Solteq Oyj - Interim report (Q1 and Q3)

Solteq Plc Interim Report 1 January – 30 September 2017

We want to simplify the digital world to make a better tomorrow

Brief look at January – September 2017

  · Revenue was 45.5 million euros (45.3 million euros).

  · Operating profit was 343 thousand euros (5,742 thousand euros).

  · Adjusted operating profit was 1,734 thousand euros (2,209 thousand euros).

  · Group’s equity ratio was 34,3% (32,4 %).

  · Earnings per share was -0,05 euros (0,26 euros).

  · Our mission is to make a better tomorrow by simplifying the digital world.

  · As a strategic alignment, we are continuing on the path of profitable growth
and internationalisation. Nevertheless, some policies are further defined to
help reach our strategic objective. Solteq is an expert in digital customer
engagement in industries where the foundations are being shaken by the digital
disruption.

  · The drop in expected adjusted operating profit for the review period was a
result of some large clients transitioning into a maintenance phase, investing
in our Swedish operations and the growth of subcontracting expenses. During the
review period we have done restructuring of our business and operations. This
will have a positive effect on our business development in the future.

  · Solteq Groups current interim period’s adjusted operating profit is expected
to be positive, but the adjusted operating profit for financial year 2017 is
expected to decrease compared to the year 2016.

Key figures and ratios

            7-9/17  7-9/16   Change  1-9/17  1-9/16  Change  1-12/16  Rolling
                                 -%                      -%              12kk
Revenue,    14,242  13,570    5.0 %  45,466  45,345   0.3 %   63,049   63,170
TEUR
Operating     -496       7  -7185.7     343   5,742   -94.0    6,444    1,045
profit,                           %                       %
TEUR
Adjusted      -116     603   -119.2   1,734   2,209   -21.5    3,114    2,639
operating                         %                       %
profit,
TEUR
Profit        -804    -485   65.8 %    -972   4,394  -122.1    4,612     -754
for the                                                   %
financial
period,
TEUR
Earnings/s
hare, e
Operating    -0.04   -0.03     33.3   -0.05    0.26  -119.2     0.26    -0.05
profit-%                         %                       %
Adjusted      -3.5     0.1  -3580.0     0.8    12,7   -93.7   10.2 %    1.7 %
operating                        %                       %
profit
Equity        -0.8     4.4   -118.5     3.8     4.9   -22.2    4.9 %    4.2 %
ratio, %                         %                       %



Olli Väätäinen, CEO of Solteq: We want to simplify the digital world to make a
better tomorrow

During my more than six months as Solteq's CEO, my vision of the path of
profitable growth and internationalisation has grown stronger. We are experts in
digital customer engagement. Our mission is to simplify the digital world to
make a better tomorrow.

The drop in expected adjusted operating profit for the review period was a
result of some large clients transitioning into a maintenance phase, investing
in our Swedish operations and the growth of subcontracting expenses.

Last year we took our first step for growth in the Nordic countries by
purchasing Aponsa AB in Sweden, who provides IT services for retail business. We
merged our existing Swedish operations with Aponsa at the start of the current
quarter. Sweden accounts for some ten percent of our current net sales. Over the
coming years, we expect strong growth from our business in Sweden. This year we
have invested almost one million euros into developing and growing the Swedish
business. While the year has so far been unprofitable for us in Sweden, the last
quarter is expected to turn a decent profit.

We changed the organizational structure of our business in Q3 to serve our
customers more effectively and ensure that our range of products and services
reaches all customer segments. Active adjustment of the cost structure and
operational improvement are an integral part of our business. The structural
changes made in the last six months, as well as the savings in personnel costs
and other operating costs, have allowed us to reach an annual cost level that is
three million euros lighter than what we had at the start of the year. Our
financial statements will not show the full savings due to the corporate
acquisitions that have changed the cost structure. The cost cutting has mostly
been focused on administrative and non-invoicing positions, as well as reducing
the costs of infrastructure and business service procurement.

The development of our proprietary software products and services has continued
as previously stated. We have been particularly active in areas where we can
integrate artificial intelligence and robotics into our products and services.
We will be activating approximately 250 thousand euros in product development
investments in the third quarter.

Our business has a solid foundation in the skills and competencies of Solteq
employees. We have already broken the news that we will be recruiting 100 new
employees in 2017. We believe that we will achieve this as planned.

Guidance on Group outlook

Solteq will change its 2017 guidance on Group outlook: Solteq Group’s current
interim period’s adjusted operating profit is expected to be positive, but the
adjusted operating profit for financial year 2017 is expected to decrease
compared to the year 2016.

Previous guidance on Group outlook: Solteq Group’s adjusted operating profit is
expected to grow compared to financial year 2016.

Online-briefing about the interim report will not be broadcasted

The online-briefing about interim report will not be broadcasted October 26th,
2017 unlike earlier communicated.

The estimated release date of the financial statements bulletin

Solteq Plc. estimates that it will release its financial statements bulletin
from the financial year 2017 on February 16th, 2018 at 8.00.

Further information

Olli Väätäinen, CEO
tel. +358 50 5578 111
e-mail: olli.vaatainen@solteq.com

Antti Kärkkäinen CFO
tel. +358 40 8444 393
e-mail: antti.karkkainen@solteq.com

DISTRIBUTION

NASDAQ OMX Helsinki
Major media
www.solteq.com

Solteq in brief

Solteq is a Nordic IT provider and software house that specialises in digital
customer engagement. We are the partner to our customer, who knows what it takes
to win in digital disruption. We offer comprehensive solutions for both business
enhancement by means of digitalisation and for omnicommerce: from back end
processes all the way to the customer’s purchasing experience and from supply
chain management to digital marketing. Over 500 experts, who work in three
countries, develop and implement solutions for clients in Europe, North America,
Asia and Australia.

Attachments:

10259900.pdf