SYSOPEN DIGIA'S STRONG Q1/2005 PERFORMANCE
SysOpen Digia Plc STOCK EXCHANGE RELEASE 2 May 2005, 8.00 a.m.
SYSOPEN DIGIA'S STRONG Q1/2005 PERFORMANCE
- Consolidated turnover: EUR 8.3 million, up 29.1 per cent
- Operating profit (EBIT): EUR 0.9 million, up 129.2 per cent
- Profitability (EBIT margin): 10.8 per cent (Q1/2004: 6.1 per cent)
- Earnings per share: EUR 0.06, up 100 per cent (Q1/2004: EUR 0.03)
- Period-end number of employees: 830, up 542
- Sysopen Plc and Digia Inc. merged on 4 March 2005
- On 21 March 2005, SysOpen Digia Plc acquired Yomi Software Ltd's share capital
from Elisa Corporation
- Reorganisation measures began immediately at Yomi Software Ltd. Due to the one-
off expenses resulting from these measures and Yomi Software Ltd making a loss,
SysOpen Digia's first half will show weaker-than-usual performance
- SysOpen Digia's integration process is proceeding as planned and the second
half of 2005 is expected to outperform the first half.
Figures in this interim report are compared with SysOpen Plc's figures for 2004.
Digia Inc.'s accounts have been consolidated since March 2005. The balance sheet
of Yomi Software Ltd and Yomi Service Ltd have been consolidated as of 31 March
2005.
GROUP KEY FIGURES AND RATIOS
Q1/2005 Q1/2004 2004
Turnover 8,340 6,460 26,174
- year-on-year change 29% -8% 4%
Operating profit/loss 901 393 2,777
- % of turnover 11% 6% 11%
Net profit/loss 710 281 2,340
- % of turnover 9% 4% 9%
Return on equity 9% 11% 21%
Return on investment 14% 13% 23%
Interest-bearing liabilities 41,218 0 0
Cash and cash equivalents 23,958 8,208 5,909
Net gearing 35% -86% -51%
Equity ratio 45% 58% 70%
Earnings per share, EUR 0.06 0.03 0.25
undiluted
Earnings per share, EUR 0.06 0.03 0.25
diluted
Equity per share 2.71 1.02 1.23
Personnel at period-end 830 272 288
ADOPTION OF IFRS
Since the beginning of 2005, SysOpen Digia Plc has applied the International
Financial Reporting Standards (IFRS), instead of the Finnish Accounting Standards
(FAS). The first interim report for 2005 was prepared in accordance with IAS 34.
On 31 March 2005, SysOpen Digia Plc published a stock exchange release containing
the reconciliation of shareholders' equity and results, and key IFRS comparatives
for 2004.
CEO'S REVIEW
SysOpen Digia's Q1/2005 performance in its two main business areas - the
integration and smartphone businesses - was in line with the combined Group's
growth strategy. An increase in demand and investments in key customer markets
during 2004 resulted in slight growth in the integration business. The smartphone
business invested in business development and its partnership strategy based
operations while maintaining profitability at a healthy level. In line with its
business strategy, SysOpen Digia reinforced its existing businesses by buying
Yomi Software Oy's share capital from Elisa Corporation. It is estimated that the
acquiree's integration with the Group will be completed by the end of June 2005.
SysOpen Digia's total business expansion and profitability are at satisfactory
levels, which are in line with the Group's first-quarter targets.
Q1/2005 KEY EVENTS BY BUSINESS AREA
Integration business
Beginning in late 2004, increase in demand continued during the first quarter of
2005. The most significant projects within the Integration business included
those for the Finnish Police, the Finnish Defence Forces and AREK Oy. The period
saw the conclusion of new agreements with the Tampere University of Technology
and Pardia (the Federation of Salaried Employees), and renewed agreements on
information system implementations for existing customers.
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 accounted 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 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, the Smartphone business developed its operations to
enable a comprehensive offering, proceeding according to its strategy. The
business area continued its active customer relationship development covering
mobile handset manufacturers, operators and semi-conductor manufacturers. 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
Continuing to recover at a moderate pace from the figures of Q1/2004, ICT markets
are projected to grow by 3.7 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 by
4.6-5.0 per cent, by Market-Visio and EITO). EITO forecasts that the Western
European ICT market will post a turnover rise of 3.8 per cent in 2005, to EUR 616
billion, and that for 2006 by 3.7 per cent, to EUR 639 billion.
Western European ICT expenditure increased by 2.7 per cent in 2004 and, according
to EITO, is expected to grow by 4.3 per cent in 2005, to EUR 298 billion. The
economic growth rate in the Euro zone is projected to rise from this year's 1.6
per cent to around 2 per cent next year.
In 2005, the mobile phone market is projected to continue its expansion, with
forecast sales totalling 723 million handsets, of which smartphones should
account for 44-49 million (forecast by Nomura, a financial services group, in
April 2005). Of all smartphones, the number of handsets based on the Symbian
operating system is estimated to reach 23-26 million, accounting for 53 per cent
of the total market. Consumer devices are projected to represent 75 per cent of
the smartphone market. According to Nomura's projections, the annual smartphone
sales volume will exceed 200 million within the next five years. The contract
engineering services market for mobile phones is expected to continue to meet
downward price pressure caused by intensified competition among mobile handset
manufacturers and the need for sustained profitability.
FUTURE OUTLOOK AND PROSPECTS FOR Q2/2005
It is estimated that leading smartphone manufacturers will focus on implementing
their selected product platform strategy and gradually diversifying into basic
mobile phones. This platform strategy will provide the capability to shorten time
to market for segment-specific smartphones and those equipped with a selected set
of functionalities. Major operators are gradually 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. Moreover, SysOpen Digia will also
have the opportunity to operate in partnership with operators and semi-conductor
manufacturers.
In the ICT market, customer-driven product and service development is a
prerequisite for an improvement in market share. The market is dividing into
players with broad service capabilities and competencies, on the one hand, and
those specialising in certain expertise and industries, on the other. In this
respect, efficient service processes built on customer needs and the ability to
cater for corporate customers' ICT needs on a comprehensive basis will play a key
role. Based on a customer satisfaction survey conducted in spring 2005, SysOpen
Digia scored high marks as a customer service organisation (by Market-Visio,
Survey 01/2005, score of 8.4) in sophisticated integration projects.
Growth in SysOpen Digia's customer market and service capabilities is based on
SysOpen Plc's and Digia Inc.'s merger and the integration of Yomi Software's
business acquired from Elisa with the Group's main business areas.
The Integration business will focus on national security, the public sector, the
financial and employment pension markets, operator services and major
architecture-based integration projects. Competence centres based on selected key
technologies will enhance SysOpen Digia's ability to serve its customers and
create new business concepts with them.
The company aims to further develop its service and solution offering to meet
changing customer needs. It will focus specifically on business lines in which
the Group's growth and profitability are expected to exceed the industry average.
It is estimated that the second-quarter turnover will reach EUR 17-18 million.
Second-quarter profitability will be affected by one-off items of roughly EUR 1.5
million, related to Yomi Software Ltd's integration with the Group and strong
reorganisation measures. Due to these one-off items and Yomi's unprofitable
business, SysOpen Digia's second quarter will show weaker-than-usual performance.
Yomi's reorganisation will be completed by the end of the second quarter, after
which the Yomi business is also expected to be in the black. SysOpen Digia's
second half is expected to outperform the first half of 2005.
KEY FINANCIAL PERFORMANCE INFORMATION FOR Q1/2005
TURNOVER
SysOpen Digia's consolidated turnover for the report period amounted to EUR 8.3
million, up 29.1 per cent on a year earlier (Q1/2004: EUR 6.5 million) and an
improvement of 7.7 per cent over Q4/2004 (EUR 7.7 million). International
operations accounted for 4.0 per cent (3.0 per cent) of consolidated turnover.
The combination merger between SysOpen Plc and Digia Inc. during the first
quarter and determined efforts to upgrade customer relationships and service
offerings contributed to favourable developments in reported turnover and
profitability, whereas Yomi Software Ltd's acquisition in late March will be
reflected in the results for the second quarter. SysOpen Digia's comparable
consolidated pro forma turnover, excluding Yomi Software sub-Group, is at the
previous year's level.
PROFIT AND PROFITABILITY
SysOpen Digia's operating profit (EBIT) totalled EUR 0.9 million, up 129.2 per
cent on a year earlier (Q1/2004: EUR 0.4 million). EBIT margin made good
progress, accounting for 10.8 per cent of turnover compared with 6.1 per cent a
year ago. Operating profit (EBIT) reported for Q1/2005 decreased by EUR 0.4
million over Q4/2004(Q1/2004: EUR 1.3 million).
Pre-tax profit was EUR 0.9 million (Q1/2004: EUR 0.3 million, up 169.4 per cent)
and net profit for the period totalled EUR 0.7 thousand (Q1/2004: EUR 0.3
million, up 233.3 per cent). Earnings per share were EUR 0.06, up 100 per cent
(Q1/2004: EUR 0.03).
The Integration business raised its profitability slightly from the level
reported a year ago. Similarly, the Smartphone business maintained its
profitability at a healthy level.
Operating expenses remained at the same, steady level, and both business areas
reported high capacity utilisation rates of over 70 per cent.
Group financial income covered financial expenses.
SysOpen Digia's comparable consolidated pro forma turnover is almost at the
previous year's level. Yomi Software sub-group is not consolidated.
FINANCIAL POSITION AND CAPITAL EXPENDITURE
Consolidated balance sheet total on 31 March 2005 amounted to EUR 113.3 million
(Q1/2004: EUR 17.2 million) and equity ratio stood at 45 per cent (Q1/2004: 61
per cent). The ratio of net liabilities to shareholders' equity, or net gearing,
was 35 per cent (Q1/2004: -87 per cent). Liquid assets totalled EUR 24.0 million
(Q1/2004: EUR 8.2 million). The Group has EUR 41.2 million in interest-bearing
liabilities, which it will be amortised using liquid assets.
The Group had a positive cash flow from business operations.
Gross capital expenditure soared to EUR 93.9 million (Q1/2004: EUR 69 thousand).
Due to the acquisition of Digia Ltd and Yomi Software Ltd, EUR 12.3 million in
acquisition costs were allocated to intangible rights. Goodwill allocation is
mainly based on customers and is amortised over 3-10 years. The acquisition of
Digia Inc. resulted in unallocated goodwill of EUR 38.3 million, while that of
Yomi Software Ltd EUR 12.2 million. This EUR 50.5 million in unallocated
goodwill, which includes the competences of the personnel and will be tested for
impairment on an annual basis.
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 14 per cent (Q1/2004: 13 per cent) while
return on equity (ROE) stood at 9 per cent (Q1/2004: 11 per cent).
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. Since the report period saw major changes in the customer
base, due to corporate transactions, it will also be necessary to assess customer
risks with due care. Employee risk management involves active performance-review
and goal-setting processes with key employees and a focus on employee and job
satisfaction applying to all Group employees. Project risk management is based on
internal and external audits and a continuous emphasis on quality management
practices, policies and processes.
During the report period, as a result of combined businesses, the company began
to audit its key projects aimed at identifying any risky projects and ensuring
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. Integration risk management is entrusted to
the Management Group, to which the Integration Office reports. It is 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.
HUMAN RESOURCES, MANAGEMENT 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 the Smartphone business's key employees.
At the end of the period, the number of employees totalled 830, up by 542, or
188.2 per cent, from the level in late 2004 (2004: 288). The number of employees
averaged 551, up 265, or 92.0 per cent (2004: 286).
Employee turnover came to 3.7 per cent (Q1/2004: 3.9 per cent).
Employees by function at the end of Q1/2005:
Integration Division 39%
Smartphone Division 53%
Administration and management 7%
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 from
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 2004.
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.
ACQUISITIONS AND DIVESTMENTS
Based on a combination agreement signed on 11 February 2005, SysOpen Plc and
Digia Inc. agreed to a merger which was confirmed on 4 March 2005, since when the
merged company has operated under the name of SysOpen Digia Plc.
Jari Mielonen, Digia Inc.'s CEO, was appointed the new company's CEO and Arto
Sahla, SysOpen Plc's Managing Director, his deputy.
The combined company's pro forma turnover for 2004 came to EUR 47.2 million and
pro forma operating profit (EBITA) EUR 5.4 million. The combined number of
employees totalled 545 on 31 December 2004.
This merger created the third largest ICT technology solutions provider listed on
the Helsinki Stock Exchange and one of the world's first listed companies
providing comprehensive Symbian integration services.
Based on both companies' prior market position and business strategies, SysOpen
and Digia estimates that the resulting combination will strengthen the new
company's ability to meet growing service needs and provide a wider range of
offerings to its customers, especially in software solutions and technologies for
smartphones and wireless terminal equipment, including the related integration,
to support the company's business. The combination of SysOpen's integration,
architecture and software development services for its Enterprise Application
Solutions with Digia's training, consulting and contract engineering services
offered to smartphone manufacturers created a powerful and diversified player in
internationalising wireless technology integration markets that are expected
expand rapidly.
SysOpen Digia's business consists of two business areas: the Integration Division
and Smartphone Division.
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, paid in cash using cash and cash equivalents.
As a result of this acquisition, SysOpen supplemented its service offerings and
grew into a major comprehensive system integrator of smart phones and information
systems. This growth in corporate size further enhanced SysOpen Digia's business
opportunities in the international arena.
These first-quarter corporate transactions made SysOpen Digia an ICT solution
integrator with around 800 employees. The company provides enterprises,
smartphone manufacturers, operators, public-sector organisations and associations
with contract engineering services, software solutions, products, training and
consulting services throughout the process chain, ranging from terminal equipment
development to communication solutions and operational information systems.
SysOpen Digia's FAS-based pro forma figures for 2004 by company:
EUR million Sysopen Plc Digia Inc. Yomi Software Total
Oy
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 for 2004 stood at 38 per cent and equity
ratio 44 per cent.
SysOpen Digia's Smartphone and Integration businesses are profitable. The company
intends to raise the acquired Yomi Software's profitability to meet Group targets
by capitalising on new business opportunities and streamlining existing business
operations.
By the end of June 2005, SysOpen Digia aims to integrate Yomi Software as part of
its current business operations and business areas.
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: Digia Inc.
(parent company holding: 100 per cent), Yomi Software Ltd (100 per cent), SysOpen
Object Team Oy (94.2 per cent) and Sysopen Limited (100 per cent). In addition,
Yomi Software Ltd has a wholly owned operating subsidiary, Yomi 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.
KEY EVENTS AFTER THE REPORT PERIOD
In its stock exchange release of 26 April 2005, SysOpen Digia announced that it
would enter into joint discussions (based on statutory Information and
Consultation) with Yomi Software Ltd's employees. The aim of these discussions is
to achieve EUR 1.5 million in annual cost-savings from 2006. The company
estimates that the resulting measures may involve 20-30 redundancies or temporary
dismissals.
ANNUAL GENERAL MEETING
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. This authorisation
is valid for one year from the date of the AGM's decision. The Board has not yet
exercised this authorisation.
SHARE CAPITAL AND SHARES
The nominal value of a share is EUR 0.1, and the number of shares at the end of
the report period totalled 18,082,950.
On 31 March 2005, SysOpen Digia had a total of 3,398 shareholders. The ten
largest shareholders were as follows:
Shareholder Proportion (%) of shares
and votes
Pekka Sivonen 21.2
Kari Karvinen 8.8
Matti Savolainen 8.0
Jorma Kylätie 7.5
Eqvitec Teknologiarahasto I Ky 4.4
TeliaSonera Finland Oyj 4.3
Mika Malin 3.9
Varma Mutual Employment Pension Insurance 3.3
Company
Umo Capital Oy 1.8
Jarkko Virtanen 1.3
Holdings by the number of shares held on 31 March 2005
Number of shares Proportion (%) of Proportion (%) of
holdings shares and votes
1-100 26.4 0.4
101-1,000 54.1 4.7
1,001-10,000 17.0 8.9
10,001-100,000 1.9 12.3
100,001-1,000,000 0.5 28.3
1,000,001-3,000,000 0.1 45.4
Total number of shares: 18,082,950
Holding by sector on 31 March 2005
Proportion (%) Proportion
of holdings (%) of shares
Non-banking corporate sector 6.8 14.7
Financial institutions and insurance 0.4 5.0
companies
Non-corporate public sector 0.1 3.9
Non-profit organisations 0.5 0.8
Households 91.8 75.2
Foreign holding 0.4 0.1
Q1/2005 SHARE PERFORMANCE ON THE HELSINKI STOCK EXCHANGE
SysOpen Digia Plc shares are quoted on the Main List of the Helsinki Stock
Exchange under the telecommunications and electronics business sector. One
trading lot includes 50 shares and the trading code is SYS1V. The lowest reported
share quotation was EUR 3.43 and the highest EUR 4.89. The share closed at EUR
4.35 on the report quarter's last trading day. The trade-weighted average
amounted to EUR 4.31. The Group's market capitalisation totalled EUR
78,660,832.50 at the end of the report period.
During the report period, the Group received the following three announcements
under 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, within 12 months as of 4
March 2005, a total of 765,011 SysOpen Digia shares - accounting for around 4.2
of SysOpen Digia shares - at a pre-determined price (call option). It this call
option is exercised 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
shareholding 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 Plc's shareholding in SysOpen Digia Plc
shares and the related votes was lower than one twentieth (1/20).
STOCK-OPTION SCHEMES
The number of stock options attached to the 2000-2005 stock-option scheme totals
21,060 as follows: 19,960 2000E stock options, 850 2000F stock options and 250
2000G stock options, all of which have been subscribed. The share subscription
period for all warrants will expire on 31 May 2005 and the share subscription
price for E warrants is EUR 8.30 per share, for F warrants EUR 5.36 per share and
for G warrants EUR 3.28. On 31 March 2005, SysOpen Digia held no stock options
based on the 2000-2005 stock-option scheme.
The number of the stock options attached to 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 per-share
subscription price for 2003A, 2003B and 2003C options is currently EUR 2.87, EUR
2.78 and EUR 3.75, respectively. For 2003D stock options, the subscription price
is determined during 1-30 April 2005 by SysOpen's share prices quoted in public
trading less the distributed dividends under the terms and conditions of the
stock-option scheme. On 31 March 2005, Sysopen Partners Oy, SysOpen Digia Plc's
wholly owned subsidiary, held a total of 183,235 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.
The number of all stock options issued by SysOpen Digia totalled 691,060 on 31
March 2005. Shares to be subscribed on the basis of the stock options will
account for a maximum of 3.7 per cent of the company's shares and votes entitled
by the shares after any possible increase of the company's share capital. On 31
March 2005, SysOpen Partners held 183,235 of all stock options. The dilution
effect of the distributed stock options was a maximum of 2.45 per cent on 31
March 2005.
SysOpen Digia announced in its stock exchange release on 22 April 2005 that a
total of 94,000 new shares had been subscribed, based on the 2003 stock-option
scheme, with 59,650 2003A stock options and 34,350 2003B stock options being
exercised.
Sysopen Digia seeks to provide Digia stock-option holders with the opportunity to
receive SysOpen Digia's new stock options under identical or, when applicable,
equal terms.
BRIEFING
SysOpen Digia will hold a briefing on its Q1/2005 performance for analysts and
the press at the Scandic hotel, Simonkentän Paviljon terassikabinetti, Simonkatu
9, Helsinki, on Monday, 2 May 2005, starting at 11.00 a.m.
Contrary to an announcement released earlier, SysOpen Digia will release its next
Interim Report on 17 August 2005.
Helsinki, 2 May 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@sysopen.fi
The interim accounts and associated slide show will be available at
www.sysopen.fi in the 'Investors' section from 11.00 a.m.
DISTRIBUTION
Helsinki Stock Exchange
Major media
ATTACHMENTS
Consolidated Income Statement, IFRS
Consolidated Balance Sheet, IFRS
Consolidated Cash Flow Statement, IFRS
Proforma Income Statement, IFRS
This Interim Report is based on unaudited figures.
CONSOLIDATED INCOME STATEMENT for 1 January-31 March 2005, EUR 1,000
Q1/2005 Q1/2004 2004
EUR 1,000
TURNOVER 8,340.3 6,459.7 26,173.7
Other operating income 33.3 24.7 187.5
Materials and services -194.5 -250.3 -934.2
Depreciation and impairment -414.9 -278.6 -1,185.8
Other operating expenses -6,862.9 -5,562.4 -21,883.5
OPERATING PROFIT 901.1 393.2 2,357.7
Financial income (net) -1.2 -33.3 419.5
Pre-tax profit 899.9 334.1 2,777.2
Income taxes -184.4 -39.8 -407.2
NET PROFIT/LOSS 715.5 294.3 2,370.1
Allocation:
Parent company shareholders 710.4 281.2 2,340.3
Minority shareholders 5.1 13.1 29.8
Earnings per share, EUR 0.06 0.03 0.25
Earnings per share (diluted), EUR 0.06 0.03 0.25
Average no. of shares:
Undiluted 11,908,92 9,262,914 9,262,914
5
Diluted 12,055,18 9,293,334 9,446,836
5
TURNOVER BY DIVISION, EUR 1,000
Q1/2005 Q1/2004 Change % 2004
Integration Division 5,686 5,793 -2 22,962
Smartphone Division 2,654 667 829 3,212
Group total 8,340 6,460 84 26,174
OPERATING PROFIT BY DIVISION, EUR 1,000
Q1/2005 Q1/2004 Change % 2004
Integration Division 498 293 70 1,876
Smartphone Division 403 100 303 482
Group total 901 393 129 2,358
CONSOLIDATED BALANCE SHEET on 31 March 2005, EUR 1,000
Assets 31 March 31 March 31 Dec.
2005 2004 2004
Non-current assets
Intangible assets 65,553.9 1,006.4 2,244.8
Tangible assets 2,952.0 1,904.6 1,697.9
Financial assets 577.4 568.9 585.6
Deferred tax assets 998.0 177.1 2.7
Total non-current assets 70,081.3 3,657.0 4,531.0
Current assets
Current receivables 19,236.2 6,174.8 10,149.0
Available-for-sale assets 19,898.9 2,065.8 2,900.4
Cash and cash equivalents 4,059.5 6,142.3 3,008.4
Total current assets 43,234.5 14,382.9 16,057.8
Total assets 113,315.8 18,039.9 20,588.8
Shareholders' equity and liabilities 31 March 31 March 31 Dec.
2005 2004 2004
Share capital 1,808.3 936.3 926.3
Issue premium fund 39,030.8 7,092.2 7,102.2
Treasury shares 0.0 -606.2 0.0
Fair value reserve 24.2 -205.4 84.9
Translation difference 23.0 -6.7 23.1
Other reserve 5,110.4 0.0 0.0
Retained earnings/loss 2,167.3 1,930.7 827.7
Net profit/loss 710.5 281.2 2,340.3
Shareholders' equity held by parent 48,874.5 9,422.1 11,304.5
company shareholders
Minority interest 92.9 112.6 121.7
TOTAL SHAREHOLDERS' EQUITY 48,967.4 9,534.7 11,426.2
Liabilities
Long-term, interest-bearing 41,217.7 329.2 133.5
liabilities
Provisions 535.6 0.0 0.0
Deferred tax liabilities 3,365.2 80.6 148.5
Total long-term liabilities 45,118.5 409.8 282.0
Short-term liabilities 19,229.9 8,095.4 8,880.6
Total short-term liabilities 19,229.9 8,095.4 8,880.6
Total liabilities 64,348.4 8,505.2 9,162.6
Shareholders' equity and liabilities 113,315.8 18,039.9 20,588.8
CONSOLIDATED CASH FLOW STATEMENT Q1/2005, Q1/2004 and 2004 EUR 1,000
Cash flow from business operations: Q1/2005 Q1/2004 2004
Cash flow from sales 8,816 6,135 24,066
Cash flow from other operations 33 25 210
Operating expenses -7,860 -5,692 -22,495
Cash flow from business operations 990 468 1,782
before financial items and taxes
Interest paid and other financial -8 -2 -9
expenses
Interest received from operations 2 0 1
Income taxes paid -37 -58 -137
Cash flow before extraordinary 946 407 1,636
items
Cash flow from business operations 0 0 -185
due to extraordinary items
Cash flow from business operations 946 407 1,451
Cash flow from investments:
Investments in tangible and -132 -69 -1,580
intangible assets
Capital gains on tangible and 1 0 11
intangible assets
Other investments -11,785 0 -55
Capital gains on other investments 167 51 572
Repayment of loans receivable 0 0 11
Dividends received from investments 1 0 24
Divested associated companies' 0 0 60
shares
Interest income from investments 47 6 54
Cash flow from investments -11,644 -11 -904
Cash flow from financing:
Rights issue 0 0 0
Withdrawal of short-term loans 0 0 0
Withdrawal of long-term loans 0 0 0
Dividends paid and other profit -888 0 -2,779
distribution
Cash flow from financing -888 0 -2,779
Change in liquid assets -11,644 396 -2,231
Liquid assets at period-start 5,909 7,781 7,781
Liquid assets received due to 29,694 0 0
business combinations
Liquid assets at period-end 23,958 8,177 5,550
Difference -11,644 396 -2,231
GROUP KEY FIGURES AND RATIOS
Q1/2005 Q1/2004 2004
Extent of business
Turnover 8,340 6,460 26,174
- year-on-year change 29% -8% 4%
Capital invested average 48,967 9,535 11,548
Personnel at period-end 830 272 288
Average personnel 554 271 286
Profitability
Operating profit/loss 901 393 2,777
- % of turnover 11% 6% 11%
Pre-tax profit 900 334 2,777
- % of turnover 11% 5% 11%
Net profit/loss 710 281 2,340
% of turnover 9% 4% 9%
Return on equity (ROE) 9% 11% 21%
Return on investment (ROI) 14% 13% 23%
Financing and financial position
Interest-bearing liabilities 41,218 0 0
Available-for-sale assets + cash and bank 23,958 8,208 5,909
receivables
Net gearing 35% -86% -51%
Equity ratio 45% 58% 70%
Cash flow from business operations 1,786 407 1,451
Earnings per share, EUR 0.06 0.03 0.25
undiluted
Earnings per share, EUR 0.06 0.03 0.25
diluted
Equity per share 2.71 1.02 1.23
Price-earnings ratio (P/E) 72.9 135.16 13.81
Lowest share price 3.43 4.06 2.90
Highest share price 4.89 5.35 5.35
Average share price 4.31 4.68 3.66
Market capitalisation on 31 March 2005 78,661 37,700 31,679
STATEMENT ON CHANGES IN SHAREHOLDERS' EQUITY, EUR 1,000
Share Issue Trans Fair Treas Retaine Minori Total
capital premium latio value ury d ty sharehol
fund n reserv share earning intere ders'
diffe e s s/loss st equity
rence
s
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 -2,223. -2,223.1
payment 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 -9.0 -170.4 0.0 2,072.8 105.7 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 -9.0 -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 39,030.8 23.1 24.2 0.0 7,988.2 92.9 48,967.5
shareholder
s´ equity
31 March
2005
RECONCILIATION OF SHAREHOLDERS' EQUITY AND RESULTS FOR 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 Q1/2004
EUR 1,000
FAS Change IFRS Q1/
Q1/2004 2004
Turnover 6,459.7 0.0 6,459.7
Other operating income 24.7 0.0 24.7
Materials and services -250.3 0.0 -250.3
Depreciation and impairment -203.5 -75.1 -278.6
Other operating expenses -5,678.2 115.8 -5,562.4
Operating profit/loss 352.4 40.8 393.2
Financial income (net) -25.0 -8.3 -33.3
Pre-tax profit 327.3 6.8 334.1
Income tax charge -55.4 15.6 -39.8
Minority interest -13.1 13.1 0.0
Net profit/loss 258.8 35.5 294.3
Allocation:
Parent company shareholders 245.7 35.5 281.2
Minority shareholders 13.1 0.0 13.1
Earnings per share, EUR 0.03 0.0 0.03
Earnings per share, diluted. 0.03 0.0 0.03
EUR
PRO FORMA INCOME STATEMENT FOR 1 Jan.-31 March 2005
The pro forma income statement below includes SysOpen Digia Plc and the operating
subsidiaries, SysOpen Object Team Oy, SysOpen Limited and Digia Inc. Yomi
Software Ltd's balance sheet accounts only were consolidated during the first
quarter.
Q1/2005 Q1/2004
EUR 1,000
TURNOVER 11,880.5 11,947.9
Other operating income 35.2 25.7
Materials and services -222.3 -416.0
Depreciation and impairment -470.8 -383.2
Other operating expenses -9,804,5 -9,597.4
OPERATING PROFIT/LOSS 1,418.1 1,577.1
Financial income (net) 116.2 117.6
Pre-tax profit 1,534.3 1,668.9
Income tax charge -347.4 -427.5
NET PROFIT/LOSS 1,186.9 1,241.4
Allocation:
Parent company shareholders 1,181.8 1,228.3
Minority shareholders 5.1 13.1
Earnings per share, EUR 0.07 0.07
Earnings per share (diluted), EUR 0.07 0.07
The weighted average of the issue-adjusted number of shares totalled 11,908,925
during the report period. The weighted average of the dilution-adjusted number of
shares during the report period was 12,055,185. The number of outstanding shares
totalled 18,082,950 at the end of the period.
The Group holds no treasury shares.
The Group has no liabilities associated with derivative contracts.
