Solteq Plc Stock Exchange Bulletin 21.10.2009 at 9.00am
- Turnover decreased by 6,5 % and totalled 20,3 million euros (21,7
million euros)
- Operating result decreased by 125 thousand euros and totalled 678
thousand euros (803 thousand euros)
- Operating result is burdened by termination benefits in the amount
of 440 thousand euros
- Operating result improved during the third quarter and totalled 453
thousand euros (383 thousand euros)
- Earnings per share was 0,03 euros (0,03 euros)
KEY FIGURES
Turnover by operation:
% 1-9/09 1-9/08 1-12/08
Softwareservices 63 60 61
Licences 28 25 26
Hardware 9 15 13
Turnover by segment:
Me 1-9/09 1-9/08 Change
Trade 13,3 14,5 -1,2
Industry and services 7,0 7,2 -0,2
Total 20,3 21,7 -1,4
Operating result by segment:
Me 1-9/09 1-9/08 Change
Trade 0,0 1,0 -1,0
Industry and services 0,7 -0,2 +0,9
Total 0,7 0,8 -0,1
Managing Director Hannu Ahola:
"During the third quarter it has been observable among several
business sectors of ours that the uncertainty is clearly began to
ease. This has appeared as picking up of sales project backlog and
strengthened sales backlog among existing customers.
During the third quarter we achieved 8,1 % level of operating result.
Since our cost level in the future will be clearly lower compared to
the first half of the year and the development of sales of services
and licenses is expected to be favorable, the odds are in our favour
to further improve the operating result percentage and to achieve our
published profitability objective for 2009. Also the bases for 2010
seem to be good.
During the review period Solteq Plc announced that company will
reform its organizational structure in the beginning of 2010 to
correspond to the company's strategic focus areas ERP (enterprise
resource planning), EAM (enterprise asset management), DATA (data
management and integration) and STORE (retail solutions and
technology). The reform aims at streamlining operations further,
enabling faster responsiveness and improving development
opportunities in the company's rapidly growing business segments. The
planning work on the basis of this is in a full swing and the first
positive effects are already evident."
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.
During third quarter Solteq's turnover totalled 5 620 thousand euros,
in which contains decrease of 10,7 per cent compared to third quarter
of 2008. This decrease of turnover had been anticipated and was
mainly due to decrease in hardware sales that was fainter compared to
previous year. No changes are expected to the turnover trend
announced earlier by Solteq Plc, i.e. turnover is expected to
decrease by 0-5 percent.
Solteq's operating result for the review period totalled 678 thousand
euros, whereas during 2008 the operating result was 803 thousand
euros. During the third quarter the operating result improved
approximately 18 per cent and totalled 453 thousand euros (383
thousand euros) and companys's operating profit percentage was 8,1 %.
Improved profitability is due to both improved level of sales of
services and licenses and efficiency measures that company has taken
during the first quarter of 2009.
Company's order backlog strengthened further during the third quarter
and the sales project backlog has increased as well. Solteq
anticipates that among its clientele the confidence related to
investment abilities is improving and the uncertainty that appeared
during first half of the year is going to ease little by little.
Positive trend gives Solteq a strong ground to achieve its objectives
for the rest of the year and good bases for 2010. No changes are made
to Solteq's earlier estimate that the operating result is
approximately 5-7 percent of the turnover.
Solteq Plc announced 16.9.2009 that company will reform its
organizational structure to correspond to the company's strategic
focus areas. New organizational structure creates possibilities to
improve company's efficiency and it supports company to sell its
product range to new areas. The first positive effects related to
this reform are anticipated to appear during the last quarter of
2009. The organizational reform will take effect on 1.1.2010.
TRADE
Business environment - Trade
Solteq's Trade unit has had no significant changes compared to the
second quarter. Customers' decision making processes are still taking
longer than usual, but based on the number of inquiries the demand
for all product segments is clearly going to pick up and several new
projects are pending. Companies' management participate actively to
the ERP development projects, because companies strive to achieve
efficiency and cost gains by the means of those projects during the
tighter economical times. Especially the demand for warehouse
management and ERP solutions relating to optimization of logistics
chain has increased.
Change-over to SEPA and PCI standards, VAT percentage change related
to food and risks relating to old systems are among others increasing
the demand for store systems among specialty and chain stores.
According to one chain of stores the chain has to print out as much
as 4-5 million new labels and price tags due to the VAT percentage
change of food. Among the chained commerce this change of VAT
percentage is going to increase the need for consultation and system
development. Also the demand for electric labels for store shelf
edges, introduced in the markets a couple of years ago, is more
active than earlier.
The demand has picked up also among medium-sized wholesale business,
in which several projects relating to warehouse automation and ERP
are pending. Compared to the first half of 2009 the number of
inquiries has multiplied. However in consequence of decelerated
decision-making the actual decisions related to projects might be
postponed to the beginning of next year.
Business environment - Car Trade
The demand for IT systems relating to Car Trade remained weak as in
the beginning of the year. The weak demand was affected by summer
holiday season and extremely weak sales of new cars. During January -
September approximately 72 000 new cars were registered which is 39
per cent less than during the same period in 2008. Solteq anticipates
that extensive IT system renewals will only start after the
consumers' confidence improves and when the sales of new cars picks
up clearly compared to current situation.
Business development - Trade
During the third quarter the business operations of Solteq's Trade
unit have developed in accordance with the plans. The demand for
Solteq's solutions has not decreased in phase with the IT investments
made by the companies during current year, and that's why Solteq has
even relatively improved its position in the markets. During the
review period Solteq has further focused on developing quality and
competence certification relating to its activities and production of
services, which has had a positive impact on demand and
profitability. Domestically combined with global products is an
advantage in the markets too.
The increase of demand was most intense among the optimization
solutions during the review period. Solteq continued its information
campaign that was launched during the second quarter, in which the
effects of SEPA and PCI standards were introduced to the customers.
The campaign has contributed to the demand for store systems.
Business development - Car Trade
During the review period the turnover and result of Car Trade unit
were clearly weaker compared to corresponding period in 2008. The
demand for services concentrated on development of customers'
existing systems.
Due to the weak market situation Solteq has made an effort in
developing own product range in order to be even more competitive
when the investments are started again.
INDUSTRY
Business environment - Industry
Precaution and strict consideration related to investment decisions
were still evident among Solteq's customers in Industry unit. The
continuance of cost savings among large and middle-sized industrial
companies has also created possibilities. During the review period it
was evident that in addition to precaution there is emerging optimism
among the clientele.
Under a tight cost pressure an increasing number of customers are
seeking more efficiency to their activities by the means of various
IT solutions. During the review period the customers of Industry unit
sought additional efficiency to their operations especially by the
means of maintenance IT solutions, whose demand picked up compared to
the first half of year.
The demand for ERP solutions was weak during the review period.
Customers' interest focused especially on precision solutions
relating to efficiency improvement and better utilization of existing
systems.
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.
The business environment of Information Management was challenging
during the review period. However the demand has improved compared to
the second quarter. 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
The budgeted objectives related to the sales of ERP systems were not
achieved. Instead the demand for maintenance IT solutions was more
active compared to the beginning of year.
Of the individual projects, the most significant was the SAP renewal
of
Helsinki University which continued as planned.
During the review period the most significant deliveries among
maintenance systems were deliveries to Nokian Tyres Plc, UPM and
Leppäkosken Sähkö. In addition the new maintenance system of Ruukki
Plc's Hämeenlinna unit was implemented. Increased sales efforts that
have increased the total number of concluded deals appeared also
among the sales of maintenance systems.
The sales project backlog of OOO Solteq Russia, Solteq's subsidiary
acting in St Petersburg, increased and the company strengthened its
partnership network in St. Petersburg.
In product development, efforts continued to develop a software
solution for operative property management together with Microsoft.
During the review period the piloting of this software continued with
two new projects. New software solution for operative property
management expands Solteq's supply for companies that offer
maintenance or field maintenance operations as service. The first
development version of this software is released during the last
quarter of 2009.
Business development - Information Management
Information Management unit started a large harmonization project in
September that will be finished in May 2010. It has been agreed that
two new harmonization project will be started during the last quarter
of 2009.
Unit has also focused on business master data management by carrying
out comparative survey in co-operation with eight companies and
administrative sectors in public administration. The survey finds out
the best current practices related to business master data management
and maps the common development targets of the future. The results
from this cooperation are expected to be available during the last
quarter of 2009.
TURNOVER AND RESULT
Turnover decreased by 6,5% compared to the previous year and totalled
20.324 thousand euros (previous financial year 21.730 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 678 thousand euros
(803 thousand euros), result before taxes was 582 thousand euros (562
thousand euros) and profit for the period 401 thousand euros (393
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 20.858 thousand euros (20.758 thousand
euros). Liquid assets totalled 195 thousand euros (277 thousand
euros).
The group's interest-bearing liabilities were 7.089 thousand euros
(6.589 thousand euros).
The group's equity ratio was 45,3 percent (44,8%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 704 thousand euros
(704 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 490 thousand euros (408 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
235 (264). Average number of personnel during the review period was
248 (264). In the end of the review period the number of personnel
could be divided as follows: Trade 118, Industry and Services 92 and
Shared Functions 25.
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 30.9.2009 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 0,3 million shares (0,8 million shares)
and
0,4 million euros (1,2 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 1,23 euros and end rate 1,28 euros. The market
value of the company's shares in the end of the review period
totalled 15,6 million euros (16,5 million euros).
Ownership
In the end of the review period, Solteq had a total of 2.004
shareholders (2.033 shareholders). Solteq's 10 largest shareholders
owned 8.202 thousand shares i.e. they owned 67,5 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)
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2009 30.9.2008 30.9.2009 30.9.2008 31.12.2008
NET TURNOVER 5 620 6 291 20 324 21 730 30 383
Other operating
income 2 2 80 41 44
Raw materials
and
services -1 584 -1 409 -5 587 -5 424 -7 744
Staff expenses -2 596 -3 192 -10 607 -11 372 -15 583
Depreciation -177 -181 -527 -540 -718
Other operating
expenses -812 -1 128 -3 005 -3 632 -4 922
OPERATING RESULT 453 383 678 803 1 460
Financial income
and
expenses -28 -83 -96 -241 -324
PROFIT BEFORE
TAXES 425 300 582 562 1 136
Income taxes -119 -89 -181 -170 -269
PROFIT FOR THE PERIOD
306 212 401 393 867
Other
comprehensive
income 0 0 0 0 0
TOTAL COMPREHENSIVE INCOME
306 212 401 393 867
Total profit/loss for the period and comprehensive income
attributable to
Owners of the
parent 306 212 401 393 867
Earnings /
share,
e(undiluted) 0,02 0,02 0,03 0,03 0,07
Earnings /
share,
e(diluted) 0,02 0,02 0,03 0,03 0,07
Taxes corresponding to the result have been presented as taxes
for the period.
GROUP BALANCE SHEET (TEUR) 30.9.2009 30.9.2008 31.12.2008
ASSETS
NON-CURRENT ASSETS
Intangible assets
Intangible rights 2 890 2 282 2 417
Goodwill 8 286 8 286 8 286
Tangible assets 2 662 2 724 2 707
Investments
Other shares and similar
rights of ownership 93 93 93
Deferred tax
assets 88 493 268
Total non-current
assets 14 019 13 878 13 771
CURRENT ASSETS
Short-term debtors 6 644 6 602 7 567
Cash in hand and at banks 195 277 695
Total current
assets 6 839 6 879 8 262
TOTAL ASSETS 20 858 20 758 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 -86 -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 401 393 867
Total equity 9 446 9 297 9 602
LIABILITIES
Non-current liabilities 3 163 3 663 3 663
Current liabilities 8 249 7 798 8 768
Total liabilities 11 412 11 461 12 431
TOTAL EQUITY AND
LIABILITIES 20 858 20 758 22 033
FINANCIAL PERFORMANCE
INDICATORS (IFRS) 1-9/2009 1-9/2008 1-12/2008
Net turnover MEUR 20,3 21,7 30,4
Change in net turnover -6,5 % 12,1 % 8,8 %
Operating result MEUR 0,7 0,8 1,5
% of turnover 3,3 % 3,7 % 4,8 %
Result before taxes MEUR 0,6 0,6 1,1
% of turnover 2,9 % 2,6 % 3,7 %
Equity ratio, % 45,3 44,8 43,6
Gearing, % 73,0 % 67,9 % 58,5 %
Gross investments in
non-current assets MEUR 0,7 0,7 0,9
Return on equity, % 5,7 % 5,7 % 9,0 %
Return on investment, % 5,7 % 6,7 % 9,0 %
Personnel at end of
period 235 264 268
Personnel average
for period 248 264 266
KEY INDICATORS PER SHARE
Earnings / share, e 0,03 0,03 0,07
Earnings / share,
e(diluted) 0,03 0,03 0,07
Equity / share, e 0,79 0,77 0,80
QUARTERLY KEY INDICATORS (MEUR)
4Q/07 1Q/08 2Q/08 3Q/08
Net turnover 8,55 6,89 8,55 6,29
Operating result 0,54 0,05 0,37 0,38
Result before taxes 0,45 -0,02 0,28 0,30
4Q/08 1Q/09 2Q/09 3Q/09
Net turnover 8,65 7,21 7,49 5,62
Operating result 0,66 -0,19 0,41 0,46
Result before taxes 0,58 -0,24 0,40 0,42
CASH FLOW STATEMENT (MEUR)
1-9/2009 1-9/2008 1-12/2008
Cash flow from business
operations -0,02 1,87 2,94
Cash flow from capital
expenditure -0,70 -0,66 -0,88
Cash flow from financing activities
Dividend distribution -0,48 -0,73 -0,73
Own shares -0,08 -0,09 -0,26
Loan agreement 0,78 -0,46 -0,72
Cash flow from financing
activities 0,22 -1,28 -1,71
Change in cash and cash
equivalents -0,50 -0,06 0,35
TOTAL INVESTMENTS (TEUR)
1-9/2009 1-9/2008 1-12/2008
Continuing operations,
group total 704 704 920
LIABILITIES (MEUR) 30.9.2009 30.9.2008 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 0,62 0,68 0,59
Lease liability,
premises 2,31 2,60 2,48
The Group has no liabilities from derivative instruments.
MAJOR SHAREHOLDERS 30.9.2009
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 1 337 625 11,0
4. TP-Yhtiöt Oy 513 380 4,2
5. Roininen Matti 340 000 2,8
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 8 202 340 67,5 %
Total of nominee-registered 84 026 0,7 %
Others 3 861 063 31,8 %
Total 12 147 429 100,0 %
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
Total comprehensive income 393 393
Subscription issue 7 -64 57 0
Acquiring of own shares -86 -86
dividend distribution -728 -728
EQUITY 30.9.2008 1 009 0 -86 75 7 213 1 086 9 297
EQUITY 1.1.2009 1 009 0 -255 75 7 213 1 560 9 602
Total comprehensive income 401 401
Acquiring of own shares -82 -82
dividend distribution -475 -475
EQUITY 30.9.2009 1 009 0 -337 75 7 213 1 486 9 446
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
Financial Reporting
Solteq Plc will publish the financial statements bulletin from the
financial year 2009 January 27, 2010.
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
Distribution:
NASDAQ OMX Helsinki
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