SYSOPEN DIGIA'S STRATEGY 2006-2010
SYSOPEN DIGIA PLC STOCK EXCHANGE RELEASE 11 November 2005 at 8:00 a.m.
SYSOPEN DIGIA'S STRATEGY 2006-2010 SysOpen Digia Plc has completed the first part of the strategy planning it started in conjunction with the corporate restructuring carried out in the spring of 2005. In this strategy planning process, the company has defined a new mission, vision, strategic objectives, and the measures it has planned to achieve these goals. KEY POINTS OF THE STRATEGY An agile and modern company SysOpen Digia sees a clear demand in the market for a modern, efficient, and agile information and communications technology (ICT) company. SysOpen Digia provides its customers modern information and communication technology solutions, and outsourcing and software development services. SysOpen Digia can handle the development and maintenance of the strategic and operational systems of its customers, the contract engineering of software-intensive products, and the integration of wireless solutions as a seamless part of these systems and products. SysOpen Digia's strategic customer segments include operators, handset manufacturers and enterprises alongside with public administration and associations. As a comprehensive systems integrator SysOpen Digia can provide its customers with exceptionally wide area of expertise in smartphones, telecommunication and software architecture combined with strong industrial know- how and experience in the building of operational data systems in all main customer segments. A technology expert and outsourcing partner in changing markets In line with existing trends, demand in the ICT market is expected to focus more and more clearly on outsourcing, contract engineering, and the integration of standard software products. An increasing part of the strategic development projects started by customers during the period under review include mobile technologies in their architecture. Most of these projects are based on modern software architectures and user interfaces. The information technology projects of the near future will focus on the business operations and needs of the user, usability and user interfaces, expandability and product life cycle of the system, and productivity and quality. The rapid increase in the number of smartphones, and their wider use as a part of the IT infrastructure of companies, opens new business opportunities. The contract engineering market for smartphones will also develop through consolidation, new working models, and partnerships. The company's aim is to achieve by 2010 a significantly better position as a supplier of information technology systems, and as an outsourcing partner, to large companies in Finland, and to expand its home markets to include Northern Europe. The company aims to continue to strengthen its position as a leading global player in the contract engineering of smartphones. During the period under review, the company's aim is to carry out significant new business activity in the area of the mobile integration of companies. A profitable growth company SysOpen Digia's primary goal is to continue to expand its business operations in a profitable way. The company's goal is to grow both organically and through corporate acquisitions. Alongside the growth, the goal is to maintain profitability at a good level. The targeted rate of growth will be achieved by developing new products and services, through corporate acquisitions, and by working actively in the outsourcing markets for ICT systems and product development. The company aims to position itself clearly among the partners of large multinational and regional ICT companies, and to operate as a modern and agile player. International growth is based on a good position in the domestic market. Adequate size and stable business operations in the domestic market make strong growth possible internationally, so that the risks of individual projects remain at a manageable level. KEY FINANCIAL TARGETS SysOpen Digia's long-term goal is to achieve average annual growth in net sales of 25 percent. Part of the growth will be carried out organically, but the plan is to achieve over half of the absolute growth target through an active corporate acquisition strategy. The company aims to maintain its profitability at a good level during the period under review. The long-term profitability target is an average EBIT of 10-12 percent. The profitability target has been set at a realistic level considering the fast growth that will be achieved in large part through corporate restructurings, or other major investments aimed at achieving a significant increase in business operations. MAIN AREAS OF BUSINESS OPERATIONS The company's two main business areas - the integration business and the smartphone software business - are both key sources of growth in the future. This is reflected in the fact that the growth targets of SysOpen Digia's two divisions have been set at the same level. The development of new mobile integration business to serve enterprises and public administration during the period under review is based on the combination of the expertise and resources of both above mentioned divisions. The Smartphone Business Division Growth in the Smartphone Business Division is supported by the significant market position achieved in this business area. SysOpen Digia is a global market leader in the contract R&D of software for Symbian-based smartphones. Consolidation trend is expected to continue in this business area, and SysOpen Digia plans to be an active participant in this process. In order to further strengthen its position, the company will continue to improve the services, products and operating models provided by the division. The division's operations will be developed through investments in products and services, by forming new partnerships as well as deepening existing ones, and through corporate acquisitions. The strategic targets of the Smartphone Business Division can be divided according to the areas of business operations as follows: - The growth of the Symbian software development business both organically and through corporate acquisitions - The growth of the Mobile Linux software development business organically and through acquisitions - The development of mobile integration solutions and technologies in co- operation with the Integration Business Division - The development of comprehensive smartphone products and services in co- operation with partners (Original Design Engineering) - The growth of business areas which support project activities, including training, consulting and usability planning, both organically and through corporate acquisitions Internal development projects to strengthen the division's competitiveness focus on improving efficiency (process development, testing automation, improvements in expertise), developing existing and new service models, contractual product development, and development of products associated with telephony solutions (telephone integration solutions, testing tools, and device management solutions). The Integration Business Division The growth of the Integration Business Division is based on deepening existing business operations and developing new areas of growth. The growth of the division is supported by the high level of customer satisfaction with the existing operations, high levels of expertise, and experience with large-scale projects. Meeting our growth targets requires investments to develop products and services, expansion into new areas of business operations, and corporate acquisitions and partnerships. The division's existing products and services will be developed to meet the needs of a wider selection of customers. The strategic targets of the Integration Business Division can be divided as follows: - Growth in existing business operations: increasing market share, focusing on deepening and expanding key customer segments, the introduction of new software products, and increased emphasis on the determined development of services and methods - Growth through new services: new integration services (including an integration expertise centre), architecture services (such as company-level architecture and service architecture), portal solutions, and business intelligence and document administration services - The development of mobile integration solutions and technologies in co- operation with the Smartphone Business Division and offering of these new services to enterprises and public administration - Expansion into new areas of business operations by making use of existing expertise: application outsourcing activities, ERP operations, selected new product operations, and next generation operator services - Growth will be sought in all business areas both organically and through corporate acquisitions Internal development projects to strengthen the division's competitiveness will focus on existing and new operating models and business operation concepts. Particular emphasis will be placed on the development of customer administration, service and process development, project management and the training of staff to increase their level of expertise. GROWTH AND CORPORATE ACQUISITIONS SysOpen Digia has set a growth target which clearly exceeds the average rate of growth in the industry. Our growth targets are based primarily on the development of the existing business operations, the development of new business operations by making use of our core areas of expertise, and expanding into new areas of business operations. Growth in all three of these areas can also be based on corporate acquisitions. Our corporate acquisition strategy is based on precise planning, the proactive choice and evaluation of targets, especially from the point of view of synergy, and a careful purchasing and integration process. Our evaluation criteria are always based first and foremost on the needs of our business operation strategy, and on increasing shareholder value. In evaluating the value of targets, we follow moderate principles, and use as means of payment whatever instrument is most suitable for each particular situation. From the point of view of risk management, targets are evaluated by taking into account such factors as size, level of international operations, the business operation environment, and how challenging the market is. FINANCING The aim of our financing strategy is to maintain the soundness of the company's financial position, and to focus on our ability to make planned investments and pay dividends. In line with our long-term financing plan, the company aims to carry out the necessary strategic investments in the period under review so that our solvency ratio will remain at the current level or higher. We will use various instruments in our financing operations, with the aim of finding the best solution from the point of view of shareholder value. DIVIDEND POLICY SysOpen Digia will follow an active dividend policy, and aims to pay out 30 percent of the company's annual profit in dividends. Dividend policy will also take into account financing to maintain profitable growth, and the company's future outlook. COMMUNICATION SysOpen Digia Oyj will organize a capital markets day for investors, analysts and the media on Thursday, November 17, 2005 from 1.00 pm to 6.00 pm. The meeting will be held at SysOpen Digia Tower, Hiomotie 19, 00380 Helsinki. If you would like to attend, please register by November 14 by sending an email to invest@sysopendigia.com. Helsinki, November 11, 2005 SysOpen Digia Plc Board of Directors For more information, please contact: Chief executive officer Jari Mielonen, Tel. +358 40 703 8383 e-mail: jari.mielonen@sysopendigia.com Head of strategy Tommi Laitinen, Tel. +358 40 505 1324 e-mail: tommi.laitinen@sysopendigia.com www.sysopendigia.com SysOpen Digia in Brief SysOpen Digia Plc is a leading integrator of information and communication solutions, providing engineering services, software solutions, training and consultation to enterprises, smartphone manufacturers, operators, public organisations and associations internationally. SysOpen Digia provides a complete end-to-end offering for both smartphone and information systems development. The company is based in Finland, operating globally and employing over 800 professionals. SysOpen Digia is listed on the Helsinki Exchanges. Distribution: Helsinki stock exchange Major media