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Hitt og þetta 26. apríl 2006

TIETO-X PLC INTERIM REPORT 1 JANUARY - 31 MARCH 2006

- Turnover for the review period was EUR 9.0 million (2005: EUR 6.0 million). - Operating profit for the review period was EUR 1.0 million (2005: EUR 0.5 million). - The turnover of the Systems Services business unit for the review period was EUR 3.3 million (2005: EUR 2.9 million) and operating profit was EUR 0.5 million (2005: EUR 0.3 million). - The turnover of the Telecommunications unit for the review period was EUR 5.8 million (2005: EUR 3.1 million) and operating profit was EUR 0.9 million (2005: EUR 0.5 million). - The company's turnover in the second quarter of 2006 is expected to significantly exceed the second-quarter turnover of 2005, and the turnover for the fiscal year is expected to clearly exceed the turnover of 2005. - The company's operating profit percentage for the second quarter of 2006 is expected to clearly exceed the operating profit percentage level of the second quarter of 2005. Twelve-month profitability is also anticipated to be higher than in the previous year.

In the first quarter of 2006 Tieto-X's turnover grew strongly and exceeded the first quarter turnover of 2005 by 50.0 per cent, standing at EUR 9.0 million (2005: EUR 6.0 million). The turnover growth was a result of the strong organic growth of Tieto-X and the additional turnover that came with the acquisition of Vega Technologies Oy in the last quarter of 2005. The combined pro forma turnover increased by 26.9 percent.

First quarter operating profit from operations exceeded the operating profit of the corresponding quarter in 2005 by 104.1 per cent. Operating profit was EUR 1.0 million (2005: EUR 0.5 million). Due to IFRS accounting principles, the good profitability of Vega Technologies Oy was not transferred in its entirety to the Group's profitability in the first quarter. The combined pro forma operating profit of Tieto-X and Vega Technologies Oy increased by 40,7 per cent.

BUSINESS OPERATIONS

Tieto-X operates in the IT service market, offering its customers flexible software development and maintenance solutions that support their competitiveness and risk management. Tieto-X's services range from expert work and consultation to software project deliveries and software maintenance services with comprehensive responsibility.

Tieto-X's operational business is organised into two business units, the Systems Services unit and the Telecommunications unit. The Systems Services unit develops and maintains software that are part of the customer companies' information systems. The unit's most significant customers operate in the finance and public administration sectors.

The Telecommunications unit offers software development, integration and testing services to telecommunications hardware and network providers. The unit's clientele comprises leading mobile and smartphone manufacturers operating on global markets, as well as mobile network suppliers and telecom carriers.

Systems Services

Tieto-X's Systems Services unit launched several new customer projects in the second half of 2005. Major part of these projects were still running in the first quarter of 2006. Since the unit also won several new customer assignments during the first quarter, turnover increased by 12.9 per cent compared to the corresponding period in 2005.

More than 50 per cent of the turnover of the Systems Services in the first quarter of the year was accrued from new extensive service contracts and software production services with comprehensive responsibility. The unit will continue to develop its services during the ongoing year.

The growth in turnover and the high number of billed hours significantly boosted the unit's profitability.

Due to slow general growth in the unit's business segment, market competition remained fierce.

Telecommunications

The organic volume of the business of Tieto-X's Telecommunications unit grew strongly in the second half of 2005 due to the launch of several new customer projects. This positive trend continued in the first quarter of the ongoing year, and the unit's business volume increased further. Turnover was also boosted by the additional turnover of Vega Technologies Oy, a company acquired in October 2005.

The integration of Vega's business operations into the Tieto-X organisation has proceeded according to plan. Vega's Symbian software design and project skills have further increased the attractiveness of the Symbian software services that the Telecommunications unit offers to smartphone manufacturers and sharpened the unit's competitive edge on the fast-growing smartphone software markets.

The profitability of the Telecommunications unit was on a good level in the first quarter of the year. Due to IFRS accounting practises, the good profitability of Vega Technologies Oy was not transferred in its entirety to the profitability of the Telecommunications unit or the consolidated profitability of the first quarter.

In October 2005 Tieto-X founded a subsidiary, Testhouse Oy, to produce testing services for Symbian smartphone software and other mobile communication device software. The company also has a Tallinn-based subsidiary Testhouse Estonia OÜ. The first assignments of the Testhouse service were launched at the end of 2005, and they were implemented during the review period.

Competition for software projects for leading international mobile and smartphone manufacturers is still fierce. Especially the Symbian software development markets are expected to continue to increase significantly and to offer growth opportunities for Tieto-X's Telecommunications unit.

TURNOVER

During the period under review, Tieto-X's turnover grew by 50.0 percent compared to the previous year and stood at EUR 9.0 million (2005: EUR 6.0 million). Of the turnover for the report period, 64 per cent was accrued by the Telecommunications unit and 36 per cent by the Systems Services unit.

TURNOVER BY SEGMENT

+-----------------------------------------------------------------+ | K EURO | 1-3 2006 | 1-3 2005 | 1-12 2005 | | | | | | |-------------------------------+----------+----------+-----------| | Telecommunications | 5,815 | 3,119 | 15,340 | |-------------------------------+----------+----------+-----------| | Systems Services | 3,265 | 2,892 | 12,432 | |-------------------------------+----------+----------+-----------| | Group's internal eliminations | - 65 | | - 376 | |-------------------------------+----------+----------+-----------| | Administration | | | | |-------------------------------+----------+----------+-----------| | Group total | 9,015 | 6,011 | 27,396 | +-----------------------------------------------------------------+

FINANCIAL RESULT

The company's operating profit grew in the period under review by 104.1 per cent compared to the previous year and was EUR 1.0 million, which is 10.8 per cent of turnover (2005: EUR 0.5 million, 8.0 per cent of turnover). Net profit for the review period improved by 68.7 per cent and was EUR 0.7 million or 7.8 per cent of turnover (2005: EUR 0.4 million, 6.9 per cent of turnover). Earnings per share were EUR 0.09 (2005: EUR 0.06). Cash flow from business operations was EUR 0.10 per share (2005: EUR -0.10).

OPERATING PROFIT BY SEGMENT

+------------------------------------------------------+ | K EURO | 1-3 2006 | 1-3 2005 | 1-12 2005 | | | | | | |--------------------+----------+----------+-----------| | Telecommunications | 860 | 514 | 2,258 | |--------------------+----------+----------+-----------| | Systems Services | 519 | 267 | 1,174 | |--------------------+----------+----------+-----------| | Administration | - 403 | - 302 | - 914 | |--------------------+----------+----------+-----------| | Group total | 977 | 479 | 2,517 | +------------------------------------------------------+

The reference data related to the share of the administrative costs of total costs differs from the figures presented in the Interim Report for 1 January - 31 March 2005 due to a change in the accounting principles in the financial statement for 1 January - 31 December 2005.

RETURN ON CAPITAL INVESTMENT

Return on investment (ROI) was 30.3 per cent during the period under review (2005: 26.0 per cent). Return on equity (ROE) was 33.7 per cent (2005: 22.2 per cent).

BALANCE SHEET AND FINANCING

The balance sheet total was EUR 20,0 million (2005: EUR 10.9 million). Liquidity was good throughout the review period. The Group's liquid assets including financial assets stood at EUR 3.3 million (2005: EUR 3.5 million) at the end of the review period. The liquid asset decrease stems from the cash payment of the second instalment of the acquisition price of Vega Technologies Oy as well as dividend payment.

To pay the final instalment of the acquisition price of Vega Technologies Oy, the company took a loan of EUR 3.0 million, which is one million less than the company announced earlier. This means that the total external financing related to the acquisition of Vega amounted to EUR 6.0 million, not EUR 7.0 million.

CASH FLOW

The company's cash flow from business operations was EUR 0.7 million for the review period (2005: - 0.8 million).

PERSONNEL

The number of personnel averaged 458 (2005: 317) during the period under review and was 460 at the end of the period (2005: 319).

SHARES AND SHARE CAPITAL

Tieto-X's share capital was EUR 292,468.00 at the end of the review period, and the total number of shares was 7,311,700. The accounting countervalue of the share is EUR 0.04. The ISIN code used in international securities trading is FI0009008007 and the trading symbol is TIX1V. Trading in the Tieto-X share began on Helsinki Stock Exchanges' Pre List on 28 September 1999, and on the NM List on 1 October 1999. The lowest quotation during the review period was EUR 3.75 and the highest EUR 4.54. The final price quoted was EUR 4.25.

There were 1,900 shareholders on 31 March 2006. Private persons owned 60 per cent and institutions 40 per cent of the company's shares. Foreign ownership was 8 per cent.

THE ANNUAL GENERAL MEETING

The Annual General Meeting of Tieto-X Plc held on 14 March 2006 adopted the company's and Tieto-X group's financial statement for the financial period 1 January-31 December 2005 and granted discharge from liability to the members of the Board of Directors and the President. The Annual General Meeting decided to distribute as dividend EUR 0,18 per share.

The Annual General Meeting confirmed the number of Board Members to be 6. The Meeting re-elected Eero Hurme, Tero Laaksonen, Esko Siik and Seppo Jaatinen as members of the Board, and elected Matti Järvinen and Matti Makkonen as new members. At its meeting right after the Annual General Meeting, the Board of Directors elected Tero Laaksonen Chairman of the Board and Eero Hurme Deputy Chairman of the Board.

The Annual General Meeting elected Peter Ramsay and Jari Sundström as the shareholders' representatives of the Nomination Committee.

Options scheme

The Annual General Meeting decided on the stock options scheme as follows:

The number of options is 400,000 options rights. Based on the options scheme, the company's share capital may not increase by more than EUR 16,000 and the number of shares not by more than 400,000.

The subscription price for option series III A/1 and III A/2 is defined based on the trade volume weighted average quotation of the company's share on 1 January - 31 March 2006. The subscription price for option series III B/1 and III B/2 is defined based on the trade volume weighted average quotation of the company's share on 1 January - 31 March 2007.

III A/1 - the share subscription period of option rights begins on 1 October 2007 III A/2 - the share subscription period of option rights begins on 1 October 2008 III B/1 - the share subscription period of option rights begins on 1 October 2008 III B/2 - the share subscription period of option rights begins on 1 October 2009

The share subscription periods for all option rights ends on 31 December 2011.

The authorization of the Board of Directors

The Annual General Meeting authorized the Board of Directors to decide on increasing the share capital and/or issuing convertible bond loans within one year after the close of the General Meeting in a manner by which the new shares subscribed on the basis of a new share issue and convertible bonds may raise the share capital by a maximum of EUR 58,493.60.

The Annual General Meeting authorized the Board of Directors to acquire within one year from the Annual General Meeting a maximum of 731,170 of the company's own shares with the available profit distributable earnings.

The Annual General Meeting authorized the Board to convey within one year from the Annual General Meeting a maximum of 731,170 of the company's own shares acquired by the company.

FUTURE PROSPECTS

Several research institutes forecast that the Finnish IT service market will see a 3-4 per cent growth during 2006. If the general economic atmosphere remains positive, companies are expected to somewhat increase their investments aimed at renewing and developing their information systems and software during the year. The investments may grow somewhat more strongly in public administration than in the private sector.

The customer companies and organisations of Tieto-X's Systems Services unit are expected to continue their moderate investments during the ongoing year, which is expected to increase the demand for the unit's services. In addition, the demand for the unit's new service concepts is expected to increase further during the ongoing year.

The business of the Telecommunications unit is also predicted to develop positively, boosted by the new project and service models with comprehensive responsibility as well as the growing smartphone markets.

Thanks to good organic growth in the last quarter of 2005 and first quarter of the ongoing year, as well as the acquisition of Vega Technologies Oy, the business volume of Tieto-X is at the moment on a significantly higher level than it was a year ago. Judging from the company's order backlogs and tender prospects, the company's turnover for the second quarter of 2006 is expected to significantly beat that of the previous year. Thanks to a high number of billed hours in both business units, the operating profit percentage is also expected to clearly exceed that of the second quarter last year.

The company's twelve-month turnover is anticipated to be clearly higher than that of 2005. The company's twelve-month profitability is predicted to be higher than in the previous year.

TIETO-X GROUP

The Interim Report has been prepared in accordance with the recognition and valuation principles of the International Financial Reporting Standards (IFRS).

The figures in the income statement and balance sheet have been consolidated. All group companies are included in the consolidated figures. The original Interim Report is in Finnish. The English version is a translation. The figures are unaudited.

NEXT REPORTS

The Interim Report for the period 1 January - 30 June 2006 will be published on 25 July 2006.

TIETO-X PLC The Board of Directors

The full report including tables can be downloaded from the following link: