SYSOPEN DIGIA'S Q2/2005 TURNOVER HIGHER THAN TARGETED
SysOpen Digia Plc STOCK EXCHANGE RELEASE 17 August 2005, 8.00 a.m.
SYSOPEN DIGIA'S Q2/2005 TURNOVER HIGHER THAN TARGETED
SysOpen Digia Plc's Interim Report for 1 January-30 June 2005
- Consolidated turnover for H1/2005 EUR 27.2 million (HI/2004: EUR 13.0 million)
and Q2/2005 EUR 18.9 million (Q2/2004: EUR 6.6 million)
- Proforma turnover for the report period improved by 9.6 per cent, year on year.
- International operations' share of turnover increased considerably
- Resulting from former Yomi Software Ltd's reorganisation, the one-off expenses
recorded for the second quarter totalled EUR 1.9 million, and this business
integration stage was completed
- Operating profit (EBIT) before restructuring expenses for H1/2005 EUR 2.5
million (HI/2004: EUR 0.8 million) and Q2/2005 EUR 1.6 million (Q2/2004: EUR 0.4
million)
- Profitability (EBIT margin) before restructuring expenses for H1/2005 9.2 per
cent (H1/2004: 6.1 per cent) and for Q2/2005 8.5 per cent (Q2/2004: 6.1 per cent)
- Operating profit (EBIT) for H1/2005 EUR 0.6 million (HI/2004: EUR 0.8 million)
and Q2/2005 EUR -0.3 million (Q2/2004: EUR 0.4 million)
- Earnings per share after restructuring expenses in H1/2005 EUR 0.02 (H1/2004:
EUR 0.08) and Q2/2005 EUR -0.02 (Q2/2004: EUR 0.05)
- Consolidated turnover for 2005 is expected to come to EUR 58-60 million and the
second-half profit is expected to be better than that reported in the first half.
Figures in this interim report are compared with Sysopen Plc's figures for 2004.
The accounts of SysOpen Digia Smartphone Ltd (formerly Digia Inc.) have been
consolidated since March 2005. The accounts of SysOpen Digia Integration Ltd
(formerly Yomi Software Ltd) and SysOpen Digia Service Ltd (formerly Yomi Service
Ltd) have been consolidated since April 2005.
GROUP KEY FIGURES AND RATIOS
Q2/ Q2/ Change H1/ H1/ Change 2004
2005 2004 % 2005 2004 %
Turnover 18,901 6,552 188% 27,241 13,011 109% 26,174
Operating profit 1,614 397 307% 2,516 790 218% 2,358
before restructuring
expenses
- % of turnover 9% 6% 9% 6% 9%
Operating profit/loss -264 397 -166% 638 790 -19% 2,358
- % of turnover -1% 6% 2% 6% 9%
Net profit/loss -414 452 -192% 296 733 -60% 2,340
- % of turnover -2% 7% 1% 6% 9%
Return on equity, % -3% 18% 2% 14% 21%
Return on investment, -1% 17% 2% 14% 23%
%
Interest-bearing 41,183 316 41,183 316 134
liabilities
Cash and cash 25,554 5,334 379% 25,554 5,334 379% 5,909
equivalents
Net gearing, % 32% -52% 32% -52% -51%
Equity ratio, % 44% 70% 44% 70% 70%
Earnings per share, -0.02 0.05 -140% 0.02 0.08 -75% 0.25
undiluted, EUR
Earnings per share, -0.02 0.05 -140% 0.02 0.08 -75% 0.25
diluted, EUR
Equity per share 2.71 1.07 153% 2.71 1.07 153% 1.23
ADOPTION OF IFRS
Since the beginning of 2005, SysOpen Digia Plc has applied the International
Financial Reporting Standards (IFRS), replacing the Finnish Accounting Standards
(FAS). The second Interim Report for 2005 was prepared in accordance with the
recognition and measurement principles under IFRS. SysOpen Digia Plc's stock
exchange release of 31 March 2005 dealt with the reconciliation of shareholders'
equity and results on the IFRS adoption date and key IFRS comparatives for 2004.
CEO'S REVIEW
During the second quarter, SysOpen Digia completed the integration of its
businesses as planned. Despite this tough integration period, we were able to
improve our second-quarter turnover. In line with our expectations, one-off
expenses due to reorganisation measures affected second-quarter profitability.
All Group business areas are expected to show a profit by the end of the current
financial year.
Joint discussions (based on the statutory Information and Consultation of
Employees) applying to administrative staff and two units that joined SysOpen
Digia as a result of Yomi Software Ltd's acquisition came to an end on
17 June 2005. As a result, SysOpen Digia came to the conclusion that it would
neither dismiss nor lay off employees. During these discussions, the company,
however, reached an agreement on voluntary employment termination with 30
employees.
SysOpen Digia has embarked on preparing the Group's business and growth strategy,
this process continuing during the third quarter. In addition, its core
businesses aim at focusing on larger-scale and more comprehensive customer
solutions. The company's key internal development issues during the second half
will involve the creation of foundations for a shared corporate culture, the
maintenance and enhancement of job satisfaction and commitment, and the further
development of management and leadership systems.
Q2/2005 KEY EVENTS BY BUSINESS AREA
Integration business
The second quarter of 2005 saw the implementation of the integration project
covering the businesses of SysOpen, Digia and Yomi Software. For the integration
business, the most significant changes included combining the businesses
specialised in services for tele operators, integrating SysOpen's and Yomi
Software's Jyväskylä-based businesses and, by and large, restructuring the
company's business as a whole. During the second quarter, the business division
invested heavily in the acquisition of customers and customer projects and in
personnel co-operation. For the main, the integration project was completed as
planned by mid-June.
Customers' activity in investing and preparing investment in new information
systems remained at first-quarter levels.
Smartphone business
The Smartphone business consists of software engineering, training and consulting
services related to mobile phones, combined with a supporting product offering.
Contract engineering services account for the largest share of turnover. The
business division's technology focus is on Symbian-based software development.
Currently, SysOpen Digia is reckoned to rank among the market leaders in contract
engineering services for the world's largest mobile handset manufacturers through
its more than 450 smartphone professionals.
During the report period, SysOpen Digia's smartphone business completed the
integration of Yomi Software Ltd by unifying the organisations and combining
SysOpen Digia's and the acquired company's offerings within the smartphone
business area. Operating efficiency remained at a good level during the report
period, despite the intense integration process.
The combined product offering will enable SysOpen Digia to provide its customers
with greater efficiency through added synergies.
For the Smartphone business, this development will enable more comprehensive
deliveries according to the company's strategy.
Due to its strong and long-term investments in the Nokia Series 60 Platform and
related services, the Smartphone business has established a strong and trusted
position among its customers.
MARKETS
Demand for ICT technology solutions seems to be continuing its variable trend.
Customer investments are tending to focus on key solutions providing immediate
business benefits, and sales cycles are relatively long. Industry competition
will remain fierce and price competition will be sustained by customers' cost
pressures.
The European Information Technology Observatory (EITO) (March 2005) estimates
that in 2005 the European ICT market will grow faster than those of the USA and
Japan. The EITO states that new prospects and opportunities for the integration
of IT, telecommunications, consumer electronics and the new media explain growth
in the global ICT markets. The EITO adds that this ICT market growth in all key
segments will be driven by greater demand, stemming from European companies' view
of IT's role shifting away from the generation of cost savings towards providing
a competitive edge.
The EITO expects the Western European ICT market to continue its modest growth
from 2004, when ICT expenditure rose by 2.7 per cent over the previous year.
According to the EITO's and Market Vision's current projections, the ICT market
will expand by 3.7-3.8 per cent in 2005, with the software and ICT services
markets showing the fastest growth (software 4.4-5.4 per cent and ICT services
4.6-5.0 per cent). The EITO forecasts that the Western European ICT market's
turnover will total around EUR 616 billion in 2005 and improve by 3.7 per cent in
2006, to EUR 639 billion.
Global mobile-handset sales volumes are projected to total 775 million this year,
due to strong April-June sales (by Strategy Analytics, a research firm).
According to Canalys, a market analysis firm, Symbian-based smartphones have
increased their market share to 62.8 per cent. In Q2/2005, global smartphone
deliveries soared by 105 per cent, year on year.
Mobile handset volumes will increase rapidly in the dynamic market of the
emerging economies, but this trend will depress average mobile-handset selling
prices. For this reason, the contract engineering services market for mobile
phones is expected to continue to encounter downward price pressure caused by
ever-intensifying competition among mobile handset manufactures and their
profitability targets.
PROSPECTS
Leading smartphone manufactures are expected to face ever-intensifying
competition for their market share. It is estimated that the largest
manufacturers will focus on implementing their selected product platform strategy
and gradually diversifying into basic mobile phones. Global operators are slowly
showing increasing interest in differentiating smartphones to meet service and
brand requirements. Faced by toughening competition, semi-conductor manufacturers
are seeking joint ventures and alliances with the aim of catering for the needs
of mobile handset manufacturers on a more comprehensive basis.
In the long term, the Smartphone business focus is expected to shift towards a
complete service provider within software integration, 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's
customer policy will place an emphasis on selected operators and semi-conductor
manufacturers.
In the ICT market, SysOpen Digia aims to provide value-added, customer-driven
solutions in which the company plays a more comprehensive role as a developer and
co-ordinator of integration architecture. The company seeks to develop its
integration business area's focus in the following segments: national security,
the public sector, the financial and employment pension information system
markets, operator services, major architecture-based integration projects and
outsourced service packages. Competence centres based on key technologies will
enhance SysOpen Digia's ability to cater for the needs of its customers and
create new business concepts with them.
The second quarter saw the completion of the first stage involved in the Group's
integration process. During the second half, the company aims to continue to
develop and streamline its business and focus on sustaining and improving
profitability. Consolidated turnover for 2005 is expected to come to EUR 58-60
million and the second-half profit is expected to be better than that reported in
the first half.
TURNOVER
Year on year, SysOpen Digia's first-half consolidated turnover improved by 109.4
per cent, to EUR 27.2 million (H1/2004: EUR 13.0 million). Second-quarter
turnover rose to EUR 18.9 million, up 188.5 per cent on a year earlier (Q2/2004:
EUR 6.6 million) and an improvement of 126.6 per cent over Q1/2005 (EUR 8.3
million). International operations accounted for 7 per cent (H1/2004: 1 per cent)
of first-half consolidated turnover and 8 per cent of second-quarter consolidated
turnover (Q2/2004: 1 per cent).
Determined efforts to develop customer relationships and service offerings
contributed favourably to reported turnover.
SysOpen Digia's proforma consolidated turnover for the first half amounted to EUR
35.4 million, up by 9.6 per cent year on year.
PROFIT AND PROFITABILITY
SysOpen Digia's first-half operating profit (EBIT) before one-off restructuring
expenses of EUR 1.9 million totalled EUR 2.5 million, up 218.4 per cent on a year
earlier (H1/2004: EUR 0.8 million), while that reported for the second quarter
before one-off restructuring expenses came to EUR 1.6 million, up 306.8 per cent
over the previous year (Q2/2004: EUR 0.4 million).
Operating profit for the report period after restructuring expenses (EBIT)
totalled EUR 0.6 million (H1/2004: EUR 0.8 million), whereas the second quarter
showed a loss of EUR 0.3 million (Q2/2004: EUR 0.4 million).
Pre-tax profit for the first half was EUR 0.2 million (H1/2004: EUR 0.8 million),
whereas the second quarter showed a loss of EUR 0.7 million (Q2/2004: EUR 0.4
million).
Net profit for the period totalled EUR 0.3 million (H1/2004: EUR 0.7 million),
whereas the second quarter showed a loss of EUR 0.4 million (Q2/2004: EUR 0.5
million). Earnings per share were EUR 0.02 (H1/2004: EUR 0.08 million) in the
second half and EUR -0.02 million in the second quarter (Q2/2004: EUR 0.05).
The Integration business reported improved year-on-year profitability (EBIT
margin) during the report period, coming to 8.1 per cent (H1/2004: 4.9 per cent),
whereas the Smartphone business recorded lower year-on-year profitability (EBIT
margin), or 10.6 per cent (H1/2004: 15.0 per cent).
Both business areas reported good capacity utilisation rates, which also
contributed favourably to turnover. The reported expense structure of business
operations was as expected.
Group net financial expenses for H1 totalled EUR 0.5 million. Based on the
Helsinki District Court's ruling, financial expenses include around EUR 0.1
million in provisions, related to a commitment fee payable to Sampo Bank Plc
associated with the 2003 Novo Group acquisition initiative.
SysOpen Digia Group posted a first-half proforma loss of EUR 3.3 (H1/2004: EUR
2.0 million). This fall in proforma results is due to writedowns of capitalised
expenses, recognised expense provisions and incurred restructuring expenses
related to the acquired business of Yomi Software.
FINANCIAL POSITION AND CAPITAL EXPENDITURE
SysOpen Digia's consolidated balance sheet total on 30 June 2005 amounted to EUR
113.2 million (30 June 2004: EUR 17.0 million) and equity ratio stood at 44 per
cent (H1/2004: 70 per cent). The ratio of net liabilities to shareholders'
equity, or net gearing, was 32 per cent (H1/2004: -52 per cent). Liquid assets
totalled EUR 25.6 million (Q2/2004: EUR 5.3 million). The Group has EUR 41.2
million in interest-bearing liabilities, which it will amortise by the end of
2005, using liquid assets.
The Group showed a positive EUR 3.3 million cash flow from business operations in
the first half and EUR 2.3 million in the second quarter.
Second-quarter gross capital expenditure totalled EUR 1.1 million (Q2/2004: EUR
1.0 million). At the period-end, unallocated Group goodwill totalled EUR 51.4
million and the amount allocated to customers EUR 12.0 million. The company uses
annual impairment tests to review the unallocated share of goodwill. As a result
of the IFRS adoption, the company no longer amortises goodwill on a regular
basis. There is no indication of impaired assets.
Reported return on investment (ROI) was 2 per cent (H1/2004: 14 per cent), while
return on equity (ROE) reached 2 per cent (H1/2004: (14 per cent). One-off
restructuring expenses of EUR 1.9 million reduced both ROI and ROE during the
report period.
RISK ASSESSMENT
The key risks monitored by SysOpen Digia within its risk management are
associated with customers, employees, projects, data security and integration.
The company aims to manage customer risks by actively developing and monitoring
its customer base. During the report period, the customer base saw favourable
developments as a result of corporate transactions, and the company has begun to
monitor risk management by customer segment. Employee risk management involves
active performance-review and goal-setting processes with key employees and, in
this respect, the Group has already set its post-integration-phase goals for
2005. The third quarter will see a job satisfaction survey. Project audits
initiated in the previous report period helped to identify risky projects and
ensure their successful implementation. Data security risk management relies on
data security audits and the continuous development of operating models,
practices and processes enhancing data security. Business integration risks were
managed at Management Group level, to which the Integration Office was attached.
It was the Integration Office's duty to prepare, co-ordinate and manage the
integration process, according to an approved integration plan and schedule, and
to identify any deviations in advance and respond to these through change
management. Due to the completion of the business integration, the Integration
Office has been closed down and daily business management has taken charge of all
of its functions.
HUMAN RESOURCES AND ADMINISTRATION
SysOpen Digia invested in employee and middle-management competence development
and training as planned, involving in-house OpenCollege training, induction
training in smartphone integration and training modules included in the Business
Academy programme for Smartphone business's key employees. The second half will
involve Group-level development of aspects related to job satisfaction and the
building of corporate culture.
At the end of the period, the number of employees totalled 821, up by 533, or
185.1 per cent, from the level in late 2004 (2004: 288). The number of employees
averaged 655, up 369, or 129.0 per cent (2004: 286).
Reported employee turnover came to 3.0 per cent (H1/2004: 6.4 per cent).
Employees by function, at the end of H1/2005:
Integration Division 39%
Smartphone Division 57%
Administration and management 4%
The period-end number of employees abroad accounted for 1 per cent of all staff.
Sysopen Plc's Board of Directors comprised the following members until the Annual
General Meeting (AGM) of 1 March 2005: Kari Karvinen (Chairman), Risto Linturi
(Vice Chairman), Pekka Eloholma, Reijo Koski-Lammi and Matti Mujunen. The AGM
elected, conditional on the merger of Sysopen Plc and Digia Inc., the following
members to SysOpen Digia Plc's Board of Directors: Pekka Sivonen (Chairman), Kari
Karvinen (Vice Chairman), Pekka Eloholma, Matti Mujunen, Mikko Terho and Pertti
Kyttälä. Sysopen Plc's former Board of Directors acted as a temporary Board
during 1-4 March 2005. Acting as SysOpen Digia Plc's CEO until 4 March 2005, Arto
Sahla was succeeded by Jari Mielonen as of 4 March 2005.
During the report period, KPMG Wideri Oy Ab, Authorised Public Accountants, acted
as the Group's auditor, with Ari Ahti, Authorised Public Accountant, acting as
the principal auditor.
MERGERS & ACQUISITIONS AND DIVESTMENTS
Based on a combination agreement signed on 11 February 2005, Sysopen Plc and
Digia Inc. agreed to merge which was confirmed on 4 March 2005, since when the
merged company has operated under the name of SysOpen Digia Plc.
On 21 March 2005, SysOpen Digia Plc signed an agreement with Elisa Corporation,
whereby SysOpen Digia would buy all Yomi Software Ltd shares for EUR 12.1
million. SysOpen Digia paid the purchase price in cash using cash and cash
equivalents.
SysOpen Digia's FAS-based proforma figure for 2004 by company:
EUR million Sysopen Plc Digia Inc. Yomi Software Total
Ltd
Turnover 26.2 21.1 16.8 64.1
EBITA 2.3 3.1 0.4 5.8
SysOpen Digia's proforma net gearing stood at 38 per cent and equity ratio at 44
per cent.
GROUP STRUCTURE AND ORGANISATION
At the end of the report period, SysOpen Digia Group consisted of SysOpen Digia
Plc, the parent company, and the following operating subsidiaries: SysOpen Digia
Integration Ltd (parent company holding: 100 per cent), SysOpen Digia Smartphone
Ltd (100 per cent), SysOpen Object Team Oy (94.2 per cent) and SysOpen Limited
(100 per cent). In addition, SysOpen Digia Integration Ltd has a wholly owned
operating subsidiary, SysOpen Digia Service Ltd.
Based on a reshaped corporate organisation, SysOpen Digia has a common Group
administration and, since 4 March 2005, has operated through two business
divisions - Integration Division and Smartphone Division. Yomi Software Ltd was
renamed SysOpen Digia Integration Ltd, to which the whole of SysOpen Digia's
Integration business was transferred. Digia Inc. was renamed SysOpen Digia
Smartphone Ltd, to which the whole of SysOpen Digia's Smartphone business was
transferred.
SysOpen Digia Plc decided to merge its wholly owned subsidiary, Eomer Holding Oy,
with SysOpen Digia Smartphone Ltd. The aim is to put this merger into effect as
soon as possible, estimated by 31 December 2005. Eomer Holding Oy does not carry
out any business.
KEY EVENTS AFTER THE REPORT PERIOD
On 5 August 2005, SysOpen Digia's Board of Directors decided to distribute the
2005 stock options, issued by the Annual General Meeting of 1 June 2005, to the
Group's key employees and SysOpen Digia Plc's wholly owned subsidiary. Stock
options are aimed at motivating key employees to work on a long-term basis with a
view to increasing shareholder value and enhancing their loyalty to the company.
In addition, this incentive plan aims to combine shareholders' goals with those
of key employees and to make the key employees become long-term shareholders in
the company.
SHAREHOLDERS' MEETINGS
1. Annual General Meeting of 1 March 2005
Convened on 1 March 2005, the Group's Annual General Meeting (AGM) adopted the
financial statements for 2004, discharged Board members and the Managing Director
from liability and, pursuant to the Board's proposal, confirmed the profit
distribution for 2004 and Board emoluments, and elected the new Board of
Directors.
In addition, the AGM decided to:
1) Alter the Articles of Association in such a way that the Board comprise 5-8
members.
2) Alter the Articles of Association, conditional on Digia Inc.'s merger, in such
a way that the company be renamed SysOpen Digia Oyj, or SysOpen Digia Plc in
English.
3) Alter the Articles of Association, conditional on the merger with Digia Inc.,
in such a way that the minimum authorised capital be one million and two hundred
thousand (1,200,000) euros and the maximum authorised capital four million and
eight hundred thousand (4,800,000) euros, within whose limits the company may
increase or reduce its share capital without altering its Articles of
Association.
4) Authorise the Board of Directors, on certain conditions, to decide on issuing
one or several convertible bonds, issuing stock options and/or increasing the
company's share capital through one or several rights issues. The authorisation
is valid for one year from the date of the AGM's decision. This authorisation was
replaced with another one issued by the Extraordinary General Meeting (EGM) of 1
June 2005. The Board has not exercised this authorisation.
2. Extraordinary General Meeting of 1 June 2005
Convened at the Group's parent company on 1 June 2005, the Extraordinary General
Meeting decided to issue 2005K and 2005 A-C stock options and, following the
cancellation of the former Board authorisation, to authorise the Board of
Directors to decide on issuing, on certain conditions, one or several convertible
bonds, issuing stock options and/or increasing share capital through one or
several rights issues. The authorisation is valid for one year from the date of
the AGM's decision. The Board has not exercised this authorisation.
SHARE CAPITAL AND SHARES
The nominal value of a share is EUR 0.1, and the period-end number of shares
totalled 18,177,800.
On 30 June 2005, SysOpen Digia had a total of 3,335 shareholders. The ten largest
shareholders were as follows:
Shareholder Proportion (%) of shares and
votes
Pekka Sivonen 20.5%
Kari Karvinen 8.7%
Matti Savolainen 8.0%
Jorma Kylätie 5.3%
TeliaSonera Finland Oyj 4.3%
Varma Mutual Employment Pension Insurance 4.1%
Company
Eqvitec Teknologiarahasto I Ky 3.3%
Mika Malin 2.7%
Umo Capital Oy 1.8%
Mutual Fund Pohjola Finland Value 1.5%
Holdings by the number of shares held on 30 June 2005
Number of shares Proportion (%) of Proportion (%) of
holdings shares and votes
1-100 26.8% 0.4%
101-1,000 53.2% 4.5%
1,001-10,000 17.0% 8.9%
10,001-100,000 2.2% 14.9%
100,001-1,000,000 0.6% 34.2%
1,000,001-3,000,000 0.1% 37.1%
Total number of shares: 18,177,800
Holdings by sector on 30 June 2005
Proportion (%) of Proportion (%) of
holdings shares
Non-banking corporate sector 6.9% 15.3%
Financial institutions and insurance 0.7% 8.8%
companies
Non-corporate public sector 0.0% 4.1%
Non-profit organisations 0.5% 1.9%
Households 91.4% 69.8%
Foreign holding 0.5% 0.1%
H1/2005 SHARE PERFORMANCE ON THE HELSINKI STOCK EXCHANGE
SysOpen Digia Plc shares are quoted on the Main List of the Helsinki Stock
Exchange under the Information Technology IT Services sector. One trading lot
includes 50 shares and the trading code is SYS1V. The lowest reported share
quotation in 2005 was EUR 3.43 and the highest EUR 4.89. The share closed at UR
4.37 on the report period's final trading day. The trade-weighted average
amounted to EUR 4.32. The Group's market capitalisation totalled EUR 79,436,986
at the end of the report period.
During the report period, the company received the following three announcements,
as required by Section 9, Chapter 2 of the Securities Market Act:
1. Related to Sysopen Plc's and Digia Inc.'s combination, SysOpen Digia Plc's
(hereinafter SysOpen Digia) largest shareholder, Pekka Sivonen, has authorised
certain former holders of Digia B series shares to buy a total of 765,011 SysOpen
Digia shares - accounting for around 4.2 per cent of SysOpen Digia shares - at a
pre-determined price (call option) within 12 months as of 4 March 2005. Should
said shareholders exercise this call option in full, Pekka Sivonen's shareholding
in SysOpen Digia and the related votes will reduce to less than one fifth (1/5).
2. Based on trades in SysOpen Digia Plc shares carried out by Eqvitec
Teknologiarahasto I Ky on 22 March 2005, Eqvitec Teknologiarahasto I Ky's holding
in SysOpen Digia Plc shares and the related votes was lower than one-twentieth
(1/20).
3. Based on trades in SysOpen Digia Plc shares carried out by TeliaSonera Finland
Plc on 23 March 2005, TeliaSonera Finland's holding in SysOpen Digia Plc shares
and the related votes was lower than one-twentieth (1/20).
STOCK-OPTION SCHEMES
SysOpen Digia Plc's stock-option scheme for 2000-2005 expired on 31 May 2005,
with
no shares subscribed on the basis of this scheme. The 2000-2005 stock options
have been removed from the book-entry security system.
Stock-option scheme 2003
The number of the stock options initially issued under the 2003 stock-option
scheme totalled 670,000 as follows: 210,000 2003A stock options, 160,000 2003B
stock options, 150,000 2003C stock options and 150,000 2003D stock options, all
of which have been subscribed. The share subscription period for 2003A stock
options is from 2 May 2004 until 31 October 2005, 2003B stock options from 1
November 2004 until 31 October 2006, 2003C stock options from 1 November 2005
until 31 October 2007 and 2003D stock options from 1 November 2006 until 31
October 2008. The dividend-adjusted per-share subscription price for 2003A, 2003B
and 2003C and 2003D options is currently EUR 2.87, EUR 2.78 and EUR 3.75 and EUR
4.32, respectively. Under the terms and conditions of the option scheme,
distributed dividends will be deducted from the subscription prices. On 16 August
2005, SysOpen Partners Oy, SysOpen Digia Plc's wholly owned subsidiary, held a
total of 47,741 stock options based on the 2003 stock-option scheme. The 2003A
options have been quoted on the Helsinki Stock Exchange's Stock Options list
since 25 May 2004 and the 2003B options since 18 January 2005.
SysOpen Digia announced in its stock exchange releases on 22 April 2005, 23 June
2005 and 12 August 2005 that a total of 97,746 new shares had been subscribed,
based on the 2003 stock-option scheme, with 63,396 2003A stock options and 34,350
2003B stock options being exercised.
Stock-option scheme 2005K
The number of stock options attached to the 2005K stock-option scheme totals
663,049, 105,408 of which are labelled with 2005K1 and 557,641 are labelled with
2005K2. All of these stock options have been subscribed. The stock options
entitle to subscription for a maximum of 663,049 SysOpen Digia Plc shares, each
share bearing a par value of EUR 0.10.
The per-share subscription price for 2005K1 and 2005K2 stock options is
EUR 1.21 and EUR 2.41, respectively. The share subscription price based on the
stock options will be reduced by the amount of dividend decided after 1 June 2005
and before share subscription on each record date. However, the per-share
subscription price is always at least the share's par value. The share
subscription period for the 2005K1 stock option began on the date of their
registration with the Trade Register on 12 August 2005 and will expire on 31
December 2007. The subscription period for the 2005K2 stock options will be from
1 January 2006 until 31 December 2007. The 2005K1 stock options may be used only
for share subscription. On 16 August 2005, SysOpen Partners Oy, SysOpen Digia
Plc's wholly owned subsidiary, held a total of 1,405 stock options based on the
2005K stock-option scheme.
Stock-option scheme 2005
The number of stock options attached to the 2005 stock-option scheme totals
900,000, 300,000 of which are labelled with 2005A, 300,000 with 2005B and 300,000
with 2005. The stock options entitle to subscription for a maximum of 900,000
SysOpen Digia Plc shares, each share bearing a par value of EUR 0.10.
The per-share subscription price for the 2005A stock option is EUR 4.33. The per-
share subscription price for the 2005K2 stock option will be determined by the
trade-weighted average of a SysOpen Digia Plc share quoted on the Helsinki Stock
Exchange during 20 trading days following the release of SysOpen Digia's January-
March Interim Report 2006.
The per-share subscription price for the 2005C stock option will be determined by
the trade-weighted average of a SysOpen Digia Plc share quoted on the Helsinki
Stock Exchange during 20 trading days following the release of SysOpen Digia's
January-March Interim Report 2007. The share subscription price based on the
stock options will be reduced by the amount of dividend decided after the
beginning of the subscription price determination period and before share
subscription on each record date. However, the per-share subscription price is always at least
the share's par value. The share subscription period for the 2005A stock option
will be from 1 November 2007 until 30 November 2009, the 2005B stock option from
1 November 2008 until 30 November 2010 and the 2005C stock option from 1 November
2009 until 30 November 2011. As a result of the share subscriptions based on the
2005A, 2005B and 2005C stock options, SysOpen Digia Plc's share capital may
increase by a maximum of EUR 90,000 and the number of shares by a maximum of
900,000 new shares. On 16 August 2005, SysOpen Partners Oy, SysOpen Digia Plc's
wholly owned subsidiary, held a total of 660.000 stock options based on the 2005
stock-option scheme.
The number of all stock options issued by SysOpen Digia totalled 2,135,303 on 16
August 2005. The shares to be subscribed on the basis of the stock options will
account for a maximum of 10.5 per cent of the company's shares and votes entitled
by the shares after any possible increase of the company's share capital. On 16
August, SysOpen Partners still held 709,146 of all stock options. The dilution
effect of the distributed stock options was a maximum of 7.3 per cent on 16
August 2005.
BRIEFING
SysOpen will hold a briefing on its H1/2005 performance for analysts and the
press at the Scandic hotel, Simonkentän Paviljon-terassikabinetti, Simonkatu 9,
Helsinki, on Wednesday, 17 August 2005, starting at 11.00 a.m. All are welcome.
Helsinki, 17 August 2005
SYSOPEN DIGIA PLC
Board of Directors
FOR FURTHER INFORMATION, PLEASE CONTACT
Jari Mielonen, CEO,
tel. +358 424 2020 370, gsm +358 40 703 8383; email:
jari.mielonen@sysopendigia.com
The interim accounts and associated slide show will be available at
www.sysopendigia.com in the 'Investors' section from 11.00 a.m.
DISTRIBUTION
Helsinki Stock Exchange
Major media
ATTACHMENTS
Consolidated Income Statement, IFRS
Turnover and operating profit by division, IFRS
Consolidated Balance Sheet, IFRS
Consolidated Cash Flow Statement, IFRS
Consolidated Income Statement by quarter, IFRS
Group key figures and ratios, IFRS
Proforma Income Statement, IFRS
Statement on changes in shareholders' equity
Summary of IFRS effects on shareholders' equity
Income Statement H1/2004, FAS - IFRS
This Interim Report is based on unaudited figures.
CONSOLIDATED INCOME STATEMENT, EUR 1,000
Q2/ Q2/ Change H1/ H1/ Change
2005 2004 % 2005 2004 % 2004
Turnover 18,901.0 6,551.5 188% 27,241.3 13,011.2 109% 26,173.7
Other operating 48.2 53.2 -9% 81.6 77.9 5% 187.5
income
Materials and -1,230.0 -262.9 368% -1,424.6 -513.2 178% -934.2
services
Depreciation and -870.9 -291.8 198% -1,285.8 -570.4 125% -1,185.8
impairment
Other operating -17,111. -5,653.0 203% -23,974. -11,215. 114% -21,883.
expenses 9 9 4 5
Operating profit -263.5 396.9 -166% 637.6 790.2 -19% 2,357.7
Financial income -450.4 22.0 -2,147 -451.6 -37.0 1,120% 419.5
(net) %
Pre-tax profit -713.9 419.0 -270% 186.0 753.1 -75% 2,777.2
Income tax charge 304.2 33.9 797% 119.8 -5.9 -2,130 -407.2
%
Net profit/loss -409.7 452.9 -190% 305.8 747.2 -59% 2,370.1
Allocation:
Parent company -414.2 452.2 -192% 296.2 733.4 -60% 2,340.3
shareholders
Minority 4.5 0.7 539% 9.6 13.8 -31% 29.8
shareholders
Earnings per -0.02 0.05 -140% 0.02 0.08 -74% 0.25
share, EUR
Earnings per share -0.02 0.05 -140% 0.02 0.08 -75% 0.25
(diluted), EUR
TURNOVER BY DIVISION, EUR 1,000
Q2/ Q2/ Change H1/ H1/ Change
2005 2004 % 2005 2004 % 2004
Integration Division 9,133 5,737 59% 14,819 11,529 29% 22,962
Smartphone Division 9,768 815 1,098% 12,422 1,482 738% 3,212
Group total 18,901 6,552 189% 27,241 13,011 109% 26,174
OPERATING PROFIT BY DIVISION, EUR 1,000
Q2/ Q2/ Change H1/ H1/ Change H1+H2/
2005 2004 % 2005 2004 % 2004
Integration Division 581 331 76% 1,194 568 110% 1,876
Smartphone Division 1,033 122 745% 1,322 222 495% 482
Restructuring expenses -1,878 0 -1,878 0
Group total -264 453 -158% 638 790 -19% 2,358
CONSOLIDATED BALANCE SHEET, EUR 1,000
Assets 30 June 2005 30 June Change % 31 Dec.
2004 2004
Non-current assets
Intangible assets 65,935.1 1,793.4 3,577% 2,244.8
Tangible assets 2,880.7 1,799.7 60% 1,697.9
Financial assets 595.1 619.2 -4% 585.6
Deferred tax assets 1,708.9 139.8 1,097% 2.7
Total non-current 71,119.8 4,352.1 1,533% 4,531.0
assets
Current assets
Inventories 26.4 0.0 0.0
Current receivables 16,524.0 7,322.9 126% 10,149.0
Available-for-sale 17,516.2 3,724.8 370% 2,900.4
assets
Cash and cash 8,038.1 1,609.5 399% 3,008.4
equivalents
Total current assets 42,104.8 12,657.2 233% 16,057.8
Total assets 113,224.6 17,009.3 565% 20,588.8
Shareholders' equity 30 June 2005 30 June 2004 Change % 31 Dec.
and liabilities 2004
Share capital 1,817.8 926.3 96% 926.3
Issue premium fund 39,290.4 7,102.2 453% 7,102.2
Treasury shares 0.0 0.0 0.0
Fair value reserve 224.6 -170.4 -232% 84.9
Translation difference 23.1 -9.0 -356% 23.1
Other reserve 5,203.8 0.0 0.0
Retained earnings/loss 2,419.3 1,339.5 81% 827.7
Net profit/loss 296.2 733.3 -26% 2,340.3
Shareholders' equity 49,275.1 9,921.9 399% 11,304.5
held by parent company
shareholders
Minority interest 97.4 105.7 -8% 121.7
Total shareholders' 49,372.5 10,027.6 395% 11,426.2
equity
Liabilities
Long-term, 41,183.3 316.3 12,920% 133.5
interest-bearing
liabilities
Provisions 704.8 0.0 0.0
Deferred tax 3,356.5 83.2 3,934% 148.5
liabilities
Total long-term 45,244.6 399.5 11,225% 282.0
liabilities
Short-term liabilities 18,607.4 6,582.2 178% 8,880.6
Total short-term 18,607.4 6,582.2 178% 8,880.6
liabilities
Total liabilities 63,852.1 6,981.7 810% 9,162.6
Shareholders' equity 113,224.6 17,009.3 565% 20,588.8
and liabilities
CONSOLIDATED CASH FLOW STATEMENT 2004-05, EUR 1,000
Cash flow from business operations: H1/2005 H1/2004 2004
Cash flow from sales 29,034 10,976 24,066
Cash flow from other operations 82 78 210
Operating expenses -25,773 -10 188 -22,495
Cash flow from business operations 3,342 867 1,782
before financial items and taxes
Interest paid and other financial 2 -14 -9
expenses
Interest received from operations 2 1 1
Income taxes paid -79 -122 -137
Cash flow before extraordinary items 3,267 732 1,636
Cash flow from business operations due 0 0 -185
to extraordinary items
Cash flow from business operations 3,267 732 1,451
Cash flow from investments:
Investments in tangible and intangible -627 -1,091 -1,580
assets
Capital gains on tangible and 1 0 11
intangible assets
Other investments -12,396 -55
Capital gains on other investments 167 30 572
Repayment of loans receivable 0 11
Dividends received from investments 5 24 24
Divested associated companies' shares 0 60
Interest income from investments 145 10 53.6
Cash flow from investments -12,705 -1,027 -903.4
Cash flow from financing:
Rights issue 269 0 0
Withdrawal of short-term loans 0 0 0
Withdrawal of long-term loans 0 0 0
Dividends paid and other profit -1,019 -2,223 -2,779
distribution
Cash flow from financing -750 -2,223 -2,779
Change in liquid assets -10,187 -2,519 -2,231
Liquid assets at period-start 5,909 7,781 7,781
Liquid assets received due to business 29,694 0
combinations
Changes in fair value 140 72 359
Liquid assets at period-end 25,554 5,334 5,909
Difference -10,187 -2,519 -2,231
CONSOLIDATED INCOME STATEMENT BY QUARTER
Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2005 2005 2004 2004 2004 2004
Turnover 18,901.0 8,340.3 7,747.2 5,415.3 6,551.5 6,459.7
Other operating 48.2 33.3 92.1 17.5 53.2 24.7
income
Materials and -1,230.0 -194.5 -199.4 -221.6 -262.9 -250.3
services
Depreciation and -870.9 -414.9 -309.0 -306.4 -291.8 -278.6
impairment
Other operating -17,111. -6,862.9 -5,803.3 -4,864.8 -5,653.0 -5,562.4
expenses 9
Operating profit/loss -263.5 901.1 1,527.5 40.0 397.0 393.2
Financial income -450.4 -1.2 181.0 275.5 -3.7 -33.3
(net)
Pre-tax profit/loss -713.9 899.9 1,708.6 315.6 393.2 359.9
Income tax charge 304.2 -184.4 -345.2 -56.1 33.9 -39.8
Net profit/loss -409.7 715.5 1,363.4 259.5 427.1 320.1
Allocation:
Parent company -414.2 710.4 1,352.3 254.6 426.4 307.0
shareholders
Minority shareholders 4.5 5.1 11.1 4.9 0.7 13.1
Earnings per share, -0.02 0.06 0.14 0.03 0.05 0.03
EUR
Earnings per share, -0.02 0.06 0.15 0.02 0.05 0.03
diluted, EUR
GROUP KEY FIGURES AND RATIOS
H1/2005 H1/2004 2004
Extent of business
Turnover 27,241 13,011 26,174
- year-on-year change 109% -4% 4%
Capital invested average 36,673,524 10,451 11,548
Personnel at period-end 821 298 288
Average personnel 655 274 286
Profitability
Operating profit/loss 638 790 2,358
- % of turnover 2% 6% 11%
Pre-tax profit 186 753 2,777
- % of turnover 1% 6% 11%
Net profit/loss 296 733 2,340
- % of turnover 1 % 6 % 9%
Return on equity (ROE) 2% 14% 21%
Return on investment (ROI) 2% 14% 23%
Financing and financial position
Interest-bearing liabilities 41,183 316 134
Available-for-sale assets + cash and 25,554 5,334 5,909
bank receivables
Net gearing 32% -52% -51%
Equity ratio 44% 70% 70%
Cash flow from business operations 3,267 732 1,451
Earnings per share, EUR 0.02 0.08 0.25
undiluted
Earnings per share, EUR 0.02 0.08 0.25
diluted
Equity per share 2.71 1.07 1.23
Price-earnings ratio (P/E) 227.40 50.46 13.81
Lowest share price 3.43 3.20 2.90
Highest share price 4.89 5.35 5.35
Average share price 4.32 4.11 3.66
Market capitalisation 79,437 33,902 31,679
PRO FORMA INCOME STATEMENT FOR 1 JANUARY-30 JUNE 2005
EUR 1,000 H1/2005 H1/2004
TURNOVER 35,379.4 32,292.9
Other operating income 283.4 120.2
Materials and services -2,051.7 -998.2
Depreciation and -4,016.3 -2,102.8
impairment
Other operating expenses -32,527.5 -26,789.9
OPERATING PROFIT/LOSS -2,932.7 2,522.2
Financial income (net) -326.3 262.8
Pre-tax profit -3,259.0 2,785.0
Income tax charge -41.1 -771.2
NET PROFIT/LOSS -3,300.1 2,013.8
Allocation:
Parent company -3,309.7 2,000.0
shareholders
Minority shareholders 9.6 13.8
STATEMENT ON CHANGES IN SHAREHOLDERS' EQUITY, EUR 1,000
Share Issue Transl Fair Treas Retaine Minori Total
capital premium ation value ury d ty sharehol
fund differ reserve share earning intere ders'
ences s s/loss st equity
FAS 936.3 7,092.2 32.9 0.0 0.0 3,218.2 153.3 11,432.9
shareholder
s' equity
31 Dec.
2003
IFRS 936.3 7,092.2 -6,7 -242.1 -606. 4,153.8 153.3 11,480.6
shareholder 2
s´ equity 1
Jan. 2004
Share -10.0 10.0 0.0
capital
Dividend -2, -2,223.1
payment 223.1
Cancellatio 606.2 -606.2 0.0
n of
treasury
shares
Available-f 36.7 36.7
or-sale
assets
Other -44.7 -44.7
Net 281.2 13.1 294.3
profit/loss
Total -10.0 10.0 0.0 36.7 606.2 2,548.2 -31.6 1,936.8
income and
expenses
recognised
for the
period
IFRS 926.3 7,102.2 -6.7 -205.4 0.0 1,605.7 121.7 9,543.8
shareholder
s´ equity
31 March
2004
Dividend 0.0
payment
Cancellatio 0.0
n of
treasury
shares
Available-f 35.0 35.0
or-sale
assets
Other -2.4 15.0 -16.7 -4.1
Net 452.2 0.7 452.9
profit/loss
Total 0.0 0.0 -2.4 35.0 0.0 467.2 -16.0 483.8
income and
expenses
recognised
for the
period
IFRS 926.3 7,102.2 -9.1 -170.4 0.0 2,072.9 105.7 10,027.6
shareholder
s´ equity
30 June
2004
Dividend
payment
Cancellatio 0.0
n of
treasury
shares
Available-f -32.0 -32.0
or-sale
assets
Other 22.0 22.0
Net 254.6 4.9 259.5
profit/loss
Total 0.0 0.0 0.0 -32.0 0.0 276.6 4.9 249.5
income and
expenses
recognised
for the
period
IFRS 926.3 7,102.2 -9.1 -202.4 0.0 2,349.4 110.6 10,277.1
shareholder
s´ equity
30 Sept.
2004
Dividend -555.8 -555.8
payment
Cancellatio 0.0
n of
treasury
shares
Available-f 287.4 287.4
or-sale
assets
Other 32.1 22.0 54.1
Net 1,352.3 11.1 1,363.4
profit/loss
Total 0.0 0.0 32.1 287.4 0.0 818.5 11.1 1,149.1
income and
expenses
recognised
for the
period
IFRS 926.3 7,102.2 23.1 85.0 0.0 3,167.9 121.7 11,426.2
shareholder
s´ equity
31 Dec.
2004
Dividend -1,018. -1,018.9
payment 9
Increase of 882.0 31,928.5 32,810.5
share
capital
Available-f -60.7 -60.7
or-sale
assets
Other 5,110.4 5,110.4
reserve
Other 18.3 18.3
Net 710.5 -28.8 681.7
profit/loss
Total 882.0 31,928.5 0.0 -60,7 0.0 4,820.3 -28.8 37,541.3
income and
expenses
recognised
for the
period
IFRS 1,808.3 39,030.7 23.0 24.3 0.0 7,988.3 92.9 48,967.5
shareholder
s´ equity
31 March
2005
Dividend 0.0
payment
Increase of 9.5 259.7 269.2
share
capital
Available-f 200.3 200.3
or-sale
assets
Other 93.4 93.4
reserve
Other 251.9 251.9
Net -414.2 4.5 -409.7
profit/loss
Total 9.5 259.7 0.0 200.3 0.0 -68.9 4.5 405.1
income and
expenses
recognised
for the
period
IFRS 1,817.8 39,290.4 23.0 224.6 0.0 7,919.4 97.4 49,372.6
shareholder
s´ equity
30 June
2005
RECONCILIATION OF SHAREHOLDERS' EQUITY AND RESULTS 2004
SUMMARY OF IFRS EFFECTS ON SHAREHOLDERS' EQUITY, EUR 1,000
1 Jan. 31 30 June 30 Sept. 31 Dec.
2004 March 2004 2004
2004 2004
Shareholders' equity held 11,279.6 9,315.3 9,722.9 9,902.8 10,531.1
by parent company
shareholders, FAS
IAS 12 Deferred tax -20.2 -6.2 -1.0 -5.4 -80.5
assets 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 held 11,327.3 9,422.1 9,921.9 10,166.5 11,304.5
by 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 H1/2004, EUR 1,000
FAS Change IFRS H1/
H1/2004 2004
Turnover 13,011.2 0.0 13,011.2
Other operating income 77.9 0.0 77.9
Materials and services -513.2 0.0 -513.2
Depreciation and impairment -449.6 -120.8 -570.4
Other operating expenses -11,416.2 200.8 -11,215.4
Operating profit/loss 710.1 80.0 790.2
Financial income (net) -1.7 -35.3 -37.0
Pre-tax profit 708.4 44.7 753.1
Income tax charge -25.9 20.0 -5.9
Minority interest -13.8 13.8 0.0
Net profit/loss 668.7 78.5 747.2
Allocation:
Parent company shareholders 668.7 64.7 733.4
Minority shareholders 13.8 0.0 13.8
Earnings per share, EUR 0.07 0.01 0.08
Earnings per share, diluted, 0.07 0.01 0.08
EUR
The weighted average of the share-issue adjusted number of shares totalled
14,833,661 during the report period. The weighted average of the dilution-
adjusted number of shares totalled 15,016,857 during the report period. The
number of outstanding shares totalled 18,177,800 at the end of the period.
The Group holds no treasury shares.
The Group has no liabilities associated with derivative contracts.
