TietoEVRY Oyj — Earnings Release 2020

Feb 17, 2021

TietoEVRY's fourth-quarter results: Strong profitability and cash flow

TietoEVRY's fourth-quarter results: Strong profitability and cash flow

·

Fourth-quarter adjusted operating margin 15% driven by Industry Software and

Digital Consulting

·

Fourth-quarter revenue down by 6% organically - affected by Covid-19 and

anticipated short-term decline in Cloud & Infra

·

Run-rate of EUR 80 million achieved in merger synergies - integration fully on

schedule

·

Strong operative cash flow of EUR 355 million in the full year - good cash

conversion

·

Dividend of EUR 1.32 per share proposed

The full interim report with tables is available at the end of this release.

About financial reporting

Tieto's and EVRY's merger was concluded on 5 December 2019. This report is based

on the official financial figures of TietoEVRY, with EVRY being consolidated as

from 5 December 2019.

COMPARABLE FINANCIAL INFORMATION for illustrative purposes

The new operating model became effective on 1 January 2020 and financial

reporting has been prepared in accordance with the new structure as from the

second-quarter interim report. As additional information, the report includes

comparable financial information for TietoEVRY with figures for 2019 restated to

account for the current segments.

[][][][]

10-12/2020 10-12/2019 1-12/2020 1-12/2019

Revenue, EUR million 712.0  778.1  2 786.4  2 950.9

Change, % -8.5  - -5.6  -

Organic growth[1)], % -6.3  - -2.2  -

Operating profit (EBIT), 77.8  56.7  146.7  230.5

EUR million

Operating margin (EBIT), 10.9  7.3  5.3  7.8

%

Adjusted[2)] operating 106.4  105.2  355.0  341.7

profit (EBIT), EUR

million

Adjusted[2)] operating 14.9  13.5  12.7  11.6

margin (EBIT), %

One-time items, EUR 28.5  48.5  208.3  111.2

million

Order backlog, EUR 3 350  3 640  3 350  3 640.0

million

Net debt/EBITDA[3)] 2.5  - 2.5  -

[1)] Adjusted for currency effects and impact from acquisitions and

divestments

[2)] Adjusted for amortization of acquisition-related intangible assets,

restructuring costs, capital gains/losses, goodwill impairment charges and other

items affecting comparability

Full-year outlook for 2021

TietoEVRY expects its organic[1)] growth to be -1% to +2%[2)] (revenue in 2020:

EUR 2 786.4 million). The company estimates its full-year adjusted operating

margin (adjusted EBITA)[3) ]to increase to 13-14% (12.7% in 2020).

[1) ]Adjusted for currency effects, acquisitions and divestments

[2)] High dependency on the Covid-19 pandemic development. Assuming normal

business environment from the third quarter of 2021.

[3)] Adjusted EBITA is fully comparable with the previous definition of adjusted

EBIT. According to both definitions, amortization of acquisition-related

intangible assets, restructuring costs, capital gains/losses, impairment charges

and other items affecting comparability are excluded - whereas amortization of

other intangible assets is included.

CEO's comment

Comment regarding the fourth-quarter report by Kimmo Alkio, President and CEO:

"We are pleased with the continued strong progress of TietoEVRY's integration

and good business momentum in the fourth quarter. We are seeing positive

development in terms of both customer and employee experience, while the impact

of the pandemic has created challenges during the year. Thanks to the commitment

of our 24 000 digital professionals, we were able to shift 96% of our employees

to remote work, drive large-scale integration and ensure business continuity to

our customers throughout 2020.

Our fourth quarter is characterized by strong profitability and several large

customer wins. During the quarter, we delivered adjusted operating profit of 15%

and strong operative cash flow of EUR 125 million. Profitability improvement was

driven by continued synergy realization and healthy profitability in Industry

Software as well as in Digital Consulting. Our Industry Software business

reached an adjusted operating margin of 26% and Digital Consulting 17%. For the

Group, fourth-quarter revenue was down by 6%, significantly impacted by Covid

-19.

We begin our 2021 company agenda with energy and a focus on growth in our core

businesses - with opportunities in areas such as cloud, data and analytics, next

generation automation, Financial Services software and Healthcare solutions.

Currently we estimate the overall business to return to growth during the second

half of 2021.

Our financial guidance has been updated both for 2021 and the longer-term view

up to 2023. Guidance for 2021 consists of revenue growth of -1% to +2% and an

increase in the adjusted profit margin (adjusted EBITA) to between 13% and 14%.

As announced at our Capital Markets Day on 3 December, our new financial targets

include revenue growth of 5% by 2023, profitability (adjusted EBITA) of 15% by

2023 as well as annual increase in dividends. Based on strong profitability and

cash flow in 2020, the dividend proposal for the Annual General Meeting is EUR

1.32 per share - continuing the longer-term dividend attractiveness of the

company.

As TietoEVRY, we are energized by the opportunity to guide and support our

customers on their digital and data-rich journeys - and contribute to the

advancement of the societies we live in. Our path forward is supported by the

recently launched Sustainability Game Plan 2023 - including ambitions for gender

balance and climate actions in our operations. This supports us in developing

our highly talented professionals and attracting future talent to join us in

this exciting and meaningful journey."

Comparable financial information for illustrative purposes

These tables include comparable financial information with comparison figures

restated to account for the new segment structure.

Financial performance in October-December

[][][][][]

Revenue, Revenue, Growth, Organic Adjusted[1)]

Adjusted[1)] Adjusted[1)] Adjusted[1)]

EUR EUR % growth, operating

operating operating operating

million million %[2)] profit, EUR profit,

EUR margin, % margin %

million

million

10-12/ 10-12/ 10-12/20 10-12/ 10-12/

10-12/

2020 2019 20 2019 2020

2

019

Digital 172.8  188.7 -8        -6  29.9

24.0 17.3  12.7

Consulting

Cloud & Infra 227.3  264.8 -14  -13 19.3

34.7 8.5  13.1

Industry 134.3  136.6 -2  -1 35.1

25.8 26.2  18.9

Software

Financial 108.8  116.8 -7  -3 15.2

17.2 14.0  14.7

Services

Solutions

Product 36.0  39.1 -8 -10 5.0

4.4 13.8  11.1

Development

Services

Other 32.8  32.0 2  16 1.9

-0.9 -  -

Total 712.0  778.1 -9 -6 106.4

105.2 14.9  13.5

[1)] Adjusted for amortization of acquisition-related intangible assets,

restructuring costs, capital gains/losses, goodwill impairment charges and other

items affecting comparability

[2)] Adjusted for currency effects and impact from acquisitions and

divestments

Financial performance in January-December

[][][][][]

Revenue, Revenue, Growth, Organic growth,

Adjusted[1)] Adjusted[1)] Adjusted[1)] Adjusted[1)]

EUR EUR % %[2)]

operating operating operating operating

million million

profit, profit, margin, % margin %

EUR

million EUR million

1-12/ 1-12/ 1-12/ 1-12/ 1-12/

1-12/

2020 2019 2020 2019

2019

2020

Digital 662.0  736.2 -10                      92.8

87.5 14.0  11.9

Consulting -6

Cloud & Infra 931.6  1005.0 -7  -5 93.5

112.5 10.0  11.2

Industry 501.1  509.2 -2  2 91.5

74.4 18.3  14.6

Software

Financial 418.8  434.0 -4  2 54.4

58.9 13.0  13.6

Services

Solutions

Product 142.4  146.6  -3 -3 18.0

14.8 12.7  10.1

Development

Services

Other 130.5  119.9   8  13 4.8

-6.4 -  -

Total 2 786.4  2 950.9 -6 -2 355.0

341.7 12.7  11.6

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen

(at) tietoevry.com (tomi.hyrylainen%40tietoevry.com)

Kjell Arne Hansen, Head of Investor Relations, tel. +47 9504 0372, kjell.hansen

(at) tietoevry.com (kjell.hansen%40tietoevry.com)

A teleconference for analysts and media will be held on Wednesday 17 February

2021 10.00 am EET (9.00 am CET, 8.00 am UK time). Kimmo Alkio, President and

CEO, and Tomi Hyryläinen, CFO, will present the results online in English.  The

presentation (https://tieto.videosync.fi/2020-q4-results) can be followed on

TietoEVRY's website (https://www.tietoevry.com/en/investor-relations/).

Teleconference numbers

Finland: +358 981 710 310

Sweden: +46 856 642 651

Norway: +47 235 002 43

United Kingdom: +44 333 300 0804

United States: +1 631 913 1422

Conference code: 11869732#

To ensure that you are connected to the conference call, please dial in a few

minutes before the start of the press and analyst conference. The teleconference

is recorded and it will be available on demand later during the day.

TietoEVRY publishes its financial information in English and Finnish.

TIETOEVRY CORPORATION

DISTRIBUTION

NASDAQ Helsinki

Oslo Børs

Principal Media

TietoEVRY creates digital advantage for businesses and society. We are a leading

digital services and software company with local presence and global

capabilities. Our Nordic values and heritage steer our success.

Headquartered in Finland, TietoEVRY employs around 24 000 experts globally. The

company serves thousands of enterprise and public sector customers in more than

90 countries. TietoEVRY's annual turnover is approximately EUR 3 billion and its

shares are listed on the NASDAQ in Helsinki and Stockholm as well as on the Oslo

Børs. www.tietoevry.com