Interim Reports

SOLTEQ PLC’S INTERIM REPORT 1.1.-30.6.2014 (IFRS)

17.7.2014

Solteq Plc Stock Exchange Bulletin 17.7.2014 at 9.00 am.

– Revenue totalled 20,4 million euros (19,7 million euros).

– The operating result for the review period was 1.137 thousand euros (1.080 thousand euros).

– The company’s operating margin was 5,6 % (5,5 %).

– Solteq Group’s equity ratio was 45,4 per cent (39,1 %).

– Earnings per share was 0,06 euros (0,05 euros).

KEY FIGURES
Turnover by operation:
% 1-6/14 1-6/13 1-12/13
Softwareservices 65 68 66
Licences 27 27 27
Hardware 8 5 7

CEO Repe Harmanen:

“In early 2014, we maintained a positive result development and at the same time increased our turnover. The first half of the year has generally met our expectations, although demand was not distributed evenly among all our business segments. The progress in some of our business units have proceeded as planned, but there are areas in which we can improve our profitability at both short and long term perspectives. We have already taken improvement measures and we will continue implementing them in the second half of the year.

In spite of the growth, the turnover is slightly behind the expected level, but we believe that the development during rest of the year will continue the same as in the first few months of the year. We are pleased to see that all our key figures have improved compared with the same period last year.

In the second half of the year, we will assess the demand for our various solution areas at short and long term perspectives and take measures to strengthen and focus our strategy.

The new solution areas defined in our strategy have proved successful in terms of both the turnover and the result. The overall turnover from the services sector is, however below our expectations and we will pay special attention to this during the latter part of the year.

We will continue cost monitoring and rationalization programs, and we will also search for new solutions to convert our fixed cost into variable costs for the years to come.

Compared with the situation last year, demand in the market has picked up, but there are still delays and postponements in project launches. The new client projects that we published during the second quarter support our view of positive signals in the market. We believe that there will be positive signs in demand in the second half of the year, as well.

The collaboration agreement with SOK that we published during the second quarter is strategically extremely important for us. Our LS Nav Hospitality based solution offering has proved an extremely modern and sought after solution and we believe that there will be wider demand for it, as well. In terms of the value, the agreement is one of the largest collaboration agreements in the history of our company.

Our strategy work has proceeded as planned, and the implementation of the strategy continues at all levels. In the latter part of the year, we will speed up our measures concerning cost flexibility and growth.

During the first half of the year, we have been able to develop our business activities in a moderate manner.

I wish all our stakeholders and interest groups a pleasant summer season.”

BUSINESS ENVIRONMENT AND BUSINESS DEVELOPMENT

Solteq is a leading retail and service industry software service company. We offer long-term partnership and the markets’ widest range of retail and service industry software services, from the optimisation of the entire supply chain to the management of consumer-customer information. Our technology-independent solutions help our customers to guide their business operations as efficiently and profitably as possible.

Solteq Plc has three reported segments. Segmentation is based on the customer segments of the company. The aim of the segmentation is to respond to customer demand as a field total supplier and therefore to improve the availability of services and ease for our customers.

Solteq’s turnover totalled 20.389 thousand euros in which contains increase of 3,4 per cent compared to corresponding period in 2013. Solteq’s operating result increased 5,3 per cent to 1.137 thousand euros from 1.080 thousand euros that was the operating result in the corresponding period 2013.

The company’s operating margin was 5,6 % (5,5 % in 2013).

Grocery and Special Retail, HoReCa

Solteq’s Grocery and Special Retail Segment provides its clients with total solutions that they can utilise to improve efficiency in terms of logistics, store operations, customer service, point of sale operations, as well as loyal customer management.

The grocery and special retail solutions help optimise the management of the product selection, space, deliveries, logistics and customer satisfaction while increasing sales and improving the result. The solutions speed up the basic operations, improve delivery reliability, reduce storage value, increase stock turnover and enhance predict­ability. The store always has the right products in the right place, at the right time, and at the right price.

During the review period the revenue of the Grocery and Special Retail segment totalled 10,5 million euros and the operating result was 0,4 million euros.

Wholesale, Logistics and Services

Solteq’s Wholesale, Logistics and Services Segment provides its clients with ERP and financial management systems, as well as optimisation, integration and reporting solutions that support these systems.

Solteq’s solutions help clients manage their operations and enhance purchases, sales, stock management and reporting. The systems can be utilised to improve delivery reliability, reduce storage value, increase stock turnover and enhance predictability. Materials flow management ensures that the right goods reach the right customers at the right time, packed in an optimal manner.

Solteq’s wholesale, logistics and services systems improve the effectiveness of operations and enable more flexible and versatile customer service. At the same time, automated data management enhances the company’s internal operations. Solteq’s solutions are used daily by a large number of clients representing various industries and sectors, such as wholesale, retail and public administration.

During the review period the revenue of the Wholesale, Logistics and Services segment totalled 7,1 million euros and the operating result was 0,1 million euros.

Enterprise Asset & Service Business Management

Solteq’s Enterprise Asset & Service Business Management Segment provides its clients with ERP and master data management solutions.

The enterprise resource planning solutions developed for the optimisation of service processes help clients manage their operations in many ways, for instance enhance production plant reliability, task and resources manage­ment, field work, sales and customer service, partner network management and materials management. The solutions are utilised by a large number of clients representing various industries and sectors, such as energy produc­tion, maintenance services, life cycle services, engineering and technical services of cities and municipalities, property management services, and home and care services.

The Enterprise Asset & Service Business Management Segment also provides client companies with services and products related to business critical data (master data) in the form of master data improvement projects, data maintenance services outsourced to master data service centers, software technologies for master data management, and consultation services. The aim of these services is to ensure that the data in the systems that support the clients’ enterprise resource planning and decision making processes are of high quality, compatible and up-to-date. Solteq’s master data manage­ment solutions are used by clients across industries and sectors.

During the review period the revenue of the Enterprise Asset & Service Business Manage­ment segment totalled 2,8 million euros and the operating result was 0,6 million euros.

REVENUE AND RESULT

Revenue totalled 20.389 thousand euros (19.716 thousand euros 2013).

Revenue consists of several individual customerships. At the most, one client cor­responds to less than ten percentages of the revenue.

The operating result for the review period was 1.137 thousand euros (1.080 thousand euros), result before taxes was 1.042 thousand euros (973 thousand euros) and result for the review period 839 thousand euros (745 thousand euros).

During the second quarter the company has started directed cost saving actions in those segments where the profit development has been unsatisfactory.

Previously in the latest Financial Statements reported financial risks in a single major project in Wholesale, Trade and Logistics segment, were limited reasonable way in business operations during the first quarter of the year. According to Solteq’s view the project will no longer have negative impact on result during this financial year.

BALANCE SHEET AND FINANCE

The total assets amounted to 25.075 thou­sand euros (26.239 thousand euros). Liquid assets totalled 1.055 thousand euros (1.823 thousand euros). In addition to liquid assets, the company has unused bank account limits amounting to a total of 1.500 thousand euros in the end of the financial year.

The Group’s interest-bearing liabilities were 4.952 thousand euros (6.148 thousand euros).

Solteq Group’s equity ratio was 45,4 per cent (39,1 per cent).

INVESTMENTS, RESEARCH AND DEVELOPMENT

Gross investment during the review period was 482 thousand euros (612 thousand euros). The investments of the review period and the corresponding period in 2013 are mainly replacement investments.

Research and development

Solteq’s research and development costs consist mainly of personnel costs. When developing basic products, it is Solteq’s strategy to cooperate with global actors such as SAP, Symphony EYC and Microsoft and utilize their resources and distribution chan­nels. Own development efforts are focused on added value products and developing tailored service concepts.

During the review period product develop­ment costs were not amortized (none in the corresponding review period, either).

PERSONNEL

The number of permanent employees at the end of the review period was 287 (293). The average number of personnel during the review period was 283 (290). In the end of the review period the number of personnel could be divided as follows: Grocery and special retail, HoReCa segment: 125 people; Wholesale, Logistics and Services: 93 people; Enterprise Asset & Service Business Management; 39 people and 30 people in shared functions.

RELATED PARTY TRANSACTIONS

Solteq’s related parties include the board of directors, managing director, the manage­ment team and the companies owned by the management.

SHARES, SHAREHOLDERS AND TREASURY SHARES

Solteq Plc’s equity on 30.6.2014 was 1.009.154,17 euros which was represented by 14.998.061 shares. The shares have no nominal value.

At the end of the review period, the amount of treasury shares in Solteq Plc and the group companies Solteq Management Oy’s and Solteq Management Team Oy’s possessions were 810.428 shares. The amount of treasury shares represented 5,4 % of the total amount of shares and votes at the end of the review period. The equivalent value of acquired shares was 54.530 euros.

During the review period, 3.1.2014 one flagging announcement was made. The Mutual Insurance Company Pension Fennia and LocalTapiola Mutual Pension Insurance Company formed a new Pension Company starting from 1.1.2014. The merger led to a situation where the new company Elo Mutual Pension Insurance Company owned more than 10 % of the shares and votes in Solteq Plc on 3.1.2014.

Exchange and rate

During the review period, the exchange of Solteq’s shares in the Helsinki Stock Exchange was 0,4 million shares (0,5 million shares ) and 0,6 million euros (0,7 million euros). Highest rate during the review period was 1,59 euros and lowest rate 1,35 euros. Weighted average rate of the share was 1,45 euros and end rate 1,49 euros. The market value of the company’s shares in the end of the review period totalled 22,3 million euros (22,3 million euros).

Ownership

In the end of the review period, Solteq had a total of 1.745 shareholders (1.767 sharehold­ers). Solteq’s 10 largest shareholders owned 11.242 thousand shares i.e. they owned 75,0 per cent of the company’s shares and votes. Solteq Plc’s members of the board owned a total of 5.546 thousand shares which equals 37,0 per cent of the company’s shares and votes.

ANNUAL GENERAL MEETING

At Solteq Plc’s Annual General Meeting on 17 March 2014 the 2013 financial statements were adopted and the members of the board and the managing director were discharged from liability for the 2013 review period.

In the meeting was accepted the proposal by the board that for the financial year 2013, there will be paid a dividend of 0.03 euros per each share on the market. In addition to this, the annual general meeting authorized the board to decide on a distribution of dividend, or other distribution of funds from the equity trust, for an amount of maximum 0.05 euros. The board is also allowed to decide on the timing and other details of this. The authorization is valid until the beginning of the next Annual General Meeting.

The Annual General Meeting authorized the board to acquire or pledge the company’s own shares in such a way that the amount of own shares can be at any time maximum 10 per cent of the whole amount of company shares. With this authorization, shares can be acquired or pledged in order to develop the equity structure; or to be used as part of the personnel incentive system; or as a funding or for the realization of acquisitions of another company; or for other business arrangements; or they can be disclosed or invalidated. These shares can be acquired also in other ratios than the shareowners ownership ratio. The shares should be acquired from the public stock exchange. The board can decide on the other conditions for this procedure. This authorization is valid until next annual general meeting.

The Annual General Meeting authorized the board to decide on an issue of shares for a maximum amount of 3 000 000 new or existing shares, owned by the company, in one or several lots. The issue of shares should be implemented as a directed issue, on the contrary to shareowners subscription rights. With this authorization the board decides on all other conditions for the share issue. This authorization is valid until next Annual General Meeting.

BOARD OF DIRECTORS AND AUDITORS

Seven members were elected to the Board of Directors. Ali Saadetdin, Seppo Aalto, Markku Pietilä, Sirpa Sara-aho, Jukka Sonninen and Matti Roininen continued as members of the board. Olli Välimäki was elected as a new member of the board. The Board elected Ali Saadetdin to act as the Chairman of the Board.

KPMG Oy Ab, Authorized Public Account­ants, was re-elected as Solteq’s auditors. Lotta Nurminen, APA, acted as the chief auditor.

EVENTS AFTER THE REVIEW PERIOD

No events requiring reporting have taken place after the review period.

RISKS AND UNCERTAINTIES

The key uncertainties and risks in short term are related to the timing and pricing of business deals that are the basis for revenue, changes in the level of costs and the com­pany’s ability to manage extensive contract agreements and deliveries.

The key business risks and uncertainties of the company are monitored constantly as a part of the board of directors’ and manage­ment team’s duties. The company has not organized a separate internal audit organiza­tion or committee.

PROSPECTS

Both revenue and operating result are expected to grow compared to financial year 2013.

Financial reporting

This Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting –standard and using the same accounting policies as the financial statements 2013.

The financial result is reported through three business areas. Grocery and special retail, HoReCa segment, Wholesale, Logistics and Services and Enterprise Asset & Service Business Management. The most essential product and service types of the Solteq group of companies are software services, licenses and hardware sales.

All forecasts and estimates presented in the bulletin are based on the current views of management on the economic environment and outlook. Because of this, the results can differ as a result of, among other factors, changes in economy, markets and competitive conditions, changes in the regulatory environment and other government actions.

The interim report is unaudited.

FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(TEUR)
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6.2014 30.6.2013 30.6.2014 30.6.2013 31.12.2013
REVENUE 10 524 9 729 20 389 19 716 38 124
Other income 0 4 0 8 50
Materials and
services -3 028 -2 103 -5 465 -4 288 -9 151
Employee benefit
expenses -5 065 -5 297 -9 926 -10 339 -19 386
Depreciation and impairments -322 -310 -639 -609 -1 228
Other expenses -1 558 -1 487 -3 222 -3 408 -6 268
OPERATING RESULT 551 536 1 137 1 080 2 141
Financial income and
expenses -16 -44 -95 -107 -214
RESULT BEFORE TAXES 535 492 1 042 973 1 927
Income tax expences -107 -107 -203 -228 -306
RESULT FOR THE PERIOD
428 385 839 745 1 621
OTHER COMPREHENSIVE INCOME
TO BE RECLASSIFIED TO PROFIT
OR LOSS IN SUBSEQUENT PERIODS
Cash flow hedges -6 0 0 20 27
Taxes related to
cash flow hedge 1 0 0 -5 -6
Other comprehensive income,
net of tax -5 0 0 15 21
TOTAL COMPREHENSIVE INCOME 423 385 839 760 1 642
Total profit for the period attributable to
owners of the parent 428 385 839 745 1 621
Total comprehensive income attributable to
owners of the parent 423 385 839 760 1 642
Earnings/share,
e(undiluted) 0,03 0,02 0,06 0,05 0,11
Earnings/share,
e(diluted) 0,03 0,02 0,06 0,05 0,11
Taxes corresponding to the result have been presented as taxes for the period.

CONSOLIDATED BALANCE

SHEET (TEUR) 30.6.2014 30.6.2013 31.12.2013
ASSETS
NON-CURRENT ASSETS
Tangible assets 1 512 1 313 1 399
Intangible assets
   Goodwill 12 730 12 730 12 730
   Other intangible rights 2 580 3 221 2 853
Available-for-sale
financial assets 551 546 546
Trade and other receivables 32 63 32
Total
non-current assets 17 405 17 873 17 560
CURRENT ASSETS
Inventories 63 91 156
Trade and other receivables 6 552 6 452 5 303
Cash and cash equivalents 1 055 1 823 2367
Total
current assets 7 670 8 366 7 826
TOTAL ASSETS 25 075 26 239 25 386
EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT
  Share capital 1 009 1 009 1 009
  Share premium reserve 75 74 75
  Hedging reserve -28 -34 -28
  Reserve for own shares -987 -933 -933
  Distributable equity
  reserve 6 392 6 392 6 392
  Retained earnings 4 721 3 749 4 331
Total equity 11 182 10 257 10 846
Non-current liabilities
Deferred tax liabilities 570 1 064 593
Financial liabilities 3 022 4 448 3 695
Current liabilities 10 300 10 470 10 252
Total liabilities 13 892 15 982 14 540
TOTAL EQUITY
AND LIABILITIES 25 075 26 239 25 386

CASH FLOW STATEMENT (MEUR)

1-6/2014 1-6/2013 1-12/2013
Cash flow from
business operations 0,28 2,07 3,83
Cash flow from capital
expenditure -0,49 -0,62 -0,96
Cash flow from financing activities
   Own shares -0,05 0,00 0,00
   Dividend distribution -0,45 -0,60 -0,90
   Loan agreements -0,60 -0,27 -0,85
Cash flow from financing
activities -1,10 -0,87 -1,75
Change in cash and cash equivalents -1,31 0,58 1,12

STATEMENT OF CHANGES IN GROUP EQUITY  (TEUR)

A=Share capital
B=Reserve for own shares
C=Share premium account
D=Hedging reserve
E=Distributable equity reserve
F=Retained earnings
G=Total

A B C D E F G
EQUITY 1.1.2013 1 009 -933 75 -49 6 368 3 607 10 077
Total comprehensive income 15 745 760
Directed issue 24 24
Dividend distribution -603 -603
EQUITY 30.6.2013 1 009 -933  74  -34  6 392  3 749  10 257
EQUITY 1.1.2014 1 009 -933 75 -28 6 392 4 331 10 846
Total comprehensive income 0 839 839
Acquiring of own shares -53 -53
Dividend distribution -449 -449
EQUITY 30.6.2014 1 009 -987 75 -28 6 392 4 721 11 182

SEGMENT INFORMATION

Turnover by segment:
Me 1-6/14 1-6/13 Change
Grocery and special retail, HoReCa 10,5 9,3 +1,2
Wholesale, Logistics and Services 7,1 7,7 -0,6
Enterprise Asset & Service Business
Management 2,8 2,7 +0,1
Total 20,4 19,7 +0,7
Operating result by segment:
Me 1-6/14 1-6/13 Change
Grocery and special retail, HoReCa 0,4 0,7 -0,3
Wholesale, Logistics and Services 0,1 0,0 +0,1
Enterprise Asset & Service Business
Management 0,6 0,4 +0,2
Total 1,1 1,1 0

QUARTERLY KEY INDICATORS (MEUR)

3Q/12 4Q/12 1Q/13 2Q/13
Net turnover 8,52 11,21 9,99 9,73
Operating result 0,51 0,88 0,54 0,54
Result before taxes 0,44 0,84 0,48 0,49
3Q/13 4Q/13 1Q/14 2Q/14
Net turnover 8,59 9,82 9,87 10,52
Operating result 0,63 0,43 0,59 0,55
Result before taxes 0,60 0,36 0,51 0,54

TOTAL INVESTMENTS (TEUR)

1-6/2014 1-6/2013 1-12/2013
Continuing operations,
group total 482 612 957

LIABILITIES (MEUR)

30.6.2014 30.6.2013 31.12.2013
Business mortgages 10,00 10,00 10,00
Other lease liabilities 3,08 3,77 3,53
RELATED PARTY TRANSACTIONS (TEUR) 30.6.2014 30.6.2013 31.12.2013
Renting arrangements 42 42 83
Outsourcing expenses 0 2 2
Transactions with the insiders have been done at market price and are
part of the company’s normal software service business.
FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The fair values of the financial assets and liabilities are mainly
the same as the book values. Hence they are not presented in
table form in the bulletin.

MAJOR SHAREHOLDERS 30.6.2014

Shares and votes
Number %
1.  Saadetdin Ali 3 481 383 23,2
2.  Keskinäinen Työeläkevakuutusyhtiö Elo 2 000 000 13,3
3.  Profiz Business Solution Oyj 1 756 180 11,7
4.  Aalto Seppo 1 662 206 11,1
5.  Keskinäinen Työeläkevakuutusyhtiö Varma 644 917 4,3
6.  Pirhonen Jalo 408 480 2,7
7.  Solteq Management Oy 400 000 2,7
8.  Roininen Matti 382 500 2,6
9.  Solteq Management Team Oy 350 000 2,3
10. Saadetdin Katiye 156 600 1,0
10 largest shareholders total 11 242 266 75,0 %
Total of nominee-registered 127 048 0,8 %
Others 3 628 747 24,2 %
Total 14 998 061 100,0 %

FINANCIAL PERFORMANCE

INDICATORS (IFRS) 1-6/2014 1-6/2013 1-12/2013
Net turnover MEUR 20,4 19,7 38,1
Change in net turnover 3,4 % 2,2 % -2,3 %
Operating result MEUR 1,1 1,1 2,1
% of turnover 5,6 % 5,5 % 5,6 %
Result
before taxes MEUR 1,0 1,0 1,9
% of turnover 5,1 % 4,9 % 5,1 %
Equity ratio, % 45,4 39,1 43,5
Gearing, % 34,9 % 42,2 % 29,4 %
Gross investments in
non current assets MEUR 0,5 0,6 1,0
Return on equity, % 15,8 % 15,1 % 15,5 %
Return on investment, % 14,5 % 13,4 % 13,2 %
Personnel at the end of
period 287 293 277
Personnel average
for period 283 290 287

KEY INDICATORS PER SHARE

Earnings/share, e 0,06 0,05 0,11
Earnings/share,
e(diluted) 0,06 0,05 0,11
Equity/share, e 0,75 0,68 0,72

CALCULATION OF FINANCIAL RATIOS

Solvency ratio, in percentage:
equity
———————————- x 100
balance sheet total – advances received
Gearing:
interest bearing liabilities – cash, bank balancies and securities
——————————————- X 100
equity
Return on equity (ROE) in percentage:
profit or loss before taxation – taxes
—————————————- x 100
equity
Profit from invested equity in percentage:
profit or loss before taxation +
interest expenses and other financing expenses
—————————————- x 100
balance sheet total- non-interest bearing liabilities
pre-tax result – taxes +/- minority interest
————————————
diluted average share issue
corrected number of shares
Diluted earnings per share:
diluted profit before taxation – taxes -/+ minority interest
———————————————–
diluted average share issue
corrected number of shares
Equity per share :
equity
———————–
number of shares

Financial reporting

Solteq Plc’s financial information bulletins in 2014 have been scheduled as follows:

– Interim Report 1-9/2014 on Friday October 17, 2014 at 9 am

More investor information is available from Solteq’s website at www.solteq.com

Additional information:

CEO Repe Harmanen,

Tel +358 400 467 717,

E-mail moc.q1513080369etlos1513080369@nena1513080369mrah.1513080369eper1513080369

CFO Antti Kärkkäinen

Tel +358 40 8444 393,

E-mail moc.q1513080369etlos1513080369@neni1513080369akkra1513080369k.itt1513080369na1513080369

Distribution:

NASDAQ OMX Helsinki

Key media

www.solteq.com

Close the search