PRELIMINARY INFORMATION ON THE EFFECTS OF IFRS ADOPTION
SysOpen Plc STOCK EXCHANGE RELEASE 11 February at 2.15 p.m.
PRELIMINARY INFORMATION ON THE EFFECTS OF IFRS ADOPTION
SysOpen Plc will apply IFRS (International Financial Reporting Standards) to its
interim reports and financial statements for 2005. The adoption schedule has
remained unchanged. In this stock exchange release, SysOpen Plc presents key
effects resulting from the shift from the Finnish Accounting Standards (FAS) to
IFRS, including the preliminary opening IFRS balance sheet on 1 January 2004 and
31 December 2004 and preliminary comparative data for the financial year 2004. In
March 2005, SysOpen Plc will disclose IFRS-compliant quarterly comparative data
for 2004 and the final reconciliation statements required by IFRS 1 (First-Time
Adoption).
The company prepared the opening IFRS balance sheets for 1 January 2004 and 31
December 2004 and comparative data for 2004 in compliance with the most recent
IFRS standards. The reference column below refers to additional information
presented in this release after the tables. This release ends with a summary of
the most significant IFRS-compliant accounting principles affecting SysOpen Plc.
FAS-compliant income statement and balance sheet figures have been re-classified
to correspond to IFRS.
The data are based on unaudited figures.
Preliminary summary of IFRS effects on shareholders' equity on 1 January 2004 and
31 December 2004, EUR 1,000
1 Jan. 2004 31 Dec. 2004
Shareholders' equity held by parent company 11,279.6 10,531.1
shareholders, FAS
IAS 12 Deferred tax assets and liabilities -20.2 -80.5
IAS 17 Lease liabilities - 12.2 -9.4
IAS 19 Employee benefits -214.0 0
IAS 38 Intangible assets 285.9 645.5
IAS 39 Financial instruments 0 229.8
Other IFRS effects 8.2 -12.1
Shareholders' equity held by parent company 11,327.3 11,304.5
shareholders, IFRS
Preliminary IFRS balance sheet reconciliation, 1 January 2004
EUR 1,000
Referen FAS 31 IFRS Preliminar
ce Dec. 2003 change y IFRS 1
Jan. 2004
Assets
Fixed and other non-current assets
Intangible assets a 715.0 294.1 1,009.1
Tangible assets a, f 1,218.5 807.3 2,025.8
Financial assets a 1,003.9 -347.1 656.8
Deferred tax assets b 130.9 65.7 196.6
Total fixed and other non-current 3,068.3 819.9 3,888.2
assets
Current assets
Current receivables 5,231.3 0.0 5,231.3
Financial assets 4,014.0 0.0 4,014.0
Cash and cash equivalents 3,767.4 0.0 3,767.4
Total current assets 13,012.7 0.0 13,012.7
Total assets 16,081.0 819.9 16,900.9
Shareholders' equity and
liabilities
Share capital 936.3 0.0 936.3
Issue premium fund 7,092.2 0.0 7,092.2
Treasury shares d 0.0 606.2 -606.2
Fair value reserve b, c 0.0 -242.1 -242.1
Translation difference e 32.9 -39,5 -6.6
Retained earnings/loss a, b, 1,795.9 935.5 2,731.4
c, d,
e, f, g
Net profit/loss 1,422.3 0.0 1,422.3
Shareholders' equity held by 11,279.6 0.0 11,327.3
parent company shareholders
Minority interest 153.3 0.0 153.3
Total shareholders' equity 11,432.9 47.7 11,480.6
Liabilities
Long-term, interest-bearing f, g 0.0 324.1 324.1
liabilities
Deferred tax liabilities b 0.0 85.8 85.8
Total long-term liabilities 0.0 409.9 409.9
Short-term liabilities f 4,648.1 362.3 5,010.4
Total short-term liabilities 4,648.1 362.3 5,010.4
Total liabilities 4,648.1 772.2 5,420.3
Total shareholders' equity and 16,081.0 819.9 16,900.9
liabilities
Preliminary IFRS 2004 comparative data
KEY FIGURES AND RATIOS, 31 December 2004
FAS IFRS
Earnings per share, EUR 0.23 0.25
Earnings per share (diluted), EUR 0.23 0.25
Equity/share, EUR 1.14 1.23
Return on equity (ROE), % 20 21
Return on investment (ROI), % 23 24
Equity ratio, % 70 70
INCOME STATEMENT
EUR 1,000
Refere FAS 2004 Change Preliminar
nce y IFRS
2004
Turnover 26,173.7 0.0 26,173.7
Other operating income a 210.2 -22.7 187.5
Materials and services -934.2 0.0 -934.2
Depreciation and impairment a -933.7 -252.1 -1,185.8
* Other operating expenses f, g, -22,694.3 810.8 -21,883.5
h
Operating profit/loss 1,821.7 536.0 2,357.7
Financial income (net) c, e, 595.2 -175.7 419.5
f
Pre-tax profit 2,416.9 360.3 2,777.2
Direct tax b -346.9 -60.3 -407.2
Minority interest -29.8 29.8 0.0
Net profit/loss 2,040.2 329.9 2,370.1
Allocation:
Parent company shareholders 2,040.2 300.1 2,340.3
Minority shareholders 29.8 0.0 29.8
Earnings per share, EUR 0.23 0.02 0.25
Earnings per share (diluted), 0.23 0.02 0.25
EUR
*Extraordinary expenses are included in other operating expenses.
Preliminary IFRS 2004 comparative data
BALANCE SHEET
EUR 1,000
Referen FAS 31 IFRS Preliminar
ce Dec. 2004 change y IFRS 31
Dec. 2004
Assets
Fixed and other non-current
assets
Intangible assets a 1,611.4 633.4 2,244.8
Tangible assets a, f 961.1 736.8 1,697.9
Financial assets a 932.7 -347.1 585.6
Deferred tax assets b 63.4 -60.7 2.7
Total fixed and other 3,568.6 962.4 4,531.0
non-current assets
Current assets
Current receivables 10,149.0 0.0 10,149.0
Financial assets c 2,541.8 358.6 2,900.4
Cash and cash equivalents 3,008.4 0.0 3,008.4
Total current assets 15,699.2 358.6 16,057.8
Total assets 19,267.8 1,321.0 20,588.8
Shareholders' equity and
liabilities
Share capital 926.3 0.0 926.3
Issue premium fund 7,102.2 0.0 7,102.2
Treasury shares d 0.0 0.0 0.0
Fair value reserve b, c 0.0 84.9 84.9
Translation difference -1.0 0.0 -1.0
Retained earnings/loss d, h 439.3 388.4 827.7
Net profit/loss a, b, 2,040.2 300.1 2,340.3
c, e,
f, g
Translation difference 24.1 0.0 24.1
Shareholders' equity held by 10,531.1 773.4 11,304.5
parent company shareholders
Minority interest 121.7 0.0 121.7
Total shareholders' equity 10,652.8 773.4 11,426.2
Liabilities
Long-term, interest-bearing f 0.0 133.5 133.5
liabilities
Deferred tax liabilities b 0.0 148.5 148.5
Total long-term liabilities 0.0 282 282
Short-term liabilities f 8,615.0 265.6 8,880.6
Total short-term liabilities 8,615.0 265.6 8,880.6
Total liabilities 8,615.0 547.6 9,162.6
Shareholders' equity and 19,267.8 1,321.0 20,588.8
liabilities
Preliminary statement on changes in shareholders' equity
EUR 1,000
Share Issue Translati Fair Treasu Retain Minori Total
capita premiu on value ry ed ty shareholde
l m fund differenc reserv shares earnin intere rs´ equity
es e gs / st
loss
FAS 936.3 7,092. 32.9 3,218. 153.3 11,432.9
shareholde 2 2
rs´ equity
31 Dec.
2003
IFRS 936.3 7,092. -6.7 -242.1 -606.2 4,153. 153.3 11,480.6
shareholde 2 8
rs´ equity
1. Jan.
2004
Share -10.0 10.0 0.0
capital
Dividend -2,778 -10.1 -2,789.0
payment .9
Cancellati 606.2 -606.2 0.0
on of
treasury
shares
Financial 327.1 327.1
assets
Other 29.8 59.0 -51.3 37.4
Net profit 2,340. 29.8 2,370.1
/ loss 3
Income and -10.0 10.0 29.8 327.1 606.2 -985.8 -31.6 -54.4
expenses
recognised
for the
period
IFRS 926.3 7,102 23.1 85.0 0.0 3,167. 121.7 11,426.2
shareholde .2 9
rs´ equity
31. Dec.
2004
CASH FLOW STATEMENT
Since there seem to be no major differences between IFRS-compliant and FAS-
compliant cash flow statements, cash flow statements are not presented here.
Below are the references to the opening IFRS balance sheet reconciliation
statement and the 2004 comparative data:
a) Intangible assets are recognised and measured as required by IAS 38 and IFRS
3. Tangible assets and long-term financial assets are treated as required by IAS
31.
b) Deferred taxes, by IAS 12 Income Taxes.
c) Financial instruments under current assets are measured as required by IAS 39.
d) Treasury shares are deducted from shareholders' equity as required by IAS 32.
e) Foreign currency changes, by IAS 21.
f) Finance leases, by IAS 17.
g) TEL defined contribution pension, by IAS 19.
h) Share-based payment (stock options), by IFRS 2.
SUMMARY OF THE MOST SIGNIFICANT IFRS-COMPLIANT PRINCIPLES AFFECTING SYSOPEN PLC
SysOpen will prepare its financial statements for 2005 in compliance with IFRS
(International Financial Reporting Standards) and adjust the FAS-compliant
comparative data for 2004 to correspond to IFRS.
TANGIBLE ASSETS
Tangible assets are stated at historical cost less depreciation. Depreciation is
based on the asset's estimated useful life.
INTANGIBLE ASSETS
Intangible assets include software licences recognised at cost and amortised on a
straight-line basis over five years.
Intangible assets include product-development projects, provided they meet the
criteria set for intangible assets and the amortisation period was still running
on 1 January 2004. Materials and services and wages, including social expenses,
are recognised as expenses as incurred. When an asset is ready for use, it will
be amortised over its useful life. The value of product-development projects came
to EUR 286 thousand on 1 January 2004.
Consolidated goodwill and goodwill are included in intangible assets. Instead of
amortising goodwill amounts, they are subject to an impairment test on the
balance sheet date.
IMPAIRMENT
An impairment test should be performed for tangible and intangible assets on each
balance sheet date when there is an indication of impairment. Whenever an
indicator of impairment exists, the asset's carrying value is compared with its
recoverable amount. An impairment loss is recognised for the amount by which the
carrying amount of the asset exceeds its recoverable amount.
FINANCIAL ASSETS
Financial assets are measured at fair value.
INCOME RECOGNITION
Work performed for contracts is recognised as income using the percentage-of-
completion method, and maintenance fees over the contract period. Construction
contracts are recognised as income using the percentage-of-completion method.
Percentage of completion is measured on the basis of the costs incurred and the
estimated total costs.
PENSIONS
Pensions are funded through payments to pension insurance companies. Based on the
defined contribution plan, pension contributions are included in personnel
expenses under the income statement and constitute net periodic costs for the
year in which they are due. Under the defined benefit plan, pensions are based on
periodic actuarial calculations.
The value of defined benefit pension plans came to EUR 214 thousand on 1 January
2004.
Based on changes approved by the Finnish authorities in December 2004, the
disability pension portion included in the TEL pension contribution is treated
under the defined contribution plan on the IFRS balance sheet of 31 December
2004, whereas it is treated under the defined benefit plan on the balance sheet
on the IFRS adoption date. The effect of this change on the pre-tax profit for
the period is EUR 214 thousand.
STOCK OPTIONS
SysOpen Plc applies IFRS 2, Share-Based Payment, to its stock options granted
after 7 November 2002 and whose subscription period has not begun before 1
January 2005. Such stock options are measured at fair value on the date of their
grant and recognised as expenses during their exercise period.
PROVISIONS
SysOpen Plc recognises provisions when the Group has a legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate of
the amount can be made.
TAXES
Income tax expenses include current tax, adjusted tax for previous years and
deferred tax. Deferred tax assets and liabilities are calculated based on
differences between taxable values and their IFRS-compliant book values, using a
tax rate determined by the balance sheet date.
FOR FURTHER INFORMATION, PLEASE CONTACT
Arto Sahla, Managing Director
tel. +358 424 2020 339, mobile +358 400 442 986, e-mail: arto.sahla@sysopen.fi
DISTRIBUTION
Helsinki Exchanges
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