Tieto's Interim Report 4/2015 – Strong fourth-quarter results – all businesses performing well

Tieto Corporation          FINANCIAL STATEMENT BULLETIN        4 February 2016,
8.00 am EET

  · Organic growth of 3% in IT services driven by Industry Products
  · Reported operating margin of 12% driven by healthy business mix and Managed
Services automation programme
  · Product Development Services business well stabilized
  · Acquisitions accelerate shift towards growth businesses

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

Key figures for the fourth quarter

IT services

  · Organic growth in local currencies was 2.8%
  · Operating profit excl. one-off items amounted to EUR 48.3 (32.5) million,
13.3% (9.4) of sales

The Group

  · Organic growth in local currencies was -2.9% – affected by lower business
volumes in Product Development Services as announced in 2014
  · Fourth-quarter operating profit excl. one-off items amounted to EUR 51.4
(44.4) million, 13.0% (11.0) of sales
  · Order intake (Total Contract Value) amounted to EUR 641 (672) million and
order backlog was EUR 2 030 (1 784) million

Key figures for the full year

IT services

  · Organic growth in local currencies was 2.7%
  · Operating profit excl. one-off items amounted to EUR 136.2 (128.5) million,
10.3% (9.9) of sales

The Group

  · Organic growth in local currencies was -2.6% – affected by lower business
volumes in Product Development Services as announced in 2014
  · Full-year operating profit excl. one-off items amounted to EUR 150.8 (150.2)
million, 10.3% (9.9) of sales
  · Proposed dividend EUR 1.10 (1.00) per share, up by 10%, and an additional
dividend of EUR 0.25 (0.30)
  · Dividend yield of 5.5%, or 4.4% excluding additional dividend

+-----------------------------+----------+----------+---------+---------+
|                             |10–12/2015|10–12/2014|1–12/2015|1–12/2014|
+-----------------------------+----------+----------+---------+---------+
|Net sales, EUR million       |   395.6  |   402.9  |1 460.1  |1 522.5  |
+-----------------------------+----------+----------+---------+---------+
|   Change, %                 |    -1.8  |    -0.6  |   -4.1  |   -5.3  |
+-----------------------------+----------+----------+---------+---------+
|   Organic change in local   |    -2.9  |     0.9  |   -2.6  |   -1.1  |
|currencies, %                |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Operating profit (EBITA), EUR|    47.4  |     9.7  |  126.4  |   62.1  |
|million                      |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Operating margin (EBITA), %  |    12.0  |     2.4  |    8.7  |    4.1  |
+-----------------------------+----------+----------+---------+---------+
|Operating profit (EBIT), EUR |    46.8  |     9.5  |  125.2  |   61.1  |
|million                      |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Operating margin (EBIT), %   |    11.8  |     2.4  |    8.6  |    4.0  |
+-----------------------------+----------+----------+---------+---------+
|Operating profit (EBIT) excl.|    51.4  |    44.4  |  150.8  |  150.2  |
|one-off items1), EUR million |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Operating margin (EBIT) excl.|    13.0  |    11.0  |   10.3  |    9.9  |
|one-off items1), %           |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Profit after taxes, EUR      |    34.4  |     6.7  |   90.5  |   35.0  |
|million                      |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|EPS, EUR                     |    0.47  |    0.09  |   1.23  |   0.48  |
+-----------------------------+----------+----------+---------+---------+
|Net cash flow from           |    67.1  |    90.2  |  132.6  |  167.9  |
|operations, EUR million      |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Return on equity, 12-month   |    19.0  |     7.1  |   19.0  |    7.1  |
|rolling, %                   |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Return on capital employed,  |    20.4  |     9.8  |   20.4  |    9.8  |
|12-month rolling, %          |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Capital expenditure and      |    32.7  |    12.9  |  136.7  |   43.5  |
|acquisitions, EUR million    |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Interest-bearing net debt,   |    13.2  |   -59.2  |   13.2  |  -59.2  |
|EUR million                  |          |          |         |         |
+-----------------------------+----------+----------+---------+---------+
|Net debt/EBITDA              |     0.1  |    -0.4  |    0.1  |   -0.4  |
+-----------------------------+----------+----------+---------+---------+
|Book-to-bill                 |     1.6  |     1.7  |    1.3  |    1.2  |
+-----------------------------+----------+----------+---------+---------+
|Order backlog                |   2 030  |   1 784  |  2 030  |  1 784  |
+-----------------------------+----------+----------+---------+---------+
|Personnel on 31 December     |  13 083  |  13 720  | 13 083  | 13 720  |
+-----------------------------+----------+----------+---------+---------+

1) Excl. restructuring costs, capital gains/losses, goodwill impairment charges
and other one-off items

Full-year outlook for 2016

Tieto expects its adjusted* full-year operating profit (EBIT) to increase from
the previous year’s level (EUR 150.8 million in 2015).

*)adjusted for restructuring costs, capital gains/losses, goodwill impairment
charges and other one-off items

CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:

“The year ended with strong fourth-quarter performance in terms of profitability
development and growth of IT services. All our businesses had a good quarter,
demonstrating continued improvement in competitiveness. Our industry-specific
software solutions experienced strong growth, accelerated by the acquisition of
Software Innovation. In parallel, we substantially improved the efficiency of
our operations by automating our service deliveries as evident from Managed
Services double-digit margin. Furthermore, our Product Development Services
business has stabilized well.

To support innovation and longer-term growth, over the last few years we have
continued to increase our annual, fully expensed investments in new service
development from EUR 40 million to EUR 60 million, while continuing to improve
profitability in line with our long-term objectives. In addition, the three
acquisitions completed during 2015 add to the speed of service and cultural
renewal. Recruitments in 2015 were also high at 1 800 in total, of which around
500 were new positions to support our capability development in emerging
services. The recruitment of over 400 professionals in the Nordic countries
further strengthens our position as the leading advisor in our core markets.

Our industry continues to change at a rapid pace, thus opening up opportunities
for growth and innovation. In light of our progress and renewal over the last
few years, we look forward to an exciting 2016.”

Financial performance by service line

+-------------------+-----------+-----------+---------+-----------+-----------+
|EUR million        |   Customer|   Customer|Change, %|  Operating|  Operating|
|                   |      sales|      sales|         |     profit|     profit|
|                   |10–12 /2015|10–12 /2014|         |10–12 /2015|10–12 /2014|
+-------------------+-----------+-----------+---------+-----------+-----------+
|Managed Services   |        132|        131|        1|       18.4|        8.2|
+-------------------+-----------+-----------+---------+-----------+-----------+
|Consulting and     |        109|        107|        2|        8.8|       10.4|
|System Integration |           |           |         |           |           |
+-------------------+-----------+-----------+---------+-----------+-----------+
|Industry Products  |        121|        107|       13|       25.2|       17.4|
+-------------------+-----------+-----------+---------+-----------+-----------+
|Product Development|         33|         58|      -43|        2.8|       -4.4|
|Services           |           |           |         |           |           |
+-------------------+-----------+-----------+---------+-----------+-----------+
|Support Functions  |           |           |         |       -8.3|      -22.1|
|and Global         |           |           |         |           |           |
|Management         |           |           |         |           |           |
+-------------------+-----------+-----------+---------+-----------+-----------+
|Total              |        396|        403|       -2|       46.8|        9.5|
+-------------------+-----------+-----------+---------+-----------+-----------+

Operating margin by service line

+----------------+-----------+-----------+---------------+---------------+
|%               |  Operating|  Operating|      Operating|      Operating|
|                |     margin|     margin|   margin excl.|   margin excl.|
|                |10–12 /2015|10–12 /2014|one-off items1)|one-off items1)|
|                |           |           |    10–12 /2015|    10–12 /2014|
+----------------+-----------+-----------+---------------+---------------+
|Managed Services|       13.9|        6.2|           13.0|            6.9|
+----------------+-----------+-----------+---------------+---------------+
|Consulting and  |        8.1|        9.8|           10.3|            9.5|
|System          |           |           |               |               |
|Integration     |           |           |               |               |
+----------------+-----------+-----------+---------------+---------------+
|Industry        |       20.8|       16.3|           21.4|           18.3|
|Products        |           |           |               |               |
+----------------+-----------+-----------+---------------+---------------+
|Product         |        8.4|       -7.5|            9.4|           20.5|
|Development     |           |           |               |               |
|Services        |           |           |               |               |
+----------------+-----------+-----------+---------------+---------------+
|Total           |       11.8|        2.4|           13.0|           11.0|
+----------------+-----------+-----------+---------------+---------------+

1)Excl. restructuring costs, capital gains/losses, goodwill impairment charges
and other one-off items

Organic change in local currency by service line

+----------------+------------+--------------------------+---------+
|                |    Customer|                  Customer|Change, %|
|                |  sales adj.|sales adj. for divestments|         |
|                |         for|               10–12 /2014|         |
|                |acquisitions|                          |         |
|                |and currency|                          |         |
|                | 10–12 /2015|                          |         |
+----------------+------------+--------------------------+---------+
|Managed Services|         133|                       131|        1|
+----------------+------------+--------------------------+---------+
|Consulting and  |         108|                       107|        2|
|System          |            |                          |         |
|Integration     |            |                          |         |
+----------------+------------+--------------------------+---------+
|Industry        |         111|                       105|        6|
|Products        |            |                          |         |
+----------------+------------+--------------------------+---------+
|IT services     |         353|                       343|        3|
+----------------+------------+--------------------------+---------+
|Product         |          33|                        54|      -39|
|Development     |            |                          |         |
|Services        |            |                          |         |
+----------------+------------+--------------------------+---------+
|Total           |         386|                       397|       -3|
+----------------+------------+--------------------------+---------+

Customer sales by industry group

+-----------------------------------+--------------+--------------+---------+
|EUR million                        |Customer sales|Customer sales|Change, %|
|                                   |   10–12 /2015|   10–12 /2014|         |
+-----------------------------------+--------------+--------------+---------+
|Financial Services                 |            92|            90|        2|
+-----------------------------------+--------------+--------------+---------+
|Manufacturing, Retail and Logistics|            78|            82|       -5|
+-----------------------------------+--------------+--------------+---------+
|Public, Healthcare and Welfare     |           133|           115|       16|
+-----------------------------------+--------------+--------------+---------+
|Telecom, Media and Energy          |            59|            59|       -1|
+-----------------------------------+--------------+--------------+---------+
|IT services                        |           363|           345|        5|
+-----------------------------------+--------------+--------------+---------+
|Product Development Services       |            33|            58|      -43|
+-----------------------------------+--------------+--------------+---------+
|Total                              |           396|           403|       -2|
+-----------------------------------+--------------+--------------+---------+

Organic change in local currency by industry group

+--------------+----------------+--------------------------+---------+
|EUR million   |        Customer|                  Customer|Change, %|
|              |  sales adj. for|sales adj. for divestments|         |
|              |acquisitions and|               10–12 /2014|         |
|              |        currency|                          |         |
|              |     10–12 /2015|                          |         |
+--------------+----------------+--------------------------+---------+
|Financial     |              93|                        90|        4|
|Services      |                |                          |         |
+--------------+----------------+--------------------------+---------+
|Manufacturing,|              78|                        80|       -3|
|Retail and    |                |                          |         |
|Logistics     |                |                          |         |
+--------------+----------------+--------------------------+---------+
|Public,       |             121|                       115|        6|
|Healthcare and|                |                          |         |
|Welfare       |                |                          |         |
+--------------+----------------+--------------------------+---------+
|Telecom, Media|              60|                        59|        2|
|and Energy    |                |                          |         |
+--------------+----------------+--------------------------+---------+
|IT services   |             353|                       343|        3|
+--------------+----------------+--------------------------+---------+
|Product       |              33|                        54|      -39|
|Development   |                |                          |         |
|Services      |                |                          |         |
+--------------+----------------+--------------------------+---------+
|Total         |             386|                       397|       -3|
+--------------+----------------+--------------------------+---------+

For further information, please contact:

Lasse Heinonen,
CFO, tel.+358 2072 66329, +358 50 393 4950, lasse.heinonen (at) tieto.com
Tanja Lounevirta, Head of Investor Relations,
tel.+358 2072 71725, +358 50 321 7510, tanja.lounevirta (at) tieto.com

Press conference for analysts and media will be held on Thursday 4 February 2016
at Tieto’s premises in Helsinki, address: Aku Korhosen tie 2–6, at 11.00 am EET
(10.00 am CET, 9.00 am UK time). The results will be presented in English by
Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO.

The conference will be
webcasted (http://webcast.tieto.com/quarterlyreport/?q=040216) and can be viewed
live on Tieto's website (http://www.tieto.com/investors). To join the
conference, attendees need Adobe Flash plugin version 10.1.0 or newer. The
meeting participants can also join a telephone conference that will be held at
the same time. The telephone conference details can be found below.

Telephone conference numbers

Finland: +358 (0)9 6937 9590
Sweden: +46 (0)8 5065 3937
UK: +44 (0)20 3427 1909
US: +1212 444 0896
Conference code: 7494938

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. An on-demand video
will be available after the conference.

Tieto publishes financial information in English and Finnish.

TIETO CORPORATION

DISTRIBUTION
NASDAQ Helsinki
NASDAQ Stockholm
Principal Media


Tieto is the largest IT services company in the Nordics providing full lifecycle
IT services. We also provide global product development services for companies
in the communications and embedded technologies arena. Through industry insight,
technology vision, and innovative thinking, Tieto proactively strives to inspire
and engage our customers in finding new ways of accelerating their business.

Building on a strong Nordic heritage, Tieto combines global capabilities with
local presence. Headquartered in Helsinki, Finland, Tieto has over 13 000
experts in more than 20 countries. Turnover is approximately EUR 1.5 billion.
Tieto’s shares are listed on NASDAQ in Helsinki and Stockholm. www.tieto.com