SYSOPEN FINANCIAL STATEMENT 2000; STRONG GROWTH AND INCREASED OPERATING PROFIT
SYSOPEN OYJ STOCK EXCHANGE RELEASE March, 1.2001 at 9:30
- Turnover increased by 112% to EUR 23,0 million
- Operating profit before depreciation of goodwill EUR 3.2 million, increase of 82%
- 303 employees in the end of the period, up 79%
- Proposed dividend of 52.4% of the Group´s profit
- Growth and profitability will remain at good level
SysOpen - major forefront technology partner
During 2000 there were significant changes in the Finnish IT market. The number and variety of IT-suppliers of e-Business, mobile, internet and web technologies grew. Despite of the general market fluctuation and trend changes SysOpen strengthened its position as a leading provider of integrated e-Business information systems.
The investment that SysOpen have made, and continue to make, in the latest technological developments including a continuous staff development program, have allowed us to significantly expand operations which has resulted in SysOpen becoming major forefront technology partner for its key customers.
SOLID STRATEGY WITH PLANNED GROWTH
Throughout 2000 SysOpen have continued to follow its growth strategy announced in 1999 during IPO. In addition to the company´s organic growth there were five acquisitions: CallCom Ltd, Benefect Ltd, QL- Systems Ltd, Sypal Ltd and Tietovalmis Group Ltd.
SysOpen will maintain its growth strategy including identifying further potential acquisitions targets consistent with the Group´s core business. This ensures that SysOpen continue to have the technical skills to meet customers´ technology needs. This will also ensure that SysOpen continues to be profitable and remains a good investment for shareholders.
In November 2000 the Board of Directors announced a three year strategic plan which included the following objectives to be achieved by the end of December 2003: revenue to exceed EUR 84 million, profitability to remain consistently high, number of employees to exceed 1000, and 40% of the revenue comes from the international operations.
Growth targets will continue to be achieved by acquisitions as well as organic growth. Various measures have been introduced to underpin organic growth including committed employees, employee training and development scheme, investment in new and emerging technologies. Potential acquisition targets are carefully selected to ensure they are consistent with SysOpen´s core business areas and meet profitability targets also in the future.
SysOpen are committed to continuously monitor and, where necessary, improve internal processes to continue to provide sufficient delivery capacity, maintain high levels of customer satisfaction and thus increase market share.
Turnover
Pro forma turnover for the SysOpen Group including acquisitions was EUR 24.9 million (1999 EUR 15,3 million) representing growth of 63%. This turnover exceeded the target of EUR 24 million set by the Board of Directors.
The turnover of the Group during the period was EUR 23,0 million (EUR 10,8 million in 1999), growth 112%. The international operations was 4% of the Group´s turnover.
Turnover for the final quarter of the year almost doubled (EUR 7 million) compared to the same period in 1999 (EUR 3.6 million). This represents a growth rate of 93%, the highest growth to date in SysOpen´s 10 year history.
Business performance
Operating profit before depreciation of goodwill (EBITA) was EUR 3.2 million, 14% of the turnover representing growth of 82% compared to 1999(EUR 1.8 million). This included extraordinary costs such as the unsuccessful UK acquisition negotiations and 10 year anniversary costs.
The operating profit before depreciation increased during the last quarter up to EUR 1,4 million and was nearly 20% of Q4 revenue. The profitability of the quarter was the best during the year 2000. The operating profit before depreciation was 236% higher compared to the same period in 1999 (EUR 0,4 million).
The profit before appreciations and taxes was EUR 3,0 million (EUR 2,1 million), growth rate of 42%. The profit for the financial year was EUR 1,9 million (EUR 1,5 million), growth rate of 32%.
Profit per share improved to EUR 0.23 compared to 1999.
Investments
SysOpen continues to make major capital investments in development such as services, software components and products. EUR 0.21 million was invested in information, messaging, call systems and OpenPort platform. Other investments in development services and software component engineering are treated as direct costs and continue to be included in overheads.
Services development and component engineering costs totalled 10,1% of the Group´s turnover.
Recognised as a leading Finnish software developer, SysOpen continues to invest in leading edge technology such as reusable code and, as a result, the software product business unit continues to grow. Following 1999 acquisitions, synergy benefits have been identified between business units and these provide excellent development opportunities. Worth of mentioning are OpenID product family and OpenPort platform.
SysOpen made some arrangements in the ownership of subsidiaries in order to strengthen the focus in key competence areas.
During the period the company increased its ownership in Midecraft Ltd to 50%. Midecraft´s expertise is in delivering IT professional resources for Telecom customers.
The ownership in Visy Oy decreased to 27,7% due directed issue of share capital. Visy Oy became part of the SysOpen Group in the acquisition of Sypal Oy. Visy Oy is one of the leading companies in the development of automatic image recognition applications designed for industry and traffic.
Ownership in Oy Ideos Ltd was held in 25,3%. Ideos plays central role as a partner in RFID (radio frequency identification) technology.
SysOpen decreased it´s ownership from 20% down to 17% of the Australian CLS Research Pty Ltd. CLS Research Pty Ltd changed it´s operations, head quarters location, and name to the United States under the name Create!form International. Create!form International supplies the software for electronic printing and document output management in the international market.
Investments during the period were EUR 1.1 million(EUR 1,0 million). The Fixed assets have been booked at the original acquisition cost, less depreciation, according to plan. The planned depreciation period for Group goodwill is five years.
Financing
At the end of the year, the consolidated balance sheet total was EUR 16,7 million (EUR 13,4 million). The equity ratio was 76 % (77 %) and liquid assets totaled EUR 6,3 million (7,3 million).
Business areas
According to the streamlined strategy, the Group primarily focused on providing integrated eBusiness solutions (Integrated eSolutions) for large and medium-sized companies in three business areas. Integrating the companies´ operative systems into new internet and wireless solutions is in a central role. The three complementary business areas:
- Enterprise Application Solutions EAS - integrated IT solutions for e-business (74% of net turnover)
- Software Solutions - packaged software solutions (15%)
- Consulting Services - consulting services focusing on business and logistics and information technology (11%)
In the two main business areas, Enterprise Application Solutions and Consulting Services, the profitability sustained high.
Demand was very good especially in e-Business and wireless solutions and respective consulting services.
Long term investments in object oriented and component technology rewarded SysOpen in form of high usability and company profitability. The Group has strengthened the market share in integrated e-Business solutions and also in OpenPort and OpenID software products. Software solutions business sector operated at a small loss due to the investments in software development.
Personnel
SysOpen recognises that continued strong and profitable growth is only possible with knowledgeable, professional, and committed personnel.
By the end of 2000 the company employed 303 IT professionals in total, an increase of 134 employees compared to 1999 and representing a growth rate of 79%. Organic growth was 17%. As part of the company´s personnel development strategy, a new share option scheme was introduced and accepted in General Meeting in November 2000.
The personnel turnover during the period was 11,8%.
Building of SysOpen´s new corporate headquarters, SysOpen Tower, continues. This brand new 16 storey 70 metre building in the Helsinki- Pitäjänmäki area will provide accommodation for almost all SysOpen personnel in the capital area. The owner and landlord is Sampo-Leonia.
Corporate Governance
Throughout the year, regular members in the Board of Directors were Kari Karvinen, Jorma Kylätie, Risto Linturi, Matti Savolainen and Timo Tiihonen. Matti Savolainen acted as the Chairman of the Board and Jorma Kylätie as the Managing Director and CEO for the entire financial year.
In 2000 SysOpen Plc´s authorised Public Accountant was Ari Ahti from KPMG Wideri Oy Ab.
Share capital
In the beginning of the financial year 2000 Sysopen Plc´s share capital was 4 150 226,50 FIM divided into 8 300 533 shares.
In connection with the acquisition of Callcom Oy 20.3.2000, the Board of Directors decided on authorisation by extraordinary shareholders meeting 1.12.1999 to raise the share capital to FIM 4 154 884 divided into 8 309 768 shares.
In connection with the acquisition of QL-Systems Oy 27.3.2000, the Board of Directors decided on authorisation by extraordinary shareholders meeting 1.12.1999 to raise the share capital to FIM 4 186 134 divided into 8 372 268 shares.
The Board of Directors was authorized by Annual General Meeting 30.3.2000 to raise share capital of the company in one or more lots in manner whereby the shares to be issued in the new issue and/or on basis of option rights and/or in connection with convertible loan may altogether increase the company´s share capital with the maximum of FIM 830 053, so that the aggregate maximum of number of shares eligible for subscription on the basis of the aforementioned alternatives is 1 660 106 shares.
In connection with the acquisition of Benefect Oy 13.4.2000, the Board of Directors decided on authorisation by shareholders meeting 30.3.2000 to raise the share capital to FIM 4 348 382 divided into 8 696 764 shares.
In connection with the acquisition of Sypal Oy 10.5.2000, the Board of Directors decided on authorisation by shareholders meeting 30.3.2000 to raise the share capital to FIM 4 434 452 divided into 8 868 904 shares.
In connection with the acquisition of Tietovalmis Oy 1.11.2000, the Board of Directors decided on authorisation by shareholders meeting 30.3.2000 to raise the share capital to FIM 4 621 952 divided into 9 243 904 shares.
The extraordinary shareholders´ meeting of SysOpen Plc held on 23 November 2000 approved the proposals the Board of Directors as follows:
The proposal on the authorisation for the Board of Directors to decide on cancelling the remaining part of the Board´s authorisation to increase the share capital given on 30 March 2000 by Annual General Meeting;
The proposal by the Board of Directors on the authorisation for the Board of Directors to decide upon increasing the share capital in one or more lots in a manner whereby the shares to be issued in the new issue and/or on the basis of option rights and/or in connection with a convertible loan may altogether increase the Company´s share capital with the maximum of FIM 924.390, so that the aggregate maximum number of shares eligible for subscription on the basis of the aforementioned alternatives is 1.848.780 shares, each with an accounting equivalent value of FIM 0.5.
The extraordinary shareholders´ meeting of Sysopen Plc decided to give an authorisation to the Company´s Board of Directors to decide on repurchasing a maximum of 5 per cent Sysopen Plc´s shares from the market at market price. The shares will be used to further develop the capital structure of the company, to finance business acquisitions or other arrangements. The authorisation includes also the right to hand over the shares against contribution in kind or otherwise under specific conditions. In the end of the financial year 2000 seven subsidiaries of the Sysopen Plc were merged into Sysopen Plc: Sysopen Audit Team Oy, Sysopen Consulting Oy, Sysopen Solutions Oy, Sysopen Edom Team Oy, Sysopen Optimus Oy, QL-Systems Oy ja Sysopen Dycom Oy.
Stock options
The extraordinary shareholders meeting of Sysopen Plc approved to the Board of Directors to grant option rights, maximum of 400.000 option rights, to the persons belonging to the boards of directors, other management and staff of the Group and Group companies as decided by the Board of Directors of Sysopen Plc as well as to the Company´s wholly-owned subsidiary.
The option rights shall be granted to the above mentioned parties deviating from the shareholders´ pre-emptive subscription right for the purpose of enhancing their commitment and motivation. The proposal for deviation from the shareholders´ pre-emptive subscription right is made because the option rights are intended as part of the Company´s incentive program, and therefore it shall be deemed to constitute a weighty financial reason for the Company.
Share trading on the Helsinki Exchanges
At the end of the financial year SysOpen Plc had 2777 registered shareholders.
Share price development followed the IT market trend. SysOpen´s lowest closing price was 5.35 EUR and highest 23.00 EUR. The average price was 12.79 EUR. At the year end the trading price was 5.80 EUR. The company´s market capitalization was approximately EUR 54 million in the end of the financial year.
Dividend
At the Annual General Meeting the Board of Directors of SysOpen Plc will propose that a dividend of EUR 0,11 per share, FIM 6,0 million FIM, to be distributed from the year´s profits. This represents 52,4% of the total consolidated profit for the financial year. The Board will propose that the remainder of the year´s profit to be placed on the company´s profit account as shareholders´ equity.
Major events after the period
During the first quarter, January 9, 2001 there was a preliminary agreement signed with Stonesoft Corporation of SysOpen to purchase Stonesoft E-Solutions Oy. On February 12, 2001, the parties informed that negotiations have been unsuccessfully closed due to the fact that parties did not achieve mutual understanding for the agreement.
The future outlook
SysOpen will execute its growth strategy in the future both by organic growth and acquisitions. SysOpen has on going negotiations of new acquisitions both in Finland and abroad.
Demand for SysOpen services is estimated to stay strong and there has not been seen decrease. The Board of Directors sees that the demand in the two main business areas, integrated e-Business Solutions and Consulting Services, will stay strong with high profitability. In Software solutions the business is expected to improve due to the investments in software development, sales and marketing. Software Solutions is forecasted to improve and turn profitable.
Group´s profitability is estimated to stay at good level (EBITA 15%).
Consolidated Income Statement 1 January - 31 December 2000 (12 months)
Consolidated Balance Sheet 31 December 2000
(EUR 1,000)
Key figures for the Group 1 January - 31 December 2000
Ratios for earnings/share and equity/share are based on the number of shares (9,175,453) adjusted with the dilution effect of the shares. The number of shares at the end of the period under review was 9,243,904.
The Group has no liabilities associated with derivative contracts.
Helsinki, February 28, 2001
SysOpen Plc
The Board of Directors
INTERIM REPORT 1-3/2001
SysOpen Plc´s interim report for January - March will be released May 10, 2001.
For further information:
Jorma Kylätie, Managing Director, CEO Tel +358 424 2020 303,
email: jorma.kylatie@sysopen.fi
Distribution:
Helsinki Stock Exchanges
Main media