TIETOENATOR CORPORATION STOCK EXCHANGE BULLETIN 1 AUGUST 2001 9.00 AM

TIETOENATOR CORPORATION STOCK EXCHANGE BULLETIN 1 AUGUST 2001 9.00 AM 1 (10) TietoEnator Interim Report 2, operating profit grew by 54 % Continued growth in high-value-added IT services. Operating profit, before non-comparable items grew by 54% to EUR 60.8 million (39.5). Business area net sales grew by 12%. Operating margin grew to 10.8% (7.0). Earnings per share grew by 16% to EUR 0.66 (0.57). MARKETS Demand for high-value-added IT services continued to grow healthily also during the second quarter, despite the general economic slow down. The trend that started to be visible late in 2000 thus continued unbroken through the first half of this year. TietoEnator's strong focus on the leading Nordic industry sectors, along with in-depth competence built up over many years, enables the company to benefit from the rapid ongoing transition by the traditional industries to the digital economy. The focus, combined with TietoEnator's long-term partnership strategy also gives the group a high resistance towards recessions. The interest in outsourcing and in business critical solutions and products has accelerated as changes in the market require clients to concentrate on their core businesses, underscoring the need for reliable IT partners. The sales cycles for large outsourcing deals have in several cases been clearly shortened. Customers want fast implementation in order to cut costs and to be able to rapidly adapt to changes in their business environment. TietoEnator is one of the leading suppliers of high-value-added services supporting such processes. NET SALES Net sales growth for the six business areas during the second quarter amounted to 13% and in local currencies the growth was 16%. The half year net sales for the business areas grew by 12% to a total of EUR 562.0 million (499.6). In local currencies the growth was 15%. The sales growth in TietoEnator's largest segments was 17% for banking and finance and the same, 17%, for telecom. Public sales grew by 4% and sales in the forest segment by 22%. As to total sales divided into TietoEnator's largest segments, sales in the finance segment accounted for 23% and in telecom for 14%, while public sales corresponded to 25%. The forest segment accounted for 7% of total sales. Organic growth was 12% for the quarter isolated and 11% for the full period.1) Geographically, Finland grew by 22%, while Sweden decreased by 7% (in local currency the Swedish growth rate was flat). Norway grew by 46%, Germany by 24% and Denmark by 17%. The order backlog on June 30 was clearly stronger compared to the same period last year, and totalled EUR 661 million (474). Approximately 50% of this figure is presumed to enter the books as income during 2001. The figure comprises only services ordered with binding contracts. In many partnership relations the binding agreements are renewed during the last quarter of the year, which causes quarterly fluctuations in the order backlog. 1) Organic growth is defined as development of sales to existing customers as well as sales to new customers, including new outsourcing deals and partnerships. The effect of changes in the group structure is excluded. Acquisition growth consists of acquiring companies or operations, including their customer bases. PROFITABILITY Isolated for the second quarter, the operating profit before non- comparable items 2) was EUR 26.6 million (15.1) and the margin was 9.4% (5.4). Operating profit before non-comparable items during the whole period amounted to EUR 60.8 million (39.5), representing a margin of 10.8% (7.0). The main reasons behind the increase in profits and margins, compared to the same period in 2000, were both an improvement in business conditions and the structural changes taking place in the Swedish operations during 2000 and 2001. The operating profit (EBIT) for the first half of 2001, including non- comparable items, amounted to EUR 81.6 million (64.1). Earnings per share before goodwill amortisation for the period was EUR 0.75 (0.64), and after goodwill amortisation EUR 0.66 (0.57). The rolling 12-month return on capital employed (ROCE) was 34.5%, and on equity 22.3%. 2) Non-comparable items are defined as non-recurring items + social costs for personnel warrants. DEVELOPMENT BY BUSINESS AREA Finance Sector Overall demand in the finance market remained good in spite of the economic slowdown. The partnership business continued to grow well, and the profitability of the product business improved during the second quarter. TietoEnator strengthened its expertise by acquiring 60% of Oy Softema Ab, the leading provider of insurance and pension systems in Finland. Softema has 70 employees and net sales of approximately EUR 5.5 million for 2001. TietoEnator also expanded into the Danish financial services market by the acquisition of a 75% stake in IT+, Denmark's leading provider of integration expertise for secure and personalised e- business. IT+ has 19 employees and sales of approximately EUR 1.2 million. Net sales for the second quarter was EUR 42.5 million (39.7), an increase of 7% compared with the same period last year. Operating profit before goodwill amortisation increased by 135% to EUR 6.2 million (2.6). Telecom & Media The downturn in the telecom industry has affected telecom operators as well as vendors, many of whom are now implementing cost-cutting programmes, delaying investments and leaving non-core businesses. Organic market growth is slower than before but the situation also provides outsourcing and acquisition opportunities. TietoEnator received the first order from a Chinese telecom manufacturer of 2G and 3G infrastructure. The manufacturing unit of the business area will create an e-business testing team together with Nokia. TietoEnator acquired a 20% holding in the Czech telecom-oriented IT services company TietoEnator ISS, focusing on the largest local telecom operators. Net sales for the second quarter was EUR 42.7 (36.4) million, an increase of 17 % compared with the same period last year. Operating profit before goodwill amortisation increased by 4% to EUR 3.7 million (3.6). Public Sector The overall public sector market continued to improve during the second quarter of 2001. Digital government services improved significantly compared to last year and several new deals were closed. Growth in Healthcare was strong. The Finnish Road Administration concluded an agreement related to the Digiroad project, the aim of which is to develop a unified register of the Finnish road network which will function as a basis for telematic traffic services. The city of Oulu signed an agreement on the delivery of a customer service system for healthcare and the National Social Insurance Board of Sweden (Riksförsäkringsverket) initiated a strategic partnership with TietoEnator as a development partner. TietoEnator also acquired Municel, strategic consultants in digital public services as well as signing a co-operation agreement with Votia, a group of e- democracy and digital government consultants. Net sales for the second quarter was EUR 41.2 million (34.0), an increase of 21% compared with the same period last year. Operating profit before goodwill amortisation increased by 13% to EUR 3.1 million (2.7). Production & Logistics The major changes within the industries, coupled with increasing information technology needs, kept demand high in the forest industry, the process and mechanical engineering industry as well as in the retail, logistics and energy sectors. During the second quarter TietoEnator made several investments in its forestry and industry products and service concepts for the customer sectors. The energy operations were strengthened by the acquisition of the Norwegian IT companies Kantate, with 30 employees and Fasett.Blå with 11 employees. The energy operations within the business area also established operations in the USA. Net sales for the second quarter was EUR 54.4 million (45.4), an increase of 20% compared to the same period last year. Operating profit increased notably to EUR 6.2 million (0.5). Processing & Network The high demand for outsourcing continued during the second quarter, increasing for ERP (Enterprise Resource Planning) hosting solutions, while eHosting and ASP (Application Services Provisioning) stayed on the same level as in the first quarter. A new five-year outsourcing deal was signed with Sodexho of Sweden. New hosting contracts were also signed with MacGregor Ab, Sulzer Pumps Finland and Aktia Bank. Net sales for the second quarter was EUR 77.7 million (71.1), an increase of 9% compared with the same period last year. Operating profit before goodwill amortisation decreased by 13% to EUR 8.4 million (9.7). Resource Management The market continued to grow, however somewhat slowly, during the period. The main focus was on the Finnish euro conversion, which continued in both finance and payroll areas, and on add-on sales within for example travel, human resources and e-commerce. Demand for outsourcing services such as payroll offices and financial shared service centres is increasing rapidly and has doubled compared to last year. The deal with Nordea related to a document-handling platform for the new Solo Internet banking portal was extended to cover areas outside Finland. Agreements related to invoice hotel services was signed with Hertz leasing, Nokia, Kesko and Kastelli-Talot. The customer service portal Apptoyou.com is now open in all Nordic countries. Net sales for the second quarter was EUR 46.4 million (42.3), an increase of 10%. Operating profit before goodwill amortisation increased by 41% to EUR 6.7 million (4.7). PERSONNEL The strong organic growth of the first quarter continued unchanged during the second quarter. During the second quarter a total of 421(339) new persons were employed within the business areas. Together with acquisitions, divestments and leaves the net increase amounted to 478 (206). During the first half of 2001 a total of 928 (706) new employees joined the group and the net increase amounted to 806 (252) persons. The group had an average of 9 668 (9 834) employees during the period, and 10 150 (10 057) by June 30. The employee turnover rate in the business areas was 11.7% on a rolling 12-month basis, an improvement compared to the full-year figure of 13.1% for 2000. The decreasing trend was further emphasised during the second quarter. PROSPECTS FOR THE REST OF THE YEAR The growth in demand for high-value-added IT services will continue. The slowdown in economic growth and the resultant restructuring is cutting overall IT spending, but is also supporting outsourcing and ready-made solutions that increase internal efficiency. TietoEnator's strategy, based on high-value-added services, strong expertise in prioritised customer segments and client-partnerships, provides an excellent match to market requirements and supports healthy organic growth. As restructuring in the sector continues and the focus of TietoEnator's external growth has moved from the Tieto and Enator combination to company acquisitions, these factors will also maintain growth in net sales. Growth in full-year net sales, including acquisitions, is expected to be higher than the growth rate during the first half of 2001. The improvement in net sales and the structural changes made in Sweden in 2000 will boost profitability in the current year. The Group's operating profit in 2001 is expected to improve significantly on the previous year and to exceed the 10% margin target. INTERIM REPORT 3/2001 TietoEnator will publish its interim report for January-September on 31 October 2001 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/01/20010801BIT00080/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/01/20010801BIT00080/bit0001.pdf The full report