Tieto Corporation STOCK EXCHANGE RELEASE 3 March 2014, 9.00 am EET
Tieto will adopt the new IFRS 11, ‘Joint arrangements’ as of 1 January 2014. Proportional consolidation of joint ventures is no longer allowed and the results will be reported as one line above operating profit (EBIT). The first interim report for 2014 to be published on 25 April will be prepared in accordance with the new standard.
Equity accounting will decrease the Group’s annual net sales by around 4%. The change mainly affects the Industry Products (around 12% negative) and Managed Services (around 2% negative) service lines. Of industry groups, the change mainly affects Financial Services (around 10% negative) and Public Healthcare and Welfare (around 7% negative). EBIT is affected by the amount corresponding to Tieto’s share of joint ventures’ financial items and taxes, and there might be a slightly positive impact, if any, on EBIT margin. The company’s net profit for the period is not affected.
Tieto's financial reporting for 2013 has been adjusted to account for the changes. The tables below are also available in Excel format at www.tieto.com/Investors.
Changed key figures | ||||||||
2013 1–3 |
2013 4–6 |
2013 7–9 |
2013 10–12 |
2013 1–12 |
||||
Return on capital employed, 12-month rolling, % *) | 11.5 | 13.6 | 12.1 | 16.8 | 16.8 | |||
Equity ratio, % | 43.2 | 44.0 | 46.7 | 49.3 | 49.3 | |||
Interest-bearing net debt, EUR million | 18.3 | 81.1 | 52.6 | 15.5 | 15.5 | |||
Gearing, % | 3.7 | 16.8 | 10.2 | 3.0 | 3.0 | |||
*) When calculating Return on capital employed for the year 2013, the balance sheet items concerning year 2012 in the 12-month average denominator are not restated according to the IFRS 11 Joint arrangements. | ||||||||
Income statement, EUR million | ||||||
2013 1–3 |
2013 4–6 |
2013 7–9 |
2013 10–12 |
2013 1–12 |
||
Net sales | 423.9 | 416.7 | 361.1 | 405.1 | 1 606.8 | |
Other operating income | 4.0 | 3.1 | 4.5 | 6.5 | 18.1 | |
Employee benefit expenses | 248.5 | 244.7 | 199.8 | 230.7 | 923.7 | |
Depreciation, amortization and impairment charges | 21.2 | 28.6 | 19.3 | 20.6 | 89.7 | |
Other operating expenses | 131.4 | 133.8 | 123.5 | 144.4 | 533.1 | |
Share of profit from investments accounted for using the equity method | 2.5 | 2.1 | 1.3 | 1.4 | 7.3 | |
Operating profit (EBIT) | 29.3 | 14.8 | 24.3 | 17.3 | 85.7 | |
Financial income and expenses | -1.5 | -1.8 | -1.7 | -1.6 | -6.6 | |
Profit before taxes | 27.8 | 13.0 | 22.6 | 15.7 | 79.1 | |
Income taxes | -6.4 | -5.6 | -4.2 | -0.7 | -16.9 | |
Net profit for the period | 21.4 | 7.4 | 18.4 | 15.0 | 62.2 |
Balance sheet, EUR million | |||||
2013 31 Mar |
2013 30 Jun |
2013 30 Sep |
2013 31 Dec |
||
Goodwill | 383.9 | 374.8 | 376.7 | 372.3 | |
Other intangible assets | 51.1 | 45.9 | 40.3 | 44.1 | |
Property, plant and equipment | 100.3 | 98.1 | 96.4 | 94.6 | |
Investments accounted for using the equity method | 18.1 | 20.2 | 20.2 | 21.5 | |
Other non-current assets | 36.6 | 38.1 | 34.6 | 31.5 | |
Total non-current assets | 590.0 | 577.1 | 568.2 | 564.0 | |
Trade receivables and other current assets | 482.6 | 463.1 | 439.8 | 416.5 | |
Cash and cash equivalents | 93.1 | 126.4 | 150.6 | 114.1 | |
Total current assets | 575.7 | 589.5 | 590.4 | 530.6 | |
Assets classified as held for sale | 47.3 | - | 2.0 | - | |
Total assets | 1 213.0 | 1 166.6 | 1 160.6 | 1 094.6 | |
Total equity | 488.7 | 483.9 | 513.5 | 514.2 | |
Non-current loans | 3.8 | 102.1 | 101.0 | 103.1 | |
Other non-current liabilities | 61.2 | 58.0 | 58.5 | 56.8 | |
Total non-current liabilities | 65.0 | 160.1 | 159.5 | 159.9 | |
Trade payables and other current liabilities | 468.6 | 379.8 | 343.9 | 341.8 | |
Provisions | 26.6 | 28.3 | 32.5 | 44.2 | |
Current loans | 118.5 | 114.5 | 111.0 | 34.5 | |
Total current liabilities | 613.7 | 522.6 | 487.4 | 420.5 | |
Liabilities classified as held for sale | 45.6 | - | 0.2 | - | |
Total equity and liabilities | 1 213.0 | 1 166.6 | 1 160.6 | 1 094.6 |
Cash flow, EUR million | |||||||
2013 1–3 |
2013 4–6 |
2013 7–9 |
2013 10–12 |
2013 1–12 |
|||
Cash flow from operations | |||||||
Net profit | 21.4 | 7.4 | 18.4 | 15.0 | 62.2 | ||
Adjustments | |||||||
Depreciation, amortization and impairment charges | 21.2 | 28.6 | 19.3 | 20.6 | 89.7 | ||
Share-based payments | 0.4 | 0.1 | 0.1 | 0.2 | 0.8 | ||
Profit/loss on sale of fixed assets and shares | 0.1 | 0.0 | -1.3 | -0.2 | -1.4 | ||
Share of profit from investments accounted for using the equity method | -2.5 | -2.1 | -1.3 | -1.4 | -7.3 | ||
Other adjustments | 1.2 | -4.9 | -0.3 | -5.2 | -9.2 | ||
Net financial expenses | 1.5 | 1.8 | 1.7 | 1.6 | 6.6 | ||
Income taxes | 6.4 | 5.6 | 4.2 | 0.7 | 16.9 | ||
Change in net working capital | -0.2 | -19.6 | 7.6 | 36.2 | 24.0 | ||
Cash generated from operations | 49.5 | 16.9 | 48.4 | 67.5 | 182.3 | ||
Net financial expenses paid | -3.0 | -1.9 | -1.1 | -6.1 | -12.1 | ||
Dividends received from investments accounted for using the equity method | 7.6 | - | - | - | 7.6 | ||
Income taxes paid | -4.1 | -4.3 | -6.5 | -3.9 | -18.8 | ||
Net cash flow from operations | 50.0 | 10.7 | 40.8 | 57.5 | 159.0 | ||
Cash flow from investing activities | |||||||
Acquisition of Group companies and business operations, net of cash acquired |
-0,0 | - | -1.7 | - | -1.7 | ||
Capital expenditures | -13.3 | -15.7 | -11.7 | -17.8 | -58.5 | ||
Disposal of Group companies and business operations, net of cash disposed |
-0,0 | -19.5 | 0.5 | 1.7 | -17.3 | ||
Sales of fixed assets | 0.0 | 0.0 | 0.3 | 0.9 | 1.2 | ||
Change in loan receivables | -0.4 | 1.4 | 0.3 | 0.8 | 2.1 | ||
Net cash used in investing activities | -13.7 | -33.8 | -12.3 | -14.4 | -74.2 | ||
Cash flow from financing activities | |||||||
Dividends paid | - | -59.7 | - | - | -59.7 | ||
Exercise of stock options | 1.2 | 5.7 | 0.0 | 0.2 | 7.1 | ||
Payments of finance lease liabilities | -2.8 | -0.6 | -1.1 | -0.9 | -5.4 | ||
Change in interest-bearing liabilities | -5.7 | 95.1 | -3.5 | -79.9 | 6.0 | ||
Net cash used in financing activities | -7.3 | 40.5 | -4.6 | -80.6 | -52.0 | ||
Change in cash and cash equivalents | 29.0 | 17.4 | 23.9 | -37.5 | 32.8 | ||
Cash and cash equivalents at the beginning of period | 75.8 | 93.1 | 126.4 | 150.6 | 75.8 | ||
Foreign exchange differences | 2.0 | 2.2 | 0.3 | 1.0 | 5.5 | ||
Assets classified as held for sale | -13.7 | 13.7 | - | - | - | ||
Change in cash and cash equivalents | 29.0 | 17.4 | 23.9 | -37.5 | 32.8 | ||
Cash and cash equivalents at the end of period | 93.1 | 126.4 | 150.6 | 114.1 | 114.1 |
Segment information | |||||
Customer sales by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 120 | 125 | 117 | 129 | 492 |
Consulting and System Integration | 108 | 108 | 92 | 102 | 410 |
Industry Products | 109 | 105 | 91 | 111 | 416 |
Product Development Services | 86 | 79 | 60 | 63 | 289 |
Group total | 424 | 417 | 361 | 405 | 1 607 |
No internal sales occur between service lines as in the management accounting, revenue and costs are booked directly to the respective customer projects in the service lines. | |||||
Customer sales by country, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Finland | 190 | 184 | 168 | 188 | 729 |
Sweden | 143 | 141 | 126 | 146 | 555 |
Other | 91 | 92 | 67 | 71 | 322 |
Group total | 424 | 417 | 361 | 405 | 1 607 |
Customer sales by industry group, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Financial Services | 80 | 84 | 77 | 89 | 331 |
Manufacturing, Retail and Logistics | 76 | 78 | 70 | 81 | 305 |
Public, Healthcare and Welfare | 107 | 102 | 90 | 105 | 403 |
Telecom, Media and Energy | 74 | 74 | 63 | 68 | 279 |
Product Development Services | 86 | 79 | 60 | 63 | 289 |
Group total | 424 | 417 | 361 | 405 | 1 607 |
Operating profit (EBIT) by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.7 | 5.4 | 3.7 | 0.4 | 10.2 |
Consulting and System Integration | 3.8 | 2.8 | 4.0 | -1.6 | 9.0 |
Industry Products | 17.6 | 15.4 | 19.9 | 28.3 | 81.2 |
Product Development Services | 9.3 | -2.6 | 3.0 | -1.3 | 8.4 |
Support Functions and Global Management | -2.1 | -6.1 | -6.3 | -8.5 | -23.0 |
Operating profit (EBIT) | 29.3 | 14.8 | 24.3 | 17.3 | 85.7 |
Operating margin (EBIT) by service line, % | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.6 | 4.3 | 3.2 | 0.3 | 2.1 |
Consulting and System Integration | 3.5 | 2.6 | 4.3 | -1.6 | 2.2 |
Industry Products | 16.1 | 14.7 | 21.9 | 25.5 | 19.5 |
Product Development Services | 10.8 | -3.4 | 5.0 | -2.0 | 2.9 |
Operating margin (EBIT) | 6.9 | 3.5 | 6.7 | 4.3 | 5.3 |
The new operating model taken into use 2013 is steered based on project performance and direct costs are linked to the deliveries in the service lines. The calculation of operating margin percentages is based on only customer sales by service lines as the internal invoicing between the legal entities based on transfer pricing requirements is reported within Support Functions and Global Management. |
Operating profit (EBIT) excl. one-off items by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.3 | 5.7 | 6.0 | 9.0 | 21.0 |
Consulting and System Integration | 5.1 | 9.6 | 9.6 | 7.7 | 32.0 |
Industry Products | 17.6 | 16.6 | 20.1 | 28.5 | 82.8 |
Product Development Services | 10.0 | 2.0 | 4.8 | 2.7 | 19.4 |
Support Functions and Global Management | -2.0 | -3.3 | -3.0 | -5.8 | -14.2 |
Operating profit (EBIT) | 31.0 | 30.6 | 37.5 | 42.0 | 141.2 |
Operating margin (EBIT) excl. one-off items by service line, % | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.3 | 4.6 | 5.1 | 6.9 | 4.3 |
Consulting and System Integration | 4.7 | 8.9 | 10.4 | 7.6 | 7.8 |
Industry Products | 16.1 | 15.8 | 22.1 | 25.7 | 19.9 |
Product Development Services | 11.6 | 2.6 | 7.9 | 4.2 | 6.7 |
Operating margin (EBIT) | 7.3 | 7.3 | 10.4 | 10.4 | 8.8 |
Personnel by service line, end of period | ||||
2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | |
Managed Services | 3 088 | 3 138 | 3 147 | 3 090 |
Consulting and System Integration | 4 289 | 4 136 | 4 152 | 3 986 |
Industry Products | 3 108 | 2 923 | 2 928 | 2 919 |
Product Development Services | 4 113 | 3 543 | 3 360 | 3 193 |
Service Lines total | 14 598 | 13 739 | 13 588 | 13 188 |
Industry Groups | 430 | 415 | 408 | 390 |
Support Functions and Global Management | 817 | 778 | 782 | 740 |
Group total | 15 845 | 14 933 | 14 778 | 14 318 |
Personnel by service line, average | ||||
2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | |
Managed Services | 3 094 | 3 104 | 3 115 | 3 112 |
Consulting and System Integration | 4 297 | 4 280 | 4 238 | 4 192 |
Industry Products | 3 089 | 3 076 | 3 022 | 2 996 |
Product Development Services | 4 200 | 4 034 | 3 827 | 3 673 |
Service Lines total | 14 680 | 14 494 | 14 201 | 13 973 |
Industry Groups | 440 | 432 | 426 | 418 |
Support Functions and Global Management | 792 | 795 | 789 | 780 |
Group total | 15 911 | 15 720 | 15 416 | 15 170 |
Non-current assets by country, EUR million |
|||||
2013 | 2013 | 2013 | 2013 | ||
31 Mar | 30 Jun | 30 Sep | 31 Dec | ||
Finland | 104.5 | 101.1 | 96.9 | 101.5 | |
Sweden | 35.0 | 31.9 | 29.7 | 28.0 | |
Other | 11.9 | 11.0 | 10.0 | 9.2 | |
Total countries | 151.4 | 144.0 | 136.7 | 138.7 | |
Non-current assets classified as held for sale | 47.3 | 0.0 | 2.0 | 0.0 | |
Total non-current assets | 198.7 | 144.0 | 138.7 | 138.7 | |
Goodwill is allocated to the Cash Generating Units, which include several countries and therefore goodwill is not included in the country specific non-current assets shown above. | |||||
Depreciation by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 17.3 | 17.0 | 15.9 | 16.9 | 67.1 |
Consulting and System Integration | 0.2 | 0.3 | 0.3 | 0.3 | 1.0 |
Industry Products | 0.2 | 0.1 | 0.1 | 0.1 | 0.5 |
Product Development Services | 0.2 | 0.2 | 0.2 | 0.1 | 0.7 |
Support Functions and Global Management | 2.3 | 2.2 | 2.0 | 2.3 | 8.8 |
Group total | 20.1 | 19.8 | 18.4 | 19.7 | 78.1 |
Amortization on allocated intangible assets from acquisitions by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.5 | 0.4 | 0.5 | 0.4 | 1.8 |
Consulting and System Integration | 0.2 | 0.1 | 0.1 | 0.2 | 0.6 |
Industry Products | 0.2 | 0.2 | 0.2 | 0.2 | 0.9 |
Product Development Services | 0.1 | 0.1 | 0.1 | 0.1 | 0.4 |
Support Functions and Global Management | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Group total | 1.0 | 0.8 | 0.9 | 0.9 | 3.7 |
Impairment losses by service line, EUR million | |||||
2013 | 2013 | 2013 | 2013 | 2013 | |
1–3 | 4–6 | 7–9 | 10–12 | 1–12 | |
Managed Services | 0.0 | 0.1 | 0.0 | 0.0 | 0.1 |
Consulting and System Integration | 0.0 | 2.6 | 0.0 | 0.0 | 2.6 |
Industry Products | 0.0 | 1.3 | 0.0 | 0.0 | 1.3 |
Product Development Services | 0.0 | 3.6 | 0.0 | 0.0 | 3.6 |
Support Functions and Global Management | 0.0 | 0.4 | 0.0 | 0.0 | 0.4 |
Group total | 0.0 | 8.0 | 0.0 | 0.0 | 8.0 |
For further information, please contact:
Tanja Lounevirta, Head of Investor Relations, tel. +358 50 321 7510, tanja.lounevirta (at) tieto.com
TIETO CORPORATION
DISTRIBUTION
NASDAQ OMX Helsinki
NASDAQ OMX Stockholm
Principal Media
Tieto is the largest Nordic IT services company providing full life-cycle services for both the private and public sectors and product development services in the field of communications and embedded technologies. The company has global presence through its product development business and global delivery centres. Tieto is committed to developing enterprises and society through IT by realizing new opportunities in customers’ business transformation. At Tieto, we believe in professional development and results.
Founded 1968, headquartered in Helsinki, Finland and with approximately 14 000 experts, the company operates in over 20 countries with net sales of approximately EUR 1.6 billion. Tieto’s shares are listed on NASDAQ OMX in Helsinki and Stockholm. Please visit www.tieto.com for more information.