Solteq Plc Stock Exchange Bulletin 13.8.2008 at 9.00am
- Turnover increased during the review period by 14,2 % and during
the second quarter by 19,5 %.
- The operating result for the period remained at the same level as
previous year and totalled 0,4 million euros. During the second
quarter operating result was slightly better compared to the previous
year.
- The company estimates turnover and result to increase as expected
during year 2008.
KEY FIGURES
Turnover by operation:
% 1-06/08 1-06/07 1-12/07
Services 62 65 63
Licences 22 24 24
Hardware 16 11 13
Turnover by segment:
Me 1-06/08 1-06/07 Change
Trade 10,1 7,9 +2,2
Industry and services 5,3 5,6 -0,3
Total 15,4 13,5 +1,9
Operating result by segment:
Me 1-06/08 1-06/07 Change
Trade 0,5 0,1 +0,4
Industry and services -0,1 0,4 -0,5
Total 0,4 0,5 -0,1
Managing Director Hannu Ahola:"During the first half of the year company's turnover has increased
faster as expected. The increase in turnover is influenced by good
existing project backlog and successes both in device and software
sales. The profit development in proportion with the turnover growth
for the first year-half didn't reach the long-term target mainly
because of the structure of the turnover was emphasized by the
device- and partner software sales and the growth of the staff
expenses. This growth couldn't yet be completely transferred to
customer prices. During the second quarter of the year the company
achieved to improve profitability clearly compared to the first
quarter of 2008. After the first half of the year we can more
definitely believe in the fulfillment of the objectives related to
growth of turnover and profitability that are set for the whole year
2008. This means organic growth of over 10 percent and the
improvement of last year's operating profit of nearly 5 percent.
In addition to the profitable domestic activities the growth
potential in Russian markets seems to strengthen. During the last
part of the year we'll increase our efforts in Russia. In the growth
phase of business operations, the adequate availability of proper
employees will became one of the most crucial success factors as well
in the domestic front as in Russia. We have already recruited
exceptionally considerable number of new employees to strengthen our
know-how."
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.
In the beginning of year 2008 Solteq's operations were internally
divided to five separate units. The result is still monitored through
two business segments. The segment Trade consists of Trade and Auto
Trade units. Industry and services segment consists of Industry and
Information Management units. Application Services is company's
internal service unit. OOO Solteq Russia acts as an independent
subsidiary, which serves with the support of the parent company's
organization Solteq's customers operating in Russia.
TRADE
Business environment - Trade
A quite positive economic trend is prevailing in the business branch
trade. Companies in chained commerce are opening new stores and
investigations to build new shopping centers are picking up all
around Finland. The growth of companies in business branch trade
appears directly also to the business operation of companies that
provide IT- solutions and services to companies in trade branch.
In addition to the growth of companies the second driver for IT-
system investments is the improvement of effectiveness, because by
means of improvement in effectiveness companies are preparing
themselves to weaker economic trends. Interest towards self-service
solutions is increasing all the time. To the consumer the most
visible example of improvement of trade's effectiveness is the usage
of payment card in card reader and PIN-code key entry during the
payment situation.
The expansion of Finnish store chains to abroad appear also as growth
of demand for IT- solutions. In abroad companies in trade want to
implement IT- systems whose properties have been developed and tested
on the domestic front. In addition to the demand for IT- systems the
globalization of companies in trade appears also in the demand for
consultancy services.
The continuance of IT- investments in the trade branch is also backed
up by the retailers' need for replace already or soon out-of-date
systems. At the moment there are a plenty of systems in use at stores
that don't support or make possible at all the implementation of new
services such as advanced reporting tools.
Business environment - Auto Trade
The business environment of Auto Trade remained stable during the
review period. In the Auto Trade branch the difficulties of American
car manufacturers, increased fuel costs and increasing interests have
engendered uncertainty to the branch, but this uncertainty has had no
influence in IT- investments of Auto Trade. The increasing
environmental consciousness of customers and consequential changes in
buying and consumption behaviour cause also changes in the business
environment. In Finland the focus of demand for information
technology for Auto Trade branch is concentrated on different
services and added value products, which Solteq and different
interest groups of Auto Trade branch are providing. Solteq implements
terminal interfaces between added value products and existing systems
of Auto Trade.
In the branch Auto Trade there are signs that companies' have
increasing interest towards building up comprehensive IT- strategy.
Companies want to fully utilize their IT- systems and take care that
their systems are harnessed as efficient as possible to serve
management of business operations and to achieve business objectives.
Business development - Trade
The development of business operations in the Trade unit was slightly
better than expected and the unit exceeded its financial objectives.
Compared with the second quarter of 2007 the turnover of business
unit trade increased clearly.
The good economic development during the review period was boosted by
systematic investments in the supply of trade related solutions and
both cooperation and product integration with Solteq's partners, such
as Wincor Nixdorf, Microsoft, IBM and SAP. Along with the own product
development and partners' versatile supply of solutions Solteq
develops solutions for all sized companies in the business branch
trade.
Among the IT- systems the demand for TP.net-store management system,
Solteq Merx and Microsoft Dynamics' NAV - ERP system have been brisk.
During the review period the number of concluded deals related to
Tekso- point-of-sale systems was also above average.
The largest single project during the review period was the renewal
of Tokmanni group of companies' of point-of-sale systems, which was
continued as installations of systems to the stores. Respecta's NAV-
project, that begun in the first quarter of the year, continued also
during the second quarter.
In May Solteq announced that it will carry out an inventory
management renewal project for Anttila in which the Hämeenkylä
distribution centre's picking services for department stores and the
functionalities of dispatch department are renewed by the means of
Solteq's Merx- solution. At the moment the project is ongoing and it
will be finalized during the last quarter of the year.
The focuses of product development were on message communications. In
addition service production standard was developed alongside with a
couple of customers. New operations models for project management
development were created similarly.
Business development - Auto Trade
The business operations in the Auto Trade unit developed satisfactory
during the review period, but the unit remained slightly below its
financial expectations. No major single ERP development projects were
launched in the beginning of the year, on the contrary the focus of
the unit's business consisted of development of customers' existing
systems and service sales.
INDUSTRY AND SERVICES
Solteq's Industry and Services business segment consists of Industry
and Information Management business units. The expertise in
enterprise resource planning (ERP) and maintenance systems has been
centralized in the Industry business segment. Information Management,
that is a new business unit and that was launched in the beginning
of 2008, provides harmonization projects for IT- systems and master
data maintenance services as well as data collection services. These
projects and services are provided both domestically and globally
along with international customers. The objective for segregation of
Information Management unit is to ensure that harmonization services
will be effectively available to all customers of Solteq.
Business environment - Industry
In Finland the propensity to invest in enterprise resource planning
(ERP) -systems and maintenance IT- systems among industrial companies
remained stable during the review period and there were no signs of
downtrend related to investments. The customers in forest industry,
whose decision-making was stressed by difficulties in the line of
business, made exception. As a whole the activity in maintenance IT-
systems has remained unchanged, and in addition the activity among
ERP- systems has increased both in SAP and Microsoft Dynamics NAV-
systems.
Russia is the growing market area for Solteq's Industry unit. In
Russia the investments in production plants of foreign companies are
still in clear upswing. The companies that are investing in Russia
want to build the IT- systems of their new production plants so that
they match with existing IT- systems in other units and so that the
new systems integrate smoothly to existing ones. In Russia there is
constant and increasing demand for maintenance systems.
Business environment - Information Management
Solteq's Information Management business unit offers harmonization of
information system master data (product, customer and supplier
information). The objective for harmonization is to improve quality
of the data that is recorded to the IT- systems. Companies'
investment in quality of data is internationally an upward trend, in
which especially large companies pay more and more attention.
In Finland the demand for harmonization services remained brisk
during the second quarter of the year. Earlier the demand was
originated by the needs of industrial companies, but now also the
trade branch is going to activate. Especially the companies among
wholesale are interested in the benefits of harmonization.
Industry is still the forerunner branch related to harmonization
projects. Industrial companies continue their efforts to gain cost
savings by harmonizing the data of their different ERP- systems and
by removing overlap data from those systems. Solteq's Information
Management unit accompanies SAP and other enterprise resource
planning projects in earlier phase than before. By the means of
harmonization the data from ERP- system is accurately transferred to
new a system as real time as possible.
Business development - Industry
During the review period the financial success of business unit
Industry exceeded significantly its objectives.
During year 2008 the Industry unit's growth is foreseen to remain
strongest among maintenance, in which both the number of customers
and the services needed are going to increase. Solteq's business
activities in Russia bring possibilities for additional growth. The
sales project backlog of Russian unit is strong and during the second
half of year 2008 efforts will be made to start new projects in
Russia, especially in the St. Petersburg area.
During the review period investments in the development work of
Arttu-, Artturi-, and PowerMaint- maintenance systems were continued.
Earlier the industrial companies took care of the maintenance by
themselves, but in the future more and more companies are going to
outsource this function. It is Solteq's objective to bring new
functionalities, which correspond to the needs of maintenance
outsourcers and network -like operating companies, to its maintenance
systems.
Ruukki's maintenance project was the most important one among single
projects. Ruukki's project continued according to plan during the
review period. The maintenance project of Pohjolan Voima was
finalized and moved on follow-up projects. After the renewal of
maintenance systems of seven power plants new projects were started
related to system renewals of Pori's and Laanila's plants.
During the review period the SAP version upgrade that was carried out
for Medix Biochemicals and implementation of SAP in Componenta's unit
in Pori have given work among enterprise resource planning systems.
Version upgrades are also on the go for several other customers.
During the review period company invested also in recruitments and
along with those recruitments the Solteq's ability to deal with more
and more projects simultaneously is going to improve.
Business development - Information Management
Solteq's Information Management unit increased its sales by 30 per
cent compared to the first quarter of 2008. The increase in sales is
boosted by one large and several smaller harmonization projects.
Ongoing projects run to time and the projects are finalized, as
planned, in the third quarter of year.
TURNOVER AND RESULT
Turnover increased by 14,2% compared to the previous year and
totalled
15.439 thousand euros (13.525 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 420 thousand
euros (455 thousand euros), result before taxes was 262 thousand
euros (385 thousand euros) and the profit for the review period 181
thousand euros (455 thousand euros).
BALANCE SHEET AND FINANCING
The total assets amounted to 22.072 thousand euros (20.592 thousand
euros). Liquid assets totalled 258 thousand euros (277 thousand
euros).
The company's interest-bearing liabilities were 6.360 thousand euros
(5.330 thousand euros)
The company's equity ratio was 41,5% (49,4%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 565 thousand euros
(1.585 thousand euros).
The additional price 200 thousand euros, due to the acquisition of
Fulmentum Oy, is included in the gross 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 and Wincor-Nixdorf 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 development costs under IFRS have been
capitalized in the amount of 273 thousand euros (10 thousand euros).
Mainly the costs relating to research and development are presented
due to their nature as yearly costs in profit and loss account.
Capitalized costs relate to two product development projects. 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
271 (251). Average number of personnel during the review period was
262 (241). At the end of the review period the number of personnel
divided as follows: trade 126, industry and services 116 and shared
functions 29.
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
Solteq group of companies. There haven't been significant changes in
the company's related party transactions after the issue of financial
statements from year 2007.
SHARES AND SHAREHOLDERS
Solteq Plc's equity on 30.6.2008 was 1.009.154,17 euros which was
represented by 12.148.429 shares. The shares have no nominal value.
In the end of the review period the amount of treasury shares in
Solteq Plc's possession was 9.000 shares. The amount of treasury
shares represented 0,07 % from total amount of shares and votes in
the end of the review period. The equivalent value of acquired shares
was 748 euros.
Exchange and rate
During the review period, the exchange of Solteq's shares in the
Helsinki Stock Exchange was 0,3 million shares (1,4 million shares)
and 0,5 million euros (2,0 million euros). Highest rate during the
review period was 1,77 euros and lowest rate 1,28 euros. Weighted
average rate of the share was 1,54 euros and end rate 1,42 euros. The
market value of the company's shares at the end of the review period
totalled 17,3 million euros (20,5 million euros).
Ownership
At the end of the review period, Solteq had a total of 2.061
shareholders (2.314 shareholders). Solteq's 10 largest shareholders
owned 7.883 thousand shares i.e. they owned 64,9 per cent of the
company's shares and votes. Solteq Plc's members of the board owned a
total of 4.867 thousand shares which equals 40,1 per cent of the
company's shares and votes.
ANNUAL GENERAL MEETING
Solteq Plc's annual general meeting on 28.3.2008 adopted the
financial statements for 2007 and the members of the board and the
managing director were discharged from liability for the financial
year 2007.
The annual general meeting decided in accordance with the board's
proposal a dividend of 0,06 euros per share. The balancing date of
dividend was 2.4.2008 and payment date 9.4.2008.
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.
BOARD OF DIRECTORS AND AUDITORS
Six 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. Markku Pietilä was elected as new
member of the board of directors. The board elected Ali Saadetdin to
act as the chairman of the board.
KPMG Oy Ab, Authorized Public Accountants, were re-elected as
Solteq's auditors. Frans Kärki, APA, acts as the lead partner.
EVENTS AFTER THE REVIEW PERIOD
Mr Seppo Aalto, the member of the board of directors, is for the
present unable to act in the board. He is on a sick leave recovering
from having a fit.
After the review period Solteq Plc has started acquiring of the
company's own shares in accordance with company's stock exchange
bulletin 21.5.2008.
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 organization or
committee.
PROSPECTS
In the interim review 8.8.2007 Solteq Plc set a long-term objective
for years 2008-2010 that is to achieve 10 % yearly organic growth of
turnover. Additional growth is sought by allocated acquisitions.
Company's objective for yearly operating profit is significant
improvement compared to previous years as the objective is 10 % of
turnover. There are still realistic conditions for achieving these
objectives. The operating profit for 2008 is expected to improve even
though it is expected not yet to reach the above-mentioned
target-level.
FINANCIAL INFORMATION
GROUP PROFIT AND LOSS ACCOUNT
(TEUR)
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6.2008 30.6.2007 30.6.2008 30.6.2007 31.12.2007
NET TURNOVER 8 544 7 147 15 439 13 525 27 926
Other operating
income 35 20 39 55 69
Raw materials and
services -2 558 -1 329 -4 015 -2 673 -6 398
Staff expenses -4 095 -3 985 -8 180 -7 434 -14 356
Depreciation -184 -206 -359 -387 -742
Other operating
expenses -1 372 -1 319 -2 504 -2 631 -5 195
OPERATING RESULT 370 328 420 455 1 304
Financial income
and
expenses -84 -45 -158 -70 -214
PROFIT BEFORE APPROPRIATION
AND TAXES 286 283 262 385 1 090
Income taxes -95 8 -81 60 28
PROFIT FOR THE PERIOD
191 291 181 445 1 118
Earnings / share,
e(undiluted) 0,02 0,03 0,01 0,04 0,09
Earnings / share,
e(diluted) 0,02 0,03 0,01 0,04 0,09
GROUP BALANCE SHEET (TEUR) 30.6.2008 30.6.2007 31.12.2007
ASSETS
NON-CURRENT ASSETS
Intangible assets
Intangible rights 2 233 2 055 2 069
Goodwill 8 286 8 086 8 086
Tangible assets 2 742 2 799 2 743
Investments
Other shares and similar
rights of ownership 99 122 117
Deferred tax
assets 563 836 661
Total non-current
assets 13 923 13 898 13 676
CURRENT ASSETS
Short-term debtors 7 891 6 417 8 025
Cash in hand and at banks 258 277 345
Total current
assets 8 149 6 694 8 370
TOTAL ASSETS 22 072 20 592 22 046
EQUITY AND LIABILITIES
CAPITAL AND RESERVES ATTRIBUTABLE TO THE SHAREHOLDERS
OF THE PARENT COMPANY
Share capital 1 009 1 001 1 002
Share issue 0 0 64
Company's own shares -14 0 0
Share premium account 75 2 168 18
Unrestricted equity
fund 7 213 6 254 7 213
Retained earnings 693 300 304
Profit for the
financial period 181 445 1 118
Total equity 9 157 10 168 9 719
LIABILITIES
Non-current liabilities 2 163 163 163
Current liabilities 10 752 10 261 12 164
Total liabilities 12 915 10 424 12 327
TOTAL EQUITY AND
LIABILITIES 22 072 20 592 22 046
FINANCIAL PERFORMANCE
INDICATORS 1-06/08 1-06/07 1-12/07
Net turnover MEUR 15,44 13,52 27,93
Change in net turnover 14,16 % 13,27 % 20,55 %
Operating result MEUR 0,42 0,46 1,30
% of turnover 2,72 % 3,37 % 4,67 %
Result before taxes MEUR 0,26 0,39 1,09
% of turnover 1,70 % 2,85 % 3,90 %
Equity ratio, % 41,49 49,38 44,08
Gearing, % 66,63 % 49,70 % 69,01 %
Gross investments in
non-current assets MEUR 0,56 1,59 1,83
Return on equity, % 3,78 % 9,14 % 11,50 %
Return on investment, % 5,49 % 6,62 % 8,72 %
Personnel at end of
period 271 251 259
Personnel average
for period 262 241 252
KEY INDICATORS PER SHARE
Earnings / share, e 0,01 0,04 0,09
Earnings / share,
e(diluted) 0,01 0,04 0,09
Equity / share, e 0,75 0,84 0,81
QUARTERLY KEY INDICATORS (MEUR)
3Q/06 4Q/06 1Q/07 2Q/07
Net turnover 4,65 6,58 6,38 7,14
Operating result -0,70 0,02 0,13 0,33
Result before taxes -0,73 -0,03 0,10 0,29
3Q/07 4Q/07 1Q/08 2Q/08
Net turnover 5,86 8,55 6,89 8,55
Operating result 0,30 0,54 0,05 0,37
Result before taxes 0,24 0,45 -0,02 0,28
CASH FLOW STATEMENT (MEUR)
1-06/2008 1-06/2007 1-12/2007
Cash flow from business
operations 1,89 -0,64 -0,46
Cash flow from capital
expenditure -0,54 -2,76 -3,47
Cash flow from financing activities
Income from issued
shares 0,00 0,01 0,08
Dividend distribution -0,73 0,00 0,00
Return of equity(paid) 0,00 0,00 -1,20
Own shares -0,01 0,00 0,00
Loan agreement -0,69 1,57 3,29
Cash flow from financing
activities -1,43 1,58 2,17
Change in cash and cash
equivalents -0,09 -1,82 -1,76
TOTAL INVESTMENTS (MEUR)
1-06/2008 1-06/2007 1-12/2007
Continuing operations,
group total 565 1 585 1 833
LIABILITIES (MEUR) 30.6.2008 30.6.2007 31.12.2007
Company quorantee for
credit limits 1,18 1,18 1,18
Perfomance bonds 0,05 0,05 0,05
Lease contracts, machinery &
equipment 0,62 0,74 0,56
Lease liability,
premises 2,71 3,15 2,93
The Group has no liabilities from derivative instruments.
MAJOR SHAREHOLDERS JUNE 30, 2008
Shares and votes
Number %
1. Saadetdin Ali 3 159 312 26,0 %
2. Aalto Seppo 1 662 206 13,7 %
3. Profiz Business Solution Oyj 1 292 974 10,6 %
4. TP-Yhtiöt Oy 513 380 4,2 %
5. Roininen Matti 326 740 2,7 %
6. Onninen-Sijoitus Oy 322 071 2,7 %
7. Hakamäki Jorma 228 430 1,9 %
8. Saadetdin Katiye 156 600 1,3 %
9. Kiiveri Jouko 118 280 1,0 %
10. Aukia Timo 103 230 0,8 %
10 largest shareholders total 7 883 223 64,9 %
Total of nominee-registered 84 196 0,7 %
Others 4 181 010 34,4 %
Total 12 148 429 100,0 %
STATEMENT OF CHANGES IN GROUP EQUITY (TEUR)
A=Share capital
B=Share issue
C=Company's own shares
D=Share premium account
E=Unrestricted equity fund
F=Equity account
G=Retained earnings
H=Total
A B C D E F G H
EQUITY 1.1.2007 994 0 0 2 164 298 5 962 296 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 betweeen
equity accounts 6 5 956 -5 962 0
EQUITY 30.6.2007 1 001 0 0 2 168 6 254 0 745 10 168
EQUITY 1.1.2008 1 002 64 0 18 7 213 0 1 422 9 719
Result for the period 181 181
Total gains and losses 181 181
Subscription issue 7 -64 57 0
Acquiring of own shares -14 -14
dividend distribution -728 -728
EQUITY 30.6.2008 1 009 0 -14 75 7 213 0 874 9 157
Taxes corresponding to the result have been
presented as taxes for the financial year.
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
This financial statements bulletin has been prepared in accordance
with IAS 34 -standard and the same accounting policies as in the
annual financial statements 2007.
All forecasts and estimates presented in the financial interim review
are based on the current views of the management on the economic
environment and outlook. Results can differ from those implied as a
result of, among other factors, changes in economic market and
competitive conditions, changes in the regulatory environment and
other government actions.
The interim review is unaudited.
SOLTEQ'S FINANCIAL INFORMATION IN 2008
Solteq Plc's financial information bulletins in 2008 have been
scheduled as follows:
- Interim report 1-9/2008 Wednesday 15.10.2008
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
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