1. Segment Information

Performance for the year

1. SEGMENT INFORMATION
 
The operating segments constitute the structure in which the Leadership Team makes strategic decisions and whose reports are regularly reviewed by the Leadership Team.
     
In July 2016 the reportable operating segments changed due the alignment of the operating structure with the new strategy. The Leadership Team considers and evaluates the business as a matrix structure comprising service lines and industry groups. In a matrix organisation, the company shall determine the reportable operating segments so that the company can provide sufficient information to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. In Tieto the service line dimension constitutes the main operating segments in which the strategic decisions are made and thus form a basis for defining the reportable segments according to IFRS 8.
     
The reportable operating segments in the service line dimension are Technology Services and Modernization, Business Consulting and Implementation, Industry Solutions and Product Development Services. The reportable service line segments constitute the structure for cash-generating units, to which the goodwill acquired in business combinations has been reallocated.
     
Group level costs like the costs related to Global management, Group's share of support functions and other non-allocated costs are not included in the service line segments but are reported under Support Functions and Global Management in the segment reporting.
     
The customer sales of service lines also present the reporting of products and services of Tieto.
     
The Leadership Team assesses the performance of the operating segments based on operating profit (EBIT) which corresponds to the operating profit in the Income statement according to IFRS.
             
Customer sales by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       762 755 1
Business Consulting and Implementation       139 125 12
Industry Solutions       475 439 8
Product Development Services       117 142 -17
Group total       1 493 1 460 2
 
No internal sales occur between service lines as in the management accounting, revenue and costs are booked directly to the respective customer projects in the service lines.
 
Net sales by country
EUR million       2016
1–12
2015
1–12
Change
%
Finland       674 669 1
Sweden       566 553 2
Norway       159 140 13
Other       94 99 -5
Group total       1 493 1 460 2
             
In Finland, IT services sales grew by 1.8% in 2016.
             
In Sweden, growth in local currencies was 3.8%. IT services grew by 7.4% in local currencies.
             
In Norway, growth in local currencies was 16.9%.
             
Customer sales by industry group
EUR million       2016
1–12
2015
1–12
Change
%
Financial Services       370 347 7
Public, Healthcare and Welfare       479 439 9
Industrial and Consumer Services       527 533 -1
Product Development Services       117 142 -17
Group total       1 493 1 460 2
 
Customer sales to the telecom sector were EUR 232 (275) million.  
 
Revenues derived from any single external customer during 2016 or 2015 did not exceed the 10% level of the total net sales of the Group.
             
Operating profit (EBIT) by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       89.0 65.5 36.0
Business Consulting and Implementation       4.1 1.5 167.0
Industry Solutions       55.2 65.4 -15.5
Product Development Services       10.9 15.6 -30.5
Support Functions and Global Management       -18.5 -22.8 19.0
Operating profit (EBIT)       140.8 125.2 12.5
             
             
Operating margin (EBIT) by service line
%       2016
1–12
2015
1–12
Change
pp
Technology Services and Modernization       11.7 8.7 3.0
Business Consulting and Implementation       3.0 1.2 1.7
Industry Solutions       11.6 14.9 -3.2
Product Development Services       9.3 11.0 -1.8
Operating margin (EBIT)       9.4 8.6 0.9
             
             
Adjusted operating profit (EBIT) by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       92.4 88.6 4.3
Business Consulting and Implementation       1.7 3.1 -43.8
Industry Solutions       59.2 61.3 -3.5
Product Development Services       11.1 14.7 -24.5
Support Functions and Global Management       -12.2 -16.8 27.6
Operating profit (EBIT)       152.2 150.8 0.9
             
             
Adjusted operating margin (EBIT) by service line
%       2016
1–12
2015
1–12
Change
pp
Technology Services and Modernization       12.1 11.7 0.4
Business Consulting and Implementation       1.2 2.5 -1.2
Industry Solutions       12.5 14.0 -1.5
Product Development Services       9.4 10.3 -0.9
Operating margin (EBIT)       10.2 10.3 -0.1
             
             
Personnel by service line
  End of period       Average  
  2016
1–12
Change
%
Share
%
2015
1–12
2016
1–12
2015
1–12
Technology Services and Modernization 6 338 8 46 5 881 6 159 6 044
Business Consulting and Implementation 1 376 2 10 1 349 1 367 1 220
Industry Solutions 4 024 10 29 3 668 3 813 3 469
Product Development Services 1 243 -3 9 1 279 1 222 1 488
Service Lines total 12 981 7 94 12 178 12 560 12 222
Industry Groups 260 -4 2 272 272 295
Support Functions and Global Management 635 0 5 634 641 667
Group total 13 876 6 100 13 083 13 472 13 184
 
             
Personnel by country
             
  End of period       Average  
  2016
1–12
Change
%
Share
%
2015
1–12
2016
1–12
2015
1–12
Finland 3 552 -2 26 3 612 3 586 3 846
Sweden 2 698 8 19 2 490 2 583 2 496
India 2 503 12 18 2 230 2 379 2 137
Czech Republic 2 247 11 16 2 025 2 145 2 037
Latvia 649 -4 5 678 664 690
Norway 636 6 5 600 607 479
Poland 413 -2 3 421 394 450
China 305 18 2 258 280 285
Estonia 280 43 2 196 256 169
Austria 138 11 1 124 130 119
Lithuania 99 -14 1 115 111 117
Other 357 7 3 335 337 358
Group total 13 876 6 100 13 083 13 472 13 184
Onshore countries 7 233 3 52 7 045 7 117 7 125
Offshore countries 6 643 10 48 6 039 6 355 6 058
Group total 13 876 6 100 13 083 13 472 13 184
             
             
Non-current assets by country
EUR million       2016
31 Dec
2015
31 Dec
Change
%
Finland       85.9 81.7 5
Sweden       39.3 24.3 61
Other       21.2 18.0 18
Total non-current assets       146.4 124.0 18
 
Goodwill is allocated to the Cash Generating Units, which include several countries and therefore goodwill is not included in the country specific non-current assets shown above.
 
             
Depreciation by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       35.2 38.7 -9
Business Consulting and Implementation       0.1 0.0 -
Industry Solutions       0.8 0.6 43
Product Development Services       0.0 0.3 -85
Support Functions and Global Management       3.7 4.2 -13
Group total       39.8 43.8 -9
 
             
Amortization on allocated intangible assets from acquisitions by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       - - -
Business Consulting and Implementation       0.4 0.2 151
Industry Solutions       2.8 1.0 183
Product Development Services       - - -
Support Functions and Global Management       - - -
Group total       3.3 1.2 178
             
             
Amortization on other intangible assets by service line
EUR million       2016
1–12
2015
1–12
Change
%
Technology Services and Modernization       8.9 9.2 -3
Business Consulting and Implementation       0.1 0.0 -
Industry Solutions       0.2 0.1 111
Product Development Services       -0.0 -0.1 -84
Support Functions and Global Management       1.6 2.4 -31
Group total       10.8 11.6 -7