SYSOPEN DIGIA PLC'S FIRST QUARTER INTERIM FINANCIAL REPORT 2006 (IFRS)
SysOpen Digia Plc STOCK EXCHANGE RELEASE 27 APRIL 2006 at 09:30 am
SYSOPEN DIGIA PLC'S FIRST QUARTER INTERIM FINANCIAL REPORT 2006 (IFRS)
Key figures
- Turnover EUR 16.9 million (EUR 8.3 million Q1 2005)
- EBIT EUR 1.6 million (EUR 0.9 million Q1 2005)
- Profitability (EBIT percentage) 9.7 per cent (10.8 per cent Q1 2005)
- Earnings per share EUR 0.06 (EUR 0.06 Q1 2005)
- Cash flow from operations positive by EUR 0.8 million (EUR 0.9 million Q1 2005)
CEO'S REVIEW:
During the first quarter of 2006 we initiated strategy-based measures in all of
our businesses. The Group's turnover grew almost as planned, first quarter
turnover being up 102.9 per cent from a year earlier, with pro forma growth of
2.3 per cent. The Group's profitability remained at the high level of 10 per cent
and proforma profitability improved from 2 per cent to 10 per cent during the
report period, the Group showing a positive cash flow from operations. Net
gearing was 25 per cent and equity ratio 57 per cent.
In the smartphone business, global operators have become interested in
differentiating smartphones in response to service and brand requirements, and
this is expected to lead to new technology alliances. SysOpen Digia has succeeded
in gaining a powerful position in smartphone differentiation projects. However,
the contract engineering market, which is still difficult to predict due to stiff
market conditions, is expected to show moderate growth.
The integration business's offering of customer-specific information system
services is being developed in line with our strategy, with the aim of becoming
an even more comprehensive solution provider, and a pioneer in new technology and
new business solutions. The goal of the integration business is to expand in
existing and new customer relationships, partly by offering new products and
services.
In 2006, SysOpen Digia will, in line with its strategy, seek strong growth based
primarily on corporate acquisitions, and aims to maintain profitability at a
level of around 10 per cent. The company expects its full-year turnover and
profitability to markedly improve from 2005 levels. However, the smartphone
business is anticipated to record a lower-than-planned turnover and profitability
for the second quarter.
CORPORATE COMMUNICATIONS
A briefing for analysts and the media on the interim financial report will be
held on Thursday, 27 April 2006, at 11:00 am in the Espa Room at Scandic Hotel
Simonkenttä, Simonkatu 9, Helsinki. All are welcome.
SysOpen Digia Plc's first quarter interim financial report 2006 (IFRS)
CONSOLIDATED KEY FIGURES
Q1 2006 Q1 2005 Change Full year 2005
%
Turnover 16 926 8 340 103 % 60 526
EBIT before 1 634 901 81 % 6 024
structuring costs
- relative to 10 % 11 % 10 %
turnover
EBIT 1 634 901 81 % 4 229
- relative to 10 % 11 % 7 %
turnover
Profit for the 1 162 716 62 % 2 355
period
- relative to 7 % 9 % 4 %
turnover
Return on equity, % 9 % 9 % 5 %
Return on 9 % 14 % 6 %
investment, %
Interest-bearing 24 828 41 218 -40 % 26 055
liabilities
Cash and cash 11 624 23 958 -51 % 12 326
equivalents
Net gearing, % 25 % 35 % 26 %
Equity ratio, % 57 % 45 % 56 %
Earnings per share, 0.06 0.06 0 % 0.14
EUR, undiluted
Earnings per share, 0.06 0.06 0 % 0.14
EUR, diluted
Equity per share 2.85 2.71 5 % 2.83
ADOPTION OF IFRS REPORTING
At the beginning of 2005, SysOpen Digia Plc replaced the Finnish Accounting
Standards (FAS) with the International Financial Reporting Standards (IFRS) in
the Group's financial reporting.
SUMMARY OF BUSINESS DIVISIONS IN THE FIRST QUARTER OF 2006
Smartphone business
The smartphone business covers the design of software and technologies for mobile
phones and their versatile use, as well as the related training services, product
business and usability service. Contract engineering services account for the
lion's share of turnover. In the smartphone business, the technology focus is on
Symbian, Linux and Java-based development.
During the first quarter of 2006, the smartphone business' turnover fell short of
the planned target due to delays in the start of some customer projects, and
increased project volatility. Despite the tight market situation, the division's
operating profit remained high. During the first quarter of 2006 the smartphone
business focused on development programmes in accordance with our strategy.
SysOpen Digia has managed to achieve a powerful position in smartphone
differentiation projects. The company aims to continue improving its position as
a leading contract developer for the world's major mobile phone manufacturers.
Integration business
Services provided by the integration business cover the entire life span of
companies' and organisations' information system projects. Turnover is primarily
generated by application and integration services, and solution provider
services, as well as maintenance and support services. These are supported by
architecture services, method services, application outsourcing and ICT
consulting for management. Key customer relationships represent the following
industry sectors: banking, insurance and employee pensions, public
administration, organisations, national security, transport and logistics,
tourism, telecom and service operators, and manufacturing and trade.
During the first quarter of 2006 the integration business' turnover was higher
than expected, its profitability increasing markedly compared with the first
quarter of 2005. The integration business's offering of customer-specific
information system services is being developed in line with our strategy, with
the aim of becoming an even more comprehensive solution provider, and a pioneer
in new technology and new business solutions. Increasingly, deliveries of
services are based on software products and finished solutions provided by us and
a third party. In addition, the integration business is focusing on deepening
existing customer relationships, and developing new ones. SysOpen Digia's
increased size and advanced delivery capability are strengthening our ability to
compete for larger customer projects in selected market areas and targeted
customer relationships during 2006.
THE MARKET
Demand for ICT solutions varies depending on the market and customer segment.
Changes in the structure of the industry, consolidation in line with current
trends and cost pressures arising from customers' competitive situations are
maintaining strong price competition. Customer relationships in the ICT service
market demand increasingly fast returns on their investments, and aim for
comprehensive solutions that provide immediate business benefits. The contract
engineering market is believed to be under increasing price and efficiency
pressures, resulting from the profitability targets of the leading mobile phone
manufacturers and the increasing speed with which new products are being
introduced onto the market.
EITO estimates that the value of the West European ICT market is some EUR 616
billion and forecasts 3.7 per cent market growth in 2006 to EUR 639 billion. IDC
estimates that the West European ICT market will grow by around 5-6 per cent
annually. Meanwhile, Market-Visio's estimate of the value of the Finnish ICT
market is EUR 5.1 billion and its growth forecast is 3.2% in 2006, reaching EUR
5.2 billion. EITO believes that, in 2006, Finland's ICT markets will grow faster
than in any other European country.
Sales of mobile phones increased by over 20 per cent in 2005. Growth is expected
to be around 15 per cent in 2006, with unit sales rising to over 900 million.
According to Gartner's forecasts, a total of 87 million smartphones will be sold
in 2006, 72 million or which will be Symbian phones. Vodafone's strong support
for the Series 60 platform is a major reason for increasing sales of Symbian
phones. Yankee Group estimates that the accumulated volume of smartphones will
exceed 300 million units in 2007, while Nokia forecasts that over 200 million
smartphones will be sold in 2008. IDC estimates that more than 130 million
smartphones will be sold in 2008 and that Symbian will continue its predominant
role in the smartphone market. According to Gartner's estimate, approximately 80
per cent of all enterprise solutions will be accessed through wireless devices in
2010. The wireless integration market is beginning to form in 2006 but its full-
scale realisation will take a few more years.
FUTURE OUTLOOK
The size of the smartphone market is expected to increase to over 200 million
units by 2008. The company believes that this growth is possible only if the
product platform strategies of smartphone manufacturers are implemented in the
mass phone market. In the case of many smartphone manufacturers, a challenge to
rapid market growth is expected to arise in the form of the requirement for
variations in platform according to market segment and operator, while
maintaining the integrity, flexibility and high quality of the product platform.
We believe that the implementation of a product platform strategy by a smartphone
manufacturer will require investment ability, clear leadership on architecture
and product lines based on product life cycles, and flexibility in implementing
customer and market-based user interfaces in operator services. Correspondingly,
we expect that the market positions of the leading manufacturers will continue to
polarise due to increasing competition for market share. However, the contract
engineering market, which is difficult to predict due to stiff market conditions,
will see moderate growth.
Global operators are becoming interested in differentiating smartphones to
respond to service and brand requirements, and this is expected to lead to new
technology alliances. In the case of the Nokia Series 60 / Vodafone alliance, for
example, Vodafone and Huawe signed an agreement to deliver 3G-based smartphones.
Growth in demand in the operator market is expected to increase pressure on
handset manufacturers to deliver differentiated smartphones, and thereby increase
competition between smartphone manufacturers with the potential to support the
operator market.
Increasingly fierce competition between semiconductor manufacturers is expected
to lead to alliances that allow them to cater for the needs of mobile handset
manufacturers on a more comprehensive basis, and increase the total value of
their products to customers. Examples of this are the reference design alliances
between semiconductor manufacturers formed at various times, whose commercial
success the company nevertheless believes would require large product volumes or
repeatable series using the same release format.
In the long term, SysOpen Digia aims to develop into a comprehensive provider of
smartphone software integration, giving it the ability to widen and deepen its
activities, particularly in demanding contract engineering projects, product
platform related orders and operator-specific projects, alongside selected key
partners in Europe and Asia. In addition, SysOpen Digia is focusing on selected
customer relationships in semiconductors, differentiating technology solutions,
company mobility and usability services.
The company expects moderate growth to continue in the ICT service and
telecommunications market. In making use of information technology, the trend is
towards looking for more possibilities to support or create business, and finding
companies that can deliver these solutions. In part, this trend is due to the
combination of IT, telecommunications, consumer electronics and content
production in creating new solutions. Increasingly, customers are looking for a
reliable partner who can deliver demanding solutions and integration products,
and take responsibility for the customer's applications and supporting services.
SysOpen Digia focuses on solutions that bring value added and cost efficiency to
the customer's business, and in which the company has a more and more
comprehensive role as a solution provider. The company aims to increase the
efficiency of its customers, and give them a competitive advantage by providing
advanced integrated ICT solutions. These solutions are based on software
platforms, comprehensive software packages or components provided by leading
technology partners, in addition to the company's own productivity tools and
application frameworks, all of which are integrated into a working whole.
Depending on the customer's needs, SysOpen Digia's delivery model ranges in size
from consulting services provided by one expert to comprehensive deliveries of
application solutions that are critical to the customer's operations, together
with the associated support and maintenance services.
Focusing both on new and existing customer relationships, the integration
business will be developed in accordance with our chosen strategy by developing
existing services and partly by expanding into new service and product
activities. In 2006, SysOpen Digia will, in line with its strategy, seek
strong growth based primarily on corporate acquisitions, and aims to maintain
profitability at a level of around 10 per cent. The company expects
its full-year turnover and profitability to markedly improve from 2005 levels.
However, the smartphone business is anticipated to record a lower-than-planned
turnover and profitability for the second quarter.
TURNOVER
SysOpen Digia's turnover during the period was EUR 16.9 million, representing an
increase of 102.9% compared with the corresponding period in the previous year
(EUR 8.3 million in Q1 2005). Turnover during the first quarter increased by 2.3
per cent compared with pro forma turnover a year earlier. International business
represented 8.9% of turnover (4.0 per cent in Q1 2005).
During the first quarter of 2006, turnover for the integration business increased
by 43.7 per cent to EUR 8.2 million (EUR 5.7 million Q1 2005). During the
reporting period, turnover within the smartphone business increased by 229.8 per
cent to EUR 8.8 million (EUR 2.7 million Q1 2005).
DEVELOPMENT OF EARNINGS AND PROFITABILITY
SysOpen Digia's EBIT during the reporting period was EUR 1.6 million,
representing an increase of 81.3 per cent compared with the previous year (EUR
0.9 million Q1 2005).
Earnings before tax stood at EU 1.6 million (EUR 0.9 million Q1 2005) and
earnings after taxes stood at EUR 1.2 million (EUR 0.7 million Q1 2005).
The Group's earnings per share were EUR 0.06 (EUR 0.06 Q1 2005).
The profitability (EBIT percentage) of the integration business improved from a
year earlier and stood at 11.4 per cent (10.8 per cent Q1 2005). That of the
smartphone business diminished in comparison with the corresponding period in the
previous year, amounting to 8.0 per cent (10.9 per cent Q1 2005). The allocated
goodwill generated in connection with the merger of Sysopen Plc and Digia Inc. in
2005 impacted on the profitability of the smartphone business. EUR 345,000 of
this allocated goodwill was amortised during the first quarter of 2006.
The Group's net financial expenses were EUR 37,900 (EUR 1,200 Q1 2005).
FINANCING AND INVESTMENTS
SysOpen Digia Group's balance sheet total at the end of the first quarter
amounted to EUR 94.0 million (EUR 113.3 million Q1 2005) and its equity ratio
improved to 57 per cent (45 per cent Q1 2005). Net gearing improved to 25 per
cent (35 per cent Q1 2005). The Group's liquid assets at the end of the reporting
period totalled EUR 11.6 million (24.0 million Q1 2005). At the end of the
reporting period, the Group had EUR 24.8 million of interest-bearing liabilities
(EUR 41.2 million Q1 2005).
The Group's cash flow from business operations was positive by EUR 0.8 million
(positive by EUR 0.9 million Q1 2005).
Investments totalled EUR 0.1 million (EUR 0.1 million Q1 2005).
Return on investment (ROI) was 9 per cent (14 per cent Q1 2005). Return on equity
(ROE) was 9 per cent (9 per cent Q1 2005).
RISK ASSESSMENT
The key risks under SysOpen Digia's risk management are customer, personal,
project, data security and integration risks. Measures to manage customer risks
include active development of the customer's corporate structure, and management
of potential risk positions. The company expects the customer's corporate
structure to develop positively as the strategy is implemented. Personal risk is
managed by implementing an active performance review and goal-setting process for
key personnel, as well as improving the effectiveness of in-house communication.
In-house communication is improved by increasing interactive communication
channels, including upgrading the Group's intranet in the spring of 2006. A job
satisfaction survey was conducted near the end of 2005. Based on the feedback,
the Group's internal procedures will be developed to improve working conditions
and job satisfaction further.
By auditing the key projects of our businesses we aim to enhance the management
of the Group's project risks, and ensure the successful delivery of projects to
customers. Project delivery reporting practices have also been strengthened. Data
security audits are carried out to manage data security risks. The company is
continually developing its working models, and practices and processes that
promote data security, with the Management Group responsible for managing risks
associated with the integration of business operations. The integration of
corporate cultures is underway, and will require sustained and determined efforts
at all levels.
With respect to IFRS-compliant accounting policies, goodwill and related
impairment tests have been included in the risks to be monitored as part of
careful and forward-looking risk management practices in financial management.
The Group's non-allocated goodwill at the end of the reporting period was EUR
50.1 million and the goodwill allocated to specific customers was EUR 10.5
million. With the adoption of IFRS, the regular amortisation of goodwill is no
longer carried out. Non-allocated goodwill is tested each quarter using
impairment calculations based on future operational cash flows. If these
calculations indicate that future cash flows will be less than the amount called
for by goodwill, goodwill will be written down as required, assuming that the
change in business operations indicates a long-term sustained trend. There are
currently no indications of impairment of any asset items. Due to the smartphone
sector's tight and difficult-to-predict market situation, the company has
nevertheless raised the level of risk.
PERSONNEL, MANAGEMENT AND ADMINISTRATION
At the end of the first quarter the number of personnel was 803, showing an
increase of 10 persons or 1.3 per cent from a year earlier (793 persons Q1 2005).
The average number of personnel during the reporting period was 800, an increase
of 69 persons or 9.4 per cent (731 persons Q1 2005).
Cumulative personnel turnover during the reporting period was 1.7 per cent (3.7
per cent Q1 2005).
Distribution of personnel by function at the end of the reporting period:
Integration Division 37%
Smartphone Division 58%
Administration and management 5%
At the end of the first quarter, one per cent of SysOpen Digia personnel worked
abroad.
The Annual General Meeting on 9 March 2006 elected a new Board of Directors for
SysOpen Digia Plc comprising Pekka Sivonen (Chairman), Kari Karvinen (Vice
Chairman), Pekka Eloholma, Matti Mujunen, Mikko Terho and Pertti Kyttälä. Jari
Mielonen is the CEO of the company, and Seppo Laaksonen is the deputy CEO. Pekka
Eloholma has resigned from the Board of Directors of SysOpen Digia Plc after
being appointed the CEO of AffectoGenimap starting from 1 September 2006.
KPMG Oy Ab authorised public accountant firm was chosen as the Group's auditor,
with Ari Ahti, Authorised Public Accountant, as the principal auditor.
CORPORATE AND BUSINESS ACQUISITIONS
The company carried out no corporate or business acquisitions during the
reporting period.
GROUP AND ORGANISATIONAL STRUCTURE
At the end of the reporting period the SysOpen Digia Group consisted of the
parent company, SysOpen Digia Plc, and the following active subsidiaries: SysOpen
Digia Integration Ltd (parent company holding 100%), SysOpen Digia Smartphone Ltd
(100%) and Sysopen Digia Object Team Ltd (94.2%). In addition, SysOpen Digia
Integration Ltd has a wholly owned active subsidiary, SysOpen Digia Service Ltd.
SysOpen Digia's Group administration is unified, and operations are divided into
two business divisions, the Integration Division and the Smartphone Division.
KEY EVENTS AFTER THE END OF THE REPORTING PERIOD
On 26 April 2006, SysOpen Digia Plc announced that it had bought all the shares
of Samstock Oy. This acquisition will strengthen SysOpen Digia's business for the
financing segment, according to its strategy, in Finland and the Nordic region.
As a result of this deal, SysOpen Digia is now able to provide a significantly
broader range of products and solutions in this market segment.
Samstock Ltd is a leading financial software company. The company's main product
areas are asset management and private banking, securities trading back-office,
mutual funds management and custody operations. The company's customers include
banks, brokerages and investment fund companies, as well as institutional
investors in the Nordic countries. Samstock has premises in Jyväskylä and
Helsinki in Finland, and Stockholm, Sweden.
Net sales of the Samstock Group (including the subsidiaries Samstock AB and
Finansium Oy) in the accounting period 1 April 2005-31 March 2006 were around EUR
4.3 million, and the company recorded a slight loss of EUR 0.1 million for the
period, due to product development expenses and non-recurring items. Samstock has
56 employees. During the current accounting period the company expects its net
sales and profitability to increase significantly, based on a recently upgraded
generation of products and new projects and customers.
The total price of the acquisition was EUR 5.1 million paid in cash in
association with the signing of the agreement, using SysOpen Digia's own cash
reserves. The main sellers comprised Juha and Raija Kainulainen, Eqvitec
Technology Fund 1 Ky and Juha Leinonkoski, the company's Managing Director.
Samstock's management and other key employees will continue to work for the
company.
GENERAL MEETINGS OF SHAREHOLDERS
Annual General Meeting 9 March 2006
The parent company's Annual General Meeting was held on 9 March 2006. At the
meeting the financial statements for 2005 were approved, the parties accountable
were released from liability, the Board's proposal for the distribution of
profits for 2005 was approved, the Board's remuneration was determined and a new
Board of Directors was elected.
In addition, the Annual General Meeting decided:
To reduce the share premium account so that all of the funds in the share premium
account, EUR 39,735,545.65, shall be transferred to a contingency reserve
included in unrestricted shareholders' equity and administered by the General
Meeting. Execution of the decision is subject to approval by the registration
authority, and this process is not complete.
To authorise the Board of Directors under certain conditions to make decisions
regarding the issue of one or more convertible bonds or stock options and/or
regarding an increase of share capital through one or more rights issues. The
authorisation shall be effective for one year from the date of the General
Meeting's decision. This authorisation has not been used.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of SysOpen Digia has established two committees: a
compensation committee and an inspection committee.
The purpose of the compensation committee is to plan remuneration systems and
study how well they work in achieving the company's goals, make sure decision
making remains objective, and ensure remuneration systems are transparent and in
order. The members of the compensation committee are Pekka Sivonen (Chairman),
Kari Karvinen and Mikko Terho.
The purpose of the inspection committee is to assist the Board of Directors in
ensuring that the company's financial reporting, accounting methods, financial
statements and other financial information provided by the company are balanced,
transparent and clear. The members of the inspection committee are Pertti Kyttälä
(Chairman), Matti Mujunen and Mikko Terho.
SHARE CAPITAL AND SHARES
The nominal value of the company share is EUR 0.1. At the end of the first
quarter of 2006 the number of shares was 18,402,851.
On 31 March 2006 SysOpen Digia had 3,201 shareholders. The ten largest
shareholders were:
Shareholder Shares and votes
Pekka Sivonen 15.9 %
Nordea Bank Finland Plc, nominee-registered 11.6 %
Kari Karvinen 8.6 %
Matti Savolainen 7.2 %
Jorma Kylätie's estate 5.2 %
Varma Mutual Pension Insurance Company 4.0 %
OP-Suomi Kasvu investment fund 2.5 %
UMO Capital Oy 2.4 %
Veikko Laine Oy 2.3 %
OMXBS/Skandinaviska Enskilda Banken Ab 1.8 %
Distribution of shareholding by number of shares held on 31 March 2006
Number of shares Percentage of Shares and votes
holdings
1 - 100 27.0 % 0.4 %
101 - 1,000 53.1 % 4.3 %
1,001 - 10,000 17.2 % 8.2 %
10,001 - 100,000 2.0 % 13.4 %
100,001 - 1,000,000 0.6 % 30.4 %
1,000,001 - 3,000,000 0.1 % 43.3 %
Total number of shares 18,402,851
Sectoral distribution of shareholding on 31 March 2006
Percentage of Percentage of
holdings shares
Businesses 6.0 % 9.1 %
Financing and insurance 0.6 % 22.5 %
Public corporations 0.1 % 4.5 %
Non-profit organisations 0.5 % 2.8 %
Households 92.3 % 60.9 %
Foreign holding 0.5 % 0.2 %
TRADING ON THE HELSINKI STOCK EXCHANGE DURING THE REPORTING PERIOD
SysOpen Digia Plc's shares are listed in the Main List of the Helsinki Stock
Exchange under Information Technology IT services. The trading code is SYS1V and
the trading lot is 50 shares. The lowest share price during the reporting period
was EUR 4.38 and the highest EUR 4.97. The official closing price on the last
trading day of the first quarter of 2006 was EUR 4.63. The average trade-weighted
price was EUR 4.64. At the end of the reporting period the company's market
capitalisation was EUR 85,205,200.
During the first quarter of 2006 the company received two notifications in
accordance with chapter 2, section 9 of the Securities Market Act:
1. Osuuspankkikeskus Osk (OPK) notified SysOpen Digia on 13 March 2006 that the
total percentage of the votes and share capital of SysOpen Digia controlled by
OPK, its subsidiaries, and investment funds controlled by its subsidiaries,
exceeded 5 per cent.
2. Columbia Wanger Asset Management, L.P. notified the company on 4 March 2006
that the total percentage of the votes and share capital of SysOpen Digia it
controls exceeded 5 per cent.
OPTION SCHEMES
Option scheme 2003
Under the 2003 option scheme, 670,000 warrants were originally issued and they
are distributed as follows: 210,000 warrants 2003A; 160,000 warrants 2003B;
150,000 warrants 2003C; and 150,000 warrants 2003D. All of the warrants have been
subscribed. The share subscription period for warrants 2003A was from 2 May 2004
to 31 October 2005 (and has thus expired), for warrants 2003B it is from 1
November 2004 to 31 October 2006, for warrants 2003C from 1 November 2005 to 31
October 2007, and for warrants 2003D from 1 November 2006 to 31 October 2008. The
current dividend-adjusted share subscription price for warrants 2003B is EUR 2.73
per share, for warrants 2003C EUR 3.70 per share and for warrants 2003D EUR 4.27
per share. Dividends paid will be deducted from the subscription prices in
accordance with the terms and conditions of the scheme. On 31 March 2006 SysOpen
Digia Plc's wholly owned subsidiary SysOpen Digia Partners Oy held a total of
57,473 warrants under the option scheme 2003. Warrants 2003B have been listed on
the Options list of the Helsinki Stock Exchange as of 25 May 2004, and warrants
2003C as of 1 November 2005.
By 31 March 2006, 207,495 new shares had been subscribed for under the option
scheme 2003. Shares were subscribed for using 172,515 of the now expired warrants
2003A and 34,980 of warrants 2003B.
Option scheme 2005K
A total of 663,049 warrants were originally issued under the 2005K option scheme,
105,408 of which were marked 2005K1 and 557,641 will be marked 2005K2. All of the
warrants have been subscribed. The warrants can be used to subscribe for an
aggregate maximum of 663,049 SysOpen Digia Plc shares with a nominal value of EUR
0.10.
The share subscription price for warrants 2005K1 is EUR 1.21 and for warrants
2005K2 it is EUR 2.36 (dividend-adjusted). On the record date for each
distribution of dividends, the share subscription price will be deducted by the
amount of dividends for which the decision to distribute has been made between 1
June 2005 and the date of subscription. However, the minimum subscription price
will always be the nominal value of the share. The share subscription period for
warrants 2005K1 started on the date of recording the warrants 2005K in the Trade
Register, 12 August 2005, and will expire on 31 December 2007, and the
subscription period for warrants 2005K2 started on 1 January 2006 and will expire
on 31 December 2007. Warrants 2005K1 could only be used for the subscription of
shares. On 31 March 2006 SysOpen Digia Plc's wholly owned subsidiary SysOpen
Digia Partners Oy held a total of 5,657 warrants under option scheme 2005K2.
All warrants 2005K1 (105,408 warrants) have been exercised to subscribe for
shares. By 31 March 2006, 6,998 new shares had been subscribed for under option
scheme 2005K.
Option scheme 2005
A total of 900,000 warrants were issued under the 2005 option scheme, 300,000 of
which are marked 2005A, 300,000 are marked 2005B and 300,000 are marked 2005C.
The warrants can be used to subscribe for an aggregate maximum of 900,000 SysOpen
Digia Plc shares with a nominal value of EUR 0.10.
The share subscription price for warrants 2005A is EUR 4.28 (dividend-adjusted),
for warrants 2005B the trading-weighted average price of the SysOpen Digia Plc
share on the Helsinki Stock Exchange in the 20 trading days following publication
of the Q1 2006 interim report, and for warrants 2005C the trading-weighted
average price of the SysOpen Digia Plc share on the Helsinki Stock Exchange in
the 20 trading days following publication of the Q1 2007 interim report. On the
record date for each distribution of dividends, the share subscription price will
be deducted by the amount of dividends for which the decision to distribute has
been made between the beginning of the price-setting period and the date of
subscription. However, the minimum subscription price will always be the nominal
value of the share. The subscription period for warrants 2005A is from 1 November
2007 to 30 November 2009, for warrants 2005B from 1 November 2008 to 30 November
2010, and for warrants 2005C from 1 November 2009 to 30 November 2011. As a
result of share subscriptions using warrants 2005A, 2005B and 2005C, the share
capital of SysOpen Digia Plc may increase by a maximum of EUR 90,000, and the
number of shares may increase by a maximum of 900,000 new shares. On 31 March
2006 SysOpen Digia Plc's wholly owned subsidiary SysOpen Digia Partners Oy held a
total of 722,000 warrants under option scheme 2005.
On 31 March 2006 a total of 1,875,663 warrants issued by SysOpen Digia remained
outstanding. Shares subscribed for using the warrants represent a maximum of
9.25% of the company's share capital and voting rights after a potential increase
in share capital. Of all valid warrants, SysOpen Digia Partners held a total of
785,130 warrants on 31 March 2006. The maximum dilution effect of the issued
warrants was 5.6% on 31 March 2006.
Helsinki, 27 April 2006
SYSOPEN DIGIA OYJ
Board of Directors
FOR FURTHER INFORMATION
Jari Mielonen, CEO and President
Telephone: +358 40 703 8383, email: jari.mielonen@sysopendigia.com
The interim financial report and associated presentation will be available from
the Investors section of the Group's website www.sysopendigia.com after 11:00 am.
DISTRIBUTION
Helsinki Stock Exchange
Key media
ATTACHMENTS
Consolidated income statement, IFRS
Segment information, IFRS
Consolidated balance sheet, IFRS
Changes in shareholders' equity
Consolidated cash flow statement, IFRS
Consolidated income statement by quarter, IFRS
Consolidated key figures, IFRS
The figures in the interim financial report are unaudited.
CONSOLIDATED INCOME STATEMENT, EUR 1,000
Q1 2006 Q1 2005 Change % Full year 2005
Turnover 16 925.9 8 340.3 103 % 60 525.5
Other operating 35.3 33.3 6 % 230.1
income
Materials and -556.0 -194.5 186 % -3 320.6
services
Depreciation and -912.6 -414.9 120 % -3 318.0
write-downs
Other operating -13 858.7 -6 862.9 102 % -49 887.8
expenses
EBIT 1 633.9 901.1 81 % 4 229.2
Financial income -37.9 -1.2 3057 % -897.1
(net)
Earnings before 1 596.0 899.9 77 % 3 332.1
tax
Income taxes -434.4 -184.4 136 % -977.5
Profit for the 1 161.6 715.5 62 % 2 354.6
period
Distribution:
Parent company 1 157.9 710.4 63 % 2 331.7
shareholders
Minority 3.7 5.1 -28 % 22.9
Earnings per 0.06 0.06 0 % 0.14
share, EUR
Earnings per 0.06 0.06 0 % 0.14
share, diluted,
EUR
SEGMENT INFORMATION, EUR 1,000
TURNOVER Q1 2006 Q1 2005 Change % Full year 2005
Integration Division 8 173 5 686 44 % 30 972
Smartphone Division 8 754 2 654 230 % 29 553
SysOpen Digia Group 16 926 8 340 103 % 60 525
total
EBIT Q1 2006 Q1 2005 Change % Full year 2005
Integration Division 932 613 52 % 2 477
Smartphone Division 702 289 143 % 3 546
Structuring costs - - -1 795
SysOpen Digia Group 1 634 901 81 % 4 229
total
CONSOLIDATED BALANCE SHEET, EUR 1,000
Assets 31 March 31 March 2005 Change % 31 Dec 2005
2006
Non-current assets
Intangible assets 62 893.3 65 553.9 -4 % 63 569.4
Tangible assets 2 967.1 2 952.0 1 % 3 116.8
Investments 242.2 577.4 -58 % 589.3
Deferred tax receivable 1 301.0 998.0 30 % 1 621.1
Total non-current 67 403.6 70 081.3 -4 % 68 896.6
assets
Current assets
Current receivables 14 926.3 19 236.2 -22 % 14 745.8
Financial assets 1 094.1 19 898.9 -95 % 1 720.5
available for sale
Cash and cash 10 529.9 4 059.5 159 % 10 605.4
equivalents
Total current assets 26 550.3 43 234.5 -39 % 27 071.7
Total assets 93 953.9 113 315.8 -17 % 95 968.4
Shareholders' equity 31 March 31 March 2005 Change % 31 Dec
and liabilities 2006 2005
Share capital 1 840.3 1 808.3 2 % 1 839.5
Share premium account 39 735.5 39 030.8 2 % 39 718.0
Revaluation reserve 191.1 24.2 690 % 166.2
Translation difference 23.1 23.0 0 % 23.1
Other reserves 5 203.8 5 110.4 5 203.8
Accrued earnings 4 275.3 2 167.3 97 % 2 796.6
Profit for the period 1 158.0 710.5 63 % 2 331.7
Shareholders' equity 52 427.1 48 874.5 7 % 52 078.9
belonging to parent
company shareholders
Minority interest 104.4 92.9 12 % 110.7
Total shareholders' 52 531.5 48 967.4 7 % 52 189.6
equity
Liabilities
Non-current 21 132.6 41 217.7 -49 % 21 296.2
interest-bearing
liabilities
Deferred tax 3 123.9 3 365.2 -7 % 3 211.8
liabilities
Total non-current 24 256.5 44 582.9 -46 % 24 508.0
liabilities
Current liabilities 17 165.9 19 765.5 -13 % 19 270.7
Total current 17 165.9 19 765.5 -13 % 19 270.7
liabilities
Total liabilities 41 422.4 64 348.4 -36 % 43 778.7
Shareholders' equity 93 953.9 113 315.8 -17 % 95 968.4
and liabilities
CHANGES IN SHAREHOLDERS' EQUITY, EUR 1,000
Share Share Other Transl Revalua Retained Minority Total
capital premium reserv ations tion earnings interest shareho
es differ reserve lders'
ences equity
Shareholders' 926 7 102 0 23 85 3 168 122 11 426
equity 1 Jan
2005
Available-for
-sale
investments:
Gains/losses - - - - 81 - - 81
from fair
value
measurement
Other - - - - - 649 - 649
Items 0 0 0 0 81 649 730
recorded
directly in
shareholders'
equity
Profit for - - - - - 2 331 24 2 355
the period
Total income 0 0 0 0 0 2 331 24 2 355
and expenses
recorded
during the
period
Increase of 914 32 616 - - - - - 33 530
share capital
Dividend - - - - - -1 019 - -1 019
payment
Other - - 5 204 - - - -35 5 169
Shareholders' 1 840 39 718 5 204 23 166 5 128 111 52 189
equity 31 Dec
2005
Share Share Other Transl Revalua Retained Minority Total
capital premium reserv ations tion earnings interest shareho
es differ reserve lders'
ences equity
Shareholders' 1 840 39 718 5 204 23 166 5 128 111 52 189
equity 1 Jan
2006
Available-for
-sale
investments:
Gains/losses - - - - 25 - - 25
from fair
value
measurement
Other - - - - - 67 - 67
Items 0 0 0 0 25 67 92
recorded
directly in
shareholders'
equity
Profit for - - - - - 1 158 -6 1 152
the period
Total income 0 0 0 0 0 1 158 -6 1 152
and expenses
recorded
during the
period
Increase of 1 18 - - - - - 19
share capital
Dividend - - - - - -920 - -920
payment
Other - - - - - - - 0
SHAREHOLDERS' 1 841 39 736 5 204 23 191 5 432 105 52 531
EQUITY 31
March 2006
CONSOLIDATED CASH FLOW STATEMENT, EUR 1,000
Cash flow from operations: 1 Jan 2006 - 1 Jan 2005 - 1 Jan 2005 -
31 March 2006 31 March 2005 30 Dec 2005
Profit for the period 1 158 716 2 355
Adjustments to profit for the period 1 456 457 3 734
Change in working capital -1 566 -184 18
Interest paid -208 -8 -264
Interest income 39 2 2
Taxes paid -33 -37 -153
Cash flow from business operations 846 946 5 691
Cash flow from investments:
Investments in tangible and -116 -132 -2 288
intangible assets
Capital gains on tangible and 376 1 1
intangible assets
Other investments 0 0 -4
Acquisition of subsidiaries 0 17 968 18 448
Capital gains on other investments 0 167 214
Dividends received from investments 0 1 5
Interest income from investments 0 47 381
Cash flow from investments 260 18 052 16 757
Cash flow from financing:
Rights issue 18 0 719
Amortisation of long-term loans -1 042 0 -40 810
Withdrawal of long-term loans 0 0 25 000
Dividends paid and other profit -809 -888 -1 020
distribution
Cash flow from financing -1 833 -888 -16 112
Change in liquid assets -727 18 110 6 336
Liquid assets at period-start 12 326 5 909 5 909
Change in market value 25 -61 81
Change in liquid assets -727 18 110 6 336
Liquid assets at period-end 11 624 23 958 12 326
CONSOLIDATED INCOME STATEMENT BY QUARTER, EUR 1,000
Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005
Turnover 16 925.9 17 927.2 15 357.0 18 901.0 8 340.3
Other operating 35.3 32.8 115.7 48.2 33.3
income
Materials and -556.0 -989.0 -907.1 -1 230.0 -194.5
services
Depreciation and -912.6 -1 033.9 -998.3 -870.9 -414.9
write-downs
Other operating -13 858.7 -14 076.0 -11 -17 -6 862.9
expenses 836.9 111.9
EBIT 1 633.9 1 861.2 1 730.5 -263.5 901.1
Financial income -37.9 -203.8 -241.7 -450.4 -1.2
(net)
Earnings before tax 1 596.0 1 657.4 1 488.8 -713.9 899.9
Income taxes -434.4 -449.9 -647.4 304.2 -184.4
Profit for the period 1 161.6 1 207.5 841.4 -409.7 715.5
Distribution:
Parent company 1 157.9 1 199.5 836.1 -414.2 710.4
shareholders
Minority 3.7 8.0 5.3 4.5 5.1
Earnings per share, 0.06 0.07 0.05 -0.02 0.06
EUR
Earnings per share, 0.06 0.07 0.05 -0.02 0.06
diluted, EUR
CONSOLIDATED KEY FIGURES
Q1 2006 Q1 2005 2005
Scope of operations
Turnover 16 926 8 340 60 526
- change on previous year 103 % 29 % 131 %
Invested capital on average 52 361 24 204 43 716
Number of personnel at end of year 803 830 793
Average number of personnel 800 554 731
Profitability
EBIT 1 634 901 4 229
- relative to turnover 10 % 11 % 7 %
Earnings before tax 1 596 900 3 332
- relative to turnover 9 % 11 % 6 %
Profit for the period 1 158 710 2 332
relative to turnover 7 % 9 % 4 %
Return on equity, % 9 % 9 % 5 %
Return on investment, % 9 % 14 % 6 %
Financing and financial standing
Interest-bearing liabilities 24 828 41 218 26 055
Cash and cash equivalents 11 624 23 958 12 326
Net gearing, % 25 % 35 % 26 %
Equity ratio, % 57 % 45 % 56 %
Cash flow from operations 846 946 5 691
Earnings per share, EUR, undiluted 0.06 0.06 0.14
Earnings per share, EUR, diluted 0.06 0.06 0.14
Equity per share 2.85 2.71 2.83
Lowest share price 4.38 3.43 3.43
Highest share price 4.97 4.89 4.93
Average share price 4.64 4.31 4.36
Market capitalisation 85 205 78 661 85 170
The weighted average number of shares during the reporting period, adjusted for
share issues, is 18,398,350. The weighted average number of shares during the
reporting period, adjusted for dilution, is 18,762,736. The number of shares
outstanding at the end of the reporting period was 18,402,851.
The company does not hold any of its own shares.
The Group does not have any liabilities arising from derivative contracts.
