Solteq: Financial Statements Bulletin 1.1.–31.12.2015 (IFRS)

HELSINKI, Finland--()--Regulatory News:

Foundations of the new Solteq ready - full speed ahead

-During the reporting period, Solteq Plc realised the biggest acquisition in its history by buying Descom Group Ltd.

-The acquisition has a significant impact on the scope of the company’s business, its balance sheet structure as well as strategic direction.

– Revenue totalled 54,2 million euros (40,9 million euros)

-Operating profit before non-recurring items was 2.990 thousand euros (2.490 thousand euros). Non-recurring costs related to the acquisition 1.702 thousand euros and the operating profit including the non-recurring costs was 1.288 thousand euros (2.490 thousand euros).

– Solteq Group’s equity ratio was 24,4 % (48,0 %). Decrease was due to the company acquisition and the financing arrangements related to the acquisition.

– Earnings per share was 0,01 euros (0,13 euros).

– The Solteq Plc Board proposes to the Annual General Meeting that no dividend will be paid from the financial period 2015.

Key figures

9-12/15 9-12/14 Change-% 1-12/15 1-12/14 Change-%
Revenue, TEUR 20 357 12 218 66,6 % 54 215 40 933 32,5 %
Operating profit before non recurring items TEUR 1 143 909 +25,7 % 2 990 2 490 +20,1 %
Operating profit, TEUR 230 909 -74,7 % 1 288 2 490 -48,3 %
Profit for the financial period, TEUR -337 738 -145,7 % 102 1 893 -94,6 %
 
Earnings/share, e -0,02 0,05 0,01 0,13
Operating profit-% 1,1 % 7,4 % 2,4 % 6,1 %
Equity ratio, % 24,4 % 48,0 %

Profit guidance 2016

Solteq Group’s turnover is expected to grow significantly compared to financial year 2015. The operating result before non-recurring is expected to grow compared to financial year 2015.

The expected growth of revenue and operating profit is mainly related to the company acquisition completed in the middle of the review period. In addition the cost synergies arising from the integration work are expected to be realized during the first half year in 2016.

CEO Repe Harmanen:

SIGNIFICANT YEAR IN THE COMPANY’S HISTORY

For Solteq, the past year was highly successful and positive, marked with the achievement of significant strategic objectives. At the beginning of 2015, Solteq was a completely different company from what it is today. During 2015, our client base, operations in Finland and abroad, solution offering and many other things developed favourably. We succeed in implementing our plans in line with our strategy, and we are extremely pleased with the outcome.

Some changes took place in the company’s ownership structure. A publicly listed company is open to new owners every day. However, the changes, which included the surrender of significant ownership in the company by two of its founding members, represented milestones that could be compared to being listed on the stock exchange.

The strategic development of Solteq into an international company that we started in 2010 has been systematic, and this work will continue in the future.

In terms of business operations, the merger with Descom Group Oy strengthened our development: we are a completely New Solteq and proud of it.

COMPETENT PEOPLE ARE OUR MOST IMPORTANT ASSET

We operate with our clients in areas that are practically always new and significant, often of critical importance to our clients. Almost without exception, the direct or indirect users of our services and solutions are the customers of our clients. Meeting their varied needs and expectations requires top expertise, innovation, new ways of thinking - and what the Finnish “sisu” is made of, i.e. determination, perseverance and resilience. We have brought together top class technical deep experts and talented customer relationship analysts. We have orchestrators who know how to run the show and introduce exceptional and unexpected innovations.

For Solteq, competent people are the company’s most important asset. It is the highly competent, dialogue-oriented professionals with constructive ideas in Finland, Sweden and Poland that take us forward and work for the good of our clients and their customers.

Towards the end of 2015, we started building an academy of our own to give our existing and new employees opportunities to develop into deep experts in their competency areas or find completely new career paths. At Solteq, the employees are given opportunities to continue their professional development in terms of both tasks and competencies in Finland and abroad.

The construction of a New Solteq started in autumn 2015. In this process, the focus has been on strengthening a new modern corporate culture and providing solutions that meet the needs of our clients and the end customers. The New Solteq is the result of a shared effort.

RECIPROCITY BETWEEN US AND OUR CLIENTS PROMOTES DEVELOPMENT

Our success is based on long-term, trusted client relationships. During the merger process, we realised that the outcome would be a new entity that has shared basic values. We believe that the understanding and appreciation of the client needs, honesty and long-term collaboration in various areas will bring the best benefits and profits. In the end, the pursuit for instant win is in nobody’s interest.

Our clients help us and we help our clients. That is what partnership is made of. We look for and implement ideas that may never have been realised or that may have been tried many times without success before. The feedback that we receive from our clients daily, monthly and yearly helps us develop our everyday work and the solutions we provide. It also gives us ideas of what our shared future will be like: where to go and how.

The Annual Report is like a milestone at which we stop on the New Year’s Eve and look back at what we have achieved in the past year. It is also the time to thank our clients for a year that has seen mutual collaboration, joy and sorrow and shared solutions. We are much more knowledgeable and better informed than the year before.

STRATEGY BECOMES REALITY BY DOING

People say that the implementation of a strategy is difficult. It may be so, but thanks to our personnel and clients, we have progressed well and at a suitable pace before and during 2015. Making right decisions at the right time has also played an important role for us.

The process of defining a new strategy that we announced in autumn 2015 started towards the end of the year. The new strategy is based on much the same principles as the previous strategies. The core of our strategy is our commitment to all forms of digital commerce and the support of its growth. Our passion is to enable tasks, procedures and implementations related to digital commerce and improve customer experiences throughout the supply chain and in the various areas of commerce digitally or traditionally.

During the past few years, the role of international operations has strengthened in our business sector. Our aim is to increase the share of international operations significantly with both our current and future clients. Global digital commerce has no borders. It creates new forms of doing business, decentralises supply chains and makes them transparent.

During this spring, we will provide further information on the New Solteq’s strategy, goals and next steps.

I would like to take this opportunity to thank all our stakeholders and interest groups for the past year and for helping us make success happen. My special thanks are due to the founding members of our company. Their work has made the existence of Solteq and its development to the next level possible.

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 until 31.12.2015 are:

  • Grocery and special retail, HoReCa;
  • Wholesale, Logistics and Services
  • Enterprise resource planning of services
  • Descom.

As from January 1 2016 Solteq Group’s busi­ness is divided into two segments: Customer Solutions and Digital Solutions. organisational restructuring and reflects company’s growth to a service provider of the digital commerce. The new busi­ness segment structure was adopted as part of the company’s

Solteq’s Digital Solutions Segment offers its clients the following:

  • Services and consultation related to digital commerce and supply chain management
  • Digital marketing and analytics services
  • Customer experience planning and imple­mentation services
  • Master data and master data integration services
  • Customised continuous service packages

Solteq’s Customer Solutions Segment offers its clients the following:

  • Integrated total solutions related to logistics, store operations, restaurant operations, customer service, payments and manage­ment of loyal customer relationships to enhance business operations
  • ERP and financial management systems and related optimisation, integration and application management services and reporting solutions
  • Due to the nature of its business, Enterprise Asset & Service Business Management Segment , previously reported as its own segment, is now part of the Customer Solutions segment

Solteq’s 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 totalled 19,3 million euros (20,5 million euros) and the operating result was 0,9 million euros (1,2 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 delays in schedules of customer projects.

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 12,0 million euros (15,4 million euros) and the operating result was 0,8 million euros (0,6 million euros).

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 Segment

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 4,9 million euros (5,0 million euros) and the operating result was 0,3 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 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 allowed the development of a product area specific, specialised strategy during 2015.

Descom

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.

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.-31.12.2015 was 18,1 million euros, of which 2,8 million was made in the Swedish subsidiary. The operating profit of the segment was 1,1 million euros.

Integration

The integration work related to the acquisition of Descom was finished according to the origi­nal plans. The operational merger was finished by the end of the year and the implementation of the legal mergers were entered into Finnish Trade register on 1 January 2016.

The integration work was targeting to annual cost savings of 2 million euros. Savings were 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. The co-operation negotiations related to personnel changes were concluded on 20 November 2015 and all arrangements concerning the personnel changes are concluded as well.

Strategic outlines of the new merged company

Solteq has announced the strategic outlines of the new merged company in the interim report 1.1.-30.9.2015.

Preparing of strategy and strategy work has continued and will continue during the ongoing winter. The company will publish a separate stock exchange bulletin concerning the results of the strategy work in the spring 2016.

REVENUE AND RESULT

Turnover by operation:

% 1-12/15 1-12/14
 
Software services 72 62
Licences 25 26
Hardware 3 12

Revenue increased by 32,5 % compared to the previous year and totalled 54.215 thousand euros (previous review period 40.933 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 48,3 % and was 1.288 thousand euros (2.490 thousand euros). Result before taxes was 305 thousand euros (2.313 thousand euros) and result for the financial year was 102 thousand euros (1.893 thousand euros).

The figures of the financial year include 820 thousand euros non-recurring consulting and arrangement costs related to the acquisition of Descom Group Oy and 882 thousand euros non-recurring costs related to the employ­ments that ended as a part of the integration process. Non-recurring costs are presented in personnel expenses and in other expenses for the financial period.

BALANCE SHEET AND FINANCE

The total assets amounted to 64.251 thousand euros (25.038 thousand euros). Liquid assets totalled 2.619 thousand euros (2.530 thousand euros). In addition to liquid assets, the company has unused bank account limits amounting to a total of 1.810 thousand euros in the end of the financial year and in addition the company has an unused standby credit limit amounting to a total of 4.000 thousand euros.

The Group’s interest-bearing liabilities were 28.410 thousand euros (4.437 thousand euros).

Solteq Group’s equity ratio was 24,4 per cent (48,0 per cent).

The financing methods used in the acquisi­tion of the subgroup Descom Group (Descom) on 2 July 2015 changed significantly Solteq Group’s balance sheet and financing structure. Information on the acquisition is presented in note Business combinations.

On 1 July 2015 Solteq Plc (Solteq) issued an unsecured bond of 27 million euros which was used as the cash contribution payable as part of the purchase price for the entire share capital of Descom Group Oy (Descom) and the purchase of the capital loans of Descom and to refinance of the existing bank loans and other financial indebtedness of the groups of Solteq and Descom.

The bond carries a fixed annual interest of 6 per cent and its maturity is five years. The financial covenants concerning the distribution of funds and incurring financial indebtedness other than permitted in the terms of the Bond (Incurrence Covenant) require that at any agreed review date, the Equity Ratio exceeds 27.5 per cent, 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 3.50:1.

Upon completion of purchase of share capi­tal approx. 4.6 million euro of purchase price of Descom Group was paid with Solteq’s new shares based on a directed share issue to be paid by contribution in kind which was directed to the shareholders of Descom Group. A total of 2,799,998 new shares of Solteq Plc were issued at a subscription price of EUR 1,65 per share which was determined based on volume-weighted average price of the shares during the period of 4 May 2015 – 3 June 2015.

More information on the acquisition of Descom and the financing arrangements (e.g. prospectus, terms of the bond and the stock exchange bulletins concerning the acquisition) are available on company’s website.

INVESTMENTS, RESEARCH AND DEVELOPEMENT

Gross investment during the review period was 23.259 thousand euros (958 thousand euros). 222 thousand euros of the gross investments of the financial period are mainly replacement investments and 23.037 thousand euros were related to the company acquisition. Investments in the reference year 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 IBM, 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).

PERSONNEL

The number of permanent employees at the end of the review period was 500 (279). In the end of the review period the number of personnel could be divided as follows: Grocery and special retail, HoReCa segment: 97 people; Wholesale, Logistics and Services: 76 people; Enterprise Asset & Service Business Manage­ment: 41 people; Descom: 211 people and 75 people in shared functions.

The key figures for Group’s personnel:

2015 2014 2013
Average number of the personnel during the review period 391 281 287
Employee benefit expenses (1 000 €) 21 484 15 234 15 850

RELATED PARTY TRANSACTIONS

Solteq’s related parties include the board of directors, managing director, the management team.

Information on related party transactions and the amounts are presented in tables presented in the end of this financial statement bulletin.

SHARES, SHAREHOLDERS AND TREASURY SHARES

Solteq Plc’s equity on 31.12.2015 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 was 825.881 shares. The amount of treasury shares represented 4,6 % of the total amount of shares and votes at the end of the review period. The equivalent value of acquired shares was 46.828 euros.

During the review period, thirteen 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.

On November 12 2015 Solteq Plc received a notification pursuant to Chapter 9, Section 5 of the Securities Markets Act from Keskinäinen Työeläkevakuutusyhtiö Varma (Varma). Accord­ing to the notification of major shareholding, Varma’s holdings and proportion of voting rights of Solteq Plc has exceeded the 5% threshold on 13 November 2015 due to acquisition of shares. Before the acquisition Varma held 644.917 Solteq shares. After the acquisition Varma holds 1.050.697 Solteq shares which represent 5.90 per cent of all of the company’s shares and votes.

On November 26 2015 Solteq Plc received a notification based on chapter 9 section 5 of the Securities Market Act from Profiz Business Solution Plc (Profiz). According to the notifica­tion of major shareholding, Profiz’s holdings and proportion of voting rights of Solteq Plc has exceeded the 10% threshold on 26 November 2015 due to acquisition of shares. Before the acquisition Profiz held 1.756.180 Solteq shares. After the acquisition Profiz holds 1.781.790 Solteq shares which represent 10,01 per cent

Exchange and rate

During the financial year, the exchange of Solteq’s shares in the Helsinki Stock Exchange was 5,0 million shares (0,8 million shares ) and 11,5 million euros (1,2 million euros). Highest rate during the financial year was 1,97 euros and lowest rate 1,32 euros. Weighted average rate of the share was 1,71 euros and end rate 1,78 euros. The market value of the company’s shares in the end of the financial year totalled 31,7 million euros (19,9 million euros).

Ownership

In the end of the financial year, Solteq had a total of 1.911 shareholders (1.689 shareholders). Solteq’s 10 largest shareholders owned 13.377 thousand shares i.e. they owned 75,2 per cent of the company’s shares and votes. Solteq Plc’s members of the board own 15 thousand shares on 31 December 2015.

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

At Solteq Plc’s Annual General Meeting on 16 March 2015, 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.

The General Meeting held on 19 October 2015 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.

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 the implementation of the subsidiary mergers were entered into Finnish Trade register on 1 January 2016. The mergers were executed according to the merger plans announced on 8 September 2015. Descom Ltd, totally owned by Descom Group Ltd merged with Descom Group Ltd and Descom Group Ltd, totally owned by Solteq Plc, merged with Solteq Plc.

RISKS AND UNCERTAINTIES

The key uncertainties and risks in short term are related to the 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.

PROPOSAL OF THE BOARD OF DIRECTORS ON THE DISPOSAL OF PROFIT FOR THE FINANCIAL YEAR

At the end of the financial period 2015, the distributable equity of the Group’s parent company is 12 824 317,24 euros.

The Solteq Plc Board proposes to the Annual General Meeting that no dividend will be paid from the financial period 2015.

The Board considers that there are no proper economic conditions for dividend distri­bution or other distribution of funds. According to the terms and conditions of the bond and with current equity ratio, the distribution of funds would lead to the realization of maturity conditions of the bond.

No essential changes have taken place in the company’s financial situation after the end of the financial period.

Financial reporting

This Financial Statements Bulletin 1.1.-31.12.2015 has been prepared in accordance with IAS 34 Interim Financial Reporting –standard. The financial statement figures presented in the bulletin are based on the company’s audited financial statements using the same accounting policies. The Auditor’s Report was provided on 18/2/2016.

The financial result is reported through four business areas. Solteq Plc’s reported segments are Grocery and special retail, HoReCa; Wholesale, Logistics and Services and Enterprise resource planning of services. The totally owned subsidiary Descom Group Ltd, acquired on 2 July 2015, is presented as one segment. 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.

FINANCIAL INFORMATION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEONSERNIN
(TEUR)
1.10.- 1.10.- 1.1.- 1.1.-
31.12.2015 31.12.2014 31.12.2015 31.12.2014
 
 
REVENUE 20 357 12 218 54 215 40 933
 
 
Other income 109 0 125 0
 
Materials and
services -6 130 -4 668 -15 153 -12 508
 
Employee benefit expenses -10 037 -5 026 -26 374 -18 897
 
Depreciation and impairments -560 -344 -1 782 -1 320
 
 
Other expenses -3 510 -1 271 -9 744 -5 718
 
OPERATING RESULT 230 909 1 288 2 490
 
Financial income
and expenses -453 -49 -984 -177
 
RESULT BEFORE TAXES -223 860 305 2 313
 
Income tax expenses -115 -122 -203 -420
 
RESULT FOR THE FINANCIAL PERIOD
-337 738 102 1 893
 
OTHER COMPREHENSIVE INCOME TO BE RECLASSIFIED TO PROFIT OR LOSS IN SUBSEQUENT PERIODS
Cash flow hedges 0 0 29 6
Other comprehensive income,
net of tax 0 0 23 5
 
TOTAL COMPREHENSIVE INCOME
-337 738 125 1 898
 
Total profit for the period attributable to
Owners of the parent -337 738 102 1 893
 
Total comprehensive income attributable to
Owners of the parent -337 738 125 1 898
 
Earnings / share,
e(undiluted) -0,02 0,05 0,01 0,13
Earnings / share,
e(diluted) -0,02 0,05 0,01 0,13
 
Taxes corresponding to the result have been presented as taxes for the period.


CONSOLIDATED BALANCE SHEET (TEUR)
31.12.2015 31.12.2014
 
ASSETS
 
NON-CURRENT ASSETS
 
 
Tangible assets 2 032 1 652
 
Intangible assets
 
Goodwill 35 235 12 730
Other intangible
rights 4 958 2 231
 
Available-for-sale
financial assets 987 555
 
Trade and other receivables 207 15
 
Total
non-current assets 43 419 17 183
 
CUNNRENT ASSETS
 
Inventories 23 35
 
Trade and other
receivables 18 190 5 290
 
Cash and cash equivalents 2 619 2 530
 
Total
current assets 20 832 7 855
 
TOTAL ASSETS 64 251 25 038
 
 
EQUITY AND LIABILITIES
 
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 1 009 1 009
Share premium reserve 75 75
Hedging reserve 0 -23
Reserve for own shares -1 109 -1 069
Distributable equity
reserve 10 449 6 392
Retained earnings 4 983 5 328
 
Total equity 15 407 11 712
 
Non-current liabilities
Deferred liabilities 1 019 512
Financial liabilities 27 385 2 591
 
Current liabilities 20 440 10 223
 
Total liabilities 48 844 13 326
 
TOTAL EQUITY
AND LIABILITIES 64 251 25 038


CASH FLOW STATEMENT (MEUR)
1-12/2015 1-12/2014
 
Cash flow from business
operations 0,40 3,27
Cash flow from capital
expenditure -16,50 -0,24
Cash flow from financing activities
Own shares -0,43 -0,14
Dividend distribution -0,45 -0,90
Loan agreements 17,07 -1,82
Cash flow from financing
activities 16,19 -2,86
 
Change in cash and cash equivalents 0,09 0,16


STATEMENT OF CHANGES IN GROUP EQUITY (TEUR)
 
A=Share capital
B=Reserve for own shares
C=Share premium account
D=Hedging reserve
E=Distributable equity reserve
F=Retained earnings
G=Total
 
A B C D E F G
 
EQUITY 1.1.2014 1 009 -933 75 -28 6 392 4 331 10 846
 
Total comprehensive income 5 1 893 1 898
 
Transactions with owners
Own shares acquired -135 -135
Dividend distribution -896 -896
Transactions with owners -135 -896 -1 031
 
EQUITY 31.12.2014 1 009 -1 069 75 -23 6 392 5 328 11 712
 
 
EQUITY 1.1.2015 1 009 -1 069 75 -23 6 392 5 328 11 712
 
Total comprehensive income 23 102 125
 
Transactions with owners
Own shares acquired -40 -40
Directed issue 4 242 4 242
Fees for the board members in the form of treasury shares 127 127
Dividend distribution -447 -447
Management incentives -312 -312
Transactions with owners -40 4 057 -447 3 570
 
EQUITY 31.12.2015 1 009 -1 109 75 0 10 449 4 983 15 407


SEGMENT INFORMATION
 
Turnover by segment:
 
Me 1-12/15 1-12/14 Change
 
Grocery and special retail, HoReCa 19,3 20,5 -1,2
Wholesale, Logistics and Services 12,0 15,4 -3,4
Enterprise Asset & Service Business Management 4,9 5,0 -0,1
Descom* 18,1 0,0 +18,1
Total 54,2 40,9 +13,3
 
Operating result by segment:
 
Me 1-12/15 1-12/14 Change
 
Grocery and special retail, HoReCa 0,9 1,2 -0,3
Wholesale, Logistics and Services 0,8 0,6 +0,2
Enterprise Asset & Service Business Management 0,3 0,7 -0,4
Descom* 1,1 0,0 +1,1
Items unallocated to segments -1,8 0,0 -1,8
Total 1,3 2,5 -1,2
 
*Descom Group is consolidated to Solteq Group from July 2 2015.
 
 
QUARTERLY KEY INDICATORS (MEUR)
1Q/14 2Q/14 3Q/14 4Q/14
Net turnover 9,87 10,52 8,33 12,22
Operating result 0,59 0,55 0,44 0,91
Result before taxes 0,51 0,54 0,41 0,86
 
1Q/15 2Q/15 3Q/15 4Q/15
Net turnover 9,13 9,82 14,90 20,36
Operating result 0,46 0,66 -0,06 0,23
Result before taxes 0,44 0,64 -0,55 -0,22
 
 
TOTAL INVESTMENTS (TEUR)
1-12/2015 1-12/2014
Continuing operations,
group total 23 259 958
 
 
LIABILITIES (MEUR) 31.12.2015 31.12.2014
 
Business mortgages 10,00 10,00
Other lease liabilities 0,25 0,15
Lease liabilities for premises 6,20 4,90
 
 
RELATED PARTY TRANSACTIONS (TEUR) 31.12.2015 31.12.2014
Renting arrangements 80 85
Sales to group company 70 0
Outsourcing expenses 3 0
Purchasing the capital stocks of the Management companies 383 0
 
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 31.12.2015 and 31.12.2014.
Hence they are not presented in table form in the bulletin.


DISTRIBUTION OF HOLDINGS BY SECTOR DECEMBER 31, 2015
 
Number of Shares and votes
holdings % number
Private companies 68 45,9 % 8 162 102
Financial and insurance institutions 7 1,7 % 300 237
Public-sector organizations 2 17,7 % 3 155 597
Households 1 826 34,7 % 6 173 447
Non-profit organizations 2 0,0 % 231
Foreigners 6 0,0 % 6 445
Total 1 911 100,0 % 17 798 059
Total of Nominee-registered 5 1,4 % 247 612
 
 
DISTRIBUTION BY NUMBER OF SHARES DECEMBER 31,2015
 
Number of Shares and votes
Number of shares holdings % number
1 - 100 383 0,2 % 27 348
101 - 1 000 1 066 2,8 % 499 549
1 001 - 10 000 373 6,5 % 1 154 526
10 001 - 100 000 73 11,7 % 2 083 564
100 001 - 1 000 000 11 17,3 % 3 074 888
1 000 000 - 5 61,6 % 10 958 184
Total 1 911 100,0 % 17 798 059
Total of Nominee-registered 5 1,4 % 247 612


MAJOR SHAREHOLDERS DECEMBER 31, 2015
 
Shares and votes
number %
1. Sentica Buyout III Ky 4 621 244 26,0
2. Keskinäinen Työeläkevakuutusyhtiö Elo 2 000 000 11,2
3. Profiz Business Solution Oyj 1 781 790 10,0
4. Saadetdin Ali 1 399 553 7,9
5. Keskinäinen Työeläkevakuutusyhtiö Varma 1 155 597 6,5
6. Solteq Plc 825 881 4,6
7. Aalto Seppo 671 882 3,8
8. Roininen Matti 420 000 2,4
9. Corpinghouse Oy 321 356 1,8
10. Sentica Buyout III Co-Investment 180 049 1,0
10 largest shareholders total 13 377 352 75,2
Total of nominee-registered 247 612 1,4
Others 4 173 095 23,4
Total 17 798 059 100,0


FINANCIAL PERFORMANCE INDICATORS (IFRS)
2015 2014 2013 2012 2011
 
Net turnover MEUR 54,2 40,9 38,1 39,0 27,1
Change in net turnover 32,5 % 7,4 % -2,3 % 43,7 % 0,5 %
Operating result MEUR 1,3 2,5 2,1 2,7 1,5
% of turnover 2,4 % 6,1 % 5,6 % 7,0 % 5,4 %
Result before taxes MEUR 0,3 2,3 1,9 2,4 1,3
% of turnover 0,6 % 5,7 % 5,1 % 6,2 % 4,7 %
Equity ratio, % 24,4 48,0 43,5 37,2 34,2
Gearing, % 167,4 % 16,3 % 29,4 % 51,5 % 65,4 %
Gross investments in
non-current assets MEUR 23,3 1,0 1,0 7,4 0,5
Return on equity, % 0,8 % 16,8 % 15,5 % 21,2 % 16,0 %
Return on investment, % 4,5 % 15,5 % 13,2 % 20,8 % 13,1 %
Personnel at end of
period 500 279 277 288 212
Personnel average
for period 391 281 287 270 211
 
KEY INDICATORS PER SHARE
 
Earnings / share, e 0,01 0,13 0,11 0,12 0,08
Earnings / share,
e(diluted) 0,01 0,13 0,11 0,12 0,08
Equity / share, e 0,91 0,79 0,72 0,67 0,52


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

ACQUISITIONS

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. Descom Group Oy was merged to Solteq Plc on 1 January 2016.

Impact of the acquired company to Solteq Group  
 
Aggregate figures for the acquisition 2.7.2015
Thousand EUR
 
Consideration
Paid in cash 6 601
Directed issue 4 536
Total 11 137
 
Provisional values of the assets and liabilities arising from the acquisition
Tangible fixed assets 992
Intangible assests, 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
Loans -6 949
Provisions -187
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 220 thousand euros (customerships).
Goodwill consists of assets that cannot be separated like synergy benefits, competent personnel, market share and entrance 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
Other expenses 820
Transaction costs of the Bond (allocated to financial expenses during the loan period) 360
Distributable quity reserve 294
Total expenses related to the acquisition 1 474
 
Impact on the Solteq Group’s number of personnel 240
 
 
Impact on the Solteq Group's comprehensive income statement 7-12/2015
Revenue** 18 090
Operating profit** 1 104

*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.

The Group did not have any acquisitions of business during the financial year 2014.

Financial reporting

Solteq’s audited financial statements for the year 2015 is published in the company’s web site on February 19, 2016. Additional information on 2015 is also available on our website from February 19, 2016. We will not publish printed Annual Report.

Solteq Plc’s financial information bulletins in 2016 have been scheduled as follows:

– Interim Report 1-3/2016 on Thursday April 21, 2016 at 8 am

– Interim Report 1-6/2016 on Friday July 15, 2016 at 8 am

– Interim Report 1-9/2016 on Tuesday October 25, 2016 at 8 am

More investor information is available from Solteq’s website at www.solteq.com

Distribution:

NASDAQ OMX Helsinki

Key media

www.solteq.com

This information was brought to you by Cision http://news.cision.com

Contacts

Additional information:
Repe Harmanen, +358 400 467 717
CEO
repe.harmanen@solteq.com
or
Antti Kärkkäinen, +358 40 8444 393
CFO
antti.karkkainen@solteq.com

Contacts

Additional information:
Repe Harmanen, +358 400 467 717
CEO
repe.harmanen@solteq.com
or
Antti Kärkkäinen, +358 40 8444 393
CFO
antti.karkkainen@solteq.com