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2017-02-02

Tieto: Tieto's Interim Report 4/2016 - Year of increased investments ends with solid performance

· Strong order intake with fourth-quarter book-to-bill 1.5
· Sales growth 2% in the fourth quarter, IT services up by 3%
· Adjusted operating margin over 12%
· Increased competitiveness driven by investments, continued
automation and efficiency programme

· Dividend of EUR 1.37 proposed
The full interim report with tables is available at the end of this
release

Key figures for the fourth quarter

IT services

· Sales growth totalled 2.7%, sales in local currencies up by 3.9%
· Adjusted operating profit amounted to EUR 45.9 (48.6) million,
12.3% (13.4) of sales

The Group

· Sales growth totalled 2.0%, sales in local currencies up by 3.5%
· Adjusted operating profit amounted to EUR 49.5 (51.4) million,
12.3% (13.0) of sales

· Order intake (Total Contract Value) at EUR 613 (641) million,
order backlog at EUR 1 847 (2 030) million - book-to-bill 1.5

Key figures for the full year

IT services

· Sales growth totalled 4.3%, sales in local currencies up by 5.3%
· Adjusted operating profit amounted to EUR 141.1 (136.4) million,
10.3% (10.3) of sales

The Group

· Sales growth totalled 2.2%, sales in local currencies up by 3.2%
· Adjusted operating profit amounted to EUR 152.2 (150.8) million,
10.2% (10.3) of sales

· Proposed dividend EUR 1.37 per share, including base dividend of
EUR 1.15 (1.10) and an additional dividend of EUR 0.22 (0.25),
representing dividend yield of 5.3%

10-12/ 10-12/ 1-12/ 1-12/
2016 2015 2016 2015
Net sales, EUR million 403.6 395.6 1 492.6 1 460.1
Change, % 2.0 -1.8 2.2 -4.1
Change in local 3.5 -2.9 3.2 -2.6
currencies, %
Operating profit (EBITA), 49.0 50.1 154.9 138.0
EUR million(1)
Operating margin (EBITA), 12.1 12.7 10.4 9.5
%
Operating profit (EBIT), 45.1 46.8 140.8 125.2
EUR million(2)
Operating margin (EBIT), % 11.2 11.8 9.4 8.6
Adjusted(2) (3) operating 49.5 51.4 152.2 150.8
profit (EBIT), EUR million
Adjusted(2) operating 12.3 13.0 10.2 10.3
margin (EBIT), %
Profit after taxes, EUR 34.2 34.4 107.2 90.5
million
EPS, EUR 0.46 0.47 1.46 1.23
Net cash flow from 50.2 67.1 97.2 132.6
operations, EUR million
Return on equity, 12-month 22.1 19.0 22.1 19.0
rolling, %
Return on capital 21.6 20.4 21.6 20.4
employed, 12-month
rolling, %
Capital expenditure and 24.7 32.7 99.2 136.7
acquisitions, EUR million
Interest-bearing net debt, 109.7 13.2 109.7 13.2
EUR million
Net debt/EBITDA 0.6 0.1 0.6 0.1
Book-to-bill 1.5 1.6 1.1 1.3
Order backlog 1 847 2 030 1 847 2 030
Personnel on 31 December 13 876 13 083 13 876 13 083

1) amortization of all intangible items; previously, only
acquisition-related intangible items

2) includes EUR 3.3 (1.2) million in allocated acquisition-based
amortization in the full year, EUR 1.1 (0.6) million in the fourth
quarter

3) adjusted for restructuring costs, capital gains/losses, goodwill
impairment charges and other items

Full-year outlook for 2017

Tieto expects its adjusted(1) full-year operating profit (EBIT) to
increase from the previous year's level (EUR 152.2 million in 2016).

1) adjusted for restructuring costs, capital gains/losses, goodwill
impairment charges and other items

CEO's comment

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

"We are pleased to be back to growth and to have ended the year with
solid performance also in terms of order intake and profitability.
While our total revenues for the full year grew by 2% - and by 4% in
IT services - our aim is to grow faster, which is supported by our
investments in new services and technologies.

The IT software and services industry is continuing to undergo
significant change globally, which requires a simultaneous focus on
future innovation and constant productivity improvement in our
operations. For example, we have increased investments in our
software products, start-ups and new data-driven businesses based on
artificial intelligence. To enable continued investments in
innovation and growth, we have also decided to take further actions
to drive our competitiveness by continuing to step up automation and
growing our less labour-intensive solutions.

In this rapidly changing world of digitalization, the required skills
and competences are evolving fast. We encourage all our employees to
pursue personal development and actively support everyone to acquire
new skills that fit the market demands. With this in mind we have
recently launched a "Learning as a Lifestyle" initiative for all
employees to provide insights on emerging skills and technologies in
the areas of Advanced Analytics, Design Thinking and DevOps for agile
development.

We are excited about the opportunities the world of digitalization
brings to society and our customers, business and employees. With
this in mind, we are looking forward to another exciting year in our
continuous renewal and expansion."

Financial performance by service line

EUR million Customer Customer Change, % Operating Operating
sales sales profit profit
10-12/ 10-12/ 10-12/ 10-12/
2016 2015 2016 2015
Technology Services 197 196 1 26.2 30.3
and Modernization
Business Consulting 38 34 10 2.0 1.3
and Implementation
Industry Solutions 138 132 4 19.7 20.8
Product Development 31 33 -5 3.3 2.8
Services
Support Functions -6.2 -8.3
and Global
Management
Total 404 396 2 45.1 46.8

Operating margin by service line

% Operating Operating Adjusted(1) Adjusted(1)
margin margin operating operating
10-12/ 10-12/ margin margin
2016 2015 10-12/ 10-12/
2016 2015
Technology Services 13.3 15.5 14.1 15.8
and Modernization
Business Consulting 5.3 3.7 1.8 5.7
and Implementation
Industry Solutions 14.3 15.7 15.5 16.2
Product Development 10.6 8.4 11.3 9.4
Services
Total 11.2 11.8 12.3 13.0
1) adjusted for
restructuring
costs, capital
gains/losses,
goodwill impairment
charges and other
items

Customer sales by industry group

EUR million Customer sales Customer sales Change, %
10-12/ 10-12/
2016 2015
Financial Services 101 92 10
Public, Healthcare and Welfare 135 133 1
Industrial and Consumer Services 137 137 0
IT services 373 363 3
Product Development Services 31 33 -5
Total 404 396 2

M&A impact by service line

Growth, % Organic growth, %
(in local currencies) (in local currencies)
10-12/ 10-12/
2016 2016
Technology Services 2.2 2.2
and Modernization
Business Consulting 11.9 2.0
and Implementation
Industry Solutions 5.0 1.2
IT services 3.9 1.6
Product Development -0.9 -0.9
Services
Total 3.5 1.4

M&A impact by industry group

Growth, % Organic growth, %
(in local currencies) (in local currencies)
10-12/ 10-12/
2016 2016
Financial Services 11.0 5.6
Public, Healthcare and Welfare 2.6 2.4
Industrial and Consumer Services 0.2 -2.0
IT services 3.9 1.6
Product Development Services -0.9 -0.9
Total 3.5 1.4

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
(http://callto:tel:+358207271725), +358 50 321 7510, tanja.lounevirta
(at) tieto.com

Press conference for analysts and media will be held at Tieto's
premises in Espoo, address: Keilalahdentie 2, on 2 February 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=020217) 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 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0)330 336 9105
US: +1 719 457 1036
Conference code: 4404154

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.

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