HELSINKI--(BUSINESS WIRE)--Regulatory News:
Solteq Plc: (HEX:STQ1V)
Growth leap taken – building the new organization has begun.
- In the review period a significant company acquisition was completed in which Solteq Plc purchased the entire stock capital of Descom Group Oy.
- Descom Group’s figures consolidated to Solteq Group’s figures as of 2.7.2015.
- To finance the acquisition Solteq Plc issued a bond and carried out a share issue.
- Revenue totalled 33,9 million euros (28,7 million euros), increase 17,9 %.
- Operating profit before non-recurring items was 1.847 thousand euros (1.581 thousand euros), increase 16,8%. Non-recurring costs related to the acquisition 789 thousand euros and the operating profit including the non-recurring costs was 1.058 thousand euros (1.581 thousand euros), decrease 33,1%.
- Solteq Group’s equity ratio was 27,1 % (47,4 %).
- Integration work has begun – targeting to annual cost synergies of 2 million euros in costs which are not related to customer work.
- Due to significant integration and transaction costs the profit guidance for year 2015 is defined.
- Targets of the new strategy are growth and internationalization, the cash flow from business operations is actively used to actualize the growth.
|Revenue, TEUR||14 900||8 326||79,0 %||33 858||28 715||17,9 %||40 933|
|Operating profit before non-recurring items, TEUR||728||444||64,0 %||1 847||1 581||16,8 %||2 490|
|Operating profit, TEUR||-61||444||-113,7 %||1 058||1 581||-33,1 %||2 490|
|Profit for the financial period, TEUR||-442||316||-239,9 %||439||1 155||-62,0 %||1 893|
|Earnings/share, e||-0,03||0,02||-250,0 %||0,03||0,08||-62,5 %||0,13|
|Operating profit-%||-0,4||5,3||-107,5 %||3,1||5,5||-43,6 %||6,1|
|Equity ratio, %||27,1||47,4||-42,8 %||27,1||47,4||-42,8 %||48,0|
Profit guidance 2015
The profit guidance for year 2015 is defined as follows:
Solteq Group’s operating result before non-recurring costs related to the acquisition and the integration is expected to grow compared to financial year 2014.
Previous profit guidance for year 2015 was:
Solteq Group’s operating result is expected to grow compared to financial year 2014.
CEO Repe Harmanen:
During the third quarter, our company took a big leap forward – maybe the biggest since it was established and since it went public. The company acquisition at the beginning of July in which we merged with Descom Group Oy and the measures involved have been extremely successful. They have met our expectations and will bring a significant contribution to the future development of our company. However, we have a lot of work ahead us. The measures we are taking will develop our company strongly, open new markets and offer our clients more comprehensive overall services.
The changes that took place in our ownership structure during the review period were positive with respect to the continuity, strategy implementation and expansiveness of our company. They will maintain and allow increasingly fast growth in the future.
The integration process started with positive momentum, and we reached the objectives we had set for the review period. As planned, we published the new Management Team at the end of the review period, and the Team quickly started work in the new company. Integration will continue in accordance with our plans, the aim being to start operations as the new company on 1 January 2016 and complete the integration process as soon as possible.
We aim at about 2 million euro annual cost savings when the integration process is completed and expect to reach the target by reducing the administrative and support organisation, by concentrating and combining certain basic acquisitions, and by combining our office facilities in Helsinki and Tampere during the first half of 2016. As to personnel adjustments, we have today sent an invitation to co-operation negotiations concerning the support and administrative functions. The invitation does not concern experts who perform customer service or solutions related tasks. The aim of the negotiations is to reach savings in personnel costs representing the costs of 15 – 20 employees by means of part-time solutions, outsourcing, pension arrangements and, to a certain extent, redundancies.
The operative result for the review period was as expected. In certain areas, revenue erosion continued and we did not succeed in growing the new business organically as well as I had expected. Our operative result was also affected negatively by the fact that certain major projects were postponed to the last quarter. I would naturally have been happier if we had succeeded better in them. However, considering the current market situation in Finland, we must regard our performance as fairly good, and especially the adjustment measures that we had taken in 2014 proved to have been well timed.
Our demand situation is good although demand still seems to be directed unevenly to our different solution areas.
We expect that the revenue and profit without non-recurring items for the last quarter of the year will grow from the previous year. If the non-recurring items brought about by organisational restructuring are taken into consideration, our operating profit level will be the same or slightly lower than last year. This is due to our efforts to complete the integration process fast, which means that most of costs affect the profit for 2015. However, this will allows us to build and implement our new strategy at full momentum right from the beginning of 2016.
BUSINESS ENVIRONMENT AND BUSINESS DEVELOPMENT
Solteq is a visionary expert in omnichannel and digital commerce. We offer partnership in supply management, store solutions and e-commerce. Solteq offers its clients superior know-how in commerce, services and industry.
Solteq Plc’s reported segments are
· Grocery and special retail, HoReCa
· Wholesale, Logistics and Services
· Enterprise Asset & Service Business Management
Segmentation reflects our customers’ demand on different sectors of the services provided.
Grocery and Special Retail, HoReCa
Solteq’s Grocery and Special Retail Segment provides its clients with total solutions that they can utilise to improve efficiency in terms of logistics, store operations, customer service, point of sale operations, as well as loyal customer management.
The grocery and special retail solutions help optimise the management of the product selection, space, deliveries, logistics and customer satisfaction while increasing sales and improving the result. The solutions speed up the basic operations, improve delivery reliability, reduce storage value, increase stock turnover and enhance predictability. The store always has the right products in the right place, at the right time, and at the right price.
During the review period the revenue of the Grocery and Special Retail segment totaled 13,7 million euros (15,0 million euros) and the operating result was 0,4 million euros (0,7 million euros).
The decrease in the net sales was mainly due to postponements in decision-making schedules in the early part of the review period. Towards the end of the review period, a large number of the projects were already underway. The result for the review period is affected by a delay in schedule of a customer project. In addition the ongoing projects were in weak marginal profit phase from revenue recognition perspective in the review period.
Wholesale, Logistics and Services
Solteq’s Wholesale, Logistics and Services Segment provides its clients with ERP and financial management systems, as well as optimisation, integration and reporting solutions that support these systems.
Solteq’s solutions help clients manage their operations and enhance purchases, sales, stock management and reporting. The systems can be utilised to improve delivery reliability, reduce storage value, increase stock turnover and enhance predictability. Materials flow management ensures that the right goods reach the right customers at the right time, packed in an optimal manner.
Solteq’s wholesale, logistics and services systems improve the effectiveness of operations and enable more flexible and versatile customer service. At the same time, automated data management enhances the company’s internal operations. Solteq’s solutions are used daily by a large number of clients representing various industries and sectors, such as wholesale, retail and public administration.
During the review period the revenue of the Wholesale, Logistics and Services segment totalled 9,0 million euros (9,8 million euros) and the operating result was 0,7 million euros (0,2 million euros).
The net sales of the review period decreased from the previous year’s level. The development of the revenue was due to the slowness in decision making related to trading of the significant customer projects. In addition the human resources of the segment were focused on the completion of the projects underway. The improvement in the operating result was mainly due to the development of the cost structure and improved resource utilisation.
Enterprise Asset & Service Business Management
Solteq’s Enterprise Asset & Service Business Management Segment provides its clients with ERP and master data management solutions.
The enterprise resource planning solutions developed for the optimisation of service processes help clients manage their operations in many ways, for instance enhance production plant reliability, task and resources management, field work, sales and customer service, partner network management and materials management. The solutions are utilised by a large number of clients representing various industries and sectors, such as energy production, maintenance services, life cycle services, engineering and technical services of cities and municipalities, property management services, and home and care services.
The Enterprise Asset & Service Business Management Segment also provides client companies with services and products related to business critical data (master data) in the form of master data improvement projects, data maintenance services outsourced to master data service centers, software technologies for master data management, and consultation services. The aim of these services is to ensure that the data in the systems that support the clients’ enterprise resource planning and decision making processes are of high quality, compatible and up-to-date. Solteq’s master data management solutions are used by clients across industries and sectors.
During the review period the revenue of the Enterprise Asset & Service Business Management segment totalled 3,6 million euros (3,9 million euros) and the operating result was 0,2 million euros (0,7 million euros).
Unlike other segments, the main business of the segment is based on the development, supply and marketing of the segment’s own software products. Owing to the nature of its business, the segment is, however, more dependable on the new investments of the client industries than the other segments.
The development of the segment’s net sales was weaker than in the previous year, and the operating result decreased.
The growth and profitability of the operations will be improved by developing products that meet the needs of the client segments better and by looking for new markets and channels. The incorporation of the business of the segment at the turn of the year will allow the development of a product area specific, specialised strategy during 2015.
The segment includes the business of the Descom Group, acquired July 2, 2015. Solteq Plc has issued three stock exchange releases regarding the acquisition (17.6.2015, 22.6.2015 and 2.7.2015). The figures of the Descom Group have been included in Solteq Plc’s figures as of 2.7.2015 and the interim report of 30.9.2015 will be the first to include this segment.
The main operations of the Descom segment focus on solutions for omnichannel commerce and the improvement of clients’ digital marketing.
Descom Group consists of the parent group Descom Group Oy and the subsidiary, Descom Oy, which includes the group’s business in Finland as well as foreign subsidiaries in Sweden, Poland and Denmark.
In the omnichannel commerce area we provide omnichannel online and physical store sales systems as well as order and product information management solutions. The aim of omnichannel commerce is not only to combine brick-and-mortar with digital channels, but to create a totally new business and different ways to attend to the customer.
In the core Descom’s digital marketing services are search engine optimization and marketing, conversion optimization as well as analytics and customer experience. Our digital marketing services help clients improve the findability of their website and gather and use customer data and analytics to make their online shopping basket bigger, among other things.
In addition, Descom offers its clients applications development, integration and maintenance services.
The revenue of the Descom segment on the period of 2.7.-30.9.2015 was 7,5 million euros, of which 1,2 million was made in the Swedish subsidiary. The operating profit of the segment was 0,4 million euros.
The integration work related to the acquisition of Descom has proceeded according to the original plans. The integration work is targeting to legal as well as operational merger by the end of the year.
In addition the integration work is targeting to annual cost savings of 2 million euros. Savings will be carried out by rationalizing the structures in administration, manager and support organizations, by centralizing and accelerating the basic purchases and by merging our office premises in Helsinki and Tampere during the first half year in 2016.
We have convened co-operation negotiations related to personnel changes today. The negotiations involve support, managerial and administration functions. The aim of the negotiations is to reach savings in personnel costs representing the costs of 15 – 20 employees by means of part-time solutions, outsourcing, pension arrangements and, to a certain extent, redundancies.
Related to the legal integration Solteq Plc published a stock exchange release on Descom Ltd, totally owned by Descom Group Ltd, to merge with Descom Group Ltd and Descom Group Ltd, totally owned by Solteq Plc, to merge with Solteq Plc. The planned registration date for the implementation of the merger of Descom Ltd is 1st January 2016 and the planned registration date for the implementation of the merger of Descom Group Ltd is 2nd January 2016.
Strategic outlines of the new merged company
We have started the work to create a strategy for the new merged company. During the last months of the year, the new Board of Directors and Management Team will work on the practical measures to finalise the plans for implementing our strategic areas.
The Board of Directors has outlined core strategy policies, including the long-term goals related to clients, solution offering, internationalisation, gearing ratio and growth.
The most essential competitive advantage of the new company will be the integrated total solutions that it is able to offer its clients. The services combine the whole supply chain from procurement to store networks and thereby to multichannel encounters with customers, and they allow industrial, service business, wholesale and retail operators improve the efficiency and fluency of their operations.
As digital business does not know borders, international operations will open up important growth and expansion opportunities for us in the future with both our current clients and through selected solutions with new clients. Growing with large globally operating clients that provide us with a significant opportunity for organic growth is something that we will continue to develop actively.
One objective of the company is organic growth that is faster than the market growth. Apart from organic growth, we also intend to pursue an active company acquisition policy in areas that strengthen our strategic focuses to develop our customer relationships, solutions or geographic position. We will also estimate the suitability of our current solution offering for the business operations of our clients. In this way, we will be prepared for appropriate operations at both the company acquisition and divestment fronts to reach our objectives.
Our profit distribution policy will support our growth objectives and strategy. We will estimate carefully if it will be more profitable for our shareholders to invest in growth and strategy implementation rather than distribute the profit annually. We consider that the development of the balance sheet structure will be important in the first phase, and at the same time, we will seek balance between growth and profit distribution.
As to the company’s gearing ratio, our long-term goal is that it will be at a level that is three times as high as EBITDA. In our opinion, this policy makes our company an interesting target for investors in the current debt market situation as a company that keeps indebtedness under control but at the same time utilises it capital efficiently to finance both organic and inorganic growth.
REVENUE AND RESULT
|Turnover by operation:|
Revenue increased by 17,9 % compared to the previous year and totalled 33.858 thousand euros (previous review period 28.715 thousand euros).
Revenue consists of several individual customerships. At the most, one client corresponds to less than ten percentages of the revenue.
The operating result for the review period decreased 33,1 % and was 1.058 thousand euros (1.581 thousand euros). Result before taxes decreased 63,7 % and was 528 thousand euros (1.453 thousand euros) and result for the financial year decreased 62,0 % and was 439 thousand euros (1.155 thousand euros).
The figures reflecting the financial result for the review period include 789 thousand euros non-recurring costs relating to the acquisition of Descom Group Oy. Non-recurring costs are presented in other expenses.
BALANCE SHEET AND FINANCING
The total assets amounted to 58.399 thousand euros (24.555 thousand euros). Liquid assets totalled 3.321 thousand euros (1.527 thousand euros). In addition to liquid assets, the company has unused bank account limits amounting to a total of 2.500 thousand euros in the end of the review period.
The Group’s interest-bearing liabilities were 29.124 thousand euros (4.588 thousand euros).
Solteq Group’s equity ratio was 27,1 per cent (47,4 per cent).
Goodwill amounting to 22.506 thousand euros, intangible assets amounting to 3.520 thousand euros and the deferred tax liabilities related to above-mentioned amounting to 704 thousand euros were arised in the acquisition cost calculation related to the business acquisition.
1.083 thousand euros of the non-recurring costs which have cash effects is presented in cash flow from capital expenditure and 361 thousand euros is presented in cash flow from financial activities.
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investment during the review period was 23.297 thousand euros (704 thousand euros). 260 thousand euros of the investments of the review period are mainly replacement investments and 23.037 thousand euros is related to the business acquisition. The investments in the reference period are mainly replacement investments.
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, Symphony EYC 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 product development costs were not amortized (none in the reference period, either).
The number of permanent employees at the end of the review period was 514 (278). In the end of the review period the number of personnel could be divided as follows: Grocery and special retail, HoReCa segment: 109 people; Wholesale, Logistics and Services: 80 people; Enterprise Asset & Service Business Management; 39 people, Descom: 201 people and 85 people in shared functions.
The key figures for Group’s personnel:
|Average number of the personnel during the year||336||280||290|
|Employee benefit expenses (1, 000 €)||13 229||11 164||11 684|
RELATED PARTY TRANSACTIONS
Solteq’s related parties include the board of directors, managing director, the management team and the companies owned by the management.
SHARES, SHAREHOLDERS AND TREASURY SHARES
Solteq Plc’s equity on 30.9.2015 was 1.009.154,17 euros which was represented by 17 798 059 shares. The shares have no nominal value. All shares have an equal entitlement to dividends and company assets. Shares are governed by a redemption clause.
At the end of the review period, the amount of treasury shares in Solteq Plc and the group companies Solteq Management Oy’s and Solteq Management Team Oy’s possessions were 860.881 shares. The amount of treasury shares represented 4,8 % of the total amount of shares and votes at the end of the review period. The equivalent value of acquired shares was 48.812 euros. On 19 March 2015, Solteq announced that the company’s share-based incentive scheme would be dissolved.
During the review period, eleven flagging announcements were made. On March 19, 2015 Solteq Plc announced that the company would dissolve the share-based incentive scheme by purchasing the capital stocks of the Management Team’s holding companies. The arrangement was implemented on 13 April 2015 and it led to a change in ownership, in which Solteq Plc and its subsidiaries hold more than 5% of Solteq Plc shares and votes.
On June 18, 2015 Solteq Plc received a notification pursuant to Chapter 9, Section 5 of the Securities Markets Act from Sentica Buyout III GP Oy ja Sentica Buyout III Ky. According to the notification Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky are parties to an agreement or other arrangement which, if completed, would cause the direct holdings of Sentica Buyout III Ky of the shares and voting rights in Solteq Plc to exceed the 5 per cent threshold. According to the notification, Sentica Buyout III GP Oy’s indirect holding through the above mentioned companies of the shares and voting rights in Solteq Plc would at the same time exceed the 5 per cent threshold. The only general partner of Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky is Sentica Buyout III GP Oy. Sentica Buyout III GP Oy exercises the power of decision in the companies. The investment management functions of both the funds have been transferred to Sentica Partners Oy based on a separate investment management agreement. The change in the holdings results from an issue of new shares in Solteq Plc directed to Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky where Descom Group’s shares will be transferred against the new shares of Solteq Plc based on the share purchase agreement signed on June 17, 2015 by and between Solteq Plc and the shareholders of Descom Group Oy regarding all the shares in Descom Group Oy. The arrangement was executed on July 2 2015 and Solteq Plc received a notification pursuant to Chapter 9, Section 5 of the Securities Markets Act concerning the changes in ownership caused by the arrangement on July 3 2015. According to the notification the direct holdings of Sentica Buyout III Ky of the shares and voting rights in Solteq Plc to exceed the 5 per cent threshold. According to the notification, Sentica Buyout III GP Oy's indirect holding through Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky of the shares and voting rights in Solteq Plc exceeds the 5% threshold.
On July 3, 2015 Solteq Plc received four notifications pursuant to Chapter 9, Section 5 of the Securities Markets Act related to the registration of the Solteq’s new shares to trade register on July 3 2015. Due to the arrangement Ali U. Saadetdin's holdings and proportion of voting rights of Solteq Plc has fallen under the 20% threshold, Seppo Aalto's holdings and proportion of voting rights of Solteq Plc has fallen under the 10% threshold, Profiz Business Solution Corp.'s (Company ID number 0830732-2) holdings and proportion of voting rights of Solteq Plc has fallen under the 10% threshold and the share of ownership of holdings and proportion of voting rights of Solteq Plc controlled by the company has fallen under the 5% threshold.
On July 6 Solteq Plc received three notifications pursuant to Chapter 9, Section 5 of the Securities Markets Act. Due to disposal of shares on July 3 2015 Ali U. Saadetdin's holdings and proportion of voting rights of Solteq Plc has fallen under the 10% threshold. In addition due to disposal of shares on July 3 2015 Seppo Aalto's holdings and proportion of voting rights of Solteq Plc has fallen under the 5% threshold. Due to the acquisition of shares on July 3 2015 Sentica Buyout III Ky's share of ownership of shares and voting rights of Solteq Plc exceeded the 25% threshold on 3 July 2015 due to acquisition of shares and Sentica Buyout III GP Oy's indirect holding through Sentica Buyout III Ky and Sentica Buyout III Co-Investment Ky of the shares and voting rights in Solteq Plc exceeded the 25% threshold due to the acquisition.
Exchange and rate
During the review period, the exchange of Solteq’s shares in the Helsinki Stock Exchange was 4,1 million shares (0,5 million shares ) and 9,9 million euros (0,8 million euros). Highest rate during the financial year was 1,94 euros and lowest rate 1,32 euros. Weighted average rate of the share was 1,70 euros and end rate 1,70 euros. The market value of the company’s shares in the end of the financial year totalled 30,3 million euros (22,6 million euros).
In the end of the financial year, Solteq had a total of 1.723 shareholders (1.720 shareholders). Solteq’s 10 largest shareholders owned 12.655 thousand shares i.e. they owned 71,1 per cent of the company’s shares and votes. Solteq Plc’s members of the board owned a total of 2.516 thousand shares which equals 14,1 per cent of the company’s shares and votes.
ANNUAL GENERAL MEETING
At Solteq Plc’s Annual General Meeting on 16 March 2015 the 2014 financial statements were adopted and the members of the board and the managing director were discharged from liability for the 2014 financial period.
In the meeting was accepted the proposal by the board that for the financial year 2014, there will be paid a dividend of 0.03 euros per each share on the market. In addition to this, the annual general meeting authorized the board to decide, in accordance with the Finnish Companies Act 13 chapter 6§ 2 paragraph, on a distribution of dividend, or other distribution of funds from the equity trust, for an amount of maximum 0.05 euros. The board is also allowed to decide on the timing and other details of this. The authorization is valid until the beginning of the next Annual General Meeting.
The Annual General Meeting authorized the Board of Directors to decide on the purchase of the Company’s own shares to improve the capital structure, to be used as a part of remuneration of personnel, to finance and execute business acquisitions and other business arrangements or to be further transferred or cancelled. The proposal includes authorization to take company’s own shares as a pledge. According to the proposal, the total number of the shares purchased shall not exceed 10 percent of all shares of the Company and they can be purchased otherwise than in proportion to the shareholdings of the shareholders. The shares shall be purchased at a price formed in public trading. The authorization includes that the Board of Directors may decide the terms and other matters concerning the purchase of own shares. The authorization is effective until the next Annual General Meeting.
The Annual General Meeting authorized the Board of Directors to give new shares or convey company’s own shares. The authorization would be executed by one or more share issues, maximum total amount being 5.000.000 shares. The authorization includes a right to deviate from the shareholders’ pre-emptive right of subscription. The authorization includes that the Board of Directors may decide the terms and other matters concerning the share issue. The authorization is effective until the next Annual General Meeting.
BOARD OF DIRECTORS AND AUDITORS
Seven members were elected to the Board of Directors. Ali Saadetdin, Seppo Aalto, Markku Pietilä, Sirpa Sara-aho, Jukka Sonninen, Matti Roininen and Olli Välimäki. The Board elected Ali Saadetdin to act as the Chairman of the Board.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as Solteq’s auditors. Lotta Nurminen, APA, acted as the chief auditor.
EVENTS AFTER THE REVIEW PERIOD
After the review period Solteq decided to appoint new Group Management Team October 1 2015 and published a stock exchange release on changes in organizational structure that are effective as of January 1 2016. Members of management team, which focuses on operative issues of Solteq Group are from October 1 2015: Repe Harmanen (CEO), Joni Henkola (VP, Sales), Tiina Honkiniemi (VP, Client Technologies), Virpi Hyytiä (VP, Accounts), Harri Ilvonen (VP Digital Customership), Antti Kärkkäinen (CFO), Konsta Saarela (VP, International Business) and Riina Tervaoja (VP, Projects). Extended management team focuses on developing the operations of Solteq Group with longer time perspective. Members of extended management team, in addition to above mentioned, are: Kirsi Jalasaho (VP, IR and Marketing), Mari Kuha (VP, HR and Culture) and Juha Luomala (VP, Services Development).
In addition, as part of ongoing organizational development has Solteq Group decided to simplify its reporting structure. There will be two reported segments from 1.1.2016 on: Client Technologies and Digital Customership.
In an extraordinary General Meeting of Shareholders held after the review period on October 19 2015 new board of directors was elected and resolution on the remuneration of the members of the board of directors was made. The General Meeting decided that The Board of Directors includes six (6) members for the term of office that expires at the end of the first Annual General Meeting of Shareholders. The General Meeting decided that Aarne Aktan, Eeva Grannenfelt, Kirsi Harra-Vauhkonen, Markku Pietilä, Mika Uotila and Olli Väätäinen are elected as Board members. In the Board meeting, held after the Annual General Meeting, Mika Uotila was elected as the Chairman of the Board. In addition the Extraordinary General Meeting decided that a 7500 euros remuneration will be paid to the Chairman of the Board and to each Board Member for the term of office that expires at the end of the first Annual General Meeting of Shareholders.
RISKS AND UNCERTAINTIES
The key uncertainties and risks in short term are related to the success of the integration work, management of changes in financing and balance sheet structures, the timing and pricing of business deals that are the basis for revenue, 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 duties. The company has not organized a separate internal audit organization or committee.
This Interim Report 1.1.-30.9.2015 has been prepared in accordance with IAS 34 Interim Financial Reporting –standard and using the same accounting policies as the financial statements 2014.
The financial result is reported through four business areas. Grocery and special retail, HoReCa segment, Wholesale, Logistics and Services, Enterprise Asset & Service Business Management and Descom. The most essential product and service types of the Solteq group of companies are software services, licenses and hardware sales.
All forecasts and estimates presented in the bulletin are based on the current views of management on the economic environment and outlook. Because of this, the results can differ 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.
|CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME|
|REVENUE||14 900||8 326||33 858||28 715||40 933|
|Materials and services||-4 549||-2 375||-9 023||-7 840||-12 508|
|Employee benefit expenses||-6 817||-3 945||-16 337||-13 871||-18 897|
|Depreciation||-561||-337||-1 222||-976||-1 320|
|Other expenses||-3 050||-1 225||-6 234||-4 447||-5 718|
|OPERATING RESULT||-61||444||1 058||1 581||2 490|
|RESULT BEFORE TAXES||-546||411||528||1 453||2 313|
|Income tax expenses||105||-95||-88||-298||-420|
|RESULT FOR THE FINANCIAL PERIOD|
|-442||316||439||1 155||1 893|
|OTHER COMPREHENSIVE INCOME TO BE RECLASSIFIED TO PROFIT OR LOSS IN SUBSEQUENT PERIODS|
|Cash flow hedges||20||6||29||6||6|
|Other comprehensive income,|
|net of tax||16||5||23||5||5|
|TOTAL COMPREHENSIVE INCOME|
|-426||321||462||1 160||1 898|
Total profit for the period
|attributable to owners of the parent||-442||316||439||1 155||1 893|
|Total comprehensive income|
|attributable to owners of the parent||-426||321||462||1 160||1 898|
Taxes corresponding to the result have been presented as taxes for the period.
|CONSOLIDATED BALANCE SHEET (TEUR)||30.9.2015||30.9.2014||31.12.2014|
|Tangible assets||2 292||1 566||1 652|
|Goodwill||35 236||12 730||12 730|
|Other intangible rights||5 299||2 409||2 231|
|Available-for-sale financial assets||561||551||555|
|Trade and other receivables||208||17||15|
|assets||43 596||17 273||17 183|
|Trade and other receivables||11 463||5 622||5 290|
|Cash and cash equivalents||3 321||1 527||2 530|
|assets||14 803||7 282||7 855|
|TOTAL ASSETS||58 399||24 555||25 038|
EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
|Share capital||1 009||1 009||1 009|
|Share premium reserve||74||74||75|
|Reserve for own shares||-1 109||-1 012||-1 069|
|reserve||10 307||6 392||6 392|
|Retained earnings||5 321||5 037||5 328|
|Total equity||15 602||11 477||11 712|
|Deferred tax liabilities||816||551||512|
|Financial liabilities||27 472||2 707||2 591|
|Current liabilities||14 509||9 820||10 223|
|Total liabilities||42 797||13 078||13 326|
|TOTAL EQUITY AND|
|LIABILITIES||58 399||24 555||25 038|
|CASH FLOW STATEMENT (MEUR)|
Cash flow from business
Cash flow from capital
|Cash flow from financing activities|
Cash flow from financing
|Change in cash and cash equivalents||0,79||-0,84||0,16|
The cash flows related to finance leasing agreements are presented in more detail.
The comparatives in the cash flow statement have been restated accordingly.
STATEMENT OF CHANGES IN GROUP EQUITY (TEUR)
B=Reserve for own shares
C=Share premium account
E=Distributable equity reserve
|EQUITY 1.1.2014||1 009||-933||75||-28||6 392||4 331||10 846|
Total comprehensive income
|5||1 155||1 160|
Transactions with owners
|Acquiring of own shares||-79||-79|
|Transactions with owners, total||-79||-449||-528|
|EQUITY 30.9.2014||1 009||-1 012||75||-23||6 392||5 037||11 477|
|EQUITY 1.1.2015||1 009||-1 069||75||-23||6 392||5 328||11 712|
|Total comprehensive income||23||439||462|
|Transactions with owners|
|Acquiring of own shares||-40||-40|
|Directed share issue||4 242||4 242|
|The fees for the board members in the|
|form of treasury shares||61||61|
|Remuneration of the|
|Transactions with owners, total||-40||3 914||-447||3 427|
|EQUITY 30.9.2015||1 009||-1 109||75||0||10 306||5 321||15 602|
|Turnover by segment:|
|Grocery and special retail, HoReCa||13,7||15,0||-1,3|
|Wholesale, Logistics and Services||9,0||9,8||-0,8|
|Enterprise Asset & Service Business Management||3,6||3,9||-0,3|
|Operating result by segment:|
|Grocery and special retail, HoReCa||0,5||0,7||-0,2|
|Wholesale, Logistics and Services||0,7||0,2||+0,5|
|Enterprise Asset & Service Business Management||0,2||0,7||-0,5|
|Operating result, total||1,8||1,6|
|Unallocated transaction costs||-0,8||0|
|Operating result, total, income statement||1,1||1,6|
*Descom is consolidated into the Solteq Group as of 2.7.2015
|QUARTERLY KEY INDICATORS (MEUR)|
|Result before taxes||0,36||0,51||0,54||0,41|
|Result before taxes||0,86||0,44||0,64||-0,55|
|TOTAL INVESTMENTS (TEUR)|
|Other lease liabilities||0,32||0,11||0,15|
|RELATED PARTY TRANSACTIONS (TEUR)||30.9.2015||30.9.2014||31.12.2014|
Transactions with the insiders have been done at market price and are part of the company’s normal software service business.
FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The fair values of the financial assets and liabilities are mainly the same as the book values on both 30.9.2015 and 30.9.2014. Hence they are not presented in table form in the bulletin.
MAJOR SHAREHOLDERS 30.9.2015
|Shares and votes|
|1. Sentica Buyout III Ky||4 621 244||25,96 %|
|2. Keskinäinen Työeläkevakuutusyhtiö Elo||2 000 000||11,24 %|
|3. Profiz Business Solution Oyj||1 756 180||9,87 %|
|4. Saadetdin Ali||1 394 553||7,84 %|
|5. Aalto Seppo||666 882||3,75 %|
|6. Keskinäinen työeläkevakuutusyhtiö Varma||644 917||3,62 %|
|7. Roininen Matti||415 000||2,33 %|
|8. Pirhonen Jalo||405 780||2,28 %|
|9. Solteq Management Oy||400 000||2,25 %|
|10. Solteq Management Team Oy||350 000||1,97 %|
|10 largest shareholders total||12 654 556||71,10 %|
|Total of nominee-registered||403 052||2,26 %|
|Others||4 740 451||26,63 %|
|Total||17 798 059||100,0 %|
|FINANCIAL PERFORMANCE INDICATORS (IFRS)||
|Net turnover MEUR||33,9||28,7||40,9|
|Change in the net turnover||17,9 %||1,5 %||7,4 %|
|Operating result MEUR||1,1||1,6||2,5|
|% of turnover||3,1 %||5,5 %||6,1 %|
|Result before taxes MEUR||0,5||1,5||2,3|
|% of turnover||1,6 %||5,1 %||5,7 %|
|Equity ratio, %||27,1||47,4||48,0|
|Gearing, %||165,4 %||26,7 %||16,3 %|
|Gross investments MEUR||23,3||0,7||1,0|
|Return on equity, %||4,3 %||13,9 %||16,8 %|
|Return on investment, %||4,8 %||13,4 %||15,5 %|
|Personnel at end of|
|KEY INDICATORS PER SHARE|
|Earnings / share, e||0,03||0,08||0,13|
|Earnings / share,|
|Equity / share, e||0,92||0,77||0,79|
|Solvency ratio, in percentage|
|balance sheet total - advances received|
|interest bearing liabilities - cash,|
|bank balances and securities||X 100|
|Return on Equity (ROE) in percentage|
|profit or loss before taxation - taxes||x 100|
|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|
|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|
|number of shares|
Descom Group Oy
Description of the acquired company:
On July 2 2015, Solteq acquired the entire capital stock of Descom Group Oy at a purchase price of approx 11.1 million euros and the capital loans at a purchase price of approx. 11.9 million euros. As a result of the corporate acquisition, Descom Group Oy became a subsidiary entirely owned by Solteq Plc.
Descom offers sales, marketing and customer service solutions for companies in trade, industry and the service sector. Descom Group has about 240 employees in Finland, Sweden and Poland. Descom Group is consolidated to Solteq Group from July 2 2015.
|The impact of the acquired company on Solteq Group|
|Aggregate figures for the acquisition||2.7.2015|
|Paid in cash||6 601|
|Directed issue||4 536|
|Provisional values of the assets and liabilities arising from the acquisition|
|Tangible fixed assets||992|
|Intangible assets, customerships*||3 520|
|Other intangible assets||164|
|Deferred tax assets||181|
|Available-for-sale financial assets||8|
|Trade and other receivables||7 850|
|Cash and cash equivalents||1 139|
|Total assets||13 854|
|Capital loans||-11 950|
|Trade payables and other liabilities||-5 399|
|Deferred tax liabilities||-738|
|Total liabilities||-25 223|
|The goodwill value from the acquisition||22 506|
|Cash flow from the acquisition|
|Consideration paid in cash and the purchase of capital loans||18 501|
|Cash and cash equivalents of the acquired company 2.7.2015||1 139|
|Total cash flow from the acquisition||17 362|
|*Depreciations of the intangible rights during the reporting period are 110 thousand euros (customerships)|
|Goodwill consists of assets that cannot be separated like synergy benefits, competent personnel, market share and entrance to new markets.|
|Adjustments of the fair value to the other intangible assets reflect the value of Descom Group's customerships.|
|Expenses related to the acquisition|
|Transaction costs of the Bond (allocated to financial expenses during the loan period)||360|
|Distributable equity reserve||294|
|Total expenses related to the acquisition||1 443|
|Impact on the Solteq Group's number of personnel240|
|Impact on the Solteq Group's comprehensive income statement||
**The amount of the revenue and the operating profit from acquisition date to the end of the reporting period. The acquired company is consolidated into the Solteq Group as of 2.7.2015. The revenue and the operating profit of the acquired company as the acquisition had taken place at the first day of the reporting period are not presented, because many significant pre-acquisition arrangements were performed in June 2015. Related to the company acquisition Descom Data Center –business was sold from Descom Group before the acquisition was completed.The Group had no business acquisitions during financial year 2014.
Solteq Plc estimates to publish the financial statements bulletin from the financial year 2015 February 19, 2016 at 8.00 am.
More investor information is available from Solteq’s website at www.solteq.com.
Distribution: NASDAQ OMX Helsinki Key media www.solteq.com
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