- Turnover increased by 13,3% and totalled 13,5 million euros (11,9
million euros)
- Operating result was 0,5 million euros (0,2 million euros)
- The company estimates turnover to increase over 20 % on a yearly
basis and the operating result to improve substantially.
- The board of directors decided an equity return of 0,10 euros per
share
KEY FIGURES
Turnover by operation:
% 1-06/07 1-06/06 1-12/06
Services 65 62 60
Licences 24 25 26
Hardware 11 13 14
Turnover by segment:
Me 1-06/07 1-06/06 1-12/06
Trade 7,9 8,0 -0,1
Industry and services 5,6 3,9 +1,7
Total 13,5 11,9 +1,6
Operating result by segment:
Me 1-06/07 1-06/06 1-12/06
Trade 0,1 -0,1 +0,2
Industry and services 0,4 0,3 +0,1
Total 0,5 0,2 +0,3
Managing Director Hannu Ahola:" Business operations during the review period continued as planned.
The new sales and favorable continuance of the sales of IT services
have guaranteed a good level of employment during the whole review
period. In connection with new sales it is noteworthy that new
significant ERP system -projects have been launched and at the same
time the investments in developing the added value products and
integration knowledge, that have been continued for years, have begun
to produce results. At the moment it can be already estimated that
the recent corporate acquisitions have been successful and those
acquisitions give a very good support to our range of solutions. On
the whole the course of events during the first half of the year
gives us a good basis also for the rest of the year. This is
supported by the increase in turnover of 16 % and the substantial
improvement in result during the last quarter."
BUSINESS ENVIRONMENT AND BUSINESS DEVELOPMENT
Solteq is a strategic partner for trade and industry, whose core
competency is IT solutions that are critical to business. Solteq
combines its own product portfolio with the products from the leading
software companies in the world to deliver individual business
development and ERP solutions for its customers. The information
that is processed by means of these solutions is helping customers to
lead their business even better than before and to improve their
profitability.
According to the research institute Gartner, data management and
quality improvement are the most essential trends in the development
work that concerns IT systems. The benefits of many significant
IT-projects such as data warehousing, ERP- or customer
information-projects remain inadequate because of the poor quality of
data. The technology that is used to improve the quality of data is
developing rapidly, but the information management in the companies
couldn't be resolved only with technological competence. The
improvement of data quality is a part of overall business process
development. Quality requirements, which the user has to comply with,
have to be set for example to all of the data that is received and
processed in the organisation. When the development of the data
processing is done it is also important to understand the
requirements that are set by different industry specific business
environments.
At the moment Solteq is expanding its data processing competence that
was acquired in connection with Artekus and Fulmentum acquisitions to
all of the business branches in which the company is active. In
consequence the company is able to offer the best solution for its
customer's data processing and enterprise resource planning needs
that also support the whole value chain, whether it is car sales,
chained commerce, wholesale trade, individual speciality stores or
industry in question.
TRADE
Business environment
The economic boom in the retail trade is still reflected also in the
demand for store management systems that has remained active during
the review period. The demand is driven by both the expansion and
chaining of domestic stores and foreign store chains, which are
expanding into the Finnish market alike. Foreign companies often need
a store management system that is applicable to the Finnish
environment. This change in the structure of commerce appears as
corporate acquisitions and mergers that occur in more and more
swiftly pace, these mergers and acquisitions demand swiftness also in
the integration and harmonisation of store management systems. A part
of these arrangements is connected with generational changes in
companies, but at the moment also small scale store chains arise
faster than before in the trade branch.
In addition the increased need for more effective customer service is
in the background of the intense demand. The availability of products
and the delivery speed are more important than before for the retail
trade customers. In practice this requires completion, spending up
and more intensive integration of systems, so that the transparency
of the whole supply chain could be improved.
The new technologies that aiming to rationalise logistics are
expanding step by step: for example picking that is based on voice
recognition has made the operations more effective and reduced the
faults. Procurement optimising can be made more accurate by the means
of system automation. At the same time the orders from the stores
don't mean only the optimising of main warehouse. It is paid more
detailed attention to the shelf space planning and also the stores
itself, not only the suppliers, are more interested in controlling of
the usage of self space.
In the trade branch the companies are still waiting for the
definition of policies in connection with EU's regulations over
payment cards, but the quickness, easiness and safety of different
payment instruments have been arisen to a very important factor in
the retail trade. The cost-effectiveness of operations is crucial for
the channel and payment instruments, that are as versatile as
possible and which have reasonable costs, are an integral part of the
efficient and modern customer service.
The below par sales during the first months of the present year in
the car sales have not been directly reflected to the development
work of IT systems. The markets of delivering ERP-systems in the car
sales are fairly saturated and there is not large growth in sales to
be expected. Main part of the demand consists of the improvement and
development of existing systems that has been very active in
connection with many actors in the branch.
In the companies acting in the trade the growing demand of
integration projects in which the store systems are integrated to
background systems are expected to continue. Harmonisation projects,
in which the product databases of different chains are harmonised and
cleared, are expected to increase in all areas of trade.
Business development
The demand for advisory services in the segment trade remained strong
during the review period. During the review period Solteq delivered
also completely new store management systems and expanded the
existing systems of its customers. The favorable development in the
branch is also believed to reflect positively to the demand during
the last part of the year.
Especially the demand for Microsoft Dynamics -system appears to be
good at the moment. During the review period Solteq launched several
new projects and the integration between Solteq TP.Net -store
management system and Microsoft Dynimics Nav -enterprise resource
planning has also been completed. The first delivery contracts have
been made in connection with this comprehensive solution for chained
commerce during the review period.
The modernization project in connection with the e-commerce systems
of Onninen, that is heating, plumbing and air conditioning supplier,
is another example of successful utilization of Microsoft's system
architecture. The renewed web store of Onninen has been implemented
in June and its usage is increasing rapidly.
The business environment of car unit has remained stable and the unit
achieved its budget objectives during the review period. The
operations were emphasized in the sales of such services in which the
customer's pre-existing systems were developed. The service sales to
the customers of car trade unit remained stabile.
The modernization of IT systems of retailing chain Automaa and system
deliveries to Renault, that were launched earlier this year, have
progressed according to plan. Solteq believes that there is demand in
the car sales for the new services in connection with data processing
and harmonising, especially in connection with the harmonization of
customer databases.
INDUSTRY AND SERVICES
Business environment
The internationalisation of the Finnish industry continues, and more
effectiveness than before is sought from the IT system projects to
support the global activities. Large scale IT system projects that
are carried through at once are made even less than before. The
development and rationalisation projects of the existing information
systems have been the focus areas in operations recently. This trend
is reflected to the demand for the services for IT systems, which has
liven up in the year end 2006 and remained strong also in the last
quarter. According to the market researcher Market-Visio the
development of operative applications is one of the growing focus
areas during year 2007. Industry companies are looking for efficiency
to their operations from development projects that relate to data
processing and harmonising, reporting and customer management
systems.
Business development
The reorganization of operations in industry and services has
continued according to plans. The merger of Artekus Oy and Fulmentum
Oy with the parent company is going to be finished up by the end of
the present year.
During the review period the industry segment achieved its setting of
financial objectives. The demand for services among existing
customers increased. The hardware sales were liven up a bit, for
example access rights were bought more. The amount of contacts in the
solicitation of new customers has been increased. This segment has
invested in the training of the latest SAP -versions and developing
knowledge and that gives a good opportunity to respond to the
increased demand. The segment has also recruited more knowledgeable
personnel during the past quarter and it is supposed to continue to
acquire more resources during the last part of the year.
During the review period the continuance of implementation of IDO's
Sanitec -unit's SAP ERP-system has been financially more significant
than expected among the large IT-system projects.
The demand for the services of the maintenance and harmonization
service has been extremely brisk and the operation is supposed to
exceed its budget objectives for the present year. After the
acquisition of Fulmentum the operations have furthermore picked up
and the backlog of orders has grown intensively. The maintenance and
harmonisation unit has recruited altogether ten persons to respond to
the growing demand. There are plans to gradually expand the
harmonising and processing of data also to the other lines of
business, car sales among others.
Among remarkable contracts the UPM delivery has been advanced
completely as scheduled and among the projects that were agreed
during the last quarter, Rautaruukki is well on the way. The
maintenance project in connection with Pohjolan Voima's hydroelectric
power plant was launched in June.
TURNOVER AND RESULT
Turnover increased 13,3% compared to the previous year and totalled
13.525 thousand euros (11.940 thousand euros).
Turnover consists of several individual customerships. At the most,
one client corresponds to a less than five percentages from the
turnover.
The operating profit for the review period totalled 455 thousand
euros (177 thousand euros), result before taxes was 385 thousand
euros (276 thousand euros) and the profit for the review period 445
thousand euros (193 thousand euros).
BALANCE SHEET AND FINANCING
The total assets amounted to 20.592 thousand euros (17.313 thousand
euros). Liquid assets totalled 277 thousand euros (233 thousand
euros).
The company's interest-bearing liabilities were 5.330 thousand euros
(3.465 thousand euros).
The company's equity ratio was 49,4 % (54,8%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 1.585 thousand euros
(4.387 thousand euros). For the most part these consist of corporate
acquisitions that have been carried out during the review period.
Corporate acquisitions
Solteq Plc announced 13.3.2007 that the company acquires all the
shares of Fulmentum Oy. Fulmentum is specialised in global master
data harmonising and maintenance projects. The company has been
consolidated in the financial statements starting from 1.5.2007.
The basic purchase price was 1.500 thousand euros and from that have
been paid 1.000 thousand euros in cash according to the purchase
agreement. The rest of the acquisition price will be paid in the
autumn 2007. The additional price, that is 1.400 thousand euros at
the maximum, consists of the possible financial benefit received from
the ongoing and future projects of Fulmentum at the time of
acquisition in the forthcoming three years.
The acquisition price exceeding Fulmentum Oy's equity at the time of
the acquisition has been allocated as goodwill totalling 1.422
thousand euros. The goodwill represents future income expectations
relating to cross-utilising customers, knowledgeable personnel and
complementing product knowledge.
Changes in the group structure
The company has taken measures to merge Artekus Oy, Tampereen
Systeemitiimi Oy and Fulmentum Oy with their parent company as
announced earlier. The planned registration date for the
implementation of the merger of Artekus Oy is 1.10.2007 and for other
companies 31.12.2007.
Research and development
Solteq's research and development costs consist mainly of personnel
costs. When developing basic products, it is Solteq's strategy to
co-operate with global actors such as SAP and Wincor-Nixdorf and
utilise their resources and distribution channels. Own development
efforts are focused on added value products and developing tailored
service concepts.
During the review period development costs under IFRS have been
capitalised in the amount of 10 thousand euros (249 thousand euros).
Mainly the costs relating to research and development are presented
due to their nature as yearly costs in profit and loss account. Two
development projects have been completed during the previous
financial year and thus the depreciation according to plan have been
started for the capitalized amount. Two other development projects
are still unfinished and the depreciation according to plan will be
started along with the commercial implementation of the projects.
PERSONNEL
The number of permanent employees at the end of the review period was
251(252). Average number of personnel during the review period was
241 (238). At the end of the review period the number of personnel
divided as follows: trade 118, industry and services 95 and shared
functions 38.
RELATED PARTY TRANSACTIONS
The company has related party relationships with members of the Board
of Directors, the managing director and the management group of the
company. There have not been significant changes in the company's
related party transactions after financial statements from year 2006.
SHARES AND SHAREHOLDERS
Solteq Plc's equity on 30.6.2007 was 1.000.498,41 euros which was
represented by 12 044 229 shares. The shares have no nominal value.
Exchange and rate
During the review period, the exchange of Solteq's shares in the
Helsinki Stock Exchange was 1,4 million shares (2,5 million shares)
and 2,0 million euros (4,9 million euros). Highest rate during the
review period was 1,74 euros and lowest rate 1,28 euros. Weighted
average rate of the share was 1,49 euros and end rate 1,70 euros. The
market value of the company's shares at the end of the review period
totalled 20,5 million euros (16,8 million euros).
Ownership
At the end of the review period, Solteq had a total of 2.314
shareholders (2.665 shareholders). Solteq's 10 largest shareholders
owned 7.285 thousand shares i.e. they owned 60,5 per cent of the
company's shares and votes.
Solteq Plc's members of the board owned a total of 4.862 thousand
shares which equals 40,4 per cent of the company's shares and votes.
During the review period there has been one announcement on change of
ownership in accordance with chapter 2, section 9, of the securities
market act, as Profiz Business Solution Plc's ownership of Solteq
shares exceeded 28.5.2007 the 5 % proportion.
ANNUAL GENERAL MEETING
Solteq Plc's annual general meeting on 23.3.2007 adopted the
financial statements for 2006 and the members of the board and the
managing director were discharged from liability for the financial
year 2006.
The annual general meeting decided in accordance with the board's
proposal to authorize the board of directors to decide on dividend
distribution or other distribution of funds from the distributable
equity fund. The board of directors is authorized to decide on
dividend distribution or other distribution of funds from the
distributable equity fund or both, totalling altogether a maximum of
0,10 euros per share. The authorization is valid until the beginning
of the next annual general meeting.
The annual general meeting decided that the equity account formed in
the extraordinary general meeting on 9.9.2005 and governed by the
general meeting of shareholders, an amount of 5.962.338,50 euros is
transferred to the distributable equity fund. The distributable
equity fund is a fund based on the new Finnish Companies Act and may
be used among other things to dividend distribution or other
distribution of funds.
The annual general meeting decided that the company's share capital
is increased from 993.654,69 euros to one million (1.000.000) euros
by transferring the respective amount from the distributable equity
fund.
The annual general meeting decided to authorize the board of
directors to decide on acquiring the company's own shares so that the
amount in the possession of the company does not exceed 10 percent of
the company's total shares at that moment. The shares can be acquired
in order to develop the company's capital structure, finance and
execute acquisitions or similar arrangements or used as part of the
incentive scheme of the personnel or convey otherwise or be
invalidated. The shares can be acquired in other proportion than the
shareholders' holdings. The shares are to be acquired through public
trading and at market price. The acquiring is to be done with the
unrestricted shareholders' equity. The authorization is valid until
the beginning of the next annual general meeting.
The annual general meeting decided to authorize the board of
directors to give or convey company's own shares, maximum amount
being 3.000.000 shares. The shares can be given or conveyed in order
to finance and fulfill terms of an acquisition or similar or develop
company's capital structure or be used as part of the incentive
scheme of the personnel or otherwise develop the company's business
operations. The authorization includes a right to deviate from the
shareholders' preemptive right of subscription if there is a weighty
financial reason for the company. The authorization includes that the
board of directors may decide the terms and other matters concerning
the share issue according to the instructions of the FinnishCompanies Act. The authorization is valid for five years starting
from the decision.
The annual general meeting decided that the funds in the share
premium account at the time of the annual general meeting totaling
2.164.197,45 euros are transferred to the distributable equity fund.
BOARD OF DIRECTORS AND AUDITORS
Five members were elected to the board of directors. Seppo Aalto, Ari
Heiniö, Veli-Pekka Jokiniva, Ali Saadetdin and Jukka Sonninen will
continue as members of the board. The board elected Ali Saadetdin to
act as the chairman of the board.
KPMG Oy Ab, Authorised Public Accountants, were re-elected as
Solteq's auditors. Frans Kärki, APA, acts as the lead partner.
EVENTS AFTER THE REVIEW PERIOD
No significant new reportable matters have taken place since after
the review period.
RISKS AND UNCERTAINITIES
The key uncertainties and risks are related to the timing and pricing
of the business deals that are the basis of the turnover, changes in
the level of costs and to 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 and management group work. The
company has not organized a separate internal audit organisation or
committee.
PROSPECTS
In the Solteq Plc's stock exchange bulletin relating to the first
quarter of the year 2007 the turnover was estimated to increase over
20 % on a yearly basis and the operating result was estimated to
improve substantially. The development during the second quarter has
further strengthened this outlook and there isn't reason to make
changes to the company's estimate.
Strategic objectives for 2008-2010
During the following three years the company aims to achieve an
average of 10 % yearly organic growth in domestic market. Additional
growth is searched by allocated acquisitions.
The expectations for additional sales are in Russian markets. During
this year the active marketing will start and the building of local
organization will begin.
The substantial improvement in operating profit in comparison with
the profits for the last years is to be achieved. The objective for
yearly operating profit is 10 % of turnover. This is planned to be
achieved by improving the sales operations and by concentrating on
tight cost-control.
The equity ratio is to be held over 40 %.
The company will follow active dividend policy. The minimum goal for
the dividend is 50 % of the yearly profit with the exception if the
assets are needed for definite investments.
RETURN OF EQUITY
The board of directors has decided in yesterday's meeting to return
equity the amount of 0,10 euros per share using the maximum
authorization granted by the annual general meeting. The date of
dividend ex-date is 14 August 2007, the date of record
is 16 August 2007 and the payment date is 23 August 2007.
FINANCIAL
INFORMATION
GROUP PROFIT AND
LOSS 1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
ACCOUNT (TEUR) 30.6.07 30.6.06 30.6.07 30.6.06 31.12.06
NET TURNOVER 7 147 6 162 13 525 11 940 23 166
Other operating
income 20 15 55 21 42
Raw materials and
services -1 329 -1 416 -2 673 -2 602 -5 378
Staff expenses -3 985 -3 552 -7 434 -6 663 -12 831
Depreciation -206 -172 -387 -333 -698
Other operating
expenses -1 319 -1 083 -2 631 -2 186 -4 799
OPERATING RESULT 328 -46 455 177 -498
Financial income
and
expenses -45 -27 -70 99 19
PROFIT/LOSS BEFORE
APPROPRIATION
AND TAXES 283 -73 385 276 -479
Income taxes 8 7 60 -83 602
PROFIT/LOSS FOR
THE
PERIOD 291 -66 445 193 123
Earnings / share,
e (undiluted) 0,03 0,00 0,04 0,02 0,01
Earnings / share,
e (diluted) 0,03 0,00 0,04 0,02 0,01
GROUP BALANCE
SHEET
(TEUR) 30.6.07 30.6.06 31.12.06
ASSETS
NON-CURRENT ASSETS
Intangible assets
Intangible
rights 2 055 2 122 2 140
Goodwill 8 086 5 394 6 600
Tangible assets 2 799 3 135 3 019
Investments
Other shares
and
similar
rights of
ownership 122 89 81
Other
long-term
debtors 0 140 0
Deferred tax
assets 836 0 663
Total non-current
assets 13 898 10 880 12 503
CURRENT ASSETS
Short-term debtors 6 417 5 985 5 619
Investments 0 215 1 579
Cash in hand and
at banks 277 233 646
Total current
assets 6 694 6 433 7 844
TOTAL ASSETS 20 592 17 313 20 347
EQUITY AND
LIABILITIES
CAPITAL AND
RESERVES
ATTRIBUTABLE TO
THE SHAREHOLDERS
OF THE
PARENT COMPANY
Share
capital 1 001 994 994
Share
premium
account 2 168 2 164 2 164
Equity
account 0 5 963 5 962
Unrestricted
equity
fund 6 254 0 298
Retained
earnings 300 170 173
Profit for
the
financial
year 445 193 123
Total equity 10 168 9 484 9 714
LIABILITIES
Non-current
liabilities
Deferred tax
liabilities 0 92 0
Interest
bearing
liabilities 163 163 163
Current
liabilities 10 261 7 574 10 470
Total liabilities 10 424 7 829 10 633
TOTAL EQUITY AND
LIABILITIES 20 592 17 313 20 347
FINANCIAL
PERFORMANCE 1-06/07 1-06/06 1-12/06
INDICATORS
Net turnover MEUR 13,52 11,94 23,17
Change in net
turnover 13,27 % 9,23 % 7,41 %
Operating result
MEUR 0,46 0,18 -0,50
% of turnover 3,37 % 1,48 % -2,15 %
Result before
taxes MEUR 0,39 0,28 -0,48
% of turnover 2,85 % 2,31 % -2,07 %
Equity ratio, % 49,38 54,78 47,74
Gearing, % 49,70 % 32,07 % 15,78 %
Gross investments
in
non-current assets
MEUR 1,59 4,39 7,68
Return on equity,
% 9,14 % 4,01 % 1,20 %
Return on
investment, % 6,62 % 5,31 % -2,44 %
Personnel at end
of
period 251 252 234
Personnel average
for
period 241 238 240
KEY INDICATORS PER
SHARE
Earnings / share,
e 0,04 0,02 0,01
Earnings / share,
e (diluted) 0,04 0,02 0,01
Equity / share, e 0,84 0,80 0,81
QUARTERLY KEY
INDICATORS
(MEUR)
3Q/05 4Q/05 1Q/06 2Q/06 3Q/06 4Q/06 1Q/07 2Q/07
Net
turnover 4,58 6,06 5,78 6,16 4,65 6,58 6,38 7,14
Operating
result 0,35 0,46 0,22 -0,04 -0,70 0,02 0,13 0,33
Result
before
taxes 0,46 0,46 0,35 -0,07 -0,73 -0,03 0,10 0,29
CASH FLOW
STATEMENT
(MEUR) 1-06/07 1-06/06 1-12/06
Cash flow from
business
operations -0,64 0,27 0,25
Cash flow from
capital
expenditure -2,76 0,25 1,86
Cash flow from
financing
activities
Income from
issued
shares 0,01 0,02 0,02
Return of
equity(paid) 0,00 -3,54 -3,54
Loan
agreement 1,57 3,00 3,27
Cash flow from
financing
activities 1,58 -0,52 -0,24
Change in cash and
cash
equivalents -1,82 0,00 1,87
TOTAL INVESTMENTS
(MEUR) 1-06/07 1-06/06 1-12/06
Continuing
operations,
group total 1 585 4 387 7 680
LIABILITIES (MEUR) 30.6.07 30.6.06 31.12.06
Perfomance bonds 0,05 0,05 0,05
Lease
contracts,machin.&equipment 0,74 0,97 0,71
Lease
liability,premises 3,15 3,46 3,42
The Group has no
liabilities from
derivative
instruments.
STATEMENT OF
CHANGES IN
GROUP
EQUITY (TEUR)
Share Share Equity Unrestr. Ret. Total
Capital premium account equity earn.
account fund
EQUITY
1.1.2006 908 234 9 500 0 167 10 809
Granted
option rights 3 3
Result for
the period 193 193
Total gains
and losses 196 196
Subscription
issue 2 2
Directed
issue 84 84
Emission gain 1 930 1 930
Return of
equity -3 538 -3 538
EQUITY
30.6.2006 994 2 164 5 962 0 364 9 484
EQUITY
1.1.2007 994 2 164 5 962 298 296 9 714
Granted
option rights 4 4
Result for
the period 445 445
Total gains
and losses 449 449
Subscription
issue 1 4 5
Transfer
between
equity
accounts 6 -5 962 5 956 0
EQUITY
30.6.2007 1 001 2 168 0 6 254 745 10 168
Taxes
corresponding to
the result have
been presented as
taxes
for the review
period
The Financial
Statements is
unaudited.
CALCULATION OF FINANCIAL RATIOS
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
Solvency ratio, in
percentage
equity x 100
balance sheet total - advances
received
Gearing:
interest-bearing liabilities - cash,
bank balances and securities x 100
equity
Diluted earnings per share:
diluted profit before taxation -
taxes +/- minority interest
diluted average share issue
corrected number of shares
Earnings per share:
Pre-tax result - taxes +/
minority interest
diluted average share issue
corrected number of shares
Equity per share
Equity
Number of shares
This interim report has been prepared in accordance with IAS 34
-standard and the same accounting policies as in the annual financial
statements 2006.
Financial reporting in 2007
Solteq Plc will publish the next interim reports for 2007 as follows:
January - September 24.10.2007
More information for investors at Solteq's website at www.solteq.com.
Additional information:
Managing Director Hannu Ahola
Telephone +358 20 1444 211 or +358 40 8444 211
E-mail hannu.ahola@solteq.com
CFO Antti Kärkkäinen
Telephone +358 20 1444 393 or +358 40 8444 393
E-mail antti.karkkainen@solteq.com
Distribution:
Helsinki Stock Exchange
Key media
