SysOpen Digia Plc's fourth quarter and financial statements 2005
SysOpen Digia Plc STOCK EXCHANGE RELEASE 10 FEB 2006 at 09:30 am
SysOpen Digia Plc's fourth quarter and financial statements 2005
SYSOPEN DIGIA CONTINUES ITS POSITIVE DEVELOPMENT
SysOpen Digia Group's key figures for 2005:
- Turnover EUR 60.5 million (2004: EUR 26.2 million)
- Pro forma turnover EUR 68.7 million, increased by 8.2 per cent compared with
2004
- EBIT before extraordinary structuring costs in the second quarter stood at EUR
6.0 million (2004: EUR 2.4 million); after structuring costs EUR 4.2 million
(2004: EUR 2.4 million)
- Profitability (EBIT percentage) before extraordinary structuring costs in the
second quarter 10.0 per cent (2004: 9.0 per cent)
- Earnings per share after structuring costs EUR 0.14 (2004: EUR 0.25)
- Cash flow from operations positive by EUR 5.7 million
SysOpen Digia Group's fourth quarter 2005:
- Turnover EUR 17.9 million (EUR 7.7 million 10-12/2004)
- EBIT EUR 1.8 million (EUR 1.5 million 10-12/2004)
- Profitability (EBIT percentage) 9.9 per cent (19.7 per cent 10-12/2004)
- Earnings per share EUR 0.07 (EUR 0.15 10-12/2004)
- Cash flow from operations positive by EUR 3.7 million.
FUTURE OUTLOOK
The company's increased size and delivery capability are expected to have a
positive effect on SysOpen Digia's ability to compete for major customer projects
in selected market areas in 2006. In accordance with its strategy, SysOpen Digia
will aim for strong growth in 2006, mainly based on acquisitions. The objective
is to maintain profitability at approximately 10 per cent in 2006.
Jari Mielonen, CEO of SysOpen Digia Plc:
"SysOpen Digia's fourth quarter 2005 went as planned. During the final quarter we
started to implement the strategy published in November within the Group. We
continued to develop our business operations and unify our processes. Strong cash
flow significantly improved the company's net gearing ratio.
Our objective in 2006 is to grow our business in accordance with the strategy,
continue internal development with the aim of becoming a single clearly unified
company, ensuring our staff's job satisfaction and competence development, as
well as further reinforcing the company's management systems."
PROPOSAL FOR DIVIDENDS
SysOpen Digia Plc's Board of Directors will propose at the Annual General Meeting
that a dividend of EUR 0.05 per share be paid for 2005 (2004: EUR 0.11).
CORPORATE COMMUNICATIONS
A briefing for analysts and the media will be held on Friday, 10 February 2006,
at 11:00 in the Paviljonki Room at Scandic Hotel Simonkenttä, Simonkatu 9,
Helsinki. Welcome.
SysOpen Digia Plc's financial statements 2005
The comparisons in the financial statements are based on Sysopen Plc's 2004
figures. SysOpen Digia Smartphone Ltd (formerly Digia Inc.) has been consolidated
since the beginning of March 2005. The figures for SysOpen Digia Integration Ltd
(formerly Yomi Software Oy) and SysOpen Digia Service Ltd (formerly Yomi Service
Oy) have been consolidated since the beginning of April 2005.
CONSOLIDATED KEY FIGURES
10-12/200 10-12/2004 Change% 1-12/200 1-12/200 Change%
5 5 4
Turnover 17 927 7 747 131% 60 526 26 174 131%
EBIT before 1 778 1 528 16% 6 024 2 358 155%
structuring costs
- relative to 10% 20% 10% 9%
turnover
EBIT 1 861 1 528 22% 4 229 2 358 79%
- relative to 10% 20% 7% 9%
turnover
Net profit 1 208 1 363 -11% 2 355 2 340 1%
- relative to 7% 18% 4% 9%
turnover
Return on equity, % 9% 49% 5% 21%
Return on 10% 65% 6% 23%
investment, %
Interest-bearing 26 055 134 26 055 134
liabilities
Liquid assets 12 326 5 909 109% 12 326 5 909 109%
Net gearing, % 26% -51% 26% -51%
Equity ratio, % 56% 70% 56% 70%
Earnings per share, 0.07 0.15 -53% 0.14 0.25 -44%
EUR, undiluted
Earnings per share, 0.07 0.14 -57% 0.14 0.25 -44%
EUR, diluted
Equity per share 2.83 1.23 130% 2.83 1.23 130%
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). The
Q2 and Q3 interim statements for 2005 have been prepared in accordance with the
IFRS-compliant accounting and valuation principles. On 31 March 2005 SysOpen
Digia Plc published a stock exchange release disclosing reconciliations of
shareholders' equity and the income statement at the time of IFRS adoption, as
well as the 2004 key figures for IFRS comparison and an explanation of the
accounting principles.
CEO'S STATEMENT
2005 was a year of integration for SysOpen Digia Group. We transformed three
separate companies into a single unified group that is a modern and agile
software house providing complete solutions. Towards the end of 2005 we disclosed
our strategy, according to which SysOpen Digia specialises in integrated business
solutions, smartphone and mobile product development, outsourcing and telecom
services.
In spite of the extensive integration effort, we were able to maintain good
profitability.
SysOpen Digia's fourth quarter 2005 went as planned. During the final quarter we
started to implement the strategy published in November within the Group. We
continued to develop our business operations and unify our procedures. Strong
cash flow significantly improved the company's net gearing ratio.
Our objective in 2006 is to grow our business in accordance with the strategy,
continue internal development with the aim of becoming a single clearly unified
company, ensuring our staff's job satisfaction and competence development, as
well as further reinforcing the company's management systems.
SUMMARY OF BUSINESS DIVISIONS IN THE FINAL QUARTER OF 2005
Smartphone business
The smartphone business covers the design of software and technologies for mobile
phones and for their versatile use, as well as related training services and
product business. Engineering services account for the largest share of
turnover. The technology focus in the smartphone business is on Symbian-based
development with Java- and Linux-based solutions supporting these activities.
Long-term plans are also made to develop user interface design services.
According to estimates, SysOpen Digia, with its more than 470-strong team of
smartphone experts, is currently one of the leading contract engineering service
providers to the world's biggest mobile phone manufacturers.
Intensive long-term focus on the Nokia S60 platform and the related services has
given the Smartphone Division a position as a trusted partner in the global
smartphone market.
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
sectors of industry: the banking, insurance and employee pension sector, public
administration, organisations, national security, transport and logistics,
tourism, telecom and service operators, and manufacturing and trade.
SysOpen Digia takes determined measures to develop its service offering within
the integration business and is one of the leading new technology ICT solution
providers in Finland. During the final quarter of 2005 the Integration Division
continued to reinforce its primary business, which is the provision of customer-
specific information system services. Areas in which the offering was developed
include ICT consulting for management, application life cycle services and
services enabling high availability, new integration services (including the
Integration Competence Centre model), new architecture services (including
corporate-level and service architecture), and emerging technology platforms
(J2EE and .NET).
Long-term investment in solution- and technology-based industry leadership has
made SysOpen Digia a trusted key partner in all of its key customer
relationships.
THE MARKET
The demand for ICT solutions varies depending on customer segment. Customer
investments focus on solutions that deliver immediate business benefits, and
sales cycles are rather long. Competition in the industry continues to be very
tough, and customers' cost pressures continue to drive the price competition.
The estimates of market analysts also reflect volatility in demand. According to
IDC's estimate, the Western European ICT market will grow by approximately 5 per
cent annually between 2004 and 2009. The Nordic countries are the region with
strongest growth in Europe, 6 per cent. Outsourcing is the segment with strongest
growth in volume. EITO estimates that the value of the West European ICT market
is some EUR 616 billion and forecasts a 3.7 per cent market growth in 2006 to EUR
639 billion. EITO estimates the Finnish ICT market to grow by 8 per cent in 2006.
The market estimate does not include the contract R&D market. 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 to EUR 5.2 billion.
Yankee Group estimates that the accumulated volume of smartphones will exceed 300
million units in 2007. According to Gartner, a total of 72 million Symbian-based
smartphones will be sold in 2006, and the smartphone market will double each
year. 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 can be accessed through wireless devices in 2010. The wireless
integration market is starting to gradually form in 2006 but its full-scale
realisation will take a few more years.
Contract engineering markets are expected to remain under price and efficiency
pressure resulting from the ever-tightening competitive situation and
profitability targets of mobile phone manufacturers.
FUTURE OUTLOOK
Leading smartphone manufacturers are expected to face ever-intensifying
competition for their market share, and the partial polarisation of the markets
is expected to continue. It is estimated that the largest manufacturers will
focus on implementing their selected product platform strategies and gradually
diversify into basic mobile phones in the medium term. Global operators are
slowly showing increasing interest in differentiating smartphones to meet service
and brand requirements, which may lead to new technology alliances. Faced with
increasingly fierce competition, semiconductor manufacturers are seeking
alliances that allow them to cater for the needs of mobile handset manufacturers
on a more comprehensive basis and to strengthen their own market position.
In the long term, Smartphone business focus is expected to shift towards becoming
a complete service provider within software integration, thereby providing
SysOpen Digia with the opportunity to expand its operations, especially in
sophisticated contract engineering projects and product-platform-related orders,
together with selected key partners in both Europe and Asia. In addition, SysOpen
Digia will focus sharply on selected operator and semiconductor manufacturer
customer relationships, differentiating technology solutions and user interface
design.
The ICT services market and the Integration business are estimated to continue
their growth. The focal point in the utilisation of information technology has
shifted more and more from increasing the efficiency of operations towards
searching for new operating opportunities. This trend is partly attributable to
the integration of IT, telecommunications, consumer electronics and content
production into new solutions that provide benefit for business. More and more
often customers look for a trusted partner that can deliver demanding solutions
and integration projects, and cater for the customer's applications, services
supporting them and solutions associated with the distribution of digital
content.
SysOpen Digia focuses on solutions that provide added value to the customer's
business and involve a more and more comprehensive role of the company as a
solution provider. The objective is to improve the efficiency of our customer's
operations and provide them with a competitive advantage as a provider of
advanced integrated ICT solutions. We will develop our integration business both
in existing and new customer relationships in accordance with the selected
customer strategies.
The company's increased size and delivery capability are expected to have a
positive effect on SysOpen Digia's ability to compete for major customer projects
in selected market areas in 2006. In accordance with its strategy, SysOpen Digia
will aim for strong growth in 2006, mainly based on acquisitions. The objective
is to maintain profitability at approximately 10 per cent in 2006.
TURNOVER
Compared with the previous year, 2004, SysOpen Digia's turnover in the financial
year 2005 increased by 131.2% and stood at EUR 60.5 million (1-12/2004: EUR 26.2
million). Turnover in the fourth quarter amounted to EUR 17.9 million, which
represents an increase of 131.4% compared with the corresponding period in the
previous year (10-12/2004: EUR 7.7 million). International business represented
7.5% of turnover in 2005 (1-12/2004: 0.6%) and 8.2% in the fourth quarter (10-
12/2004: 0.2%).
Turnover of the Integration business in 2005 increased by 34.9% to EUR 31.0
million (1-12/2004 EUR 23.0 million). Turnover of the Integration business in the
fourth quarter amounted to EUR 8.5 million (10-12/2004: EUR 6.7 million),
representing an increase of 27.1% compared to the corresponding period last year.
Turnover of the Smartphone business in 2005 increased significantly (820.1%) to
EUR 29.6 million (1-12/2004 EUR 3.2 million). Turnover in the fourth quarter
amounted to EUR 9.4 million (10-12/2004: EUR 1.1 million), representing a
substantial increase (793.5%) compared to the corresponding period last year.
SysOpen Digia Group's consolidated pro forma turnover in the financial year
amounted to EUR 68.7 million, representing an increase of 8.2% compared with the
2004 pro forma turnover.
DEVELOPMENT OF EARNINGS AND PROFITABILITY
SysOpen Digia's EBIT in 2005 before the extraordinary structuring costs of EUR
1.8 million in the second quarter were EUR 6.0 million, representing an increase
of 155.5% compared with 2004 (1-12/2004: EUR 2.4 million). The corresponding EBIT
for the fourth quarter was EUR 1.8 million, representing an increase of 16.4%
compared with the corresponding period in the previous year (10-12/2004: EUR 1.5
million).
EBIT in 2005 after the structuring costs in the second quarter stood at EUR 4.2
million (1-12/2004: EUR 2.4 million), and the figure for the fourth quarter was
EUR 1.9 million (10-12/2004: EUR 1.5 million).
Earnings before tax in 2005 stood at EUR 3.3 million (1-12/2004: EUR 2.8
million), and the figure for the fourth quarter was EUR 1.7 million (10-12/2004:
EUR 1.7 million).
Income taxes for the review period represent 29.3% of pre-tax earnings, while
income taxes for the fourth quarter equal 27.1% of pre-tax earnings. Eomer
Holding Oy's losses that are not tax-deductible have a significant effect on the
Group's income taxes. Eomer Holding Oy was merged into SysOpen Digia Smartphone
Ltd on 10 November 2005.
Earnings after taxes in 2005 stood at EUR 2.4 million (1-12/2004: EUR 2.4
million), and the figure for the fourth quarter was EUR 1.2 million (10-12/2004:
EUR 1.4 million).
The Group's Profit earnings per share for 2005 were EUR 0.14 (1-12/2004: EUR
0.25), and the figure for the fourth quarter was EUR 0.07 (10-12/2004: EUR 0.15).
The profitability (EBIT percentage) of the Integration Division before
structuring costs remained on the previous year's level in 2005, amounting to
8.0% (1-12/2004: 8.2%). The profitability (EBIT percentage) of the Smartphone
Division diminished in comparison with the corresponding period in the previous
year, amounting to 12.0% (1-12/2004: 15.0%). The allocated goodwill generated in
connection with the merger of Sysopen Plc and Digia Inc. that was written down by
EUR 1.2 million in 2005 impacted on the Smartphone Division's profitability.
The Group's net financial expenses in 2005 were EUR 0.9 million (1-12/2004: net
financial income of EUR 0.4 million).
The extraordinary items associated with the structural rearrangements following
the merger of SysOpen Plc, Digia Inc. and Yomi Software Oy have an impact on the
pro forma income statement. The extraordinary items having the strongest negative
effect on the pro forma earnings compared with the previous year include the
amortisation of capitalised balance sheet items (EUR 2.6 million) from Yomi
Software's acquired business, provisions for expenses (EUR 0.9 million) and the
structuring costs generated during the second quarter (EUR 1.8 million). The
amount of structuring costs was revised from EUR 1.9 million to EUR 1.8 million
during the fourth quarter due to the dissolution of a provision for premises.
Furthermore, the changed financing structure of the company and the share of
allocated goodwill that was generated by the merger and is subject to annual
amortisation have a negative effect on the earnings for the financial year. For
these reasons, most of which are non-recurring, the pro forma earnings of SysOpen
Digia Group in 2005 showed a loss of EUR 1.3 million (1-12/2004: EUR 3.6
million).
FINANCING AND INVESTMENTS
SysOpen Digia Group's balance sheet total at the end of the financial year
amounted to EUR 96.0 million (1-12/2004: EUR 20.6 million) and its equity ratio
was 56 per cent (1-12/2004: 70 per cent). Net gearing was 26 per cent (1-12/2005:
-51 per cent). The Group's liquid assets totalled EUR 12.3 million (1-12/2004:
EUR 5.9 million). The Group has EUR 26.1 million of interest-bearing liabilities.
The Group's cash flow from business operations in 2005 was positive by EUR 5.7
million; in the fourth quarter positive by EUR 3.7 million.
The Group's investments in the fourth quarter totalled EUR 0.3 million (10-
12/2004: EUR 0.2 million). The Group's non-allocated goodwill at the end of the
financial year was EUR 50.4 million and the goodwill allocated to specific
customers was EUR 10.8 million. Impairment calculations based on future cash
flows from business are carried out annually to revise the non-allocated share of
turnover. With the adoption of IFRS, the regular amortisation of goodwill is no
longer carried out. If the calculations indicate that future cash flows will be
less than the amount called for by goodwill, goodwill will be written down as
required. There are currently no indications of impairment of any asset items.
Return on investment (ROI) was 6 per cent in 2005 (1-12/2004: 23 per cent).
Return on equity (ROE) was 5 per cent (1-12/2004: 21 per cent). The extraordinary
structuring costs of EUR 1.8 million in the second quarter have a negative impact
on ROI as well as ROE for the financial year 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 the active development and follow-up of the customer structure. Business
arrangements resulted in favourable customer structure development; customer
segment-specific risk management is applied to business activities. Personal risk
is managed by implementing an active performance review and goal-setting process
with key personnel. In addition, the Divisions have improved their in-house
communications and taken measures to build interactive communication channels to
support personnel satisfaction and commitment. A job satisfaction survey charting
the personnel's opinions was conducted in November 2005. Based on the results,
the Group's internal procedures will be developed to further improve working
conditions and job satisfaction. The financial year 2005 marked the start of
auditing key projects to identify potentially risky projects and to deliver them
successfully. Project delivery reporting practices have also been strengthened.
Data security audits are carried out to manage data security risks, and practices
and processes designed to promote data security are being developed. The
Management Group has been responsible for managing risks associated with the
integration of business operations. Amortisation of goodwill due to inorganic
growth and their impairment testing has been included in the risks to be
monitored as a part of normal business risk management practice. Measures aimed
at integrating corporate cultures were launched during the year. Sustained and
determined efforts to this effect will be required at all levels.
PERSONNEL, MANAGEMENT AND ADMINISTRATION
Planned personnel and middle management training and development measures were
taken, including in-house OpenCollege training programmes, smartphone integration-
related induction training, and studies included in the Business Academy training
programme for key personnel in the Smartphone Division. Group-level action was
taken to improve personnel job satisfaction and to build a shared corporate
culture throughout the financial year.
At the end of 2005 the number of personnel was 793, showing an increase of 505 or
175.3 per cent on the previous year (2004: 288). The average number of personnel
during 2005 was 731, an increase of 445 or 155.6 per cent (1-12/2004: 286).
Cumulative personnel turnover during 2005 was 10.6 per cent (1-12/2004: 10.5 per
cent).
Distribution of personnel by function at the end of the year:
Integration Division 37%
Smartphone Division 59%
Administration and management 4%
At the end of the year one per cent of SysOpen Digia personnel worked abroad.
Until the Annual General Meeting of 1 March 2005, Sysopen Plc's Board of
Directors comprised Kari Karvinen (Chairman), Risto Linturi (Vice Chairman),
Pekka Eloholma, Reijo Koski-Lammi and Matti Mujunen. Conditional on the merger of
Sysopen Plc and Digia Inc., the Annual General Meeting 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. Sysopen Plc's existing Board of Directors served as an interim Board
between 1 and 4 March 2005. SysOpen Digia Plc's CEO until 4 March 2005 was Arto
Sahla and as of 4 March 2005 Jari Mielonen. Seppo Laaksonen, Director of the
Smartphone Division, was appointed deputy CEO on 23 November 2005.
During the entire financial year 2005 the Group's auditor was the KPMG Oy Ab
authorised public accountant firm with Ari Ahti, Authorised Public Accountant, as
the principal auditor.
BUSINESS ACQUISITIONS
A merger agreement was signed between Sysopen Plc and Digia Inc. on 11 February
2005. The merger was confirmed on 4 March 2005 and the new company continued its
operations under the name SysOpen Digia Plc.
On 21 March 2005 SysOpen Digia Plc and Elisa Corporation signed a contract under
which SysOpen Digia acquired the entire share capital of Yomi Software Oy.
The sale price of Yomi Software was EUR 12.1 million. The sale price was paid for
in cash and financed from cash funds.
SysOpen Digia's pro forma figures (FAS) for 2004 by company:
EUR million Sysopen Plc Digia Inc. Yomi Software Companies
Oy total
Turnover 26.2 21.1 16.8 64.1
EBITA 2.3 3.1 0.4 5.8
SysOpen Digia's pro forma net gearing in 2004 was 38 per cent and the equity
ratio was 44 per cent.
GROUP AND ORGANISATIONAL STRUCTURE
At the end of the year 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 organisational structure was revamped so that as of 4 March 2005
there are two business divisions - the Integration Division and the Smartphone
Division - and a shared Group administration. Yomi Software Oy was renamed
SysOpen Digia Integration Ltd and it assumes all of the company's integration
business. Digia Inc. was renamed SysOpen Digia Smartphone Ltd. SysOpen Digia
Smartphone Ltd assumed the entire smartphone business of SysOpen Digia.
SysOpen Digia Plc's wholly owned subsidiary Eomer Holding Oy was merged into
SysOpen Digia Smartphone Ltd on 10 November 2005. Eomer Holding Oy was not
engaged in business activities.
SysOpen Digia divested the entire stock of Sysopen Limited on 14 October 2005.
The divestiture did not have any significant effect on the company's turnover or
profitability.
ESSENTIAL EVENTS AFTER THE BALANCE SHEET DATE
No essential events.
GENERAL MEETINGS OF SHAREHOLDERS
1. Annual General Meeting 1 March 2005
The parent company's Annual General Meeting was held on 1 March 2005. At the
meeting the financial statements for 2004 were approved, the parties accountable
were released from liability, the Board's proposal for the distribution of
profits for 2004 was approved, the Board's remuneration was determined and a new
Board of Directors was elected.
In addition, the Annual General Meeting decided:
1) To amend the Articles of Association to state that the Board of Directors
shall comprise 5-8 members.
2) Conditional on the merger with Digia Inc. to amend the Articles of Association
to state that the company's business name is SysOpen Digia Oyj, in English
SysOpen Digia Plc.
3) Conditional on the merger with Digia Inc. to amend the Articles of Association
to state that the company's minimum share capital is one million two hundred
thousand (1,200,000) euro and the maximum share capital is four million eight
hundred thousand (4,800,000) euro, within which limits the company's share
capital may be increased or decreased without amending the Articles of
Association.
4) To authorise the Board, under certain conditions, to make decisions regarding
the issue of one or more convertible bonds or stock options and/or regarding the
increase in the share capital through one or more rights issues. The
authorisation shall be effective for one year from the date of the EGM's
decision. This authorisation was replaced with an authorisation given at the
Extraordinary General Meeting on 1 June 2005. The authorisation had not been
exercised.
2. Extraordinary General Meeting 1 June 2005
The parent company's Extraordinary General Meeting held on 1 June 2005 decided to
issue stock options 2005K and 2005A-C and to authorise the Board, cancelling any
previous authorisations, to make decisions regarding the issue of one or more
convertible bonds or stock options and/or regarding the increase in the share
capital through one or more rights issues. The authorisation shall be effective
for one year from the date of the EGM's decision. The authorisation has not been
exercised.
SHARE CAPITAL AND SHARES
The nominal value of the company share is EUR 0.1. At the end of 2005 the number
of shares was 18,395,349.
On 31 December 2005 SysOpen Digia had 3,321 shareholders. The ten largest
shareholders were:
Shareholder Shares and votes
Pekka Sivonen 19.6%
Kari Karvinen 8.6%
Nordea Bank Finland Plc, nominee-registered 8.1%
Matti Savolainen 7.2%
Jorma Kylätie's estate 5.2%
Varma Mutual Pension Insurance Company 4.0%
Veikko Laine Oy 2.3%
Mika Malin 2.1%
Mutual Insurance Company Pension-Fennia 2.0%
Pohjola Finland Value mutual fund 1.9%
Distribution of shareholding by number of shares held on 31 December 2005
Number of shares Percentage of Shares and votes
holdings
1 - 100 26.4% 0.4%
101 - 1.000 52.9% 4.4%
1.001 - 10.000 17.8% 8.9%
10.001 - 100.000 2.2% 13.7%
100.001 - 1.000.000 0.6% 29.0%
1.000.001 - 3.000.000 0.1% 43.6%
Total number of shares 18,395,349
Sectoral distribution of shareholding on 31 December 2005
Percentage of Percentage of
holdings shares
Businesses 6.7% 10.2%
Financing and insurance 0.5% 14.1%
Public corporations 0.1% 6.2%
Non-profit organisations 0.5% 2.1%
Households 91.7% 67.3%
Foreign holding 0.5% 0.1%
TRADING ON THE HELSINKI STOCK EXCHANGE IN 2005
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 in the financial year 2005
was EUR 3.43 and the highest EUR 4.93. The official closing price on the last
trading day of the financial year 2005 was EUR 4.63. The average trade-weighted
price was EUR 4.36. At the end of the year the company's market capitalisation
was EUR 85,170,466.
Four announcements under chapter 2, section 9, of the Securities Market Act were
made during the year:
1. SysOpen Digia Plc's (SysOpen Digia) biggest shareholder, Pekka Sivonen, has,
in conjunction with the merger of Sysopen Plc and Digia Inc., granted certain
former holders of Digia's class B shares the right to buy, during a 12-month
period starting 4 March 2005, a total of 765,011 SysOpen Digia shares, which
represent approximately 4.2 per cent of SysOpen Digia's share capital, at a pre-
determined price (call option). If the call option is exercised in full, Pekka
Sivonen's shareholding and voting rights in SysOpen Digia will fall below one-
fifth (1/5).
2. Following the trading of SysOpen Digia Plc shares by Eqvitec Technology Fund I
Ky on 22 March 2005, the Fund's share of votes and share capital in SysOpen Digia
Plc fell below one-twentieth (1/20).
3. Following the trading of SysOpen Digia Plc shares by TeliaSonera Finland on 23
March 2005, TeliaSonera Finland's share of votes and share capital in SysOpen
Digia Plc fell below one-twentieth (1/20).
4. Following the trading of SysOpen Digia Plc shares by Pekka Sivonen on 8 July
2005, Pekka Sivonen's share of votes and share capital in SysOpen Digia Plc fell
below one-fifth (1/5).
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 2.78
per share, for warrants 2003C EUR 3.75 per share and for warrants 2003D EUR 4.32
per share. Dividends paid will be deducted from the subscription prices in
accordance with the terms and conditions of the scheme. On 31 December 2005
SysOpen Digia Plc's wholly owned subsidiary SysOpen Digia Partners Oy held a
total of 11,544 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 December 2005, 206,991 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 34,476 of the 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 having 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 2.41. Dividends paid will be deducted from the subscription
price in accordance with the terms and conditions of the option scheme. 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 December 2005 SysOpen Digia Plc's
wholly owned subsidiary SysOpen Digia Partners Oy held a total of 5,657 warrants
under the option scheme 2005K2.
All warrants 2005K1 (105,408 warrants) have been exercised to subscribe for
shares.
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 having a nominal value of EUR 0.10.
The share subscription price for warrants 2005A is EUR 4.33, 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 the 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 the 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 December 2005 SysOpen Digia
Plc's wholly owned subsidiary SysOpen Digia Partners Oy held a total of 716,000
warrants under the option scheme 2005.
On 31 December 2005 a total of 1,883,165 warrants issued by SysOpen Digia
remained outstanding. Shares subscribed for using the warrants represent a
maximum of 9.29% 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 773,361 warrants on 31 December 2005. The maximum
dilution effect of the issued warrants was 5.7% on 31 December 2005.
PROPOSAL FOR DIVIDENDS
On 31 December 2005, SysOpen Digia's consolidated balance sheet showed
distributable assets of EUR 5,317,542.84. The parent company's distributable
assets were EUR 1,351,553.52. The Group's earnings per share for 2005 were EUR
0.14 (2004: EUR 0.25). SysOpen Digia Plc's Board of Directors will propose at the
Annual General Meeting that a dividend of EUR 0.05 per share be paid for 2005
(2004: EUR 0.11). On 10 February 2005, parties external to the company hold a
total of 18,395,349 shares, and the corresponding dividends proposed by the Board
of Directors amount to approximately EUR 0.92 million (2006: EUR 1.0 million).
Helsinki, 10 February 2006
SYSOPEN DIGIA PLC
Board of Directors
FOR FURTHER INFORMATION
Jari Mielonen, CEO,
Telephone: +358 424 2020 370, mobile +358 40 703 8383, email:
jari.mielonen@sysopendigia.com
The financial statements and associated presentation will be available within the
Investors section of the Group's Web site 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
Consolidated cash flow statement, IFRS
Consolidated income statement by quarter, IFRS
Consolidated key figures, IFRS
Pro forma income statement, IFRS
Summary of IFRS effects on shareholders' equity
Income statement 1-12/2004, FAS - IFRS
The figures in the financial statements are unaudited.
CONSOLIDATED INCOME STATEMENT, EUR 1,000
10-12/2005 10-12/2004 Change 1-12/2005 1-12/200 Change
% 4 %
Turnover 17 927.2 7 747.2 131% 60 525.5 26 173.7 131%
Other operating 32.8 92.1 -64% 230.1 187.5 23%
income
Materials and -989.0 -199.4 396% -3 320.6 -934.2 255%
services
Depreciation and -1 033.9 -309.0 235% -3 318.0 -1 185.8 180%
write-downs
Other operating -14 076.0 -5 803.3 143% -49 887.8 -21 128%
expenses 883.5
EBIT 1 861.2 1 527.5 22% 4 229.2 2 357.7 79%
Financial income -203.8 181.0 -213% -897.1 419.5 -314%
(net)
Earnings before 1 657.4 1 708.5 -3% 3 332.1 2 777.2 20%
tax
Income taxes -449.9 -345.2 30% -977.5 -407.2 140%
Net profit 1 207.5 1 363.4 -11% 2 354.6 2 370.1 -1%
Distribution:
Parent company 1 199.5 1 352.3 -11% 2 331.7 2 340.3 0%
shareholders
Minority 8.0 11.1 -28% 22.9 29.8 -23%
Earnings per 0.07 0.15 -53% 0.14 0.25 -44%
share, EUR
Earnings per 0.07 0.14 -57% 0.14 0.25 -44%
share, diluted,
EUR
SEGMENT INFORMATION, EUR 1,000
TURNOVER 10-12/20 10-12/2 Change 1-12/20 1-12/20 Change
05 004 % 05 04 %
Integration Division 8 510 6 693 27% 30 972 22 962 35%
Smartphone Division 9 417 1 054 793% 29 553 3 212 820%
SysOpen Digia Group 17 927 7 747 131% 60 526 26 174 131%
total
EBIT 10-12/2 10-12/2 Change 1-12/20 1-12/20 Change
005 004 % 05 04 %
Integration Division 475 1 311 -64% 2 477 1 876 32%
Smartphone Division 1 302 217 500% 3 546 482 636%
Structuring costs 83 0 -1 795 0
SysOpen Digia Group 1 861 1 528 22% 4 229 2 358 79%
total
CONSOLIDATED BALANCE SHEET, EUR 1,000
Assets 31.12.2005 31.12.2004 Change %
Non-current assets
Intangible assets 63 569.4 2 244.8 2761%
Tangible assets 3 116.8 1 697.9 84%
Investments 589.3 585.6 1%
Deferred tax receivable 1 621.1 2.7 59940%
Total non-current 68 896.6 4 531.0 1435%
assets
Current assets
Current receivables 14 745.8 10 149.0 45%
Financial assets 1 720.5 2 900.4 -41%
available for sale
Liquid assets 10 605.4 3 008.4 253%
Total current assets 27 071.7 16 057.8 69%
Total assets 95 968.4 20 588.8 369%
Shareholders' equity 31.12.2005 31.12.2004 Change %
and liabilities
Share capital 1 839.5 926.3 99%
Share premium account 39 718.0 7 102.2 459%
Own shares 0.0 0.0
Revaluation reserve 166.2 84.9 96%
Translation difference 23.1 23.1 0%
Other reserves 5 203.8 0.0
Accrued earnings 2 796.6 827.7 238%
Net profit 2 331.7 2 340.3 0%
Shareholders' equity 52 078.9 11 304.5 361%
belonging to parent
company shareholders
Minority interest 110.7 121.7 -9%
Total shareholders' 52 189.6 11 426.2 357%
equity
Liabilities
Non-current 21 296.2 133.5 15852%
interest-bearing
liabilities
Deferred tax 3 211.8 148.5 2063%
liabilities
Total non-current 24 508.0 282.0 8714%
liabilities
Current liabilities 19 270.7 8 880.6 120%
Total current 19 270.7 8 880.6 120%
liabilities
Total liabilities 43 778.7 9 162.6 385%
Shareholders' equity 95 968.4 20 588.8 369%
and liabilities
CONSOLIDATED CASH FLOW STATEMENT 2005-2004, EUR 1,000
Cash flow from operations: 1.1.2005 - 1.1.2004 -
30.12.2005 31.12.2004
Payments from sales 63 747 24 066
Payments from other operating income 230 210
Payments for operating expenses -57 871 -22 680
Cash flow from operations before 6 106 1 596
financial items and taxes
Interest paid and payments for other -264 -9
operational financing expenses
Interest received from operations 2 1
Direct taxes paid -153 -137
Cash flow from operations 5 691 1 451
Cash flow from investments:
Investments in tangible and intangible -2 288 -1 580
assets
Income from the disposal of tangible 1 11
and intangible assets
Capital expenditure in other -4 -55
investments
Acquisitions of subsidiaries 18 448
Income from the disposal of other 214 572
investments
Repayment of loan receivables 0 11
Dividends received from investments 5 24
Shares divested in associates 0 60
Interest received from investments 381 53.6
Cash flow from investments 16 757 -903
Cash flow from financing:
Paid share issue 719 0
Repayments of long-term loans -40 810 0
Withdrawals of long-term loans 25 000 0
Dividends paid and other distribution -1 020 -2 779
of profit
Cash flow from financing -16 112 -2 779
Change in liquid assets 6 336 -2 231
Liquid assets at beginning of period 5 909 7 781
Changes in fair value 81 359
Change in liquid assets 6 336 -2 231
Liquid assets at end of period 12 326 5 909
CONSOLIDATED INCOME STATEMENT BY QUARTER, EUR 1,000
10-12/20 7-9/2005 4-6/2005 1-3/2005 10-12/20 7-9/2005
05 04
Turnover 17 927.2 15 357.0 18 901.0 8 340.3 7 747.2 15 357.0
Other operating 32.8 115.7 48.2 33.3 92.1 115.7
income
Materials and -989.0 -907.1 -1 230.0 -194.5 -199.4 -907.1
services
Depreciation and -1 033.9 -998.3 -870.9 -414.9 -309.0 -998.3
write-downs
Other operating -14 -11 -17 -6 862.9 -5 803.3 -11
expenses 076.0 836.9 111.9 836.9
EBIT 1 861.2 1 730.5 -263.5 901.1 1 527.5 1 730.5
Financial income -203.8 -241.7 -450.4 -1.2 181.0 -241.7
(net)
Earnings before tax 1 657.4 1 488.8 -713.9 899.9 1 708.6 1 488.8
Income taxes -449.9 -647.4 304.2 -184.4 -345.2 -647.4
Net profit 1 207.5 841.4 -409.7 715.5 1 363.4 841.4
Distribution:
Parent company 1 199.5 836.1 -414.2 710.4 1 352.3 836.1
shareholders
Minority 8.0 5.3 4.5 5.1 11.1 5.3
Earnings per share, 0.07 0.05 -0.02 0.06 0.15 0.05
EUR
Earnings per share, 0.07 0.05 -0.02 0.06 0.14 0.05
diluted, EUR
CONSOLIDATED KEY FIGURES
1-12/2005 1-12/2004
Scope of operations
Turnover 60 526 26 174
- change on previous year 131% 4%
Invested capital on average 78 245 11 548
Number of personnel at end of year 793 288
Average number of personnel 731 286
Profitability
EBIT 4 229 2 358
- relative to turnover 7% 9%
Earnings before tax 3 332 2 777
- relative to turnover 6% 11%
Net profit 2 332 2 340
relative to turnover 4% 9%
Return on equity 5% 21%
Return on investment 6% 23%
Financing and financial standing
Interest-bearing liabilities 26 055 134
Financial securities + cash and bank 12 326 5 909
receivables
Net gearing 26% -51%
Equity ratio 56% 70%
Cash flow from operations 5 691 1 451
Earnings per share, EUR, undiluted 0.14 0.25
Earnings per share, EUR, diluted 0.14 0.25
Equity per share 2.83 1.23
Lowest share price 3.43 2.90
Highest share price 4.93 5.35
Average share price 4.36 3.66
Market capitalisation 85 170 31 679
PRO FORMA INCOME STATEMENT, EUR 1,000
1.1.-31.12.2005 1.1.-31.12.2004
TURNOVER 68 663.6 63 468.0
Other operating income 431.9 570.9
Materials and services -3 947.8 -2 212.4
Depreciation and -6 048.5 -4 268.2
write-downs
Other operating expenses -58 440.4 -53 833.0
EBIT 658.9 3 725.3
Financial income (net) -771.8 1 107.0
Earnings before tax -112.9 4 832.3
Income taxes -1 138.4 -1 245.0
NET PROFIT -1 251.3 3 587.3
Distribution:
Parent company -1 274.1 3 557.5
shareholders
Minority 22.9 29.8
SUMMARY OF IFRS EFFECTS ON SHAREHOLDERS' EQUITY
Shareholders' equity 11,279.6 9,315.3 9,722.9 9,902.8 10,531.1
belonging to parent
company shareholders FAS
IAS 12 Deferred tax -20.2 -6.2 -1.0 -5.4 -80.5
receivables and
liabilities
IAS 17 Leases - 12.2 5.7 10.9 16.3 -9.4
IAS 19 Employee benefits -214.0 -229.8 245.5 -261.3 0
IAS 38 Intangible assets 285.9 336.7 401.6 548.2 645.5
IAS 39 Financial 0 7.4 36.4 -5.4 229.8
instruments
Other IFRS effects 8.2 -7.1 -3.4 -28.8 -12.1
Shareholders' equity 11,327.3 9,422.1 9,921.9 10,166.5 11,304.5
belonging to parent
company shareholders IFRS
Minority interest 153.3 112.6 105.7 110.6 121.7
Total shareholders' 11,480.6 9,534.7 10,027.6 10,277.1 11,426.2
equity
INCOME STATEMENT 1-12/2004, EUR 1,000
FAS Change IFRS
1-12/2004 1-12/2004
Turnover 26 173.7 0.0 26 173.7
Other operating income 210.2 -22.7 187.5
Materials and services -934.2 0.0 -934.2
Depreciation and write-downs -933.7 -252.1 -1 185.8
Other operating expenses -22 694.3 810.8 -21 883.5
EBIT 1 821.7 536.0 2 357.7
Financial income (net) 595.2 -175.7 419.5
Extraordinary items 0.0 0.0 0.0
Earnings before tax 2 416.9 360.3 2 777.2
Income taxes -346.9 -60.3 -407.2
Minority interest -29.8 29.8 0.0
Net profit 2 040.2 329.8 2 370.0
Distribution:
Parent company shareholders 2 040.2 300.1 2 340.3
Minority 29.8 0.0 29.8
The weighted average number of shares during the financial year, adjusted for
share issues, is 16,551,207. The weighted average number of shares during the
financial year, adjusted for dilution, is 16,754,151. The number of shares
outstanding at the end of the financial year was 18,395,349.
The company does not hold any of its own shares.
The Group does not have any liabilities arising from derivative contracts.
