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Reporting changes

Due to business-driven organizational changes as well as changes in reporting standards, we have published adjusted historical figures for business domain net sales, operating profit and margin

Details of all reporting changes

New IFRS 15 and IFRS 9

The first interim report for 2018 is prepared in accordance with the new standards.

New Business Structure 2016

Our operating model and structure have been aligned to the strategy launched in March 2016, based on service lines and industry groups.

Business Transactions 2015 and 2016

The impact of acquisitions during this period.

New IRFS 11

We adopted the new IFRS 11 joint arrangements as of 1 January 2014.

Divestments impact on 2014

An estimation of the divestments impact on service lines and industry group sales.

New Business Structure 2013

Our new business structure and operating model took effect at the beginning of 2013.
New Business Structure 2011 Our new business structure and operating model took effect at the beginning of 2011.

New Business Structure 2009

Our new business structure and operating model took effect at the beginning of 2009.

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Tieto has implemented internal business transfers that help the company capture consulting-driven market opportunities as well as further drive customer value. As from 1 April, business transfers from Technology Services and Modernization to Business Consulting and Implementation include enterprise application-related business for cloud-born applications, integration consulting and Value Networks as a related solution. Annual sales of the transferred businesses amount to around EUR 37 million. In addition, Tieto's Financial Digital Channels business (previously part of the Industry Solutions service line), with sales of EUR 11 million, was transferred to Business Consulting and Implementation on 1 May. Other business transfers are smaller in size.

Relevant documentation:

Comparison figures

Tieto has adopted the new IFRS 9, ‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with Customers’ as of 1 January 2018. The first interim report for 2018 is prepared in accordance with the new standards.

The impact of IFRS 15 on 2017 Group-level net sales is EUR 0.2 million and on operating profit (EBIT) EUR -0.1 million. The change mainly affects the Technology Services and Modernization service line. The impact of IFRS 9 on the company’s equity in the opening balance sheet for 2018 is EUR 0.4 million (negative). The total impact of reporting changes on equity, including IFRS 9 and IFRS 15, is EUR 0.2 million (positive). Tieto's financial reporting for 2017 has been adjusted to account for the reporting standard changes.

Relevant documentation:

Comparison figures

Effective from 1 July 2016, the new structure is based on service lines and industry groups. In line with the operating model, we have also changed our financial reporting. From the third-quarter of 2016, reports have been prepared in accordance with the new structure.

Our service lines:

· Technology Services and Modernisation
· Business Consulting and Implementation
· Industry Solutions
· Product Development Services.

They constitute our reportable segments. We will disclose the customer sales and operating profit, among others, of these reportable segments.

Additionally, we will disclose customer sales by industry groups:

· Financial Services
· Public, Healthcare and Welfare
· Industrial and Consumer Services.

Our financial reporting in 2015 and the first half of 2016 was adjusted to account for these changes. 

Relevant documentation:

New business structure 2016

During 2015 and 2016 we completed the following acquisitions:

Software Innovation in August 2015 (Industry Solutions)
Imano in December 2015 (BCI)
Smilehouse in December 2015 (BCI)
Emric in September 2016 (Industry Solutions)

The impact on 2016

Sales of these companies are included in our 2016 figures. The following table illustrates quarterly sales of acquired companies before consolidating to Tieto:

EUR million

1-3/2015

4-6/2015

7-9/2015

10-12/2015

1-12/2015

Smilehouse and Imano (in BCI)

4

5

4

3

16

Software Innovation (IS)

9

11

4

 

24

Emric (IS)

   

2

6

8

Total

13

16

10

9

48

Impact on 2017

The following table illustrates quarterly sales of acquired companies before consolidating to Tieto

EUR million

1-3/2016

4-6/2016

7-9/2016

10-12/2016

1-12/2016

Emric (IS)

5

5

3

13

Total

5

5

3

 

13

We adopted the new IFRS 11 ‘joint arrangements’ as of 1 January 2014. Proportional consolidation of joint ventures is no longer allowed and the results are reported as one line above operating profit (EBIT). Our reports from 2014 onwards are prepared in accordance with the new standard.

Equity accounting will decrease the group’s net sales by around 4%. The change mainly affects the Industry Products (around 12% negative) and Managed Services (around 2% negative) service lines. Of industry groups, the change mainly affects Financial Services (around 10% negative) and Public Healthcare and Welfare (around 7% negative).

EBIT is affected by the amount corresponding to our share of joint ventures’ financial items and taxes, and there might be a slightly positive impact, if any, on EBIT margin. The company’s net profit for the period is not affected.

Relevant documentation:

Income statement 
Balance sheet
Cashflow
Segment reporting

Our new business structure and operating model took effect at the beginning of 2013. The new structure is based on service lines and industry groups. In line with the new operating model, we also changed our financial reporting at the beginning of 2013.

The service lines are:

· Managed Services
· Consulting and System Integration
· Industry Products
· Product Engineering Services.

They constitute the main operating segments. We will disclose the customer sales and operating profit, among others, of the service lines.

Additionally, we will disclose customer sales by industry group:

· Financial Services
· Manufacturing, Retail and Logistics
· Public, Healthcare and Welfare
· Telecom, Media and Energy.

Due to an amendment of IAS 19 ‘Employee benefits’, there will be a change in the calculation of pension liability. The related finance costs are calculated on a net funding basis and presented in financial items. This change has an impact of EUR 1.7 million on our annual-level operating profit. This amount will increase finance costs. Based on the change, we restated our operating profit (EBIT) for 2012 as EUR 63.0 million (previously EUR 61.3 million) and operating profit (EBIT) excl. one-off items for 2012 as EUR 138.8 million (previously EUR 137.1 million). The net result remains unchanged. 

Relevant documentation:

Comparison figures

Our new business structure and operating model changed beginning of 2011. The new structure was based on market units and business lines. In line with the new operating model, renewed internal reporting and the IFRS requirements, we also changed our financial reporting at the beginning of 2011.

The market units will be the main operating segments covering Finland and the Baltic countries, Scandinavia, Central Europe and Russia, and Global Accounts. Reportable segments are defined based on IFRS8, 'Operating Segments'. On these segments, we will disclose a range of quarterly figures as required by the IFRS.

In addition to market unit reporting, we disclosed the net sales by business lines, which are Industry Solutions, Enterprise Solutions, Managed Services and Transformation, and Product Engineering Solutions. We also disclosed net sales by customer sector.

Our financial reporting for 2010 was adjusted for the changes.

Relevant documentation:

Comparison figures

The tables below include an estimation of the divestments impact on our service lines and industry group sales in 2014, for local businesses ib Germany and the Netherlands, and local forest business in the UK.

The impact of Fidenta divestment (joint venture with Nordea) is no longer visible in this divestments table. As it is based on IFRS 11, joint venture sales are eliminated from the Group sales.

Relevant documentation:

Divestment tables

Our new business structure and operating model changed at the beginning of 2009. The new structure was based on country operations, industries and service lines. In line with our new operating model, internal reporting and the IFRS requirements, we adopted a new financial reporting structure at the beginning of 2009.

The countries were the main operating segments and the reporting covered Finland, Sweden and International. Reportable segments were defined based on IFRS8, ‘Operating Segments’.

In addition to country reporting, we disclosed net sales by customer segments, which were telecom, finance and other segments. In 2008, we reported net sales by business area and customer segment.

Relevant documentation:

Business structure

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