2009-08-12 08:00:00 CEST
2009-08-12 08:01:48 CEST
REGULATED INFORMATION
Solteq Oyj - Interim report (Q1 and Q3)
SOLTEQ PLC'S INTERIM REPORT 1.1.-30.6.2009
Solteq Plc Stock Exchange Bulletin 12.8.2009 at 9.00am
- Turnover for the review period decreased by 4,8 % and totalled 14,7
million euros (15,4 million euros)
- Operating result for the period decreased and totalled 225 thousand
euros (420 thousand euros)
- Operating result improved during the second quarter and totalled
415 thousand euros (370 thousand euros)
- Termination benefits amounting to 440 thousand euros affected the
operating result for the first quarter
- Earnings per share was 0,01 euros (0,01 euros)
KEY FIGURES
Turnover by operation:
% 1-6/09 1-6/08 1-12/08
Softwareservices 63 62 61
Licences 27 22 26
Hardware 10 16 13
Turnover by segment:
Me 1-6/09 1-6/08 Change
Trade 9,7 10,1 -0,4
Industry and services 5,0 5,3 -0,3
Total 14,7 15,4 -0,7
Operating result by segment:
Me 1-6/09 1-6/08 Change
Trade -0,2 0,5 -0,7
Industry and services 0,4 -0,1 +0,5
Total 0,2 0,4 -0,2
Managing Director Hannu Ahola:"Our company's result for the second quarter improved clearly
compared to the first quarter and was slightly better than a year
before. Saving and efficiency measures made in the beginning of the
year have started to have an effect and, on the other hand, turnover
has come out as expected. The order backlog strengthened especially
during the last part of the review period clearly, which anticipates
improved operating result and meeting the profitability targets set
for the whole year.
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
manage their business even better than before and to improve their
profitability.
Solteq's operations are internally divided into five separate units.
The result is monitored through two operating segments. The segment
Trade consists of Trade and Car Trade units. Industry and services
segment consists of Industry and Information Management units.
Application services is company's internal service unit. OOO Solteq
Russia operates as an independent subsidiary which with the
assistance of the parent company's organization serves customers
operating in Russia. The number data of OOO Solteq Russia is reported
according to the operating segment of the end customer.
The company's turnover decreased during the second quarter by 12,3
percent while during the first quarter it still increased by 4,6
percent. This decrease had been anticipated and was mainly due to
decrease in hardware sales compared to the year before when the
hardware sales were at an exceptionally high level. No changes are
expected to the turnover trend announced earlier, i.e. turnover is
expected to decrease by 0-5 percent.
The company's operating result for the review period decreased and
totalled 225 thousand euros (420 thousand euros) but improved during
the second quarter totalling 415 thousand euros (370 thousand euros)
which is 5,5 percent of the turnover. The improved result clearly
reflects the effect of different efficiency and cost saving measures
made in the beginning of the year as well as the anticipated turnover
trend. As the operating result for the review period is burdened by
the one-off termination benefit costs in the amount of 440 thousand
euros, the comparable operative business is more profitable during
this review period than a year before.
The order backlog had a favourable trend especially towards the end
of the review period and several significant new orders came in. Due
to the overall economic situation, there are still uncertainties
regarding the business development for the rest of the year but these
are clearly smaller than the ones in the beginning of the year.
TRADE
Business environment - Trade
Solteq's Trade unit has had no significant changes compared to the
first quarter. Customers' decision making processes take longer than
usual and starting projects is considered carefully. There are
however several long-term investments and system development projects
pending which wholesale and chain stores use in aiming to be prepared
for the uptrend to be followed after the recession.
There is demand especially for solutions relating to improve
efficiency of operations and optimisation. Wholesale and chain stores
seek to make their delivery chain more efficient in e.g. procurement,
inventory management and transportation monitoring. In addition, a
little over one-year transition period to SEPA and PCI standards
challenges both speciality shops, wholesale and chain stores to be
prepared for the changes in cash register and payment systems. Just
like the first quarter, recession had most significant impact on
individual stores which concentrated mainly on updating versions of
the old systems.
Trade unit customers pay special attention to the investment's
expected yield and repayment time. Projects with most efficiency and
cost gains are transferred to the top of the list. Larger projects
are often divided into several phases and smaller modules.
Reliability of the supplier partner in this market situation is
emphasized even more and the partner being a domestic operator is
being valued more than before. These requirements give Solteq strong
ground to increase its clientele.
Business environment - Car Trade
The economic situation prospects of Car Trade were weak as in the
beginning of the year and the number of first registrations of cars
continued to diminish. During January - June approximately 52 000 new
cars were registered which is 41 percent less than during the same
period in 2008. This radical decrease has a direct effect on car
dealers' IT investments. Solteq anticipates that extensive IT system
renewals will only start after the economic prospects become clear.
The most significant change in the business environment was the
renewal of car tax. The law which came into force on 1.4.2009 changed
in such a way that value added tax on car tax was abandoned and
respectively the car tax was increased. The renewal caused need for
changes in car dealers' IT systems and their interfaces.
Business development - Trade
Despite the recession, the business operations of the Trade unit have
developed almost in accordance with the plans. During the review
period Solteq focused especially on developing quality and project
management systems as well as competence certifications and training.
These efforts for their part have helped Solteq to strengthen its
position in the markets.
During the second quarter, the demand of customers in wholesale and
chain stores focused especially on comprehensive solutions to improve
delivery chain efficiency. In addition both speciality stores as well
as chain and wholesale stores develop their systems to fulfil the
requirements of SEPA and PCI standards. Trade customers require more
information on the requirements set by these standards which
increases the demand for consultancy services. Solteq made an
information campaign during the review period which introduced the
effects of SEPA and PCI standards to the customers.
In store systems the project backlog has remained stable. New
investments are made in new stores and old systems are renewed when
required.
One of the most significant new contracts is the renewal of the ERP
system for Tuko Logistics, which will improve the overall
controllability and manageability of the customer's work. The
contract was signed in June 2009 and the project will begin during
the third quarter of the year.
Business development - Car Trade
During the review period, the demand for Car Trade unit's services
concentrated on development of customers' existing systems.
The emphasis of system development focused on changes required by the
car tax legislation. During the second quarter, invoicing and
financial management features were included in the systems.
In this challenging market situation Solteq has made an effort in
active customer service and developing own product range in order to
be even more competitive when the investments are started again.
INDUSTRY
Business environment - Industry
The business environment of Solteq's Industry unit remained uncertain
as in the beginning of the year. The order backlogs of large and
middle-sized industrial companies have decreased and companies have
continued their cost saving measures. Cost savings and precaution are
evident also in the companies that are planning on IT investments,
which has pushed their actual investments or decision-making on them
further.
Cautiousness has clearly spread from large companies to the
middle-sized companies during the review period. This could be seen
especially in export companies which have discontinued or postponed
their investment plans. Although the cautiousness in the operating
environment has increased, there is still demand for solutions which
can improve efficiency or bring cost savings in a short period of
time.
Demand for systems in maintenance and material handling was weak in
large companies. Also middle-sized companies' willingness to invest
in maintenance systems decreased compared to the first quarter of the
year.
Service operations for ERP investment projects developed as expected.
Regarding new sales, the focus is on middle-sized companies which
seek cost savings through the renewal of their ERP.
Business environment - Information Management
Solteq's Information Management business unit offers harmonization
and management of master data to its customers. The objective for
harmonization is to improve quality of the data that is recorded in
the IT systems. Managing by information in integrated systems is
enabled for customers by the means of master data management.
During the review period, the customers' decision making processes
slowed down slightly, although also new projects were started.
Despite the prolonged decision-making the companies are still
interested in harmonization solutions which improve the efficiency of
present systems and gain cost savings. Projects seek solutions to
carefully defined individual needs.
The customers of Information Management unit consisted mainly of
industrial companies. Solteq foresees that public sector customers
are a growing customer group in the future. Solteq believes that
companies will continue their investments in information management
also during the economically tight period because clear cost savings
with a short payback period are achieved by the means of
harmonization.
Business development - Industry
Sales of ERP systems in Solteq's Industry unit were in accordance
with the budget. Demand for maintenance systems continued to be weak
but certain signs of recovering demand can be seen towards the end of
the year.
Of the individual projects, the most significant was the SAP renewal
of Helsinki University which continued as planned. SAP implementation
in Componenta Plc Group's Dutch office was successful. New Microsoft
Dynamics NAV deliveries were made for Nekos Oy among other customers.
Of maintenance system customers, a new solution for field maintenance
operations was delivered to STX Finland.
Solteq's subsidiary acting in St Petersburg, OOO Solteq Russia, is
launching a new maintenance project during the third quarter. Also at
the same time co-operation with two new partner companies is
beginning. Solteq is also preparing to allocate more human resources
to the Russian operations.
In product development, efforts continued to develop a software
solution for operative property management together with Microsoft.
First pilot projects were successfully executed during the review
period and at least one of these is leading to a further project for
the third quarter. Also a first product version of this software is
finalised during the third quarter in accordance with the schedule.
Business development - Information Management
Information Management unit started a harmonization project of
Outokumpu Tubular's sales items in mid-June which will continue until
the end of September. Two other projects have been agreed to be
started in the third quarter of the year and thus the demand can be
seen to recover in this business area as well.
TURNOVER AND RESULT
Turnover decreased by 4,8% compared to the previous year and totalled
14.704 thousand euros (previous financial year 15.439 thousand
euros).
Turnover consists of several individual customerships. At the most,
one client corresponds to a less than five percentages of the
turnover.
The operating result for the review period was 225 thousand euros
(420 thousand euros), result before taxes was 157 thousand euros (262
thousand euros) and profit for the period 95 thousand euros (181
thousand euros).
Operating result is burdened by termination benefits in the amount of
440 thousand euros.
BALANCE SHEET AND FINANCING
The total assets amounted to 22.218 thousand euros (22.072 thousand
euros). Liquid assets totalled 319 thousand euros (258 thousand
euros).
The company's interest-bearing liabilities were 6.737 thousand euros
(6.360 thousand euros).
The company's equity ratio was 41,1 percent (41,5%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 485 thousand euros
(565 thousand euros).
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 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 capitalized under IFRS
totalled 285 thousand euros (273 thousand euros). Most costs relating
to development are annually expensed due to their nature. Capitalised
costs relate to two development projects. Amortisation according to
plan will begin when the projects have been commercially implemented.
PERSONNEL
The number of permanent employees at the end of the review period was
245 (271). Average number of personnel during the review period was
253 (262). At the end of the review period the number of personnel
could be divided as follows: Trade 122, Industry and Services 96 and
Shared Functions 27.
RELATED PARTY TRANSACTIONS
Solteq's related parties include Solteq's board of directors,
managing director and the Group's management team. There have been no
significant changes in the company's related party transactions since
the financial statements 2008.
SHARES, SHAREHOLDERS AND TREASURY SHARES
Solteq Plc's equity on 30.6.2009 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 258.436 shares. The amount of treasury
shares represented 2,13 % from the total amount of shares and votes
in the end of the review period. The equivalent value of acquired
shares was 21.468 euros.
Exchange and rate
During the review period, the exchange of Solteq's shares in the
Helsinki Stock Exchange was 0,2 million shares (0,3 million shares)
and 0,3 million euros (0,5 million euros). Highest rate during the
review period was 1,39 euros and lowest rate 1,02 euros. Weighted
average rate of the share was 1,21 euros and end rate 1,25 euros. The
market value of the company's shares at the end of the review period
totalled 15,2 million euros (17,3 million euros).
Ownership
At the end of the review period, Solteq had a total of 1.984
shareholders (2.061 shareholders). Solteq's 10 largest shareholders
owned 8.190 thousand shares i.e. they owned 67,4 per cent of the
company's shares and votes. Solteq Plc's members of the board owned a
total of 5.189 thousand shares which equals 42,7 per cent of the
company's shares and votes.
ANNUAL GENERAL MEETING
Solteq Plc's annual general meeting on 27.3.2009 adopted the
financial statements for 2008 and the members of the board and the
managing director were discharged from liability for the financial
year 2008.
The annual general meeting decided in accordance with the board's
proposal to distribute a dividend in the amount of 0,04 euros per
share. The reconciliation date for the dividend was 1.4.2009 and
payment date 8.4.2009.
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. The authorization is valid until 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, Jukka Sonninen and Markku
Pietilä will continue as members of the board. 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
After the review period no events have occurred that require
reporting.
RISKS AND UNCERTAINITIES
The key uncertainties and risks in short term are related to the
timing and pricing of the business deals that are the basis for the
turnover, 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
work. The company has not organized a separate internal audit
organization or committee.
PROSPECTS
In the stock exchange bulletin that was announced 16.2.2009 the Board
of Directors of Solteq Plc has estimated that the turnover for 2009
is estimated to decrease by 0-5 percent and that the estimated
operating result is 5-7 percent of the turnover. There are no reasons
to make changes to this estimate.
Financial Reporting
This interim report has been prepared in accordance with the
recognition and measurement principles of IFRS-standards, but not all
of the requirements of IAS 34 have been applied in the preparation.
Solteq Group has applied the following new and revised standards
starting from 1.1.2009: IFRS 8 - Operating Segments and IAS 1 -
Presentation of Financial Statements. The change of IFRS 8 has an
effect on the segment information in notes and the change of IAS 1
standard has an effect on the presentation of profit and loss
statement. In all other respects the same accounting policies as in
the annual financial statements 2008 have been applied.
The financial result is reported through two operating segments. The
Trade segment includes both the Trade business unit and the Car Trade
business unit. The Industry and Information Management units belong
to the Industry and Services segment. The Application Services unit
forms a part of both operating segments. The segments have been
defined based on the operations of company's customer groups. The
most essential product and service types of Solteq group of companies
are software services, licenses and hardware sales. Implementation of
IFRS 8 has not changed the operating segments reported by Solteq
Group because the segment information that was reported already
earlier was based on the management's internal reporting and that was
prepared in accordance with the same recognition and measurement
principles as external reporting.
All forecasts and estimates presented in the interim report 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 economy, markets and competitive
conditions, changes in the regulatory environment and other
government actions.
The interim report is unaudited.
FINANCIAL INFORMATION
GROUP PROFIT AND LOSS ACCOUNT
(TEUR)
1.4.- 1.4.- 1.1.- 1.1.- 1.1.-
30.6.2009 30.6.2008 30.6.2009 30.6.2008 31.12.2008
NET TURNOVER 7 495 8 544 14 704 15 439 30 383
Other operating
income 77 35 78 39 44
Raw materials and
services -2 085 -2 558 -4 003 -4 015 -7 744
Staff expenses -3 781 -4 095 -8 011 -8 180 -15 583
Depreciation -177 -184 -350 -359 -718
Other operating
expenses -1 114 -1 372 -2 193 -2 504 -4 922
OPERATING RESULT 415 370 225 420 1 460
Financial income
and
expenses -18 -84 -68 -158 -324
PROFIT BEFORE APPROPRIATION
AND TAXES 397 286 157 262 1 136
Income taxes -113 -95 -62 -81 -269
PROFIT FOR THE PERIOD
284 191 95 181 867
Other
comprehensive
income 0 0 0 0 0
TOTAL COMPREHENSIVE INCOME
284 191 95 181 867
Total profit for the period and comprehensive income attributable to
Owners of the
parent 284 191 95 181 867
Earnings / share,
e(undiluted) 0,03 0,02 0,01 0,01 0,07
Earnings / share,
e(diluted) 0,03 0,02 0,01 0,01 0,07
GROUP BALANCE SHEET (TEUR) 30.6.2009 30.6.2008 31.12.2008
ASSETS
NON-CURRENT ASSETS
Intangible assets
Intangible rights 2 751 2 233 2 417
Goodwill 8 286 8 286 8 286
Tangible assets 2 676 2 742 2 707
Investments
Other shares and similar
rights of ownership 93 99 93
Deferred tax
assets 207 563 268
Total non-current
assets 14 013 13 923 13 771
CURRENT ASSETS
Short-term debtors 7 886 7 891 7 567
Cash in hand and at banks 319 258 695
Total current
assets 8 205 8 149 8 262
TOTAL ASSETS 22 218 22 072 22 033
EQUITY AND LIABILITIES
CAPITAL AND RESERVES ATTRIBUTABLE TO THE SHAREHOLDERS
OF THE PARENT COMPANY
Share capital 1 009 1 009 1 009
Company's own shares -337 -14 -255
Share premium account 75 75 75
Unrestricted equity
fund 7 214 7 213 7 213
Retained earnings 1 084 693 693
Profit for the
financial period 95 181 867
Total equity 9 140 9 157 9 602
LIABILITIES
Non-current liabilities 3 163 2 163 3 663
Current liabilities 9 915 10 752 8 768
Total liabilities 13 078 12 915 12 431
TOTAL EQUITY AND
LIABILITIES 22 218 22 072 22 033
FINANCIAL PERFORMANCE
INDICATORS (IFRS) 1-6/2009 1-6/2008 1-12/2008
Net turnover MEUR 14,7 15,4 30,4
Change in net turnover -4,8 % 14,2 % 8,8 %
Operating result MEUR 0,2 0,4 1,5
% of turnover 1,5 % 2,7 % 4,8 %
Result before taxes MEUR 0,2 0,3 1,1
% of turnover 1,1 % 1,7 % 3,7 %
Equity ratio, % 41,1 41,5 43,6
Gearing, % 70,2 % 66,6 % 58,5 %
Gross investments in
non-current assets MEUR 0,5 0,6 0,9
Return on equity, % 2,1 % 3,8 % 9,0 %
Return on investment, % 3,1 % 5,5 % 9,0 %
Personnel at end of
period 245 271 268
Personnel average
for period 253 262 266
KEY INDICATORS PER SHARE
Earnings / share, e 0,01 0,01 0,07
Earnings / share,
e(diluted) 0,01 0,01 0,07
Equity / share, e 0,77 0,75 0,80
QUARTERLY KEY INDICATORS (MEUR)
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
3Q/08 4Q/08 1Q/09 2Q/09
Net turnover 6,29 8,65 7,21 7,49
Operating result 0,38 0,66 -0,19 0,41
Result before taxes 0,30 0,58 -0,24 0,40
CASH FLOW STATEMENT (MEUR)
1-6/2009 1-6/2008 1-12/2008
Cash flow from business
operations 0,25 1,89 2,94
Cash flow from capital
expenditure -0,49 -0,54 -0,88
Cash flow from financing activities
Dividend distribution -0,48 -0,73 -0,73
Own shares -0,08 -0,01 -0,26
Loan agreement 0,42 -0,69 -0,72
Cash flow from financing
activities -0,14 -1,43 -1,71
Change in cash and cash
equivalents -0,38 -0,09 0,35
TOTAL INVESTMENTS (TEUR)
1-6/2009 1-6/2008 1-12/2008
Continuing operations,
group total 485 565 920
LIABILITIES (MEUR) 30.6.2009 30.6.2008 31.12.2008
Company quorantee for
credit limits 1,18 1,18 1,18
Perfomance bonds 0,02 0,05 0,05
Lease contracts, machinery &
equipment 0,60 0,62 0,59
Lease liability,
premises 2,31 2,71 2,48
The Group has no liabilities from derivative instruments.
MAJOR SHAREHOLDERS 30.6.2009
Shares and votes
Number %
1. Saadetdin Ali 3 481 383 28,7 %
2. Aalto Seppo 1 662 206 13,7 %
3. Profiz Business Solution Oyj 1 332 925 11,0 %
4. TP-Yhtiöt Oy 513 380 4,2 %
5. Roininen Matti 332 000 2,7 %
6. Solteq Oyj 258 436 2,1 %
7. Hakamäki Jorma 228 430 1,9 %
8. Saadetdin Katiye 156 600 1,3 %
9. Kiiveri Jouko 118 280 1,0 %
10. Halmet Jarmo 106 000 0,9 %
10 largest shareholders total 8 189 640 67,4 %
Total of nominee-registered 85 026 0,7 %
Others 3 873 763 31,9 %
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=Retained earnings
G=Total
A B C D E F G
EQUITY 1.1.2008 1 002 64 0 18 7 213 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 7 213 874 9 157
EQUITY 1.1.2009 1 009 0 -255 75 7 213 1 560 9 602
Result for the period 95 95
Total gains and losses 95 95
Acquiring of own shares -82 -82
dividend distribution -475 -475
EQUITY 30.6.2009 1 009 0 -337 75 7 213 1 180 9 140
Taxes corresponding to the result have been presented as
taxes
for the period.
CALCULATION OF FINANCIAL RATIOS
Solvency ratio, in percentage
equity x100
----------------------------------
balance sheet total - advances received
Gearing
interest bearing liabilities - cash,
bank balances and securities x100
-------------------------------------------
equity
Return on Equity (ROE) in percentage
profit or loss before taxation - taxes x100
----------------------------------------
equity
Profit from invested equity in percentage
profit or loss before taxation +
interest expenses and other financing expenses x100
----------------------------------------
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
Solteq Plc's financial information bulletins in 2009 have been
scheduled as follows:
- Interim report 1-9/2009 Wednesday 21.10.2009
More investor information on 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
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