Slide 1: Q4 2019: Strong fourth-quarter performance
Q4 2019 Strong fourth-quarter performance – integration of TietoEVRY progressing well Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO Per Hove, former CEO EVRY
Slide 2: Outline
2 Outline • CEO opening • TietoEVRY summary • Tieto Q4 and 2019 • EVRY Q4 and 2019 • CFO report • Integration status • Guidance 2020
Slide 3: Q4 in brief
3 Q4 in brief Strong fourth-quarter performance – integration of TietoEVRY progressing well • Merger to create a leading Nordic digital services company completed in the fourth quarter • Tieto stand-alone: revenue growth 2%, adjusted operating margin over 13% - healthy performance driven by Hybrid I
Slide 4: Our value proposition & strategy
4 Our value proposition & strategy Creating digital advantage for businesses and society We are the backbone of the Nordic society, transforming businesses with expertise, technology and data, to harness the biggest opportunities of our time Services focus Nordic International Digital Consulting • D
Slide 5: The Nordic IT market remains dynamic
5 The Nordic IT market remains dynamic TietoEVRY expects the New services built Business continuity and Nordic IT services around data and design, efficiency continue to be market to grow by 2–3% cloud adoption, multi- of high importance in 2020 cloud management and automation is anticipated to grow
Slide 6: A leading community for digital professionals
6 A leading community for digital professionals • Building the company culture on Nordic heritage and values of openness, trust and diversity • Combined recruitment in 2019 of over 4 800 new professionals – over 2000 in the Nordics • Continued priority to be an attractive company, aiming to be the b
Slide 7: Official reported financials
7 Official reported financials* (IFRS) Revenue EBIT EBIT Adj.** € 543m € 31.5m € 71.4m The board proposes Q4 a dividend at 2019 Growth EBIT % EBIT Adj.%** EUR 1.27 28.7% 5.8% 13.1% Revenue EBIT EBIT Adj.** € 1.734m € 124.2m € 196.4m Representing a FY dividend yield of 2019 Growth EBIT % EBIT Adj.%**
Slide 8: Q4 stand-alone performance
8 Q4 stand-alone performance Tieto EVRY Healthy growth in Hybrid Infra and Industry Software Solid growth and EBIT margin Revenue EBIT Adj.* Backlog Revenue EBIT Adj.* Backlog € 423m € 57m €1 642m € 355 € 48m € 1 998m Growth** EBIT Adj.%* Growth*** EBIT Adj.%* 2% 13.5% 4% 13.4% MEUR 2% % MEUR 4% % 4
Slide 9: Tieto stand-alone performance
9 Tieto stand-alone performance
Slide 10: Tieto Q4 - main highlights
10 Tieto Q4 - main highlights • Healthy growth in Hybrid Infra and Industry Software with 5% and 4% growth, respectively • Continued adjusted operating margin improvement to over 13% driven by strong performance from Hybrid Infra at 16% • Successful execution of the strategy and efficiency program s
Slide 11: Tieto multi-year performance improvement
11 Tieto multi-year performance improvement CUSTOMER EXPERIENCE / NPS REVENUE GROWTH DIVIDEND/SHARE, EUR 1700 1,5 1600 0,20 1,3 0,20 1500 0,25 0,22 1400 1 614 1,1 1 600 1 493 1 543 1,25 1,27 1 460 0,9 1,15 1,20 1300 1,10 1200 0,7 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018
Slide 12: Tieto Q4 2019 key figures
12 Tieto Q4 2019 key figures MEUR % Revenue up by 0.3% 0.3 › EUR 423.0 (421.9) million › Growth in local currencies 2% 500 13,5 15 › Organic growth in local currencies 2% 13,2 400 Adjusted EBIT margin 13.5% (12.1%) 10,0 › EBIT EUR 31.9 (45.7) million, 7.6% (10.8%) 9,3 12,1 10 9,0 8,4 › Includes EUR
Slide 13: Digital Experience
13 Digital Experience Revenue Q4 MEUR -6% % › EUR 123 (130) million 150 20 › Down by 6%, or 4% in local currencies EBIT 13,7 14,5 15 › Adjusted1) EBIT EUR 15.5 (19.0) million, 12.7% 100 12,8 12,7 (14.6) 10,9 14,6 14,9 8,6 10 Q4 highlights › Application Services continued to be impacted by 50 one lar
Slide 14: Hybrid Infra
14 Hybrid Infra Revenue in Q4 MEUR +3% % › EUR 137 (133) million 150 20 › Up by 3%, or 5% in local currencies 15,5 15,8 EBIT 15 › Adjusted1) EBIT EUR 21.8 (12.9) million, 15.8% (9.7) 100 12,5 10,8 10,8 9,7 10 Q4 highlights 7,5 6,9 › Growth driven by infrastructure cloud, up by 20% in 50 local curren
Slide 15: Industry Software
15 Industry Software Revenue Q4 MEUR % › EUR 125 (122) million +2% 150 20 › Up by 2%, 4% in local currencies 18,0 16,9 16,5 15,2 EBIT › Adjusted1) EBIT EUR 20.6 (22.0) million, 16.5% 12,5 15 100 (18.0) 10,9 10,3 Q4 highlights 10 7,5 › Strong growth of Healthcare solutions continued, up by 14% 50 › C
Slide 16: Product Development Services
16 Product Development Services Revenue Q4 MEUR % › EUR 38 (36) million +4% 50 20 › Up by 4%, or 7% in local currencies EBIT › Adjusted1) EBIT EUR 3.8 (3.7) million, 10.1% 12,7 12,3 15 (10.1) 9,9 10,1 9,6 10,1 Q4 highlights 25 8,7 10 7,9 › Strong volume development with the largest key customers foc
Slide 17: Country performance: Finland, Sweden, Norway
17 Finland country Sweden country Norway country growth 2% growth 1% in local growth 8% in local › Industry Software growth currencies currencies driven by Healthcare › Growth driven by Hybrid › Growth across businesses solutions Infra, up by 4% in local › Strongest growth in Hybrid › Strong demand
Slide 18: EVRY stand-alone performance
18 EVRY stand-alone performance
Slide 19: EVRY Q4 - main highlights
19 EVRY Q4 - main highlights • Strong organic growth of 3.9% and adjusted EBIT margin of 13.4% • Financials Services showing strong momentum with high order backlog in Q4 • Strategic direction supports solid growth in Consulting services and application services by 7.1% and 9.4% respectively • Still
Slide 20: Group financial highlights
20 Group financial highlights Financial Organic growth EVRY group Norway Sweden Q4 /FY 2019 Services Q4 2019 FY 2019 Q4 2019 FY 2019 Q4 2019 FY 2019 Q4 2019 FY 2019 Consulting Services REVENUE 7.1%/ 5.6% 355.2 1,336.9 158.8 601.7 82.6 314.8 97.5 365.1 €m Application Organic 1.7% Services 3.9% 8.6% 2
Slide 21: Service mix development in line with strategy
21 Service mix development in line with strategy Financial year Organic growth 4,9% Q4 /FY 2019 31,0% Consulting 32.3% 33.8% 38,2% Services 5.6% 63,7% Application 27,2% Services 30.9% 32.2% 22,8% 8.3% Digital Platform 27,6% Services 28.2% 30,1% 27.1% -0.7% 31,4% Fulfilment 14,2% 8.6% 6.9% 8,9% Servi
Slide 22: Positive development in Sweden continues
22 Positive development in Sweden continues Adj. EBIT margin1 16.6% 14.5% 13.9% 13.7% 13.7% 13.5% 13.4% Financial Services 12.5% 12.3% 12.5% Group 11.9% 11.8% 11.4% 11.3% 11.4% 11.2% 10.6% Norway 10.3% 10.4% 10.0% 10.0% 9.0% 8.0% 9.1% 7.7% 7.1% 7.4% 6.2% Sweden 5.4% 4.9% 3.8% Q1’18 Q2’18 Q3’18 Q4’18
Slide 23: Financial Services with solid performance in Q4
23 Financial Services with DSS solid performance in Q4 A new 6-year agreement with nine savings banks to provide a complete portfolio of banking • Organic growth of 7.3% in Q4 services. TCV of approx. NOK 600 million over • Strong adjusted EBIT margin the period of 13.3% • Continuing vote of confide
Slide 24: CFO report
tieto fixy CFO report
Slide 25: CFO highlights
25 CFO highlights • Strong fourth-quarter performance in revenue, profit and cashflow from both companies • Reported numbers impacted by adjusted items, primarily related to the merger and integration of TietoEVRY • Merger of TietoEVRY completed and preliminary Purchase Price Allocation (PPA) prepar
Slide 26: Net debt / EBITDA starts at 2.7x - Strong cash flow continued
26 Net debt / EBITDA starts at 2.7x - Strong cash flow continued 3 2,7 Net debt/EBITDA 2,5 2 Net debt / EBITDA TietoEVRY combined 1,5 1,4 at ~2.7x* (~2.4x ex IFRS 16 impact) 1,5 1,0 1,0 1,1 1 0,7 0,5 Target level Net debt/EBITDA TietoEVRY 0,5 < 2 in 2-3 years 0 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3
Slide 27: TietoEVRY merger completed - Purchase accounting summary
27 TietoEVRY merger completed - Purchase accounting summary Merger consideration (IFRS) EUR million • Total merger consideration amounted Consideration in shares 1 195 to EUR 1 398 million Consideration in cash 196 • Preliminary purchase price allocation Replacement of share based payment awards 7 r
Slide 28: Summary of 2019 adjustment items impacting reported EBIT
28 Summary of 2019 adjustment items impacting reported EBIT Tieto stand-alone FY2019 EUR million • Restructuring cost mainly relates to 2019 Restructuring cost 28 efficiency programme Merger and integration cost 21 • Merger and integration costs relate mainly to advisory services, integration cost a
Slide 29: Synergy planning progressing well, EUR 75 million target confirmed
29 Synergy planning progressing well, total target of EUR 75 million confirmed with goal to realize EUR 30-40 million run-rate synergies by year-end 2020 Integration and synergy work progressing EUR 75 million synergies achieved within three years well Synergies run-rate impact at end of year (MEUR)
Slide 30: Merger and integration update
30 Merger and integration update • Merger closed on 5 December • Integration work progressing well with high intensity and strong employee engagement • New operating model deployed – focusing on maximum customer value, efficiency and speed
Slide 31: Integration progressing as planned
31 Integration progressing as planned Status end of January 2020, 8 weeks post merger acceptance Integration focus area Progress* Current status Integrated structure and • TietoEVRY operating model launched leadership • Group leadership and next level nominated Common processes and • Collaboration a
Slide 32: Performance drivers during the first year of integration
32 Performance drivers during the first year of integration Annual performance drivers Merger specific performance drivers • Long term, TietoEVRY aims to grow faster • Moderate growth during 2020 in light of than the market. integration and discontinued contracts and businesses • Adjusted operating
Slide 33: Guidance for 2020
33 Guidance for 2020 TietoEVRY expects its comparable full-year adjusted operating 1) profit (EBIT) to increase from the previous year's level (Tieto's and EVRY's adjusted operating profit combined amounted to a total of EUR 343.1 million in 2019) 1) Adjusted for amortization of acquisition-related
Slide 34: tieto fizy
tieto fizy