Growth leap taken – building the new organization has begun.
- In the review period a significant company acquisition was completed in which
Solteq Plc purchased the entire stock capital of Descom Group Oy.
- Descom Group’s figures consolidated to Solteq Group’s figures as of 2.7.2015.
- To finance the acquisition Solteq Plc issued a bond and carried out a share
issue.
- Revenue totalled 33,9 million euros (28,7 million euros), increase 17,9 %.
- Operating profit before non-recurring items was 1.847 thousand euros (1.581
thousand euros), increase 16,8%. Non-recurring costs related to the acquisition
789 thousand euros and the operating profit including the non-recurring costs
was 1.058 thousand euros (1.581 thousand euros), decrease 33,1%.
- Solteq Group’s equity ratio was 27,1 % (47,4 %).
- Integration work has begun – targeting to annual cost synergies of 2 million
euros in costs which are not related to customer work.
- Due to significant integration and transaction costs the profit guidance for
year 2015 is defined.
- Targets of the new strategy are growth and internationalization, the cash flow
from business operations is actively used to actualize the growth.
Key figures
7-9/1 7-9/1 Change 1-9/1 1-9/14 Change-% 1-12/14
5 4 -% 5
Revenue, TEUR 14 8 326 79,0 % 33 28 715 17,9 % 40 933
900 858
Operating profit before 728 444 64,0 % 1 847 1 581 16,8 % 2 490
non-recurring items,
TEUR
Operating profit, TEUR -61 444 -113,7 1 058 1 581 -33,1 % 2 490
%
Profit for the financial -442 316 -239,9 439 1 155 -62,0 % 1 893
period, TEUR %
Earnings/share, e -0,03 0,02 -250,0 0,03 0,08 -62,5 % 0,13
%
Operating profit-% -0,4 5,3 -107,5 3,1 5,5 -43,6 % 6,1
%
Equity ratio, % 27,1 47,4 -42,8 27,1 47,4 -42,8 % 48,0
%
Profit guidance 2015
The profit guidance for year 2015 is defined as follows:
Solteq Group’s operating result before non-recurring costs related to the
acquisition and the integration is expected to grow compared to financial year
2014.
Previous profit guidance for year 2015 was:
Solteq Group’s operating result is expected to grow compared to financial year
2014.
CEO Repe Harmanen:
During the third quarter, our company took a big leap forward – maybe the
biggest since it was established and since it went public. The company
acquisition at the beginning of July in which we merged with Descom Group Oy and
the measures involved have been extremely successful. They have met our
expectations and will bring a significant contribution to the future development
of our company. However, we have a lot of work ahead us. The measures we are
taking will develop our company strongly, open new markets and offer our clients
more comprehensive overall services.
The changes that took place in our ownership structure during the review period
were positive with respect to the continuity, strategy implementation and
expansiveness of our company. They will maintain and allow increasingly fast
growth in the future.
The integration process started with positive momentum, and we reached the
objectives we had set for the review period. As planned, we published the new
Management Team at the end of the review period, and the Team quickly started
work in the new company. Integration will continue in accordance with our plans,
the aim being to start operations as the new company on 1 January 2016 and
complete the integration process as soon as possible.
We aim at about 2 million euro annual cost savings when the integration process
is completed and expect to reach the target by reducing the administrative and
support organisation, by concentrating and combining certain basic acquisitions,
and by combining our office facilities in Helsinki and Tampere during the first
half of 2016. As to personnel adjustments, we have today sent an invitation to
co-operation negotiations concerning the support and administrative functions.
The invitation does not concern experts who perform customer service or
solutions related tasks. The aim of the negotiations is to reach savings in
personnel costs representing the costs of 15 – 20 employees by means of part
-time solutions, outsourcing, pension arrangements and, to a certain extent,
redundancies.
The operative result for the review period was as expected. In certain areas,
revenue erosion continued and we did not succeed in growing the new business
organically as well as I had expected. Our operative result was also affected
negatively by the fact that certain major projects were postponed to the last
quarter. I would naturally have been happier if we had succeeded better in them.
However, considering the current market situation in Finland, we must regard our
performance as fairly good, and especially the adjustment measures that we had
taken in 2014 proved to have been well timed.
Our demand situation is good although demand still seems to be directed unevenly
to our different solution areas.
We expect that the revenue and profit without non-recurring items for the last
quarter of the year will grow from the previous year. If the non-recurring items
brought about by organisational restructuring are taken into consideration, our
operating profit level will be the same or slightly lower than last year. This
is due to our efforts to complete the integration process fast, which means that
most of costs affect the profit for 2015. However, this will allows us to build
and implement our new strategy at full momentum right from the beginning of
2016.
BUSINESS ENVIRONMENT AND BUSINESS DEVELOPMENT
Solteq is a visionary expert in omnichannel and digital commerce. We offer
partnership in supply management, store solutions and e-commerce. Solteq offers
its clients superior know-how in commerce, services and industry.
Solteq Plc’s reported segments are
· Grocery and special retail, HoReCa
· Wholesale, Logistics and Services
· Enterprise Asset & Service Business Management
· Descom.
Segmentation reflects our customers’ demand on different sectors of the services
provided.
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
totaled 13,7 million euros (15,0 million euros) and the operating result was 0,4
million euros (0,7 million euros).
The decrease in the net sales was mainly due to postponements in decision-making
schedules in the early part of the review period. Towards the end of the review
period, a large number of the projects were already underway. The result for the
review period is affected by a delay in schedule of a customer project. In
addition the ongoing projects were in weak marginal profit phase from revenue
recognition perspective in the review period.
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 9,0 million euros (9,8 million euros) and the operating result
was 0,7 million euros (0,2 million euros).
The net sales of the review period decreased from the previous year’s level. The
development of the revenue was due to the slowness in decision making related to
trading of the significant customer projects. In addition the human resources of
the segment were focused on the completion of the projects underway. The
improvement in the operating result was mainly due to the development of the
cost structure and improved resource utilisation.
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 3,6 million euros (3,9 million euros) and the
operating result was 0,2 million euros (0,7 million euros).
Unlike other segments, the main business of the segment is based on the
development, supply and marketing of the segment’s own software products. Owing
to the nature of its business, the segment is, however, more dependable on the
new investments of the client industries than the other segments.
The development of the segment’s net sales was weaker than in the previous year,
and the operating result decreased.
The growth and profitability of the operations will be improved by developing
products that meet the needs of the client segments better and by looking for
new markets and channels. The incorporation of the business of the segment at
the turn of the year will allow the development of a product area specific,
specialised strategy during 2015.
Descom
The segment includes the business of the Descom Group, acquired July 2, 2015.
Solteq Plc has issued three stock exchange releases regarding the acquisition
(17.6.2015, 22.6.2015 and 2.7.2015). The figures of the Descom Group have been
included in Solteq Plc’s figures as of 2.7.2015 and the interim report of
30.9.2015 will be the first to include this segment.
The main operations of the Descom segment focus on solutions for omnichannel
commerce and the improvement of clients’ digital marketing.
Descom Group consists of the parent group Descom Group Oy and the subsidiary,
Descom Oy, which includes the group’s business in Finland as well as foreign
subsidiaries in Sweden, Poland and Denmark.
In the omnichannel commerce area we provide omnichannel online and physical
store sales systems as well as order and product information management
solutions. The aim of omnichannel commerce is not only to combine brick-and
-mortar with digital channels, but to create a totally new business and
different ways to attend to the customer.
In the core Descom’s digital marketing services are search engine optimization
and marketing, conversion optimization as well as analytics and customer
experience. Our digital marketing services help clients improve the findability
of their website and gather and use customer data and analytics to make their
online shopping basket bigger, among other things.
In addition, Descom offers its clients applications development, integration and
maintenance services.
The revenue of the Descom segment on the period of 2.7.-30.9.2015 was 7,5
million euros, of which 1,2 million was made in the Swedish subsidiary. The
operating profit of the segment was 0,4 million euros.
BUSINESS DEVELOPMENT
Integration
The integration work related to the acquisition of Descom has proceeded
according to the original plans. The integration work is targeting to legal as
well as operational merger by the end of the year.
In addition the integration work is targeting to annual cost savings of 2
million euros. Savings will be carried out by rationalizing the structures in
administration, manager and support organizations, by centralizing and
accelerating the basic purchases and by merging our office premises in Helsinki
and Tampere during the first half year in 2016.
We have convened co-operation negotiations related to personnel changes today.
The negotiations involve support, managerial and administration functions. The
aim of the negotiations is to reach savings in personnel costs representing the
costs of 15 – 20 employees by means of part-time solutions, outsourcing, pension
arrangements and, to a certain extent, redundancies.
Related to the legal integration Solteq Plc published a stock exchange release
on Descom Ltd, totally owned by Descom Group Ltd, to merge with Descom Group Ltd
and Descom Group Ltd, totally owned by Solteq Plc, to merge with Solteq Plc. The
planned registration date for the implementation of the merger of Descom Ltd is
1st January 2016 and the planned registration date for the implementation of the
merger of Descom Group Ltd is 2nd January 2016.
Strategic outlines of the new merged company
We have started the work to create a strategy for the new merged company. During
the last months of the year, the new Board of Directors and Management Team will
work on the practical measures to finalise the plans for implementing our
strategic areas.
The Board of Directors has outlined core strategy policies, including the long
-term goals related to clients, solution offering, internationalisation, gearing
ratio and growth.
The most essential competitive advantage of the new company will be the
integrated total solutions that it is able to offer its clients. The services
combine the whole supply chain from procurement to store networks and thereby to
multichannel encounters with customers, and they allow industrial, service
business, wholesale and retail operators improve the efficiency and fluency of
their operations.
As digital business does not know borders, international operations will open up
important growth and expansion opportunities for us in the future with both our
current clients and through selected solutions with new clients. Growing with
large globally operating clients that provide us with a significant opportunity
for organic growth is something that we will continue to develop actively.
One objective of the company is organic growth that is faster than the market
growth. Apart from organic growth, we also intend to pursue an active company
acquisition policy in areas that strengthen our strategic focuses to develop our
customer relationships, solutions or geographic position. We will also estimate
the suitability of our current solution offering for the business operations of
our clients. In this way, we will be prepared for appropriate operations at both
the company acquisition and divestment fronts to reach our objectives.
Our profit distribution policy will support our growth objectives and strategy.
We will estimate carefully if it will be more profitable for our shareholders to
invest in growth and strategy implementation rather than distribute the profit
annually. We consider that the development of the balance sheet structure will
be important in the first phase, and at the same time, we will seek balance
between growth and profit distribution.
As to the company’s gearing ratio, our long-term goal is that it will be at a
level that is three times as high as EBITDA. In our opinion, this policy makes
our company an interesting target for investors in the current debt market
situation as a company that keeps indebtedness under control but at the same
time utilises it capital efficiently to finance both organic and inorganic
growth.
REVENUE AND RESULT
Turnover by operation:
% 1-9/15 1-9/14 1-12/14
Software services 71 64 62
Licences 25 28 26
Hardware 4 8 12
Revenue increased by 17,9 % compared to the previous year and totalled 33.858
thousand euros (previous review period 28.715 thousand euros).
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 decreased 33,1 % and was 1.058
thousand euros (1.581 thousand euros). Result before taxes decreased 63,7 % and
was 528 thousand euros (1.453 thousand euros) and result for the financial year
decreased 62,0 % and was 439 thousand euros (1.155 thousand euros).
The figures reflecting the financial result for the review period include 789
thousand euros non-recurring costs relating to the acquisition of Descom Group
Oy. Non-recurring costs are presented in other expenses.
BALANCE SHEET AND FINANCING
The total assets amounted to 58.399 thousand euros (24.555 thousand euros).
Liquid assets totalled 3.321 thousand euros (1.527 thousand euros). In addition
to liquid assets, the company has unused bank account limits amounting to a
total of 2.500 thousand euros in the end of the review period.
The Group’s interest-bearing liabilities were 29.124 thousand euros (4.588
thousand euros).
Solteq Group’s equity ratio was 27,1 per cent (47,4 per cent).
Goodwill amounting to 22.506 thousand euros, intangible assets amounting to
3.520 thousand euros and the deferred tax liabilities related to above-mentioned
amounting to 704 thousand euros were arised in the acquisition cost calculation
related to the business acquisition.
1.083 thousand euros of the non-recurring costs which have cash effects is
presented in cash flow from capital expenditure and 361 thousand euros is
presented in cash flow from financial activities.
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investment during the review period was 23.297 thousand euros (704
thousand euros). 260 thousand euros of the investments of the review period are
mainly replacement investments and 23.037 thousand euros is related to the
business acquisition. The investments in the reference period 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 reference period, either).
PERSONNEL
The number of permanent employees at the end of the review period was 514 (278).
In the end of the review period the number of personnel could be divided as
follows: Grocery and special retail, HoReCa segment: 109 people; Wholesale,
Logistics and Services: 80 people; Enterprise Asset & Service Business
Management; 39 people, Descom: 201 people and 85 people in shared functions.
The key figures for Group’s personnel:
1-9/2015 1-9/2014 1-9/2013
Average number of the personnel during the year 336 280 290
Employee benefit expenses (1, 000 €) 13 229 11 164 11 684
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 30.9.2015 was 1.009.154,17 euros which was represented by
17 798 059 shares. The shares have no nominal value. All shares have an equal
entitlement to dividends and company assets. Shares are governed by a redemption
clause.
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 860.881 shares. The amount of treasury shares represented 4,8 %
of the total amount of shares and votes at the end of the review period. The
equivalent value of acquired shares was 48.812 euros. On 19 March 2015, Solteq
announced that the company’s share-based incentive scheme would be dissolved.
During the review period, eleven flagging announcements were made. On March 19,
2015 Solteq Plc announced that the company would dissolve the share-based
incentive scheme by purchasing the capital stocks of the Management Team’s
holding companies. The arrangement was implemented on 13 April 2015 and it led
to a change in ownership, in which Solteq Plc and its subsidiaries hold more
than 5% of Solteq Plc shares and votes.
On June 18, 2015 Solteq Plc received a notification pursuant to Chapter 9,
Section 5 of the Securities Markets Act from Sentica Buyout III GP Oy ja Sentica
Buyout III Ky. According to the notification Sentica Buyout III Ky and Sentica
Buyout III Co-Investment Ky are parties to an agreement or other arrangement
which, if completed, would cause the direct holdings of Sentica Buyout III Ky of
the shares and voting rights in Solteq Plc to exceed the 5 per cent threshold.
According to the notification, Sentica Buyout III GP Oy’s indirect holding
through the above mentioned companies of the shares and voting rights in Solteq
Plc would at the same time exceed the 5 per cent threshold. The only general
partner of Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky is
Sentica Buyout III GP Oy. Sentica Buyout III GP Oy exercises the power of
decision in the companies. The investment management functions of both the funds
have been transferred to Sentica Partners Oy based on a separate investment
management agreement. The change in the holdings results from an issue of new
shares in Solteq Plc directed to Sentica Buyout III Ky and Sentica Buyout III Co
-Investment Ky where Descom Group’s shares will be transferred against the new
shares of Solteq Plc based on the share purchase agreement signed on June 17,
2015 by and between Solteq Plc and the shareholders of Descom Group Oy regarding
all the shares in Descom Group Oy. The arrangement was executed on July 2 2015
and Solteq Plc received a notification pursuant to Chapter 9, Section 5 of the
Securities Markets Act concerning the changes in ownership caused by the
arrangement on July 3 2015. According to the notification the direct holdings of
Sentica Buyout III Ky of the shares and voting rights in Solteq Plc to exceed
the 5 per cent threshold. According to the notification, Sentica Buyout III GP
Oy's indirect holding through Sentica Buyout III Ky and Sentica Buyout III Co
-Investment Ky of the shares and voting rights in Solteq Plc exceeds the 5%
threshold.
On July 3, 2015 Solteq Plc received four notifications pursuant to Chapter 9,
Section 5 of the Securities Markets Act related to the registration of the
Solteq’s new shares to trade register on July 3 2015. Due to the arrangement Ali
U. Saadetdin's holdings and proportion of voting rights of Solteq Plc has fallen
under the 20% threshold, Seppo Aalto's holdings and proportion of voting rights
of Solteq Plc has fallen under the 10% threshold, Profiz Business Solution
Corp.'s (Company ID number 0830732-2) holdings and proportion of voting rights
of Solteq Plc has fallen under the 10% threshold and the share of ownership of
holdings and proportion of voting rights of Solteq Plc controlled by the company
has fallen under the 5% threshold.
On July 6 Solteq Plc received three notifications pursuant to Chapter 9, Section
5 of the Securities Markets Act. Due to disposal of shares on July 3 2015 Ali U.
Saadetdin's holdings and proportion of voting rights of Solteq Plc has fallen
under the 10% threshold. In addition due to disposal of shares on July 3 2015
Seppo Aalto's holdings and proportion of voting rights of Solteq Plc has fallen
under the 5% threshold. Due to the acquisition of shares on July 3 2015 Sentica
Buyout III Ky's share of ownership of shares and voting rights of Solteq Plc
exceeded the 25% threshold on 3 July 2015 due to acquisition of shares and
Sentica Buyout III GP Oy's indirect holding through Sentica Buyout III Ky and
Sentica Buyout III Co-Investment Ky of the shares and voting rights in Solteq
Plc exceeded the 25% threshold due to the acquisition.
Exchange and rate
During the review period, the exchange of Solteq’s shares in the Helsinki Stock
Exchange was 4,1 million shares (0,5 million shares ) and 9,9 million euros (0,8
million euros). Highest rate during the financial year was 1,94 euros and lowest
rate 1,32 euros. Weighted average rate of the share was 1,70 euros and end rate
1,70 euros. The market value of the company’s shares in the end of the financial
year totalled 30,3 million euros (22,6 million euros).
Ownership
In the end of the financial year, Solteq had a total of 1.723 shareholders
(1.720 shareholders). Solteq’s 10 largest shareholders owned 12.655 thousand
shares i.e. they owned 71,1 per cent of the company’s shares and votes. Solteq
Plc’s members of the board owned a total of 2.516 thousand shares which equals
14,1 per cent of the company’s shares and votes.
ANNUAL GENERAL MEETING
At Solteq Plc’s Annual General Meeting on 16 March 2015 the 2014 financial
statements were adopted and the members of the board and the managing director
were discharged from liability for the 2014 financial period.
In the meeting was accepted the proposal by the board that for the financial
year 2014, 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, in accordance with the Finnish Companies Act 13 chapter 6§ 2 paragraph,
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 of Directors to decide on the
purchase of the Company’s own shares to improve the capital structure, to be
used as a part of remuneration of personnel, to finance and execute business
acquisitions and other business arrangements or to be further transferred or
cancelled. The proposal includes authorization to take company’s own shares as a
pledge. According to the proposal, the total number of the shares purchased
shall not exceed 10 percent of all shares of the Company and they can be
purchased otherwise than in proportion to the shareholdings of the shareholders.
The shares shall be purchased at a price formed in public trading. The
authorization includes that the Board of Directors may decide the terms and
other matters concerning the purchase of own shares. The authorization is
effective until the next Annual General Meeting.
The Annual General Meeting authorized the Board of Directors to give new shares
or convey company’s own shares. The authorization would be executed by one or
more share issues, maximum total amount being 5.000.000 shares. The
authorization includes a right to deviate from the shareholders’ pre-emptive
right of subscription. The authorization includes that the Board of Directors
may decide the terms and other matters concerning the share issue. The
authorization is effective until the 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, Matti Roininen and Olli
Välimäki. 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
After the review period Solteq decided to appoint new Group Management Team
October 1 2015 and published a stock exchange release on changes in
organizational structure that are effective as of January 1 2016. Members of
management team, which focuses on operative issues of Solteq Group are from
October 1 2015: Repe Harmanen (CEO), Joni Henkola (VP, Sales), Tiina Honkiniemi
(VP, Client Technologies), Virpi Hyytiä (VP, Accounts), Harri Ilvonen (VP
Digital Customership), Antti Kärkkäinen (CFO), Konsta Saarela (VP, International
Business) and Riina Tervaoja (VP, Projects). Extended management team focuses on
developing the operations of Solteq Group with longer time perspective. Members
of extended management team, in addition to above mentioned, are: Kirsi Jalasaho
(VP, IR and Marketing), Mari Kuha (VP, HR and Culture) and Juha Luomala (VP,
Services Development).
In addition, as part of ongoing organizational development has Solteq Group
decided to simplify its reporting structure. There will be two reported segments
from 1.1.2016 on: Client Technologies and Digital Customership.
In an extraordinary General Meeting of Shareholders held after the review period
on October 19 2015 new board of directors was elected and resolution on the
remuneration of the members of the board of directors was made. The General
Meeting decided that The Board of Directors includes six (6) members for the
term of office that expires at the end of the first Annual General Meeting of
Shareholders. The General Meeting decided that Aarne Aktan, Eeva Grannenfelt,
Kirsi Harra-Vauhkonen, Markku Pietilä, Mika Uotila and Olli Väätäinen are
elected as Board members. In the Board meeting, held after the Annual General
Meeting, Mika Uotila was elected as the Chairman of the Board. In addition the
Extraordinary General Meeting decided that a 7500 euros remuneration will be
paid to the Chairman of the Board and to each Board Member for the term of
office that expires at the end of the first Annual General Meeting of
Shareholders.
RISKS AND UNCERTAINTIES
The key uncertainties and risks in short term are related to the success of the
integration work, management of changes in financing and balance sheet
structures, 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.
Financial reporting
This Interim Report 1.1.-30.9.2015 has been prepared in accordance with IAS 34
Interim Financial Reporting –standard and using the same accounting policies as
the financial statements 2014.
The financial result is reported through four business areas. Grocery and
special retail, HoReCa segment, Wholesale, Logistics and Services, Enterprise
Asset & Service Business Management and Descom. 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)
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2015 30.9.2014 30.9.2015 30.9.2014 31.12.2014
REVENUE 14 900 8 326 33 858 28 715 40 933
Other income 16 0 16 0 0
Materials and -4 549 -2 375 -9 023 -7 840 -12 508
services
Employee benefit -6 817 -3 945 -16 337 -13 871 -18 897
expenses
Depreciation -561 -337 -1 222 -976 -1 320
Other expenses -3 050 -1 225 -6 234 -4 447 -5 718
OPERATING RESULT -61 444 1 058 1 581 2 490
Financial income
and
expenses -486 -33 -531 -128 -177
RESULT BEFORE -546 411 528 1 453 2 313
TAXES
Income tax 105 -95 -88 -298 -420
expenses
RESULT FOR THE
FINANCIAL PERIOD
-442 316 439 1 155 1 893
OTHER
COMPREHENSIVE
INCOME TO BE
RECLASSIFIED TO
PROFIT OR LOSS IN
SUBSEQUENT PERIODS
Cash flow hedges 20 6 29 6 6
Other
comprehensive
income,
net of tax 16 5 23 5 5
TOTAL
COMPREHENSIVE
INCOME
-426 321 462 1 160 1 898
Total profit for
the period
attributable to -442 316 439 1 155 1 893
owners of the
parent
Total
comprehensive
income
attributable to -426 321 462 1 160 1 898
owners of the
parent
Earnings/share,
e(undiluted) -0,03 0,02 0,03 0,08 0,13
Earnings/share,
e(diluted) -0,03 0,02 0,03 0,08 0,13
Taxes
corresponding to
the result have
been presented as
taxes for the
period.
CONSOLIDATED BALANCE SHEET (TEUR) 30.9.2015 30.9.2014 31.12.2014
ASSETS
NON-CURRENT ASSETS
Tangible assets 2 292 1 566 1 652
Intangible assets
Goodwill 35 236 12 730 12 730
Other intangible rights 5 299 2 409 2 231
Available-for-sale financial assets 561 551 555
Trade and other receivables 208 17 15
Total non-current
assets 43 596 17 273 17 183
CURRENT ASSETS
Inventories 19 133 35
Trade and other receivables 11 463 5 622 5 290
Cash and cash equivalents 3 321 1 527 2 530
Total current
assets 14 803 7 282 7 855
TOTAL ASSETS 58 399 24 555 25 038
EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 1 009 1 009 1 009
Share premium reserve 74 74 75
Hedging reserve 0 -23 -23
Reserve for own shares -1 109 -1 012 -1 069
Distributable equity
reserve 10 307 6 392 6 392
Retained earnings 5 321 5 037 5 328
Total equity 15 602 11 477 11 712
Non-current liabilities
Deferred tax liabilities 816 551 512
Financial liabilities 27 472 2 707 2 591
Current liabilities 14 509 9 820 10 223
Total liabilities 42 797 13 078 13 326
TOTAL EQUITY AND
LIABILITIES 58 399 24 555 25 038
CASH FLOW STATEMENT (MEUR)
1-9/2015 1-9/2014 1-12/2014
Cash flow from business
operations 1,66 1,36 3,27
Cash flow from capital
expenditure -18,18 -0,22 -0,24
Cash flow from financing activities
Own shares -0,04 -0,08 -0,14
Dividend distribution -0,45 -0,45 -0,90
Loan agreements 17,80 -1,45 -1,82
Cash flow from financing
activities 17,31 -1,97 -2,86
Change in cash and cash equivalents 0,79 -0,84 0,16
The cash flows related to finance leasing agreements are presented in more
detail.
The comparatives in the cash flow statement have been restated accordingly.
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 1.1.2014 1 009 -933 75 -28 6 392 4 331 10 846
Total comprehensive income 5 1 155 1 160
Transactions with owners
Acquiring of own shares -79 -79
Dividend distribution -449 -449
Transactions with owners, total -79 -449 -528
EQUITY 30.9.2014 1 009 -1 012 75 -23 6 392 5 037 11 477
EQUITY 1.1.2015 1 009 -1 069 75 -23 6 392 5 328 11 712
Total comprehensive income 23 439 462
Transactions with owners
Acquiring of own shares -40 -40
Directed share issue 4 242 4 242
The fees for the board members in the
form of treasury shares 61 61
Dividend distribution -447 -447
Remuneration of the
management -389 -389
Transactions with owners, total -40 3 914 -447 3 427
EQUITY 30.9.2015 1 009 -1 109 75 0 10 306 5 321 15 602
SEGMENT INFORMATION
Turnover by segment:
Me 1-9/15 1-9/14 Change
Grocery and special retail, HoReCa 13,7 15,0 -1,3
Wholesale, Logistics and Services 9,0 9,8 -0,8
Enterprise Asset & Service Business Management 3,6 3,9 -0,3
Descom* 7,5 0,0 +7,5
Total 33,9 28,7 +5,1
Operating result by segment:
Me 1-9/15 1-9/14 Change
Grocery and special retail, HoReCa 0,5 0,7 -0,2
Wholesale, Logistics and Services 0,7 0,2 +0,5
Enterprise Asset & Service Business Management 0,2 0,7 -0,5
Descom* 0,4 0,0 0,4
Total 1,8 1,6 0,2
Operating result, total 1,8 1,6
Unallocated transaction costs -0,8 0
Operating result, total, income statement 1,1 1,6
*Descom is consolidated into the Solteq Group as of 2.7.2015
QUARTERLY KEY INDICATORS (MEUR)
4Q/13 1Q/14 2Q/14 3Q/14
Net turnover 9,82 9,87 10,52 8,33
Operating result 0,43 0,59 0,55 0,44
Result before taxes 0,36 0,51 0,54 0,41
4Q/14 1Q/15 2Q/15 3Q/15
Net turnover 12,22 9,13 9,82 14,90
Operating result 0,91 0,46 0,66 -0,06
Result before taxes 0,86 0,44 0,64 -0,55
TOTAL INVESTMENTS (TEUR)
1-9/2015 1-9/2014 1-12/2014
Continuing operations,
group total 23 297 704 958
LIABILITIES (MEUR) 30.9.2015 30.9.2014 31.12.2014
Business mortages 10,00 10,00 10,00
Other lease liabilities 0,32 0,11 0,15
Lease liabilities
for premises 6,57 2,78 4,90
RELATED PARTY TRANSACTIONS (TEUR) 30.9.2015 30.9.2014 31.12.2014
Renting arrangements 55 62 85
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 on both 30.9.2015 and 30.9.2014. Hence they are not presented
in table form in the bulletin.
MAJOR SHAREHOLDERS 30.9.2015
Shares and votes
number %
1. Sentica Buyout III Ky 4 621 244 25,96 %
2. Keskinäinen Työeläkevakuutusyhtiö Elo 2 000 000 11,24 %
3. Profiz Business Solution Oyj 1 756 180 9,87 %
4. Saadetdin Ali 1 394 553 7,84 %
5. Aalto Seppo 666 882 3,75 %
6. Keskinäinen työeläkevakuutusyhtiö Varma 644 917 3,62 %
7. Roininen Matti 415 000 2,33 %
8. Pirhonen Jalo 405 780 2,28 %
9. Solteq Management Oy 400 000 2,25 %
10. Solteq Management Team Oy 350 000 1,97 %
10 largest shareholders total 12 654 556 71,10 %
Total of nominee-registered 403 052 2,26 %
Others 4 740 451 26,63 %
Total 17 798 059 100,0 %
FINANCIAL PERFORMANCE INDICATORS (IFRS) 1-9/2015 1-9/2014 1-12/2014
Net turnover MEUR 33,9 28,7 40,9
Change in the net turnover 17,9 % 1,5 % 7,4 %
Operating result MEUR 1,1 1,6 2,5
% of turnover 3,1 % 5,5 % 6,1 %
Result before taxes MEUR 0,5 1,5 2,3
% of turnover 1,6 % 5,1 % 5,7 %
Equity ratio, % 27,1 47,4 48,0
Gearing, % 165,4 % 26,7 % 16,3 %
Gross investments MEUR 23,3 0,7 1,0
Return on equity, % 4,3 % 13,9 % 16,8 %
Return on investment, % 4,8 % 13,4 % 15,5 %
Personnel at end of
period 514 278 279
Personnel average
for period 336 280 281
KEY INDICATORS PER SHARE
Earnings / share, e 0,03 0,08 0,13
Earnings / share,
e(diluted) 0,03 0,08 0,13
Equity / share, e 0,92 0,77 0,79
CALCULATION OF FINANCIAL RATIOS
Solvency ratio, in percentage
equity x 100
----------------------------------
balance sheet total - advances received
Gearing
interest bearing liabilities - cash,
bank balances 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
Earnings per share
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
ACQUISITIONS
Descom Group Oy
Description of the acquired company:
On July 2 2015, Solteq acquired the entire capital stock of Descom Group Oy at a
purchase price of approx 11.1 million euros and the capital loans at a purchase
price of approx. 11.9 million euros. As a result of the corporate acquisition,
Descom Group Oy became a subsidiary entirely owned by Solteq Plc.
Descom offers sales, marketing and customer service solutions for companies in
trade, industry and the service sector. Descom Group has about 240 employees in
Finland, Sweden and Poland. Descom Group is consolidated to Solteq Group from
July 2 2015.
The impact of the acquired company on Solteq Group
Aggregate figures for the acquisition 2.7.2015
thousand EUR
Consideration
Paid in cash 6 601
Directed issue 4 536
Total 11 137
Provisional values of the assets and liabilities arising from
the acquisition
Tangible fixed assets 992
Intangible assets, customerships* 3 520
Other intangible assets 164
Deferred tax assets 181
Available-for-sale financial assets 8
Trade and other receivables 7 850
Cash and cash equivalents 1 139
Total assets 13 854
Capital loans -11 950
Trade payables and other liabilities -5 399
Loans -6 949
Provisions -187
Deferred tax liabilities -738
Total liabilities -25 223
The goodwill value from the 22 506
acquisition
Cash flow from the acquisition
Consideration paid in cash and the purchase of capital loans 18 501
Cash and cash equivalents of the acquired company 2.7.2015 1 139
Total cash flow from the acquisition 17 362
*Depreciations of the intangible rights during the reporting
period are 110 thousand euros (customerships)
Goodwill
consists of
assets that
cannot be
separated like
synergy
benefits,
competent
personnel,
market share
and entrance
to new
markets.
Adjustments
of the fair
value to the
other
intangible
assets reflect
the value of
Descom Group's
customerships.
Expenses related to the acquisition
Other expenses 789
Transaction costs of the Bond (allocated to financial 360
expenses during the loan period)
Distributable equity reserve 294
Total expenses related to the acquisition 1 443
Impact on the Solteq Group's number of personnel240
Impact on the Solteq Group's comprehensive income statement 7-9/2015
Revenue** 7 488
Operating profit** 388
**The amount of the revenue and the operating profit from
acquisition date to the end of the reporting period. The
acquired company is consolidated into the Solteq Group as of
2.7.2015. The revenue and the operating profit of the
acquired company as the acquisition had taken place at the
first day of the reporting period are not presented, because
many significant pre-acquisition arrangements were performed
in June 2015. Related to the company acquisition Descom Data
Center –business was sold from Descom Group before the
acquisition was completed.The Group had no business
acquisitions during financial year 2014.
Financial reporting
Solteq Plc estimates to publish the financial statements bulletin from the
financial year 2015 February 19, 2016 at 8.00 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 repe.harmanen@solteq.com
CFO, Antti Kärkkäinen
Tel +358 40 8444 393
E-mail antti.karkkainen@solteq.com
Distribution:
NASDAQ OMX Helsinki
Key media
www.solteq.com
