Solteq Oyj - Interim report (Q1 and Q3)

Solteq Plc's Interim Report January 1 - March 31, 2024

Stock Exchange Bulletin
Interim Report
April 30, 2024, at 8.00 am
A Positive Turnaround in Profitability
January-March

  ·
Comparable revenue totaled EUR 13.6 million (14.1) and decreased by 3.8 percent.
Revenue totaled EUR 13.6 million (16.9) and decreased by 19.7 percent

  ·
Comparable EBITDA was EUR 0.4 million (0.1) and EBITDA EUR 0.4 million (1.3).
Comparable EBITDA percent was 2.6 (0.9)

  ·
Comparable operating result was EUR -0.2 million (-0.7) and operating result EUR
-0.2 million
(-0.1). Comparable operating result percent was -1.8 (-4.6)

  ·
Earnings per share was EUR -0.04 (0.01)

  ·
Solteq Group's equity ratio was 29.3 percent (30.5)

  ·
Net cash flow from operating activities was EUR 1.0 million (0.5)

  ·
The company expects the comparable revenue to grow and the operating result to
be positive. The comparable revenue was EUR 54,183 thousand for the financial
year 2023

Key figures


                    1-3/2024  1-3/2023  Change %  1-12/2023  Rolling 12mos

Revenue, TEUR         13,571    16,899     -19.7     57,655         54,327
Comparable            13,571    14,113      -3.8     54,183         53,641
revenue, TEUR
EBITDA, TEUR             358     1,281     -72.1      8,695          7,772
Comparable EBITDA,       358       121     196.7     -1,662         -1,425
TEUR
Operating result,       -247       -91    -170.8     -3,541         -3,697
TEUR
Comparable              -247      -652      62.1     -4,575         -4,171
operating result,
TEUR
Result for the          -705       204    -445.4     -5,380         -6,289
financial period,
TEUR
Earnings per           -0.04      0.01    -445.4      -0.28          -0.32
share, EUR
Operating result,       -1.8      -0.5                 -6.1           -6.8
%
Comparable              -1.8      -4.6                 -7.2           -7.8
operating result,
%
Equity ratio, %         29.3      30.5                 30.1           30.0

CEO Aarne Aktan: A Positive Turnaround in Profitability
Solteq Plc's first quarter brought a positive turnaround in profitability
development. However, revenue development lagged and fell short of the company's
expectations due to decreased customer demand and weaker-than-expected sales
performance. The Group's comparable revenue was EUR 13.6 million in the review
period. The comparable revenue decreased by 2.6 percent in the Retail & Commerce
segment and 7.5 percent in the Utilities segment.
The company's profitability improved during the review period. The comparable
EBITDA was EUR 0.4 million, and the comparable operating result was EUR -0.2
million. The comparable EBITDA improved by EUR 0.2 million, and the comparable
operating result by EUR 0.4 million relative to the comparison period. Utilities
drove the turnaround in profitability. The segment's efficiency improvement
program in 2023 and the persistent work with product quality assurance started
materializing. In Retail & Commerce, however, profitability weakened due to a
disproportionate cost structure relative to diminishing revenue.
The long-term market outlook for the Retail & Commerce segment is expected to
remain moderate and demand to recover as the markets stabilize. Retail &
Commerce will renew its sales strategy and account management processes during
the current quarter to improve sales performance. The long-term market outlook
for the Utilities segment is expected to remain good and provide opportunities
for profitable growth.

Profit Guidance 2024
The company expects the comparable revenue to grow and the operating result to
be positive. The comparable revenue was EUR 54,183 thousand for the financial
year 2023

Going concern principle
In assessing the going concern principle, the management of the company has
considered the risks related to the refinancing of the company. The key elements
of Solteq Group's debt financing are a fixed-rate bond, as well as standby and
bank account credit limits.
Solteq issued a fixed-rate unsecured senior bond with a nominal value of EUR
23.0 million on October 1, 2020. Of the EUR 23.0 million bond outstanding at the
time of the Interim Report, EUR 0.6 million was held by the company. The bond
matures on October 1, 2024. The standby and bank account credit limits total EUR
7.0 million. The related financial covenants are linked to the terms of the
bond.
The terms of the bond include financial covenants concerning the distribution of
funds and incurring financial indebtedness other than permitted under the terms
of the bond (Incurrence Covenant). The covenants require that the equity ratio
exceeds 27.5 percent, the interest coverage ratio (EBITDA/net interest cost)
exceeds 3.00:1, and that the Group's net interest-bearing debt to EBITDA ratio
does not exceed 4:1. The covenants concerning the distribution of funds and
incurring financial indebtedness other than permitted under the terms of the
bond are not fulfilled based on the reporting period. The fulfillment of the
covenants is always reviewed based on the last reported 12-month period.
Violations of the above-mentioned financial covenants of the bond do not, as
such, lead to the right to demand immediate repayment of the bond, but they
limit the distribution of the company's funds and incurring financial
indebtedness other than permitted under the terms of the bond.
The prerequisite for the company's going concern is the restructuring of the
financing. The company has initiated measures to arrange refinancing of the
company.
In assessing the going concern, the management of the company has considered the
effects of the measures taken during the financial year 2023, the financial
performance during the review period 1-3/2024, financial forecasts, and risks
related to the availability of financing and to financial negotiations.
The company believes that the planned financing arrangements will lead to a
favorable outcome. However, there are still no binding decisions on the
restructuring of the financing and if the company failed to restructure the
financing by the bond maturity date, the company would not be able to meet its
obligations and the conditions for the company's going concern would become
jeopardized.
Considering the above measures and risks, the management estimates that
operations will continue and that the risk of insufficient funding is small.
Therefore, the management of the company has deemed it justified to prepare the
Interim Report under the going concern principle.
Financial reporting
The Interim Report has been prepared in accordance with the recognition and
valuation principles of IFRS standards and using IAS 34 and the same accounting
policies as the Financial Statements 2023. The new IFRS standards, taken into
use on January 1, 2024, do not have a significant impact on the Group's Interim
Report. The information presented in the Interim Report has not been audited.

Attachments
Solteq Plc's Interim Report January 1 - March 31, 2024

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

CFO, General Counsel Mikko Sairanen
Tel: +358 50 567 3421
E-mail: mikko.sairanen@solteq.com

Distribution
Nasdaq Helsinki
Key media
www.solteq.com

Solteq in brief
Solteq is a Nordic software solution and expert service provider specializing in
retail and energy sectors and needs related to e-commerce. The company employs
nearly 500 professionals and has offices in Finland, Sweden, Norway, Denmark,
Poland, and the UK.

Attachments:

Interim Report Q1 2024.pdf

04290080.pdf