SYSOPEN DIGIA'S STRATEGY 2007 - 2010
SYSOPEN DIGIA PLC STOCK EXCHANGE RELEASE 09.11.2006 at 10:00 a.m.
SYSOPEN DIGIA'S STRATEGY 2007 - 2010 SysOpen Digia will continue its strategy of profitable growth. The company has specified its strategic objectives and updated its strategy to match its new business segments published in August 2006. As part of its financing strategy, the company has today 9.11.2006 signed a syndicated loan agreement of EUR 80 million which will be used to reorganise the current loan portfolio. KEY POINTS OF THE STRATEGY An agile and modern company SysOpen Digia believes that there is a clear demand in the market for a modern, efficient, agile ICT partner with the ability to provide complete solutions and services. SysOpen Digia provides ICT solutions, services and technologies as well as outsourcing and software development services for its Customers to improve their business processes and competitive advantage. The company's key customer segments are telecommunications, industy and trade, and finance and services. As a complete solution provider, SysOpen Digia can offer its customers with exceptionally wide area of expertise product and service packages, combined with strong business domain expertise and profound experience in key business related information systems and contract engineering in selected customer segments. The company's operations in all business areas are based on customer-driven combination of product and service packages. SysOpen Digia aims to be the preferred partner for its strategic customers in the delivery of their key business related information systems. The company aims to position itself clearly among the multinational and large regional ICT companies. In this peer group SysOpen Digia differs as a modern and agile company. A complete solution provider, 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, extensive complete system deliveries and the integration of standard software products. In terms of the development of expertise and solutions, SysOpen Digia has made significant investments in focus areas in accordance with the key market trends. These key elements in the information technology projects of the near future include business domain knowledge, usability and user interfaces, expandability and total life-cycle management, as well as productivity and quality. An increasing number of customers' strategic development projects also include mobile technologies in their architecture. The rapid increase in the use of smartphones and wireless technologies as part of the IT infrastructure of companies is continuously opening up new business opportunities. The smartphone contract engineering market will also develop through consolidation, operating models based on assuming total responsibility and alliances. SysOpen Digia is a forerunner in the development and integration of wireless and mobile solutions as a seamless part of the information systems related to its customers' core business operations. By 2010, the company aims to attain a significantly better position as a supplier of information technology systems and an outsourcing partner in Finland and to expand its domestic market to cover Northern Europe. SysOpen Digia will have global operations in selected business areas. During the period under review, the company aims to establish significant new business activities in the area of mobile and real-time information systems for companies. MAIN AREAS OF BUSINESS OPERATIONS During 2006, the company has strengthened its main business areas and carried out a new organisation in August 2006 to meet the needs of its business operations and customers. The company's key business areas - telecommunications, industry and trade, and finance and services - acted as the basis for the new organisation, being all essential sources of growth in the future. The targeted organic growth and development of new business operations - among others in the area of mobile integration - taking place during the period under review, will be based on the synergistic integration of the competence and resources of all three business areas. Telecommunications SysOpen Digia has a strong position in the product development of smartphones and ICT solutions for operators. The company offers extensive product and service solutions that help its customers - mobile phone manufacturers, semiconductor suppliers and operators - to develop their own products and offerings. As one of the leading global software integrators in the smartphone market, SysOpen Digia has the capability to manage the complete development and integration of smartphone and software platforms. Our customers can benefit from our contract engineering services and products in all stages of smartphone development, as well as throughout the product life-cycle. SysOpen Digia also offers a comprehensive solution package that helps operators and service providers to expand their range of services and transfer fluently to IP-based services. The company provides high quality and cost-effective outsourcing services. Industry and Trade SysOpen Digia has a strong position in the information system market with respect to industry segment and trade value chain. The company's solid business sector expertise provides an optimal foundation for co-operation, creating a user- friendly and technically accomplished solution that supports the customer's processes. SysOpen Digia's solutions streamline companies' business processes, bring transparency to the order-delivery chain, and automate routine tasks. Company's business solutions cover enterprise resource planning systems, wireless and integration solutions, comprehensive eBusiness and content management solutions, and the related consulting, outsourcing and maintenance services. The solutions are based on SysOpen Digia's own duplicable software products, its partners' products, and packaged project delivery models. Finance and Services SysOpen Digia's ICT solutions for the finance and service sector are based on sound industry and technology know-how, covering the entire life-cycle of information systems. Nordic finance customers typically include professionals in investment and asset management, banks, and insurance and pension insurance companies. In the service sector, the company works mainly with travel and transport companies, the media, the public sector and various organisations. SysOpen Digia provides its customers with integrated complete solutions based on its own duplicable software products or its partners' products. Customer-specific solutions utilise advanced productivity tools and application frameworks. The services also include executive ICT and architecture consulting, e-business solutions, mobile integration, and application development methods. KEY FINANCIAL TARGETS SysOpen Digia's primary goal is to continue to expand its business operations in a profitable way. Growth is regarded as an integral part of strengthening the company's market position, developing a sufficient product and service offering, and producing services throughout the life-cycle of the customer relationship. Alongside this rapid pace of growth, the goal is to maintain profitability at a good level. SysOpen Digia's long-term objective is still to achieve average annual growth of 25 per cent in revenues. Part of this growth will be achieved organically, but the plan is to pursue over half of the absolute growth objective for 2006-2010 by employing an active M&A strategy. The target of inorganic growth is to create higher potential for future organic growth. SysOpen Digia has successfully reached its synergy targets of previous acquisitions ahead of schedule, and trusts in its ability to benefit further from the expertise and opportunity created by these reorganisations in terms of organic growth too. Growth will be achieved through the development of new services and products, active participation in the outsourcing market for ICT systems and product development, by expanding the market area with respect to potential business segments, and by acting as a forerunner in the development and integration of mobile and wireless solutions. SysOpen Digia will also continue its active acquisition strategy. International growth is based on a strong position in the domestic market. Sufficient size and steady business operations will enable strong international expansion, ensuring that the risks remain at a manageable level. Efforts will be made to retain the profitability target at a high level during the period under review. The long-term profitability target is an average EBIT of 10-12 per cent. This has been set higher than the industry average, but at a realistic level considering the rapid growth sought by the company. MERGERS AND ACQUISITIONS The acquisition strategy is founded on careful planning based on the business strategy, proactive selection of targets and their assessment, particularly from the perspective of business synergy, organic growth and shareholder value, and a meticulous acquisition and integration process. From a risk management perspective, matters to be considered include size, international activities, the business environment and market challenges. FINANCING The objective of the financing strategy is to secure the Group's financial position and its ability to execute planned investments and pay dividends. The purpose is to keep the equity ratio at least at the 40 per cent level while the necessary strategic investments are carried out. A long-term target is to raise the equity ratio above 50 per cent during the period under review. Various instruments will be used in the financing arrangements with the objective of finding the best solutions, taking shareholder value into account. As part of its financing strategy, the company has signed today, 9 November 2006, a syndicated loan agreement worth EUR 80 million, which is divided into a term loan of EUR 50 million and a revolving credit facility of EUR 30 million. The term of the loan is three years. With the loan arrangement, the company's current loan portfolio will be rearranged, its funding base will be expanded, financing costs will be optimised and the funding of future investments will be enabled. The banks participating in the loan arrangement are Sampo, Oko and Nordea. DIVIDEND POLICY SysOpen Digia follows an active dividend policy and aims to distribute 30 per cent of the Group's annual profit in dividends. However, the financing required for profitable growth and the company's prospects are taken into account each year when considering dividend payments. COMPANY MANAGEMENT Chaired by the CEO, the Management Group is in charge of the company's day-to-day business activities and the implementation of the corporate strategy in the company's practical operations, approved by the Board of Directors. In addition to the CEO, the Management Group consists of the heads of the company's business divisions, and representatives of the organisation's support functions. The members of the Management Group and their areas of responsibility are as follows: Jari Mielonen, President and CEO Seppo Laaksonen, Executive Vice President, Telecommunications Juha Sihvonen, Senior Vice President, Industry & Trade Juha Leinonkoski, Senior Vice President, Finance and Services Kjell Lindqvist, Chief Financial Officer, Financial Management and Administration Tommi Laitinen, Senior Vice President, Group Strategy and Development Tomi Merenheimo, Vice President, Legal and Communications CORPORATE COMMUNICATIONS SysOpen Digia will organise a capital markets day for investors, analysts and the media at 1 p.m. - 5 p.m. on Thursday, 9 November 2006 at the SysOpen Digia Tower, address Hiomotie 19, 00380 Helsinki. All are welcome. Helsinki, 9 November 2006 SysOpen Digia Plc Board of Directors For further information, please contact: Jari Mielonen, President and CEO, tel. 040 703 8383 email: jari.mielonen@sysopendigia.com Tommi Laitinen, Senior Vice President, Group Strategy and Development, tel. 040 505 1324 email: tommi.laitinen@sysopendigia.com www.sysopendigia.com SysOpen Digia in brief SysOpen Digia Plc is a modern, agile software company providing and implementing ICT products, services and technologies for its customers to improve their competitive advantage - solutions for the needs of a transforming world. The company is based in Finland, operating globally and employing over 1,100 professionals. SysOpen Digia is listed on the Nordic Exchange. Distribution: Helsinki Stock Exchange Key media