Solteq Plc - Stock Exchange Bulletin 24.10.2007 at 9 a.m.
- Turnover increased by 16,8% and totalled 19,4 million euros
(16,6 million euros)
- Operating result was 0,8 million euros (-0,5 million euros)
- The company defines the earlier profit estimate (the
operating result will improve significantly from -0,5 million euros)
and estimates the yearly operating profit to reach a level of 1,5
million euros
KEY FIGURES
Turnover by operation:
% 1-09/07 1-09/06 1-12/06
Services 65 61
60
Licences 24 26 26
Hardware 11 13 14
Turnover by segment:
Me 1-09/07 1-09/06 1-12/06
Trade
12,6 11,0 +1,6
Industry and services 6,8 5,6 +1,2
Total 19,4
16,6 +2,8
Operating result by segment:
Me 1-09/07 1-09/06 1-12/06
Trade 0,4 -0,8
+1,2
Industry and services 0,4 0,3 +0,1
Total
0,8 -0,5 +1,3
Managing Director Hannu Ahola:"During the third quarter the turnover growth rate accelerated from
before and it was now approximately 26 per cent. The relative
profitability of the company has improved likewise quarter by
quarter. We believe that the same trend both in the development of
turnover and profitability will continue also during the last quarter
of the year. The systematic work to increase sales projects backlog,
which will appear more and more as realized sales, was the major
factor behind the improvement of key figures. On the other hand, the
integration process to the group in connection with the acquired
companies has proceeded well, that has brought both significant
synergy benefits and cost-efficiency. The measures taken during this
year and the development of business operations give a good starting
point to the next year and back up the long-term objectives that were
issued by the board of directors in the last interim report."
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.
TRADE
Business environment
The rapid development of retail trade both in small and large chains
has had a positive impact to the demand of store management systems
during the review period. All solutions that are related to the
development and rationalisation of customer service are in the
interest of retail trade and thus have had a substantial effect on
the sales of Solteq. There is also more and more often demand for
solutions that improve customer service in the whole sale trade.
The demand is furthermore strengthened by chaining and
internationalization of stores that have an extensive effect on all
store management systems. Tight integration and accuracy of data are
both prerequisites so that the new data can be entered to the system
as a continuous flow and the operations remain effective both
domestic and foreign places of business of the chain.
Also the changed role of the point-of-sale systems has had an
essential influence on the operational environment - the
point-of-sale system is the brains behind the store. The current
status of the store and whole chain, product sales, product
information and loyal customerships are all view by the means of a
centralized system. Even small chains of stores are interested in
loyal customership systems and there is a lot of ongoing analysis in
connection with this issue at the moment.
The strengthened demand is also influenced by the fact that stores
have used old solution generations for a long time and renewal of
point-of-sale system is naturally ahead. According to the analysis f
the market researcher Market-Visio the renewals of point-of-sales
systems are also one of the most influential trends and drivers in
the IT-markets of trade.
The role of payment transaction itself has been emphasized in this
same turning point. People are more and more used to use payment
cards, but compromises can not be done in connection with the
efficiency and safety of the payment transaction. In the trade branch
the companies are still waiting for the definition of policies in
connection with EU's regulations over payment cards, but there has
been enormous development in connection with payment devices.
It is also significant to notice that retail trade and chained
commerce converge all the time. The activities are interlocked and
boundaries crossed, what is perking up the sales.
The business environment of car unit has remained stable. Both
consumers and car dealers have been waiting government's decisions on
car tax reform. Solteq doesn't expect the future tax reforms to have
immediate effect on demand for management systems. Majority of the
IT-investments in car sales are emphasized in the development of
pre-existing systems.
According to the market researcher Market-Visio the most important
drivers for information technology in the car sales, by the year end
2008, are improvement of customer service during the purchase moment
and better utilization of customer information. Both of those above
mentioned drivers are core competence of Solteq's car sales unit. The
unit will continue its development work is these sectors to further
strengthen its supply of solutions.
Business development
The trade unit is approaching its setting of financial objectives.
The system development has been intensive especially during first
half of the year. The sales of advisory services have remained
effective and the sales of management systems are perking up towards
the year end, what is expected to have a positive affect on the
all-year business objectives.
The development in the demand for loyal customership systems and
e-commerce has been especially favorable. One of the most significant
projects during the review period was the establishment of e-commerce
and the start-up of rationalisation of procurement optimisation for
Koivunen Oy, which is a company with diversified activities of
technical trade in the automotive field.
In connection with procurement optimisation there are several other
ongoing projects, thus a couple of years work among with this
solution comes now to fruition. Procurement optimising can be made
more effective by the means of system automation. This has also an
effect to the usage of shelf space, whose efficiency the companies
are interested in.
The upturn in the sales of store management systems has improved also
the sales of Solteq's harmonization solutions. In the trade segment
the product and customer master files are the basement of activities.
Companies want to get the overlapping and faulty data of their
systems, because that kind of data causes extra costs. The data is
uniform, real time and in a more efficient form after the
harmonisation. This improves usability and efficiency.
During the review period Solteq announced the Solteq Store -concept.
The aim of this concept is to increase the understanding of trade
segment companies about stores at whole and to promote the sales of
solutions. Solteq Store is a complex solution that in addition with
store management system includes also for example e-commerce, data
communication solutions for financial administration and technical
maintenance. Customer is able to choose the required features from
the concept for its own business needs, which intensify sales and
communications.
The business operations of car sales unit developed favorable and the
unit achieved its turnover and result objectives during the review
period. Majority from the turnover of car sales unit consisted of
development of customer's pre-existing systems. The modernization of
IT systems of Automaa and ERP- project in connection with Renault's
importing company, that were launched earlier this year, were the
most important single projects during the review period.
INDUSTRY AND SERVICES
Business environment
The amount of export ventures in the Finnish export industry was
still expanding. Strong development of export companies increase the
demand for the Solteq's IT- solutions for industry.
According to the market researcher Market-Visio the Finnish companies
want to improve the utilisation of pre-existing information. This is
shown up in the markets as increasing interest in the development of
Business Intelligence -systems and integration projects, in which
interface links are built between different systems, such as ERP and
CRM systems.
There were no significant changes in the business environment in
connection with maintenance and harmonisation services during the
review period. The economic boom in public economy and the positive
development of industry continued during the review period and this
was shown up as brisk demand for maintenance and harmonisation
services.
Business development
Solteq's industry segment exceeded its setting of turnover and result
objectives. The best development was among the demand for maintenance
and harmonization services, the turnover and result of these services
increased faster than expected. The services in connection with
industry's ERP solutions lag a bit behind expectations due to changes
in the planned schedules in two projects. These projects are
postponed to be realized during the last quarter of 2007 and the
first quarter of 2008.
As per the first half of the year the demand for large and
comprehensive ERP- solutions in the industry segment has been quite
dull. The demand for ERP subsystems, such as customership management
systems and reporting systems and services, was increasing instead.
However compared to the first three quarters in previous year the
backlog of sales projects at the end of the review period in
connection with ERP- systems was clearly larger. Solteq expects that
couple of SAP- and Microsoft projects will be launched during the
last quarter.
IDO's Sanitec unit's SAP ERP- system was the most significant one
among the ERP- projects, and the implementation project in connection
with this continued during the review period.
During the review period there has been strong development among the
business operations in connection with maintenance and harmonization
services. The interest of industrial companies towards the
possibilities of harmonization has increased strongly during the
review period. This is shown up in the unit's sales projects backlog
that is largest in the history.
The recruitments, which have begun during the first half of the year,
continued during the review period. The unit will also hire more
employees along with the increased demand during the rest of the
year.
Among the large single projects, the company has launched
harmonization project with Ruukki (Rautaruukki Oyj) in connection
with customer's title registers. This harmonization of data is
continuance to the delivery of a maintenance system to Ruukki's Raahe
production plant that was started in April.
Solteq's maintenance projects in Russia moved ahead according to
plan. The company has launched a maintenance project and continues
the expansion of maintenance business in the St. Petersburg region
during the rest of the year.
TURNOVER AND RESULT
Turnover increased 16,8% compared to the previous year and totalled
19.382 thousand euros (16.592 thousand euros).
Turnover consists of several individual customerships. At the most,
one client corresponds to a less than five percentages from the
turnover.
The reported income taxes are positive mainly due to intercompany
structuring. The loss due to the arrangement, 3.559 thousand euros,
in 2005 is written of in taxation and as a change in deferred taxes
in income statement during 2006-2007. The reported income taxes for
2007 will be reduced by change in deferred taxes by 77 thousand euros
in the last quarter of 2007.
The operating profit for the review period totalled 758 thousand
euros (-519 thousand euros), result before taxes was 630 thousand
euros (-453 thousand euros) and the profit for the review period 719
thousand euros (0 thousand euros).
BALANCE SHEET AND FINANCING
The total assets amounted to 20.101 thousand euros (17.435 thousand
euros). Liquid assets totalled 108 thousand euros (315 thousand
euros).
The company's interest-bearing liabilities were 6.996 thousand euros
(4.161 thousand euros).
The company's equity ratio was 46,0% (53,3%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 1.702 thousand euros
(4.509 thousand euros). For the most part these gross investments
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 it has been
paid in cash according to the purchase agreement. 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
that relate to cross-utilising customers, knowledgeable personnel and
complementing product knowledge.
Changes in the group structure
During the review period the company has started operations to merge
it's subsidiaries that carry on business operations with their parent
company. The merger of Artekus Oy realised 1.10.2007. The estimated
implementation date of the mergers of Fulmentum Oy and Tampereen
Systeemitiimi Oy is 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
cooperate with global actors such as SAP, Wincor-Nixdorf and
Microsoft and utilise their resources and distribution channels. Own
development efforts are focused on added value products and
developing tailored service concepts.
During the financial period development costs under IFRS have been
capitalised in the amount of 95 thousand euros (331 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
257(242). Average number of personnel during the review period was
243 (243). At the end of the review period the number of personnel
divided as follows: trade 116, industry and services 101 and shared
functions 40.
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 haven't been significant changes in the company's
related party transactions after the issue of financial statements
from year 2006.
SHARES AND SHAREHOLDERS
Solteq Plc's equity on 30.9.2007 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 1,9 million shares (2,7 million shares)
and 3,0 million euros (5,2 million euros). Highest rate during the
review period was 1,84 euros and lowest rate 1,28 euros. Weighted
average rate of the share was 1,54 euros and end rate 1,60 euros. The
market value of the company's shares at the end of the review period
totalled 19,3 million euros (16,7 million euros).
Ownership
At the end of the review period, Solteq had a total of 2.258
shareholders (2.603 shareholders). Solteq's 10 largest shareholders
owned 7.441 thousand shares i.e. they owned 61,8 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 businessoperations. 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 Finnish
Companies 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.
RETURN OF EQUITY AND LOWERING OF THE SHARE PREMIUM FUND
The board of directors has decided in its meeting 7.8.2007 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 was 14 August 2007, the date of record was 16 August
2007 and the payment date was 23 August 2007.
The company has received an announcement that was dated 5.9.2007 from
The Finnish Register of Companies that the transfer of funds,
totaling 2.164.197,45 euros, from the share premium account to
distributable equity fund can be carried out. According to the new
Companies Act no separate entry to the Finnish Trade Register has to
be done in connection with the lowering of share premium fund.
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
So far it was estimated the turnover to increase over 20 % on a
yearly basis and the operating result to improve substantially.
The turnover estimate remains unchanged. The company defines the
earlier profit estimate and estimates the yearly operating profit to
reach a level of 1,5 million euros.
FINANCIAL INFORMATION
GROUP PROFIT AND LOSS ACCOUNT
(TEUR)
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2007 30.9.2006 30.9.2007 30.9.2006 31.12.2006
NET TURNOVER 5 857 4 652 19 382 16 592 23 166
Other operating
income 10 1 65 22 42
Raw materials
and
services -1 426 -1 106 -4 099 -3 708 -5 378
Staff expenses -2 907 -2 610 -10 341 -9 273 -12 831
Depreciation -179 -169 -566 -502 -698
Other operating
expenses -1 052 -1 464 -3 683 -3 650 -4 799
OPERATING
RESULT 303 -696 758 -519 -498
Financial
income and
expenses -58 -33 -128 66 19
PROFIT BEFORE APPROPRIATION
AND TAXES 245 -729 630 -453 -479
Income taxes 29 536 89 453 602
PROFIT/LOSS FOR THE PERIOD
274 -193 719 0 123
Earnings /
share,
e(undiluted) 0,02 -0,02 0,06 0,00 0,01
Earnings /
share,
e(diluted) 0,02 -0,02 0,06 0,00 0,01
GROUP BALANCE
SHEET (TEUR) 30.9.2007 30.9.2006 31.12.2006
ASSETS
NON-CURRENT
ASSETS
Intangible
assets
Intangible
rights 2 091 2 137 2 140
Goodwill 8 086 5 394 6 600
Tangible assets 2 784 3 128 3 019
Investments
Other shares and
similar
rights of
ownership 117 89 81
Other
long-term
debtors 0 140 0
Deferred tax
assets 801 554 663
Total
non-current
assets 13 879 11 442 12 503
CURRENT ASSETS
Short-term
debtors 6 114 5 472 5 619
Investments 0 206 1 579
Cash in hand
and at banks 108 315 646
Total current
assets 6 222 5 993 7 844
TOTAL ASSETS 20 101 17 435 20 347
EQUITY AND
LIABILITIES
CAPITAL AND RESERVES ATTRIBUTABLE TO THE
SHAREHOLDERS
OF THE PARENT
COMPANY
Share
capital 1 001 994 994
Share issue 3 0 0
Share
premium account 4 2 164 2 164
Equity
account 0 5 962 5 962
Unrestricted
equity
fund 7 213 0 298
Retained
earnings 302 172 173
Profit for
the
financial
year 719 0 123
Total equity 9 242 9 292 9 714
LIABILITIES
Non-current
liabilities 163 163 163
Current
liabilities 10 696 7 980 10 470
Total
liabilities 10 859 8 143 10 633
TOTAL EQUITY
AND
LIABILITIES 20 101 17 435 20 347
FINANCIAL
PERFORMANCE
INDICATORS 1-09/2007 1-09/2006 1-12/2006
Net turnover
MEUR 19,38 16,59 23,17
Change in net
turnover 16,81 % 7,01 % 7,41 %
Operating
result MEUR 0,76 -0,52 -0,50
% of turnover 3,91 % -3,13 % -2,15 %
Result before
taxes MEUR 0,63 -0,45 -0,48
% of turnover 3,25 % -2,73 % -2,07 %
Equity ratio, % 45,98 53,29 47,74
Gearing, % 74,53 % 39,18 % 15,78 %
Gross
investments in
non-current
assets MEUR 1,70 4,51 7,68
Return on
equity, % 10,38 % 0,01 % 1,20 %
Return on
investment, % 6,95 % -3,61 % -2,44 %
Personnel at
end of
period 257 242 234
Personnel
average
for period 243 243 240
KEY INDICATORS PER SHARE
Earnings /
share, e 0,06 0,00 0,01
Earnings /
share,
e(diluted) 0,06 0,00 0,01
Equity / share,
e 0,77 0,79 0,81
QUARTERLY KEY INDICATORS (MEUR)
4Q/05 1Q/06 2Q/06 3Q/06
Net turnover 6,06 5,78 6,16 4,65
Operating
result 0,46 0,22 -0,04 -0,70
Result before
taxes 0,46 0,35 -0,07 -0,73
4Q/06 1Q/07 2Q/07 3Q/07
Net turnover 6,58 6,38 7,14 5,86
Operating
result 0,02 0,13 0,33 0,30
Result before
taxes -0,03 0,10 0,29 0,24
CASH FLOW STATEMENT (MEUR)
1-09/2007 1-09/2006 1-12/2006
Cash flow from
business
operations -0,66 -0,14 0,25
Cash flow from
capital
expenditure -3,38 0,07 1,86
Cash flow from financing activities
Income from
issued
shares 0,01 0,02 0,02
Return of
equity(paid) -1,20 -3,54 -3,54
Loan
agreement 3,24 3,67 3,27
Cash flow from financing
activities 2,04 0,15 -0,24
Change in cash
and cash
equivalents -2,00 0,08 1,87
TOTAL INVESTMENTS (MEUR)
1-09/2007 1-09/2006 1-12/2006
Continuing
operations,
group total 1 702 4 509 7 680
LIABILITIES
(MEUR) 30.9.2007 30.9.2006 31.12.2006
Performance
bonds 0,05 0,00 0,05
Lease contracts, machinery&
equipment 0,77 0,95 0,71
Lease
liability,
premises 3,09 3,38 3,42
The Group has no liabilities from derivative instruments.
STATEMENT OF CHANGES IN GROUP EQUITY (TEUR)
A=Share capital
B=Share issue
C=Share premium account
D=Equity account
E=Unrestricted equity fund
F=Retained earnings
G=Total
A B C D E F G
9 10
EQUITY 1.1.2006 908 0 234 500 0 167 809
Granted option rights 5 5
Result for the period 0 0
Total gains and losses 0 0
Subscription issue 2 2
Directed issue 84 84
1
Emission gain 1 930 930
-3 -3
Return of equity 538 538
5 9
EQUITY 30.9.2006 994 0 2 164 962 0 172 292
5 9
EQUITY 1.1.2007 994 0 2 164 962 298 296 714
Granted option rights 5 5
Result for the period 719 719
Total gains and losses 719 719
Subscription issue 1 3 4 8
Transfer between
-2 -5 8
equity accounts 6 164 962 120 0
-1 -1
Return of equity 204 204
7 1 9
EQUITY 30.9.2007 1 001 3 4 0 214 020 242
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 financial statements bulletin from the
financial year 2007 January 30, 2008.
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
