TIETO-X PLC STOCK EXCHANGE RELEASE 7 FEBRUARY 2007 AT 9.30 A.M FINANCIAL STATEMENT BULLETIN FOR THE PERIOD 1 JANUARY 2006 31 DECEMBER 2006 TIETO-X TURNOVER AND OPERATING PROFIT GREW STRONGLY - Turnover for the financial period was EUR 39.2 million (2005: EUR 27.4 million). - Operating profit for the financial period was EUR 3.9 million (2005: EUR 2.5 million). - Turnover of the Systems Services business unit was EUR 14.6 million (2005: EUR 12.4 million) and operating profit was EUR 1.6 million (2005: EUR 1.2 million). - Turnover of the Telecommunication business unit was EUR 24.9 million (2005: EUR 15.3 million) and operating profit was EUR 3.6 million (2005: EUR 2.3 million) - The company's turnover in the first quarter of 2007 is expected to clearly exceed the first-quarter turnover of 2006, and the turnover for the fiscal year is expected to clearly exceed the turnover of 2006. - The company's relative profitability of business operations in the first quarter of 2007 is expected to be on the same level as in the first quarter of 2006. However, due to the one-off costs of approximately EUR 0.55 million related to the change of the company name and the revamping of the corporate image, operating profit for the first quarter is expected to be on the same level as in 2006. The operating profit percentage for the financial year is expected to be on the same level as in 2006, at least, and thus the operating profit to clearly exceed that of the previous year. In the last quarter of 2006, Tieto-X's turnover continued to grow strongly and exceeded the last quarter turnover of 2005 by 34.0 per cent, standing at EUR 12.1 million (2005: EUR 9.1 million). The turnover for the financial year exceeded the turnover of the previous year by 43.0 percent, amounting to EUR 39.2 million (2005: EUR 27.4 million). The Groups pro forma organic growth, compared to 2005, was 21.8 per cent. Operating profit for the last quarter exceeded the operating profit of the same period in the previous year by 53.7 per cent, amounting to EUR 1.2 million (2005: EUR 0.8 million). Operating profit for the financial year grew by 56.6 percent compared to the previous year and stood at EUR 3.9 million (2005: EUR 2.5 million). Service 4 Mobile Oy (S4M), a company producing project management services for demanding information systems ventures, which Tieto-X acquired in June 2006, was adopted in the consolidated balance sheet on 30 June 2006 using the acquisition cost method and in the consolidated profit and loss account from 1 July 2006. In the segment reporting S4M has been adopted into the companys Systems Services segment. BUSINESS OPERATIONS Tieto-X operates in the IT and ICT service markets, offering its customers flexible software development, maintenance and project management solutions that support their competitiveness and risk management. Tieto-Xs services range from expert work and consultation to software project deliveries and software maintenance services with comprehensive responsibility. Tieto-Xs operational business is organised into two business units, the Systems Services unit and the Telecommunications unit. The Systems Services unit develops and maintains software that is part of the customer companies information systems, and it also produces project management services. The unit's most significant customers operate in the telecommunications, finance and public administration sectors. The Telecommunications unit produces software development, integration and testing services for the telecommunications sector. The units clientele comprises leading mobile and smartphone manufacturers operating on the global markets, as well as mobile network suppliers and telecom carriers. Systems Services The services of Tieto-Xs Systems Services unit comprise software project deliveries, continuous maintenance services, resourcing services related to the customer companies software and systems ventures, as well as project management services. The unit was reorganized on 1 October 2007 to suit the service models. The aim of the reorganization is to boost the growth of the service business in project and maintenance services with comprehensive responsibility and project management services in large-scale systems ventures. The units turnover for the fiscal year grew by 17.5 per cent. The acquisition in June of Service 4 Mobile Oy (S4M), a company producing project management services, had a positive impact on the growth of the units business volume in the second half of the fiscal year. The integration of S4Ms business operations into the operations of Tieto-X has been implemented according to plan, and the first joint customer projects were launched in the last quarter of the year. S4M has been formed into Tieto-Xs project management competence center that develops and productises the project management competence for the expert project management tasks of the customers software and systems ventures, as well as for the project management of Tieto-Xs software services with comprehensive responsibility. Project management services are anticipated to be in demand in the coming few years, especially in companies operating in finance and telecommunication, as well as in public administration organizations. The units turnover growth and high utilization rate increased the unit's profitability compared to the previous year. The units operating profit grew by 38.8 per cent. Competition remained fierce in the markets of the Systems Services unit. Telecommunications The turnover of Tieto-Xs Telecommunications unit continued its strong organic growth during the review period. The growth was boosted by the successful integration of the business operations and organisation of Vega Technologies Oy, a company that Tieto-X acquired in autumn 2005, and Tieto-Xs Telecommunications unit. The integration brought competence and efficiency advantages that were put to use, especially in the second half of the year. The units turnover for the financial period grew 62.2 per cent compared to the previous year. The unit's competence in software design and project management for Symbian smart phones is very competitive, both in terms of price and quality. This has increased the units market share among its key customers, and given the unit the opportunity to extend its operations to new customers operating on the international smart phone markets. In October 2005 Tieto-X founded a subsidiary to produce testing services for Symbian smartphone software and other mobile communication device software. The name of the company is Testhouse Oy, and it has a Tallinn-based subsidiary Testhouse Estonia OÜ. During the financial year, the Testhouse service has grown into an organization that employs dozens of people and provides the Telecommunications unit with an excellent way to get competitive price-setting models for test work. The operations of Testhouse will be expanded to a new office in Eastern Europe. The one-time reorganisation costs related to the integration of Vega Technologies Oy were higher than expected in the second quarter. These costs weakened the profitability of the first six months of the year. However, the profitability of the Telecommunications unit returned to normal level in the third quarter. The units operating profit for the review period grew by 58.7 per cent compared to the previous year. The global competition for the software ventures of the leading international mobile and smartphone manufacturers remained fierce throughout the year. The software markets for the Symbian operating system and smartphones based on other technologies are expected to continue to increase and to offer growth opportunities for Tieto-X's Telecommunications unit. TURNOVER Consolidated turnover was EUR 39.2 million (2005: EUR 27.4 million), up 43.0 per cent from the previous year. Of the turnover, EUR 18.2 million (2005: EUR 12.6 million) was accrued during the first six months of the year, and EUR 21.0 million (2005: EUR 14.8 million) during the last six months. Of the turnover for the financial period, 37 per cent was accrued by the Systems Services unit and 63 per cent by the Telecommunications unit. TURNOVER BY SEGMENT K EURO 1-12 2006 1-12 2005 Telecommunications 24,879 15,340 Systems Services 14,604 12,432 Group's internal - 299 - 376 eliminations Administration 0 0 Group total 39,184 27,396 FINANCIAL RESULT Consolidated operating profit was EUR 3.9 million (2005: EUR 2.5 million), and profit before taxes was EUR 3.8 million (2005: EUR 2.6 million). Profit for the financial period was EUR 2.9 million (2005: EUR 1.9 million), which is 7.4 per cent of turnover. Earnings per share were EUR 0.38 (2005: EUR 0.26). Cash flow from business operations was EUR 0.33 per share (2005: EUR 0.21). OPERATING PROFIT BY SEGMENT K EURO 1-12 2006 1-12 2005 Telecommunications 3,583 2,258 Systems Services 1,629 1,174 Administration - 1,271 - 914 Group total 3,941 2,517 RETURN ON CAPITAL INVESTMENT Consolidated return on equity (ROE) was 29.8 per cent (2005: 22.9) and return on investment (ROI) was 28.2 per cent (2005: 26.1). BALANCE SHEET AND FINANCING The balance sheet total was EUR 25.4 million (2005: EUR 20.8 million). Shareholders equity was EUR 10.9 million (2005: EUR 8.6 million). Equity ratio was 42.7 per cent (2005: 41.5 per cent). The Group's liquid assets stood at EUR 3.4 million (2005: EUR 5.0 million) at the end of the financial period. The Group's liquidity was good throughout the financial period, despite the EUR 5.2 million cash payment related to corporate structuring. CASH FLOW Consolidated cash flow from business operations was EUR 2.5 million (2005: EUR 1.6 million). PERSONNEL The number of personnel averaged 503 (2005: 355) during the financial period and was 579 (2005: 438) at the end of the period. The average age of the personnel was 34.9 years (2005: 34.9 years). 22 per cent (2005: 20) of the personnel were women and 78 (2005: 80) per cent were men. The educational background of the personnel was as follows: university degree 38 (2005: 39) per cent, higher vocational degree 31 (2005: 27) per cent, vocational degree 21 (2005: 22) per cent and other education 9 (2005: 12) per cent. PERSONNEL EXPENSES Salaries and fees including employer's social costs came to EUR 20.2 million (2005: EUR 14.9 million), pension expenses to EUR 3.4 million (2005: EUR 2.5 million) and other indirect personnel costs to EUR 1.2 million (2005: EUR 0.9 million). Personnel expenses totalled EUR 24.8 million (2005: EUR 18.3 million), which was approximately 71 per cent of total costs. SHARES AND SHARE CAPITAL Tieto-Xs share capital is EUR 296,948.00, and the total number of shares is 7,423,700. In accordance with the Articles of Association, the share capital is a minimum of EUR 217,668 and a maximum of EUR 870,672. The accounting countervalue of the share is EUR 0.04. The ISIN code used in international securities trading is FI0009008007 and the trading symbol is TIX1V. SHAREHOLDERS There were 2,190 shareholders on 31 December 2006. Private persons owned 64.6 per cent and institutions 35.4 per cent of the companys shares. Foreign ownership was 4.6 per cent. OPTIONS PLANS During the financial period the company had two active stock options plans. The first of the plans (Stock options plan II/2001) was authorized by the Annual General Meeting of 10 April 2001. The option rights issued under this plan have been offered, in deviation from the pre-emptive rights of the companys shareholders, to the President and CEO of the company and the Group companies, to the management, and to key personnel, as determined by the Board. The option rights entitle their holders to subscribe for a total of 500,000 Tieto-X Plc shares, and correspondingly the company share capital due to share subscriptions may increase by a maximum of EUR 20,000. The maximum dilution effect is 6.4 per cent. The extended subscription periods for all option series of the stock option plan II/2001 have ended on 31 December 2005 at the latest.The subscription period for all options ends on 31 December 2008 at the latest.A total number of 475,000 options had been allocated to the company's key persons by the end of the financial period. At the end of the financial year 70,000 company shares had been subscribed with the options. The Annual General Meeting of 14 March 2006 authorized a stock options plan (Stock options plan III/2006) where the option rights have been offered, in deviation from the pre-emptive rights of the companys shareholders, to the President and CEO of the company and the Group companies, to the management, and to key personnel, as determined by the Board. The option rights entitle their holders to subscribe for a total of 400,000 Tieto-X Plc shares, and correspondingly the company share capital due to share subscriptions may increase by a maximum of EUR 16,000. The maximum dilution effect is 4.9 per cent. The extended subscription periods for the options of option series A under stock option plan III/2006 ended on 30 April 2006, and the extended subscription period for options of series B is April 1 30, 2007. The subscription period for all options ends on 31 December 2011 at the latest. A total number of 265,000 options had been allocated to the company's key persons by the end of the financial period. The subscription period for the options had not started by the end of the financial period. BOARD AUTHORIZATIONS At the end of the financial year the Board of Directors held the following valid authorizations: Authorization granted by the Annual General Meeting on 14 March 2006 to decide to raise share capital in one or more new issues, to grant option rights and/or to float a convertible bond, resulting in an increase in share capital of a maximum of EUR 58,493.60. By the end of the financial period, the Board of Directors had utilized EUR 2,800.00 of this authorization in connection to the acquisition of Service 4 Mobile Oy. The authorization is valid for one year from the date of the Annual General Meeting. The purpose of the authorization is to facilitate the use of company shares in acquisitions and other corporate structuring, strengthening or developing the financial and capital structure of the company, realization of the objectives to seek motivation and commitment from personnel or other initiatives which need to be undertaken to further the company's business. The maximum dilution effect of the authorization with the present number of shares is 16.5 per cent. Authorization by the Annual General Meeting on 14 March 2006 to acquire and convey a maximum of 731,170 of the companys shares. This authorization was unutilized in its entirety at the end of the financial period. The authorization is valid for one year from the date of the Annual General Meeting. Own shares can be acquired to develop the companys capital structure, to finance acquisition or other corporate structuring or to be conveyed or cancelled. INVESTMENTS The investments for the period totalled EUR 4.0 million, including the acquisition of Service 4 Mobile Oy for EUR 3.7 million. Of this sum EUR 1.6 million has been entered in the balance sheet under short-term debt. FINANCING The company agreed on an external financing package with interest to finance the acquisition of Vega Technologies Oy in October 2005. The financing package included a non-equity loan of max. EUR 7.0 million to finance the corporate acquisition. The companys interest-bearing debt was raised to EUR 3.0 million during the financial period. At the end of the financial period, EUR 6.0 million of this financing package had been used. RISKS The aim of Tieto-Xs risk management is to ensure undisturbed and continuous business operations and development, and to support the implementation of the companys operational targets and increase its value. The risks of software development and maintenance processes are regarded as the most significant risks that threaten the companys business development. These risks are managed with service production supervision and monitoring instruments that are in accordance with the quality management system. Other significant risks are those related to information systems and data security. These risks are managed with data administration regulations. Other risks that are perceived as significant are market and competition risks as well as economic risks that are managed with measures in accordance with the companys and the business units strategies and business plans and regulations of economic planning and control. In addition, the risk management aims at minimizing personnel risks by employing measures in line with the personnel strategy. Contractual, product liability and other legal threats are managed with the help of the companys administrative and quality system practices as well as with proper liability insurances. The threat that possible accidents and injuries cause is prepared for by office-specific instructions and insurances. Risk management planning, development and control are part of the responsibilities of Tieto-Xs CFO, who reports to the President and CEO. The administrative units and the business units that implement the companys business operations are responsible for the assessment and prevention of risks related to their functions. The Board of Directors deals with significant business risks. The Board of Directors monitors the implementation of the companys risk management policy as part of the strategy, business plan and budgeting processes. BOARD OF DIRECTORS, PRESIDENT AND CEO, AND AUDITORS The Annual General Meeting on 14 March 2006 elected Tero Laaksonen, Eero Hurme, Seppo Jaatinen, Matti Järvinen, Matti Makkonen and Esko Siik as members of the Board. The Board re- elected Tero Laaksonen as Chairman of the Board. Kari Happonen has been President and CEO since 1 May 2002. The Board of Directors met 19 times during the financial period. The auditors were PricewaterhouseCoopers Oy, Authorized Public Accounting Firm, with Authorized Accountant Heikki Lassila as principal auditor. EVENTS AFTER THE REVIEW PERIOD The extraordinary General Meeting of Tieto-X Plc on 25 January 2007 approved the proposal by the Board of Directors to change the company name and the companys 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. FUTURE PROSPECTS Market analysts estimate that the growth of the Finnish IT and ICT service market will be 4-6 per cent in 2007. If private companies and public administration organizations increase their investments, even moderately, to upgrade and develop their information systems and software, Tieto-Xs Systems Services unit has potential to boost its business. Accelerated by the new large- scale services with extensive responsibility, the units turnover is expected to continue to grow in the fourth quarter and throughout the financial period. The primary growth motors for the Telecommunications unit is the increasing demand for software development, integration and testing services across a wider customer base, as well as growing smartphone markets. The Testhouse services for smartphones are expected to continue to grow strongly. Thus, the turnover of the Telecommunications unit is expected to continue to grow strongly at the beginning of 2007 and to continue to do so throughout the financial year. Judging from the business units order backlogs and tender prospects, Tieto-Xs first quarter turnover is expected to clearly exceed the turnover of the same period in 2006, and the 12-month turnover is expected to significantly exceed that of the previous year. The company's relative profitability of business operations in the first quarter of 2007 is expected to be on the same level as in the first quarter of 2006. However, due to the one-off costs of approximately EUR 0.55 million related to the change of the company name and the revamping of the corporate image, operating profit for the first quarter is expected to stay on the same level as in 2006. The operating profit percentage for the financial year is expected to be on the same level as in 2006, at least, and thus the operating profit to clearly exceed that of the previous year. BOARD OF DIRECTORS' PROPOSAL TO THE ANNUAL GENERAL MEETING The parent company's disposable funds on 31 December 2006 were EUR 4.761.132,31. The Board of Directors proposes that the net profit of the parent company be disposed of as follows: - a dividend to shareholders of EUR 0.27 per share EUR 2,004,399.00 - carried over in shareholders' equity EUR 338,199.07 __________________ 2,342,598.07 The Board of Directors proposes that the dividend be paid on shares entered in the shareholders' register kept by the Finnish Central Securities Depository on the balancing date, 27 March 2007. The Board of Directors proposes that the dividend be paid on 4 April 2007. TIETO-X GROUP The figures in the income statement and balance sheet have been consolidated. All group companies are included in the consolidated figures. The original financial statement bulletin is in Finnish. The English language release is a translation. The figures are unaudited. CONSOLIDATED PROFIT AND 1.1.- 1.1.- LOSS ACCOUNT, K EURO 31.12.2006 31.12.2005 Change Turnover 39,184 27,396 43.0 % Operating costs - 35,243 - 24,890 41.6 % OPERATING PROFIT 3,941 2,517 56.6 % Financial income and - 174 101 - 273.3 % expenses Profit before extraordinary 3,766 2,618 43.9 % items Extraordinary income and 0 0 0 expenses Profit before provisions 3,766 2,618 43.9 % and taxes Taxes - 855 - 713 20.0 % NET PROFIT FOR THE PERIOD 2,911 1,905 52.8 % CONSOLIDATED BALANCE SHEET, K EUR ASSETS 31.12.2006 31.12.2005 FIXED ASSETS Property, plant and equipment 399 245 Goodwill 11,190 8,621 Intangible assets 450 473 Deferred tax claim 49 0 Long-term receivables 12 28 Other investments 19 30 FIXED ASSETS TOTAL 12,120 9,397 CURRENT ASSETS Accounts receivable and other 9,945 6,446 receivables Financial assets 695 1,993 Liquid assets 2,689 2,968 CURRENT ASSETS TOTAL 13,330 11,406 TOTAL ASSETS 25,449 20,804 SHAREHOLDERS' EQUITY AND 31.12.2006 31.12.2005 LIABILITIES SHAREHOLDERS' EQUITY Share capital 297 292 Premium fund 4,176 3,746 Share issue 0 0 Acquired own shares fund 0 0 Fair value and other reserves 315 108 Retained earnings 3,180 2,591 Net profit for the period 2,911 1,905 SHAREHOLDERS' EQUITY TOTAL 10,879 8,643 LIABILITIES Long-term liabilities 4,733 2,960 Current liabilities 9,837 9,201 TOTAL LIABILITIES 14,570 12,161 SHAREHOLDERS' EQUITY AND 25,449 20,804 LIABILITIES TOTAL CHANGE IN Share Prem Share Own Fair Retai Total EQUITY hol ium issue shares value ned K EURO ders fund fund and earnings equity other reser ves Shareholders' 291 3,704 28 0 46 3,905 7,975 equity on 1 January 2005 Transfer to 62 62 reserves Share issue 1 43 - 28 16 Dividend - 1,314 - 1,314 Conversion 0 0 difference Profit for 1,905 1,905 the period Shareholders' 292 3,746 0 0 108 4,496 8,643 equity on 31 December 2005 Shareholders' 292 3,746 0 0 108 4,496 8,643 equity on 1 January 2006 Transfer to 207 207 reserves Share issue 4 430 434 Dividend - 1,316 - 1,316 Conversion 0 0 difference Profit for 2,911 2,911 the period Shareholders' 297 4,176 0 0 315 6,091 10,879 equity on 31 December 2006 GROUP CASH FLOW 1.1.- 1.1.- CALCULATION, K EURO 31.12.2006 31.12.2005 Business operations Profit before extraordinary 3,766 2,618 items Depreciations and 415 411 amortisations Adjustments 178 131 Change in net working - 785 - 1,077 capital Fixed assets sales profit 1 - 10 Taxes - 1049 - 498 Cash flow from business 2,526 1,575 operations Investments Investments in fixed assets - 315 - 71 Transfer income from fixed 248 34 assets Change in financial assets 1,298 1,989 Acquisition of subsidiaries - 5,186 - 4,182 Cash flow from investments - 3,954 - 2,230 total Cash flow before financing - 1,429 - 655 FINANCING Dividend paid - 1,316 - 1,314 Increase of long-term loans 3,000 3,000 Repayment of long-term debt - 658 Share issue 117 16 Converted certificates of 0 0 deposits Change in short-term loan 7 - 9 receivables Total cash flow from 1,150 1,692 financing Change in funds - 279 1,037 Liquid assets at start of 2,968 1,931 period Liquid assets at end of 2,689 2,968 period CONSOLIDATED PROFIT AND LOSS ACCOUNT, QUARTERLY, K EURO Q4/2006 Q3/2006 Q2/2006 Q1/2006 Q4/2005 1.10.06- 1.7.06- 1.4.06- 1.1.06- 1.10.05- 31.12.06 30.9.06 30.6.06 31.3.06 31.12.05 Turnover 12,141 8,862 9,166 9,015 9,064 Operating costs - 10,964 - 7,764 - 8,477 - 8,038 - 8,298 OPERATING PROFIT 1,178 1,098 689 977 766 Financial income and 0 - 94 - 32 -49 43 expenses Profit before 1,178 1,004 656 928 809 provisions and taxes Extraordinary items 0 0 0 0 0 Profit before 1,178 1,004 656 928 809 provisions and taxes Taxes - 179 - 310 - 144 - 223 - 224 PROFIT FOR THE 999 695 513 705 585 PERIOD SEGMENT REPORTING 1.1.-31.12.2006 1.1.-31.12.2005 Turnover by segment Telecommunications 24,879 15,340 Systems Services 14,604 12,423 Group's internal - 299 - 376 eliminations Administration 0 0 Turnover total 39,184 27,396 Operating profit by segment Telecommunications 3,583 2,258 Systems Services 1,629 1,174 Administration - 1,271 - 914 Total operating profit 3,941 2,517 Operating profit of turnover 10.1 9.2 % Interest and financial - 174 101 income Profit before taxes 3,766 2,618 Taxes - 855 - 713 PROFIT FOR THE PERIOD 2,911 1,905 FINANCIAL RATIOS 1.1.-31.12.2006 1.1.-31.12.2005 Earnings per share, EUR 0.38 0.26 Equity per share, EUR 1.43 1.17 Operating cash flow per 0.33 0.21 share, EUR Return on investment, % 28.2 26.1 Return on equity, % 29.8 22.9 Operating profit/turnover, % 10.1 9.2 OTHER INFORMATION 1.1.-31.12.2006 1.1.-31.12.2005 Average number of personnel 503 355 Personnel at the end of the 579 438 period COMMITMENTS 31.12.2006 31.12.2005 Commitments for group Rental security 148 85 (bank deposits), k Euro Amounts payable for 1,398 712 leasing contracts, k Euro 1,369 1,444 Leasing commitments TIETO-X PLC THE BOARD OF DIRECTORS INFORMATION MEETING A briefing will be held for analysts and the press on 7 February 2007 at 10.30 a.m. at Kiasma, the museum of contemporary art, Seminar Hall, Mannerheiminaukio 2, 00100 Helsinki. THE ANNUAL GENERAL MEETING The Annual General Meeting of Tieto-X shareholders will be held on Thursday 22 March 2007 at 5.00 p.m. at Opus Business Park, Auditorium Aida, Hitsaajankatu 20, 00810 Helsinki. The Annual Report of Tieto-X Group for the period 1 January 31 December 2006 will be issued in March, week 12. INTERIM REPORTS The interim reports in 2007 will be published as follows: - interim report 1-3/2007, Wednesday 25 April 2007 - interim report 1-6/2007, Wednesday 1 August 2007 - interim report 1-9/2007, Wednesday 24 October 2007 ADDITIONAL INFORMATION: TIETO-X PLC President and CEO, Kari Happonen phone +358 (0)424 2231, +358 (0)400 700 761 kari.happonen@tieto-x.fi DISTRIBUTION: Helsinki Stock Exchange Main media Neither this press release nor any copy of it may be taken, transmitted into or distributed in the United States of America or its territories or possessions.