Solteq Oyj - Half Year financial report

Solteq Plc Half-Year Report January 1 - June 30, 2022

Stock Exchange Bulletin
August 11, 2022 at 8.00 am

Challenges in the Utilities Business Weakened the Profitability of Solteq
April-June


  · Revenue totaled EUR 17.9 million (18.5) and decreased by 3.0 percent
  · EBITDA was EUR 1.8 million (3.7) and EBITDA percent was 9.9 (20.2)
  · Operating profit was EUR 0.4 million (2.4) and operating profit percent was
2.3 (13.2)
  · Earnings per share was EUR 0.00 (0.08)

January-June


  · Revenue totaled EUR 37.2 million (35.9) and increased by 3.6 percent
  · EBITDA was EUR 4.5 million (7.2) and EBITDA percent was 12.1 (20.1)
  · Operating profit was EUR 1.8 million (4.7) and operating profit percent was
4.8 (13.0)
  · Earnings per share was EUR 0.04 (0.16)
  · Solteq Group's equity ratio was 35.4 percent (35.3)
  · Net cash flow from operating activities was EUR 1.6 million (7.8)

Key figures

            4-6/202  4-6/202  Change  1-6/202  1-6/202  Change  1-12/20  Rolling
                              %       2        1        %       21       12mos
            2        1

Revenue,    17,937   18,487   -3.0    37,176   35,870   3.6     69,055   70,361
TEUR
EBITDA,     1,776    3,726    -52.3   4,496    7,217    -37.7   12,267   9,547
TEUR
Comparable  1,946    3,767    -48.3   4,868    7,322    -33.5   12,556   10,103
EBITDA,
TEUR
Operating   414      2,440    -83.0   1,798    4,672    -61.5   7,123    4,249
profit,
TEUR
Comparable  585      2,481    -76.4   2,170    4,777    -54.6   7,412    4,805
operating
profit,
TEUR
Profit for  -90      1,551    -105.8  705      3,007    -76.6   4,100    1,798
the
financial
period,
TEUR
Earnings    0.00     0.08     -105.8  0.04     0.16     -76.6   0.21     0.09
per
share, EUR
Operating   2.3      13.2             4.8      13.0             10.3     6.0
profit,
%
Comparable  3.3      13.4             5.8      13.3             10.7     6.8
operating
profit,
%
Equity                                35.4     35.3             36.9     35.3
ratio, %

CEO Aarne Aktan: Challenges in the Utilities Business Weakened the Profitability
of Solteq

The second quarter of the year was challenging for Solteq. The Group's revenue
was EUR 17.9 million, with operating profit of EUR 0.4 million. The revenue
decreased by 3.0 percent and operating profit by 83.0 percent from the
comparison period.

The difficulties were mainly caused by challenges in the development of software
products. This increased delivery costs for projects and decreased customer
invoicing relative to the comparison period. Due to these factors, Solteq
published a profit warning on May 25, 2022, and lowered its guidance for both
revenue and operating profit.

The Solteq Software segment accounted for just over one-third of the Group's
revenue, and the Solteq Digital segment for just under two-thirds. Solteq
Software's profitability was affected by challenges in product development in
the Solteq Utilities business area and the resulting increase in project
delivery costs. The revenue and profitability of Solteq Digital were weakened by
slower than expected sales and delays in the commencement of certain customer
projects. Foreign subsidiaries accounted for 22.7 percent of the Group's
revenue.

Russian invasion of Ukraine, increasing inflation, and changes in the energy
sector caused insecurities in the operating environment during the second
quarter. Changes in the operating environment were not significantly reflected
in the Group's operations yet. In the long run, Russian invasion of Ukraine
causes economic uncertainty, which will affect the investment capabilities of
customer organizations. In addition, the high inflation will affect the Group's
cost level going forward.

Despite some growing pains and changes in the operating environment, the outlook
for Solteq Group's international and domestic business is estimated to remain
positive. Demand in the key solution areas of Solteq Software is expected to
create significant growth opportunities, especially in the energy sector. In
Solteq Digital, growth will be driven by the internationalizing customer base
and new technological solutions. Solteq Group is updating its business strategy
and will release it within the current half-year period. Solteq continues to
strengthen its international operations and to develop the Utilities business
for profitable, international growth.

Profit Guidance 2022 (updated on May 25, 2022)

Solteq Group's revenue is expected to grow and profit to weaken.

Attachments

Solteq Plc Half-Year Report January 1 - June 30, 2022

Further Information

CEO Aarne Aktan
Tel: +358 40 342 4440
E-mail: aarne.aktan@solteq.com

CFO Kari Lehtosalo
Tel: +358 40 701 0338
E-mail: kari.lehtosalo@solteq.com

Distribution

NASDAQ OMX Helsinki
Key media
www.solteq.com

Solteq in brief

Solteq is a provider of IT services and software solutions specializing in the
digitalization of business and industry-specific software. The key sectors in
which the company has long-term experience are retail, manufacturing, utilities,
and services. The company employs over 650 professionals with offices in
Finland, Sweden, Norway, Denmark, Poland, and the UK, with a customer base
throughout Europe.

Attachments:

Half-Year Report Q2 2022.pdf

08108847.pdf