start of conference call, service number , code TietoEnator. A replay will be available until To listen, please call: , access code An audiocast of the conference will also be available at by For further information, please contact: Åke Plyhm, Deputy CEO, tel , Tuija Soanjärvi, CFO, tel , Eric Österberg, Senior Vice President, Communications, tel , Päivi Lindqvist, Investor Relations Manager, tel , TietoEnator Corporation Business ID Kutojantie 10, P.O. Box 33 FIN Espoo, Finland tel telefax Kronborgsgränd 1 SE Kista, Sweden tel telefax info@tietoenator.com TietoEnator is one of the leading architects in building a more efficient information society and the largest IT services company in the Nordic countries. TietoEnator specialises 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 latest information technology. TietoEnator has 13,000 experts in more than 20 countries. TIETOENATOR CORPORATION DISTRIBUTION Helsinki Exchanges Stockholmsbörsen Principal Media