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Annual Report 2009

Building leaders

of the digital world

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Tieto is an IT service company providing IT, R&D and consulting services. With approximate- ly 16 000 experts, we are among the leading IT service companies in Northern Europe and the global leader in selected segments.

We specialize in areas where we have the deepest understanding of our customers’ busi- nesses and needs. Our superior customer centricity and expertise in digital services set us apart from our competitors.

We focus on serving large and medium-sized organizations in our main markets – Northern Europe, Germany and Russia. In telecom, forest, oil and gas as well as digital services, we serve our customers globally. We work hand in hand with many of the world’s leading com- panies and organizations and grow in step with them.

The company’s shares are listed on NASDAQ OMX in Helsinki and Stockholm.

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Building leaders of the digital world –

a world of better service, higher productivity

and new opportunities.

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Tieto Annual Review 2008

Contents

Year 2009 in brief 3

CEO’s review 4

Business description 6

Strategy 14

Corporate governance statement 20 Financial information

Report by the Board of Directors 36 Consolidated financial statements 46 Parent company’s financial statements 95 Shares and shareholders 106 Proposal of the Board of Directors 110

Auditor’s report 111

Information for the shareholders 112

Contact information 113

Tieto Annual Report 2009 2

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The IT market became highly challenging at the beginning of 2009. However, the relatively strong outsourcing market has balanced out the weak demand for IT services.

Tieto’s net sales declined due to the soft market. Thanks to streamlining actions, we succeeded in turning profitability to an upward trend during the second half of 2009.

Our new operating model and company structure went live in 2009. New Tieto emphasizes people, competence and quality. We work together – together we succeed.

Key figures 2009 2008

Net sales, EUR million 1 706.3 1 865.7

Operating profit (EBIT), EUR million 75.3 111.6

Operating margin, % 4.4 6.0

Operating profit (EBIT) excl. one-off items, EUR million 108.0 149.9

Operating margin excl. one-off items, % 6.3 8.0

Profit before taxes, EUR million 70.3 82.4

Earnings per share, EUR 0.77 0.83

Equity per share, EUR 7.25 6.75

Dividend per share, EUR 0.50 0.50

Investments, EUR million 58.9 97.9

Return on equity, % 11.0 12.6

Return on capital employed, % 16.8 25.2

Gearing, % 12.7 21.0

Equity ratio, % 46.0 41.1

Personnel on average 16 568 16 397

Personnel on 31 Dec 16 663 16 618

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We delivered

in tough markets

2009 was a challenging year for Tieto – we introduced a new organization and operating model, and at the same time tackled the difficulties created by the global economic downturn. In the tough markets, we executed according to our plans and deliv- ered results to our stakeholders.

Tieto is now a stronger company and has a good foundation to build on.

Tieto Annual Report 2009 4

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The IT services sector is late-cyclical, and therefore changes in the customers’ businesses have a delayed impact on the demand for IT services. When the global economy started to tumble in late 2007, we felt the impact of the turbulence starting in early 2009. During 2009, customers were very cautious in new IT investments and their focus was clearly on cost-savings. The demand for consulting and project services in particular was hit quite hard, which put significant pressure on Tieto’s top line. This was partly offset by robust outsourcing demand.

Overall, the competitive landscape in the IT sector did not change dramatically last year in Tieto’s main markets. Competi- tion continued to be tough, creating price pressure, especially in the telecom sector. The importance of adequate offshore capabilities has gained more and more importance, and Tieto has continued to invest in its global delivery model with excel- lent results.

At the end of 2009, we had reached an offshore ratio of 30%, which makes us one of the leading offshore providers among European IT service companies. In India, we currently have more than 1 000 employees, and in China, we doubled our resources during 2009. Altogether, Tieto has more than 5 000 professionals working in its global delivery centres.

Focus on profitability

The decline in the IT market had a negative impact on our sales and profitability. Ever since the poor start in the early months of 2009, our focus has been on managing our profitability. Like many other companies, we took significant actions to adjust our operations to lower demand.

The positive signs of these actions were visible in Tieto’s profitability during the latter half of 2009, and by the end of the year we achieved the EUR 70 million savings target set for 2009. The personnel-related actions were completed as planned, we closed 21 offices and our business expenses were down by 25%.

Commitment to quality and offering development

One of Tieto’s corporate values is related to quality. This has been an important focus area during the past 24 months, resulting in significant improvements in the quality of our serv- ices and deliveries. The results of this work cannot directly be measured in euros, but our efforts have been recognized by our customers. According to a study made by research house EquaTerra in 2009, Tieto was ranked as the best provider of application management services in the Nordic countries.

In 2009, we also put a lot of emphasis on driving new sales and building up the market for our advanced offerings. During difficult times, customers look for services that help them to improve productivity and efficiency. Offerings that meet this need had the best demand in 2009, but as times are gradu- ally improving our customers are starting to think about how to boost growth with IT.

Cloud computing is one of the hottest topics today. In prac- tice this means providing customers with scalable and secure capacity, applications, and business services over the internet.

In this model the customer does not invest in the IT infrastruc- ture. Instead, the service provider delivers IT functionality as a

complete package. The additional benefits of these standard- ized offerings are increased flexibility and lower costs as cus- tomers pay for the service according to usage.

Becoming a Green IT company

Our investments in new, energy-efficient data centres in Fin- land, Sweden and Russia are an essential part of the cloud services as well as our green IT offering and drive to reduce our carbon footprint. In addition to these new data centre opera- tions, for us sustainability also entails reducing unnecessary business travel and using collaborative IT tools. We are also in the process of certifying some of our offices according to WWF’s Green Office standard during 2010.

Good corporate identity is built on sound business ethics and sustainable operations. Tieto is already included in many sustainability indices and our aim is to become the leading Green IT company. We will use the Global Reporting Initiative (GRI) as our guideline. We have developed a new Corporate Responsibility reporting service to enable companies to moni- tor their sustainability performance. Tieto will naturally use the same tool. We are making every effort to make our and our customers’ business operations and services as sustainable as possible.

Shifting eyes on growth

In 2010, we will continue to manage our business tightly. Our Finnish operations are in a good shape, Sweden has started to recover and our performance in Tieto International also im- proved towards the end of 2009. Going forward, Russia offers lucrative business opportunities for us. We have had a prom- ising start, and Tieto is already well known among its target customers. This, coupled with our innovative offerings including Tieto Cloud, will help us to make breakthroughs in Russia dur- ing this year.

We started to see early signs of market stabilization to- wards the end of 2009, and our management agenda is gradu- ally shifting more to growth. The outsourcing market is growing in all of our main markets and our sales pipeline is stronger than before. In addition to outsourcing, we see good demand for R&D-related IT offerings as well as digital front office solutions.

In 2010, Tieto’s operations will be developed according to earlier plans, and we will continue to drive offering development as well as sales and quality excellence. Our longer-term target is to grow faster than the relevant IT market and we are aiming at an EBIT margin of 10% or above in the coming years.

Tieto’s values set the foundation for our operations – how we conduct business, collaborate and develop ourselves to meet and exceed our customers’ needs. I am extremely proud of my Tieto colleagues for upholding these values. Thank you all for your commitment and support during these turbulent times. I also want to thank our customers for their continuous good collaboration and our shareholders for their endurance and trust. The world is full of opportunities for Tieto and we want to share the benefits with you.

Helsinki, February 2010

Hannu Syrjälä President and CEO

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Services

To whom

Where

Our

position

We provide value-adding services by combining our knowledge of our customers’ businesses, technologies and trends in the digital world. We turn this knowledge into sustainable results for our customers.

We provide IT services R&D services

Digital transformation and consulting services.

IT services comprise – Project services – Industry solutions

– Application service management (ASM) – ICT infrastructure services.

Our main markets are Northern Europe, Germany and Russia. In addition, we serve our customers globally in certain areas of expertise and have industry-specific activities in selected countries. In our operating structure, the markets are grouped under

Finland Sweden and International.

Our deep understanding of customers’ businesses and needs lays the foundation for long-term relation- ships with large and medium-sized organizations. We serve customers in the following sectors:

Telecom and media Finance

Industry sectors.

– Norway – Denmark – Germany – Russia – Other countries

We are one of the leading IT service companies in North- ern Europe and the global leader in selected segments.

#1 in IT services in Finland

#1 in project services in Finland and Sweden

#1 in telecom R&D in Europe

#1 in solutions for the forest industry globally

We aim to become the leading IT service company in Northern Europe by 2011. We also seek to establish a strong presence in Russia and become the world-lead- ing R&D partner in the telecom sector.

Industry sectors include – Automotive

– Energy

– Healthcare and welfare – Manufacturing – Logistics – Public – Retail.

Tieto Annual Report 2009 6

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Net sales by services and products in 2009

Net sales by country segment in 2009 Net sales by customer sector in 2009

1) Application management accounts for around half of the share.

Project services include industry solutions, R&D services and consulting.

2) Products include license fees and maintenance.

Other 3%

International 27%

Our main markets are Northern Europe, Germany and Russia. In addition, we serve our customers globally in certain areas of expertise and have industry- specific activities in selected countries.

Finland 48%

Sweden 25%

Finance 21%

Telecom and media 34%

Public 9%

Energy 6%

Manufacturing 10%

Retail and logistics 7%

Project services and application management 1) > 60%

ICT infrastructure services ~20%

Products 2) 10–15%

Other < 5%

Healthcare and welfare 10%

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Cloud computing reshapes IT service models

Service models are changing from traditional delivery projects towards models where customers buy IT, or functionality, as a service. In this cloud ecosystem, the IT service provider designs, builds and operates the solution or service and offers it for the use of several customers at the same time.

Customers are billed on a pay as you go basis, e.g. based on time consumed or number of transactions or users. Due to their scale advantages and flexibility, these types of cloud services provide customers with a more affordable way of buying IT that ties up less capital. See also page 16.

Project services range from consulting and designing new IT solutions to integrat- ing and developing existing ones. Solutions are often based on products or compo- nents that are developed by Tieto or a third party. On top of these, solutions include customer-specific work.

We provide a wide range of industry solutions that improve customer service and the efficiency of customers’ operations by enhancing business and information processes.

Application service management (ASM) ensures uninterrupted business processes for our customers. Services comprise maintaining, developing and enhancing existing applications under a long-term contract as well as operating

customers’ business critical applications and business processes on a 24/7 basis.

ICT infrastructure services ensure 24/7 operations for our customers. Many customers are in the market for outsourc- ing their entire ICT infrastructure manage- ment.

We are the largest European supplier of telecom R&D services, such as design, de- velopment and maintenance of software for our customers’ products, and an active player in emerging R&D such as future connectivity.

Our strong R&D offering is aimed at develop- ing telecom networks, mobile devices, auto- motive and emerging R&D areas.

With more than 4 000 R&D professionals, we see ourselves as an extension to our custom- ers’ own R&D – a reliable and agile partner.

Our established presence in Europe and Asia enables us to serve our customers flexibly and cost-efficiently.

With around 700 consultants, Digital Trans- formation and Consulting (DTC) provides digital consumer services from consulting to implementation. Every industry is affected by the transformation to digital services. The implementation of this change always involves a combination of highly diverse competences.

Our offerings aim for efficiency and high quality for example in the areas of Digital Customer- ship (multichannel consumer services), Future Office (increasing information worker produc- tivity) and Financial Value Chain (digitalizing the financial supply chain).

Our service lines

IT services

R&D services

Digital transformation and consulting services

Tieto Annual Report 2009 8

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9

At your service

Finland Sweden China

Czech Republic Denmark Estonia Germany Great Britain India Latvia Lithuania Netherlands Norway Poland Russia

We also operate in Austria (Telecom), Belarus (delivery centre for several industries), Belgium (Financial Services), Canada (Energy, IMS), France (IMS, Telecom), Indonesia (IMS), Italy (Telecom), Malaysia (Energy), Spain (Telecom) and USA (Energy, IMS).

IMS: Industrial Manufacturing & Services Telecom

& Media Financial

Services Energy

Automotive Healthcar

e & Welfare Industrial

Manufacturing

& Services

Public Retail & Logistics Go-to-market country

Tieto delivery centre

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Long-lasting benefits from our knowledge of

customers’ businesses

Thanks to our deep understanding of our customers’ businesses, we are able to provide the best services that increase productivity and create new business opportunities for them. We turn our people and customers into leaders in the digital world – a world of better service.

Telecom &

Media

Telecom & Media provides sustainable IT and R&D services to leading network equipment and mobile device manufacturers, telecom operators and media companies. R&D services, mainly comprising design, development and main- tenance of software for our customers’ products, account for around half of our net sales in this industry. We are the supplier of choice for a number of global customers whose ideas we help turn into tangible results.

Financial Services

Financial Services offers high-value-added IT services and solutions to banks, insurance companies and financial services providers. Product-based solutions account for around 30% of our net sales in this industry and include core bank- ing, payments, e-Banking, cards suites, mortgages and fund management.

About 25% of net sales are generated in partnerships where we assume wide responsibility for our customers’ IT.

Automotive

Automotive offers professional R&D services for the automotive and transport telematics industries. We implement tailored solutions for systems and compo- nents in control units, communication platforms and multimedia applications in the fields of infotainment, driver assistance systems, stability control and battery and power management. Thanks to our expertise in the telecom and media sectors, we are able to expand our customers’ value-added chain with innova- tive business ideas.

Tieto Annual Report 2009 10

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Long-lasting benefits from our knowledge of

customers’ businesses

We are the largest European supplier of R&D services to the telecom industry and one of the largest globally.

Customers include Alcatel-Lucent, Ericsson, Nokia, Nokia Siemens Networks, SonyEricsson, ST-Ericsson, Telecom Italia, Telenor and TeliaSonera.

The Nordic countries account for more than 70%

of our net sales of Financial Services. We also operate in the Baltic countries, Russia and the UK. In the Nordic countries, we are the leading service provider in this field.

Customers include Barclays, Handelsbanken, If P&C Insurance, Ilmarinen, Nordea, OP-Pohjola, Royal Bank of Scotland, Russian Standard Bank, Swedbank and Varma.

Our focus is on the German market. Customers include BMW, Ford, Mercedes-

Benz, Bosch, Continental, ZF, Hella, Delphi and Hilite.

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Energy

Energy supplies IT solutions and services to the energy sector in Northern Europe. We offer globally leading products and services for oil & gas production, for example within hydrocarbon accounting. We are also the leading provider of customer information and billing solutions to the Nordic utility sector. Product- related business accounts for more than half of our net sales in this industry.

Deep industry knowledge combined with long-term business relations with the most successful energy companies gives us a unique opportunity to main- tain our position as the leading expert.

Healthcare &

Welfare

Healthcare & Welfare supports its customers by digitalizing their service and care processes to improve the quality, safety and efficiency of lifetime care. We enable our customers to reduce waiting times, secure the flow of information, make high quality decisions and empower citizens.

We provide a comprehensive set of solutions based on our own products as well as customized solutions and ICT services. Product-related business ac- counts for more than half of our net sales in this industry. Solutions are focused on making lives easier for citizens, patients and the caring staff. Over 40 years in the business and close customer relations give us a strong foundation to further develop healthcare and welfare at the individual, regional and national level.

Industrial

Manufacturing &

Services

Industrial Manufacturing & Services offers a full range of IT services and solu- tions, such as SCM (Supply Chain Management), ERP (Enterprise Resource Planning) and MES (Manufacturing Execution System). In the forest industries, we provide solutions and services globally for the entire value chain of the pulp, paper, board, tissue and recycling industries.

We have a clear vision on how IT can help our customers in the fundamental transformation of the manufacturing industries. We digitalize core operations in the manufacturing sector, thereby making our customers and their supply net- works more competitive.

Customer solutions are built on our own industry-leading products or indus- try standard platforms. Business related to our own products accounts for more than 15% of our net sales.

Public

Our services for the public sector range from strategic development to supplying solutions and continuous services. Services are based on in-depth knowledge of the sector and comprehensive partner networks. Customer-oriented digital services help ensure that private citizens and businesses can use public sector services as easily and naturally as possible.

Public offers IT services, such as systems integration, application service management, ICT infrastructure management and consulting, for creating and developing digital services for the public sector, i.e. local and central government.

Retail & Logistics

We help our customers in the retail, wholesale, logistics, services and environ- ment sectors to meet the needs of their customers and hence to fully benefit from the ongoing change in customer behaviour and purchasing habits. To this end, we provide solutions e.g. for supply chain efficiency, customer profile analysis, digitalizing of purchasing and warranty systems as well as loyalty pro- grammes.

Retail & Logistics supplies a full range of IT services as well as IT solutions, such as ERP, Smart Shopping, Assortment Planning, Warehouse Management and Transport Planning. Our solutions are often based on products and mod- ules provided by world-leading companies.

Tieto Annual Report 2009 12

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In the oil & gas segment, we operate globally. In the utilities segment, we have a leading position in the Nordic countries, and are expanding our operations in Germany and Russia.

Customers include BP Amaco, Chevron Texaco, ConocoPhillips, Eneco, E.On, Exxon Mobil, Fortum, Gassco, Neste Oil, RWE, Shell and Statoil Hydro.

We are the leading vendor in the Nordic coun- tries and have a strong position in Germany and the Netherlands.

Customers include over 2 000 companies and organizations, e.g. the Finnish hospital districts, the Helsinki University Hospital and Suomen Terveystalo, the Swedish counties of Skåne and Stockholm, the Cities of Helsinki, Espoo, Oulu, Oslo and Stockholm, Sjukvårdsrådgivningen (SVR), German Bundesknappschaft and Rhön, the Norwegian Central Health Region and the Danish Capital Region.

We are the market leader in Finland, supporting our customers in their different locations, mainly in the Baltic Rim, and the global leader in solu- tions for the forest industries.

In forest industries, we have a strong market position in Europe and North America, and are expanding our operations in Russia and China.

Customers include Stora Enso, Rautaruukki, Saab Technologies, UPM, Metso, ABB, Cargotec, Orion, Myllykoski Group, Metsäliitto Group, Sappi and Smurfit Kappa.

We operate in Finland, Sweden, Norway and Estonia.

Customers include the National Board of Taxes, the Motor Vehicle Administration Centre, the Ministry of Justice, the State Treasury, municipalities such as the Cities of Helsinki, Tampere and Stockholm, the Helsinki Metropolitan Area Council, the majority of County Councils in Sweden, such as Region Skåne, Stockholm County Councils and the County Council of Jämtland, the Swedish Tax Agency and Aditro.

We operate in Finland, Sweden, Norway, Russia, Latvia and Lithuania, and are the market leader in the Baltic Rim area.

Customers include Alko, Apoteket, Finnair, Itella, Kesko, Lassila & Tikanoja, Onninen, S Group, Stockmann, Tuko Logistics and VR Group Ltd.

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1

2

3

4

Leading IT service company in

Northern Europe by 2011

Environmental protection calls for a huge in c rease in IT use.

We seek growth especially from advanced

digital services.

Our unique value proposition boosts customers’

growth and profitability.

Customers’ rationalization measures drive growth in

the short term.

We pursue a higher market share in Sweden.

Russia provides long-term growth

opportunities.

Global-scale efficiency and delivery excellence

drive profitability.

Streamlining the cost base continues with a special

focus on Sweden and International.

Tieto Annual Report 2009 14

Why invest

in Tieto

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We want to build a professional service company culture, where knowledge and passion lead to great performance and profitability.

Strategy

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IT value chains change along with cloud computing

Implementation of green IT services globally

USD

Operate Build Design Licences Hardware

Hardware

Customer

Customer Several vendors

Licences Design Build Operate Standard Customize

solutions Traditional

service model

Vendor Cloud computing

Leading IT service provider in Northern Europe by 2011

Environmental protection calls for a substantial increase in IT use

The digitalization of our society will accelerate significantly in the years ahead. IT use must be stepped up massively to reduce greenhouse gas emissions. At the same time, digital natives – those who have used digital media since childhood – are changing the ways in which services are deployed. They demand continuous service and ease of use without time or place restrictions. This applies equally to consumer interfaces and business processes. Traditional time and material projects and application management are stagnating, and new digital services and service models are emerging.

Growth from advanced digital services and cloud computing

Our customers operate in a highly competitive environment where innovative new services are the key success driver.

As efficiency demands are also riding high, industrial service production is an operational must. Our long experience in the development of new business models and IT utilization in nu- merous industries is one of our strategic strengths. New digital services are key sources for our future growth. These services include digital front office, i.e. customer interfaces and manage- ment, as well as services aiming to improve business process productivity.

Cloud computing opens up new opportunities for IT service providers. When it comes to our role in the cloud ecosystem

we have a strong basis to build on. We have in-depth experi- ence in digital business services like eInvoice, ePayment and eCustomer Care. Moreover, we are well positioned to grow in this area despite the intensifying global competition thanks to our deep customer relationships, comprehensive data centre services as well as our strong alliances with world-leading technology companies. In addition, integrating cloud systems provided by other IT companies generates new business. As an expert in adapting business solutions to the needs of a spe- cific customer, we expect to get a firm foothold in the expanding cloud computing market. More about cloud computing on page 8.

Source: Market Overview: Green IT Services, April 24, 2009, Forrester Research, Inc.

The estimates only include direct green IT services. They do not include indirect effects, i.e. the use of smart IT solutions that indirectly reduce emissions, for example due to less travelling and printing.

Tieto Annual Report 2009 16

North America

2008 2014

Europe

Asia & Pacific

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Growth

Increasing sales and customer satisfaction

Efficiency

Creating new revenue and digital services

Improving the efficiency of IT operations Enhancing business and

information processes Customers’ agenda Where we can help

Cloud computing provides customers with a more affordable way to buy IT that ties up less capital.

Northern Europe, Germany and Russia are our main markets, and Finland and Sweden are the largest. We constantly evalu- ate our business portfolio and also explore new potential go- to-market countries. One of these is Poland, which is clearly a robust market for our offerings. Moreover, most of our big Nordic customers are present in that market.

Increased market share in Sweden

There is untapped potential in the Swedish IT market, given its large size and our relatively low market share. We will leverage our current and new offerings and proactively seek growth especially from the public, finance, healthcare and welfare sectors.

Strong presence in Russia

The Russian market offers lucrative opportunities. Growth in the IT sector has been very hardware-driven, but IT services,

especially those aiming to improve the productivity of custom- ers, are now expected to increase their share. The recession has even strengthened this trend. We aim to grow in Russia by serving our European key customers and acquiring new Rus- sian customers.

World-leading telecom partner

In the telecom sector, we seek to grow with our existing and new customers as well as by boosting new services, such as new network services and mobile internet services. Naviga- tion, music downloads and maps are examples of services that relatively few consumers currently have access to, leading to good demand for related services.

Currently, we hold the leading position in telecom R&D in Europe and aim to be the world-leading telecom R&D partner.

We also seek to grow by leveraging our highly advanced IT services for customers in this sector.

Stronger market position in Sweden – Russia opens up new growth opportunities

Our unique value proposition drives customers’ growth and profitability

In today’s competitive landscape, it is difficult to beat the com- petition on price or pure performance. We have chosen to differentiate ourselves from the competitors through superior customer centricity. We seek to meet our customers’ business challenges with our specialized, high value added offerings.

With the help of our unique value proposition, we support our customers in their efforts to grow and improve productivity.

Supporting customers with the related business transformation is one of our core competences.

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Strong value proposition

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customer focus Servic

e l ine

SinDUSTrieS

Industry expertise

Market and cOUnTrieS

Service valu

e, qu

ality,

eff cie ncy

Operating model drives customer value

Success for people – success for Tieto

Our future success will be built on our people and their com- petence and motivation. We must attract and retain talented people to work towards our common goals. Our values-based leadership culture encourages our employees to pull together and improve their performance. To this end, we provide sup- port, honest feedback and immediate coaching whenever needed. In our open leadership environment, dialogue and performance evaluation are continuous, straight and fair, and based on clear measures.

Through our change programmes we will achieve agile re- source planning, implement an efficient global HR platform and transform competences to support Tieto’s transformation.

Global-scale efficiency through the new operating model

As the IT industry continues to go global, the significance of standardized services and efficient service provision will rise. To answer this trend, we are forging Tieto into a horizontally inte- grated company with strong global delivery centres that boost cross-border growth and co-operation. Through our integrated structure, we will improve the use of resources across indus- tries, countries and service lines. We will harness the resulting synergies for the benefit of our customers.

At Tieto, global service lines are responsible for delivery excellence and the development of horizontal offerings. The ramp-up of global delivery capacity will continue, especially in India and China. Our target is to achieve an offshore ratio of 40% by the end of 2011. Industries, countries and service lines are described on pages 8–13.

Our values

We work together.

We are committed to quality.

We care for our people and customers.

We learn and grow.

Tieto Annual Report 2009 18

Customer value &

promise

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Tieto in 2009 Management agenda

in 2010

Targets

for 2011

Our new structure and operating model were implemented suc- cessfully. Despite the challeng- ing market conditions and the simultaneous structural changes in the company, the results of our employee satisfaction survey improved globally from the previ- ous year.

Streamlining actions reduced the cost base by EUR 70 million com- pared with 2008.

Investments in the global delivery model (GDM) continued. The number of offshore resources rose by 20% and the year-end offshore ratio stood at 30% (25).

Significant quality improvements were achieved. Tieto reached the leading position in customer satisfaction in providing applica- tion management services in the Nordic countries.

We launched the Tieto Partner Programme to support our stra- tegic collaboration with leading technology companies, such as Microsoft, EMC, IBM, Oracle and SAP. The programme drives in- novation, thereby supporting our business growth through com- mon and agile offerings as well as higher customer satisfaction.

Strategy in action

The competences related to our overhauled offering portfolio are in place.

Sales, quality and delivery excel- lence are at the desired level.

An offshore ratio of 40% will be achieved by the end of 2011.

Our project to sharpen compe- tence planning and sourcing will be finalized.

The strategic growth areas and targets as well as the EBIT target of over 10% for 2011 were set before the economic downturn in 2008. Reaching these targets would require prompt market recovery to a more robust level than now anticipated.

Improving profitability remains high on the management agenda. We continue our efforts to increase pro- ductivity and manage the cost base efficiently, with a special focus on Sweden and Tieto International.

Driving quality and sales excellence is ongoing. Implementation of a global HR platform, including global people processes, tools and way of working, and the boosting of HR efficiency to support the business targets remain key focus areas for HR management.

Our offering portfolio will be sharp- ened. In line with the strategy, the share of horizontal services is in- creasing.

We will enhance our global delivery platform and reach an offshore ratio of 35% by the end of 2010.

We will invest in the most competi- tive and eco-efficient data centres.

Actions to divest non-core and sub- scale businesses will be taken when feasible.

The full offering portfolio will be lever- aged to capture growth opportuni- ties, especially in Sweden, and kick off new business in Russia.

Long-term financial targets

Organic growth outpacing the relevant market. Our growth strategy is supported by acquisitions.

Operating margin (EBIT%) of over 10%

Targets for the equity structure and dividend payout

Long-term gearing target of 40%

Dividend payout ratio of around 50% of net income includ- ing one-time items. However, the annual dividend payout ratio will depend on the financial position and the major investment needs of the company.

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Corporate Governance Statement

External Control:

Auditors

Internal Control

External rules and regulations Companies Act

Securities Markets Act

Rules of NASDAQ OMX Helsinki and Stockholm Standards of the Financial Supervisory Authority Finnish Corporate Governance Code

Internal rules and regulations Articles of Association

Charter of the Board Board Committee Charters Code of Conduct, values Policies, rules and guides Shareholders

AGM and EGM

Internal Audit Control and compliance

Governance at Tieto

Tieto is committed to good corporate governance. In addition to the relevant legislation, Tieto fully complies with the Finnish Corporate Governance Code issued by the Securities Market Association of Finland in 2008.

Remuneration and

Nomination Committee Audit and Risk Committee

President and CEO Leadership Team

Group Operations Business Units

Finance, Risk Management, Internal Control,

Legal Services, HR, ICT, Procurement, Facilities, CR, Communications, Marketing Countries

Industries Service Lines

Reporting

Objectives and strategies Reporting

This Corporate Governance Statement has been prepared in accordance with the Finnish Corporate Governance Code. The code is available at www.cgfinland.fi. This Statement has been issued separately from the Report by the Board of Directors.

The Governance section on Tieto’s website

(www.tieto.com/Investors) includes further information on Tieto’s governance, such as information on the AGM, Articles of Association, Board of Directors, Leadership Team and auditors.

Board of Directors

Tieto Annual Report 2009 20

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The share and option hold- ings of Tieto insiders are avail- able at www.tieto.com and from Euroclear Finland Ltd.

The Annual General Meeting

Tieto’s supreme decision-making body is the Annual General Meeting (AGM). The AGM elects the members of the Board of Directors and appoints auditors, decides on their compensa- tion and discharges the members of the Board of Directors from liability. The AGM’s approval is required for option pro- grammes as well as Board authorizations for matters like share repurchases and share issues. The meeting also makes the decision on the Board’s annual dividend proposal.

The following persons are present at Tieto’s AGM:

Board of Directors: Chairman, proposed new members and usually the majority of other Board members

Leadership Team: President and CEO, CFO Auditors

All of these Board members are independent of both the company and its significant shareholders. Independency of the members is evaluated at the Board’s constitutive meeting. The Board members shall inform the Board if any changes in these circumstances occur, in which case their independency will be re-evaluated.

In addition to the members elected by the AGM, Tieto’s personnel elects two members and two deputy members to the Board of Directors. This is done by the personnel repre- sentatives in accordance with the Personnel Representation Cooperation Agreement.

Personnel representatives on the Board

The following persons continued as personnel representatives:

Anders Eriksson Jari Länsivuori.

The Board of Directors and their share ownerships in Tieto are presented in the table on page 22. More detailed back- ground information, such as working experience and other positions of trust, is presented on pages 28–29.

The compensation of Board members is decided by the AGM based on a proposal prepared by the Remuneration and Nomination Committee or shareholders. The fixed monthly

Annual General Meeting

In 2009, the AGM convened on 26 March in Helsinki, Finland. Altogether 636 shareholders and 32 037 244 shares (44.7% of the total outstanding shares) were repre- sented at the meeting. All decisions were made with- out voting. No EGMs were held in 2009.

The Board of Directors

It is the general obligation of Tieto’s Board of Directors to safe- guard the interests of the company and its shareholders.

Composition and election of Tieto’s Board of Directors

The Board’s Remuneration and Nomination Committee pre- pares a proposal on the composition of the Board to be pre- sented to the AGM for its decision. According to Tieto’s Articles of Association, the Board of Directors shall consist of at least six and no more than twelve members. Board members have a term of office of one year. Tieto’s Board members shall be professionally competent and as a group have sufficient knowl- edge of and competence, inter alia, in the company’s field of business and markets.

In 2009, Tieto’s AGM elected Anders Ullberg (Chairman) Olli Riikkala (Deputy Chairman) Kimmo Alkio (new member) Bruno Bonati

Mariana Burenstam Linder Risto Perttunen

Markku Pohjola (new member).

For more information regarding the AGM, share- holders and their participation possibilities please visit www.tieto.com/Investors.

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monitors management succession issues, appoints and discharges the President and CEO

decides on the President and CEO’s compensation, sets annual targets and evaluates their accomplishment decides on the compensation of the President and CEO’s

immediate subordinates

addresses the major risks and their management at least once a year

reviews and approves interim reports, annual reports and financial statements

reviews and approves the company’s key policies meets the company’s auditors at least once a year without

the company’s management

appoints the members and Chairmen of the Board’s com- mittees and defines their charters

reviews assessments of its committees as well as the Presi- dent and CEO

evaluates its own activities.

Attendance at meetings Shareholdings3) and compensation

Board Audit and Risk Committee

Remuneration and Nomination

Committee

Shareholding at 31 December

2009 2008 Compensation 2009 2008

Anders Ullberg 17/17 9/9 8/8 5 000 5 000 92 400 103 0004)

Olli Riikkala 17/17 9/9 4 000 4 000 64 000 80 2004) 5)

Kimmo Alkio 11/13 3/4 0 0 32 100 -

Bruno Bonati 17/17 6/6 4/4 0 0 49 200 49 300

Mariana Burenstam Linder 16/17 8/8 100 100 46 800 48 500

Risto Perttunen 16/17 9/9 3 000 3 000 47 600 56 9004) 5)

Markku Pohjola 13/13 4/4 1 000 1 000 34 500 -

Anders Eriksson 17/17 0 0 - -

Jari Länsivuori 17/17 0 0 - -

Bengt Halse 1) 4/4 4/4 - 12 000 13 100 49 300

Kalevi Kontinen 2) 4/4 - 2 670 10 700 60 100

1) Member of the Board and the Remuneration and Nomination Committee until 26 March 2009

2) Member of the Board until 26 March 2009

3) Shares in the company held by the Board member and the corporations under his or her control

4) Includes planning committee fees regarding the public tender offer in 2008

5) Includes compensation for a special assignment related to the public tender offer in 2008 cash compensation of Tieto’s Board members is specified in

note 6 of the Financial Statements. In addition, members of the Board of Directors receive remuneration for each Board meet- ing and for each meeting of a permanent or temporary com- mittee. Board compensation does not include the company’s shares or share derivatives. Tieto’s executives or employees are not entitled to compensation for their Board attendance.

Tasks of Tieto’s Board

The main duties and working principles of the Board have been defined in written Working Orders. Additionally, the work of the Board is based on an annual action plan. More specifically, the Board

approves the company’s values, strategy and organizational structure

defines the company’s dividend policy

approves the company’s annual plan and budget and su- pervises their implementation

Board of Directors at 31 December 2009

Position Born Member

since Independent

Member of the Remuneration and

Nomination Committee

Member of the Audit and Risk Committee

Anders Ullberg Chairman 1946 1999 Chairman

Olli Riikkala Deputy Chairman 1951 2004 Chairman

Kimmo Alkio Member 1963 2009

Bruno Bonati Member 1949 2007

Mariana Burenstam Linder Member 1957 2005

Risto Perttunen Member 1954 2008

Markku Pohjola Member 1948 2009

Anders Eriksson Personnel

representative 1963 2006 Jari Länsivuori Personnel

representative 1949 2006

Tieto Annual Report 2009 22

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Work of Tieto’s Board

The Board has scheduled meetings every one to two months.

Besides the Board members, the meetings are attended by the President and CEO, the CFO and the General Counsel, who acts as a secretary of the meetings. In addition to the sched- uled meetings, the Chairman shall convene the Board when- ever needed as well as at the request of any of its members or the President and CEO.

Matters to be handled are prepared by the Board commit- tees and the President and CEO. The Board receives infor- mation on the company’s financial performance monthly and more detailed financial reports quarterly. Any material related to issues to be handled by the Board is provided five days prior to the meeting. Other case-specific materials are delivered at the management’s initiative or the Board’s request. Board members shall be informed about all significant company events imme- diately.

Assessment of the Board

The performance of Tieto’s Board is assessed annually; the latest assessment was carried out by an external partner in late 2009. Assessments review the Board’s knowledge of the com- pany’s operations and management as well as its understand- ing of the field of business. Additionally, the effectiveness of the Board work is evaluated. The results are taken into considera- tion when drawing up a proposal for the Board’s composition and its next annual plan.

Board committees

Tieto’s Board is assisted by committees that prepare matters for which the Board is responsible. The Board defines the charters of the committees and decides on their composition.

The entire Board, however, remains responsible for the duties assigned to the committees.

The Remuneration and Nomination Committee independ- ently prepares a proposal on the composition of the Board for the AGM on behalf of the whole Board. It also proposes the fees to be paid to the members of the Board.

The Audit and Risk Committee independently prepares a proposal on the nomination of the company’s auditors for the AGM on behalf of the whole Board and assesses their com- pensation as well as arranges the tender process.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee comprises at least three non-executive directors elected by the Board. The majority of the members shall be independent of the company. The head of Human Resources acts as a secretary of the meetings.

In 2009, all committee members were non-executive direc- tors and independent of the company. Based on the Board’s decision, the Remuneration and Nomination Committee was composed of

Anders Ullberg (Chairman) Kimmo Alkio

Mariana Burenstam Linder Markku Pohjola.

The committee meets regularly at least twice a year. The Chairman of the committee reports to the Board when applica- ble. The main tasks of the committee are to:

prepare for the AGM a proposal on the composition of the Board and the compensation of its members

monitor the targets of the compensation schemes, imple- mentation of the compensation schemes, performance assessment and compensation determination

Work of Tieto’s Board

The Board convened 17 times in 2009 and average attendance was 97.4%.

The Board met once during the year without the management present. The Board held one joint meeting with the auditors and the Leader- ship Team members. The Board met the auditors once without the presence of the management.

Work of Tieto’s Remuneration and Nomination Committee

The committee convened 8 times in 2009 and average attendance was 96.9%. The main issues considered by the Remuneration and Nomination Committee were Tieto’s compensation and benefit frame, Tieto Leadership Team performance and development, Tieto Talent management and de- velopment as well as employee satisfaction survey (VOICE) results and follow-up.

Work of Tieto’s Audit and Risk Committee The committee convened 9 times in 2009 and at- tendance was 100%. In 2009, the work of the com- mittee focused on internal control – particularly the financial reporting process – and risk management issues.

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Major risks related to Tieto’s business are described in the Report by the Board of

Directors on pages 36–44.

ensure that the targets set for earning the bonuses defined in the compensation scheme are met

prepare a proposal for the Chairman and Deputy Chairman of the Board

prepare a proposal on the committee members and Chair- men, and the duties and responsibilities of these commit- tees

monitor corporate governance

prepare a compensation proposal concerning the President and CEO and his immediate subordinates, and the princi- ples of personnel compensation

prepare option schemes and other share-based incentive schemes for the Board

evaluate the performance of the President and CEO prepare the assessment of the Leadership Team prepare a proposal on the Board’s Working Orders.

Audit and Risk Committee

The Audit and Risk Committee comprises at least three non- executive directors who are independent of the company and out of whom at least one member shall be independent of significant shareholders. The Chairman and the members are elected by the Board. At least one committee member must be a financial expert. The Chief Risk Officer acts as a secretary of the meetings.

In 2009, all committee members were non-executive direc- tors who were independent of the company and significant shareholders. Olli Riikkala, Anders Ullberg and Risto Perttunen have the required expertise in accounting, bookkeeping or auditing.

Based on the Board’s decision, the Audit and Risk Committee was composed of

Olli Riikkala (Chairman) Bruno Bonati Risto Perttunen Anders Ullberg.

The committee convenes regularly at least four times a year and meets the company’s auditors, also without the company’s management present. The Chairman of the committee reports to the Board when applicable. The main tasks of the committee are to:

review and supervise internal control – particlularly the financial reporting process – and risk management issues discuss and review the interim and annual reports and the

financial statements

assess compliance with legislation, official regulations and the company’s code of conduct

evaluate the sufficiency of internal control and the internal audit

examine, assess and approve the internal audit plan assess the appropriate coverage of risk management and

monitor the efficiency of risk management

review significant risks and unusual business events prepare a proposal for the AGM on the nomination of exter-

nal auditors and their compensation

evaluate the external auditors’ independence, assess the audit plan and examine the audit reports

monitor the statutory audit and consult with the auditors regarding matters that should be brought to the Board’s attention.

Tieto Annual Report 2009 24

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Compensation of the Leadership Team

Hannu Syrjälä, the President and CEO

Salary and benefits EUR 35 000/month and car benefit

Basis of bonus Maximum 100% of salary based on the Group’s net sales and profit Weighting of the reward factors EBIT of the company 80%

Net sales of the company (organic and acquisitive) 20%

Options and warrants 2006 B option programme: right to subscribe for 35 000 shares 2006 C option programme: right to subscribe for 80 000 shares 2009 A option programme: right to subscribe for 15 000 shares

The terms and conditions of the option programme are available in the Shares section of the company’s website www.tieto.com/Investors

Performance Share Plan 2009–20111) The reward to be paid to the President and CEO on the basis of the Performance Share Plan 2009–2011 corresponds to a maximum of 90 000 shares

Share ownership guideline The recommended minimum investment in the company’s shares corresponds to the share buyer’s one-time annual gross base salary

Retirement age 60

Pension expenditures Annual fee (in addition to statutory pension provision): 23% of the annual base salary

Period of notice 12 months

Severance payment Equivalent to 12–18 months’ salary

Other Leadership Team members

Basis of bonus Maximum 60% of salary based on the Group’s net sales and profit as well as annual performance index of transformation

Weighting of the reward factors EBIT of the company 50%

Total net sales of the company (organic and acquisitive) 15%

Annual performance index of transformation 35%

Options and warrants The options held by each member and the terms and conditions of the option programme are available on the company’s website

Performance Share Plan 2009–20111) The reward to be paid to the members of the Leadership Team on the basis of the Performance Share Plan 2009–2011 corresponds to a maximum of 450 000 shares Share ownership guideline The recommended minimum investment in the company’s shares corresponds to the

share buyer’s one-time annual gross base salary

1) The plan includes one three-year earning period, which will end on 31 December 2011. The potential reward from the plan is based on the earnings per share of the company in 2011 and it will be paid in Tieto shares. In addition, the participants will receive cash compensation for dividends accumulated on the shares during 2009–2011. Further information on the Perfomance Share Plan in the Shares and shareholders section.

Work of Tieto’s Leadership Team The Leadership Team convened 10 times in 2009 and average attendance was 98%. The work of the Leadership Team focused on defining and monitoring the strate- gic development of Tieto and leading transformation and corporate level programmes.

The President and CEO and operative management

Tieto Group’s operative management consists of the President and CEO, the Leadership Team, the industry and country or- ganizations and the service lines. The President and CEO is appointed by the Board and he is responsible for the Group’s operative management, internal efficiency and quality.

Tieto’s President and CEO is assisted by the Leadership Team, which includes the heads of country and industry or- ganizations, the head of Global Service Lines, the CFO, the head of Customer and Market Operations and the head of HR.

Appointments of Leadership Team members are approved by the Chairman of the Board based on the President and CEO’s proposal.

The Leadership Team members are accountable for the per- formance and development of their management areas and they supervise the operations of the units belonging to their areas. As a general rule, the business units in each management dimen- sion (industries, countries and service lines) make their own

operative decisions and are responsible for conducting their operative duties. The country organizations, industry organiza- tions and service lines have a profit and loss responsibility.

Compensation of Leadership Team members consists of short-term incentives: a base salary, benefits and an annual

bonus

long-term incentives, such as option programmes or other share-based programmes and pension rights.

The terms of option programmes are approved by the AGM and share ownership plans by the Board of Directors. The an-

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nual expenditure related to the pension plans of the President and CEO and CFO amounts to 23% of their annual base salary, while that of other Finnish Leadership Team members with no earlier pension plans amounts to 15% of their annual base sal- ary. Non-Finnish members have private pension plans.

The aim of Tieto’s compensation systems is to attract and retain talent, motivate key people and align the goals of the company’s shareholders and key executives in order to en- hance the value of the company. The Remuneration and Nomi- nation Committee is responsible for planning the compensation of Leadership Team members and preparing the principles underlying the compensation of other personnel. The Board of Directors decides on the compensation of the President and CEO and other members of the Leadership Team based on a proposal by the committee.

Shareholdings and compensation of the Leadership Team in 2009

Responsibility Born Member since

Shareholding at

31 December Options held at 31 December

2009 2008 2009 2008

Hannu Syrjälä President and CEO 1966 2008 22 300 16 300 115 000 115 000

Eva Gidlöf Tieto Sweden 1957 2008 3 260 50 10 000 10 000

Kavilesh Gupta Customer and Market

Operations 1968 2008 0 0 0 0

Per Johanson Financial Services 1962 2009 0 0 0 0

Seppo Haapalainen Chief Financial Officer 1961 2008 4 500 0 16 330 48 500

Ari Karppinen Tieto Finland 1957 2005 5 000 600 32 000 48 500

Bengt Möller Telecom and Media 1959 2009 1 500 0 12 700 12 700

Johanna Pyykönen-Walker Human Resources 1966 2008 1 500 0 5 000 5 000

Ari Vanhanen Industry Group 1961 2004 10 710 6 710 36 000 63 100

Pekka Viljakainen International 1972 2005 653 647 649 447 36 000 45 000

The President and CEO currently holds 15 000 Stock Options 2009 A and other Leadership Team members 7 500 Stock Options 2009 A each. The subscriptions were approved by the Board in February 2010.

In 2009, the President and CEO’s salary and benefits amounted to EUR 857 956 (In 15 February–31 December 2008: EUR 899 594). No bonuses were paid in 2009 (2008: EUR 371 548). In addition, the President and CEO was paid 6 000 shares (taxable value EUR 58 440) as well as EUR 87 660 in cash for taxes and tax-related costs on the basis of the Share Ownership Plan 2006–2008. At the end of 2009, he was entitled to 10 000 Tieto shares. Other Leadership Team members’ salary and benefits amounted to EUR 2 773 487 (other Corporate Management Team members in 2008: EUR 4 068 488). No bonuses were paid to these members in 2009 (2008: EUR 730 490). In addition, the members were paid 16 660 shares (taxable value EUR 162 268) as well as EUR 243 403 in cash for taxes and tax-related costs.

The purpose of the annual bonus schemes is to reward performance that surpasses expectations. Tieto’s bonus sys- tem is based on clear measurable targets set for net sales and operating profit as well as factors measuring success in the company’s transformation, e.g. employee and customer satis- faction and quality improvements. The long-term incentives are directed at persons who play a key role in the future execution of the Group’s strategy and whom it is important for the com- pany to retain.

Detailed information on the compensation of the President and CEO and other Leadership Team members is presented in the tables on pages 25–26. The compensation of the whole Leadership Team in 2009 is also summarized in note 6 of the Financial Statements.

Internal control, risk management and internal audit

Tieto uses risk management as a means of developing busi- ness operations and their profitability and ensuring the continu- ity of successful business operations. The role of risk manage- ment is to maintain the company’s risk management framework and report risk exposures consisting of strategic, financial and operational risks.

The activities related to internal control and risk manage- ment are part of Tieto’s management practices and integrated into the business and planning processes defined in the com- pany’s W2E (Way to Excellence) business system. The frame- work consists of Tieto’s policies, procedures, operating princi- ples and guidelines. The owner of each process is responsible for the continuous development of the established procedures, Internal control and risk management framework

Tieto’s internal control framework supports the execution of the strategy and ensures regulatory compliance. The foundation for internal control is set by internal control, risk management and governance policies as well as Tieto’s values and Code of Conduct.

The aim of Tieto’s internal control framework is to assure that operations are effective and efficiently aligned with the strate- gic goals and to ensure reliable, complete and timely financial reporting and management information as well as compliance with applicable legislation and regulations. The framework endorses ethical values, good corporate governance and risk management practices.

Tieto Annual Report 2009 26

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Internal control

In 2009, the focus of Tieto’s internal control has been on financial reporting in the closing processes and risk man- agement. This work is ongoing. Tieto’s risk manage- ment has concentrated on strategic risks related to the changed market situation. The main focus of Tieto’s Internal Audit has been on project deliveries and business continuity.

Auditing

The 2009 AGM re-elected the firm of authorized public accountants PricewaterhouseCoopers Oy as the company’s auditor for the financial year 2009.

PricewaterhouseCoopers Oy notified the company that authorized public accountant Kim Karhu served as the chief auditor.

In 2009, Tieto Group paid the auditors for audit- ing a total of EUR 1.4 (1.5) million, of which EUR 1.3 (1.3) million to the Group’s auditor Pricewaterhouse- Coopers Oy, and for consulting a total of EUR 0.5 (0.8) million.

including internal control and risk management. Tieto’s risk management is headed by the Chief Risk Officer, who reports to the CFO. The Audit and Risk Committee monitors the ef- ficiency of the company’s internal control, risk management and internal audit.

Internal control and risk management pertaining to financial reporting

The purpose of internal control over financial reporting is to ensure the correctness of financial reporting, including interim and annual reports, and the compliance of financial reporting with regulatory requirements. Tieto’s Audit and Risk Committee has the oversight role in Tieto’s external financial reporting.

Financial reporting process and responsibilities Tieto has a common accounting and reporting platform, Tieto ERP. Group consolidation and reporting are based on the re- porting system, which facilitates common control requirements for all cost centres and legal entities reporting to the Group.

Financial reporting consists of monthly performance reports, including all the key performance indicators, rolling forecasts and interim financial reports.

On the operational level, Tieto Finance includes global serv- ices, country units and group reporting. The Global Services function is in charge of centralized shared finance operations and the development of common finance processes and tools.

It also has ownership of finance policies and rules. The Global Services function is also responsible for process performance and operational compliance. Tieto has documented the key financial process flows, such as order to cash, purchase to pay, record to report, master data management and accounting system access and role management. Each process is headed by a process owner.

Finance Country Units are responsible for implementing global practices, processes, tools, policies and rules in local operations. They are also responsible for executing local re- quirements set by authorities.

Tieto’s Group Reporting function provides leadership and coordination of financial reporting and ensures that accounting procedures conform to generally accepted accounting princi- ples. It serves as the key legislative liaison for the Group’s finan- cial issues and executes operative follow-up of the adequacy and effectiveness of control activities.

Information and releases concerning the internal financial guidelines and schedules are available on Tieto’s intranet to all employees concerned. All the financial processes described are available in the company’s W2E business system.

Monitoring activities of financial reporting

Financial reports are regularly reviewed by the Leadership Team and the Board. The follow-up is based on a thorough compari- son of the actual figures with the set objectives, forecasts and previous periods. If the figures deviate, the Leadership Team members are responsible for initiating corrective actions.

The Audit and Risk Committee can assign individual audit engagements to the company’s internal audit function related to the internal control and risk management systems of the financial reporting process. The committee also reviews interim and annual reports. Tieto’s Board of Directors approves the financial reports.

Internal audit

Tieto’s Internal Audit function carries out both business and internal audit activities. Business audit activities aim to ensure the efficiency and appropriateness of Tieto’s operations. Internal audit activities are intended to assess and assure the adequacy and effectiveness of internal controls within Tieto. Internal audit is carried out independently and it reports to the President and CEO and to the Audit and Risk Committee. The charter and annual internal audit plan are approved by the Audit and Risk Committee.

Auditors

The Board’s Audit and Risk Committee prepares a proposal on the appointment of Tieto’s auditors, which is then presented to the AGM for its decision. The compensation paid to the audi- tors is decided by the AGM and assessed annually by the Audit and Risk Committee.

27

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