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- Turnover increased by 12,1% during the review period. - The operating result for the review period totalled 0,8 million euros and compared to the previous year it was slightly better. - The company estimates turnover and result to increase as expected during year 2008.
Trade 14,5 12,6 +1,9 Industry and services 7,2 6,8 +0,4 Total 21,7 19,4 +2,3
Operating result by segment:
Me 1-09/08 1-09/07 Change
Trade 1,0 0,4 +0,6 Industry and services -0,2 0,4 -0,6 Total 0,8 0,8 0,0
Managing Director Hannu Ahola:
"Development of company's turnover continued in a planned growth trend during the third quarter. Also the operating profit is on a yearly level slightly better compared to previous year. During recent months we have reported that we have concluded several new significant delivery contracts, which empower the company to achieve the objectives that are set for the whole year 2008 and also provide dynamic start for 2009. The uncertainty in general economic situation is not actually shown in our business and the ongoing projects are continuing as planned."
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 lead their business even better than before and to improve their profitability.
In the beginning of year 2008 Solteq's operations were internally divided to five separate units. The result is still monitored through two business segments. The segment Trade consists of Trade and Auto Trade units. Industry and services segment consists of Industry and Information Management units. Application Services is company's internal service unit. OOO Solteq Russia acts as a separate subsidiary, which serves with the support of the parent company's organization Solteq's customers operating in Russia.
TRADE
Business environment - Trade
IT-investments have remained stable in the business branch trade. International financial crisis has brought caution also to the decision-making of companies in trade, but no fading has been seen in the demand for IT-solutions. IT-system investments in the business branch trade are driven by demand for strengthen customer service to competitive advantage, chaining of stores, need to improve effectiveness of activities and building of new shopping- and logistics centers.
The expansion of Finnish store chains to abroad appear also as growth of demand for IT- solutions. In abroad companies in trade want to implement IT- systems whose properties have been developed and tested on the domestic front. In addition to the demand for IT- systems the globalization of companies in trade appears also in the demand for consultancy services.
The foreign companies in trade, whose expand their activities to Finland, increase also the demand for IT-system knowledge in business branch trade. Companies are seeking Finnish partners who have the knowledge in local systems and who have robust experience in integration of different systems to each other.
The continuance of IT- investments in the trade branch is also backed up by the retailers' need for replace already or soon out-of-date systems. The need for change related to old systems becomes concrete when companies acquire new systems either by themselves or through corporate acquisitions and different systems have to be harmonized or connect to each other at the minimum. At the moment there are a plenty of systems in use in stores that don't support or make possible at all the implementation of new services such as advanced reporting tools.
Interest especially towards various optimization solutions has increased. By the means of procurement optimization the purchasers take care of it that there are right products in a right price and right time available for the customers. Solteq has invested in knowledge of procurement and logistics optimization and it is well positioned, when the awareness of benefits of those solutions continues to increase.
The customers in business branch trade are increasingly interested in various standards that have been developed in EU-area. For the system deliverers in business branch trade standards like SEPA (Single Euro Payments Area) and PCI (Payment Card Industry) entail requirements related to training and gaining certificates. Solteq has systematically trained the standards to its specialists. The objective is to improve company's competitive strength by combining standards of trade to Solteq's own strength, knowledge in value chain of trade.
Business environment - Auto Trade
During the review period there were no major changes in the business environment of auto trade, but since the review period the economical uncertainty has clearly arisen. Increased fuel costs and interest expenses as well as uncertainty due to the global financial crisis can be seen as car trades customer's protracted or postponed purchase decisions. The caution of end customers reverberates to the allocation of car traders own investment decisions. The caution in IT-investments appears in the markets as low demand for system renewals.
Instead of new investments the companies in car trade are still investing in developing existing systems. The focus of IT demand in business branch auto trade is concentrated on different services and added value products which Solteq and various interest groups of the branch are providing. Solteq implements terminal interfaces between the services of different interest groups of auto trade, between its own added value products and existing systems of auto trade.
The business development in auto trade is lead by a group of companies, whose are seeking innovative solutions for their activities regardless of economic cycle. Companies' need to respond more accurately to the needs of their customers is the driver for the development work. The companies in auto trade can achieve changes that make the service more smooth and activities more effective by developing their systems.
Business development - Trade
During the review period the business operations in the Trade unit developed according to plans and unit achieved its challenging financial objectives.
During the review period Solteq's investments continued in the supply of trade related solutions and both cooperation and product integration with Solteq's partners such as Wincor Nixdorf, Microsoft, IBM, SAP, JDA Software and Optiscan. Along with the own product development and partners' versatile supply of solutions Solteq develops solutions for all sized companies in the business branch trade.
The strongest demand was focused on ERP-systems and store management systems. During the review period there were several Solteq Merx and Microsoft Dynamics NAV -ERP projects ongoing, those projects kept the Solteq's specialists of industry branch trade busy. Like previous quarter the interest towards Tekso- point-of-sale systems remained above average among the store management systems.
During the review period the largest single projects were the system renewals in Anttila Oy's distribution center in Hämeenkylä and Tokmanni Group of companies' logistics center in Mäntsälä. Anttila's warehouse management renewal consists of Merx ERP and solution related to speech picking based on voice recognition. During the review period Solteq carried out Tokmanni Group a pilot project that is going to expand during the last quarter of 2008 to cover group-wide ERP and warehouse management systems as well as procurement optimization and solution related to speech picking based on voice recognition.
The focuses of product development were on message communications. Also the development of project management was continued. The best practices related to ways of action of project management, which have been increased along with group's corporate acquisitions, have been collected up in the product development project.
Business development - Auto Trade
The business operations of the Auto Trade unit developed satisfactory during the review period. The service sales of customers' existing systems developed as expected, whereas the license sales of new systems remained below expectations.
INDUSTRY AND SERVICES
Solteq's Industry and Services business segment consists of Industry and Information Management business units. The expertise in enterprise resource planning (ERP) and maintenance systems has been centralized in the Industry business segment. Information Management, that is a new business unit and that was launched in the beginning of 2008, provides harmonization projects for IT- systems and master data maintenance services as well as data collection services. These projects and services are provided both domestically and globally along with international customers. The objective for segregation of Information Management unit is to ensure that harmonization services will be effectively available to all customers of Solteq.
Business environment - Industry
In Finland the industrial companies have continued their investments in ERP-systems and maintenance IT-systems. In the markets there are more signs of caution than before, but so far there have been no evident signs of fading demand, except for the customers in forest industry.
The demand for maintenance IT-systems has remained brisk like it was during the first half of the year. Among ERP-systems especially the sales of Microsoft Dynamics NAV -systems has been active. In addition the demand for data collection -solutions has activated significantly during the third quarter. Russia is the growing market area for Solteq's Industry unit. In Russia the investments in production plants of foreign companies are still in clear upswing. The companies that are investing in Russia want to build the IT- systems of their new production plants so that they match with existing IT-systems in other units and so that the new systems integrate smoothly to existing ones.
In addition more and more Russian companies are willing to invest in maintenance systems. Effectively utilized maintenance system increases production days and thereby generated increase in production capacity provides solutions' short payback period.
Business environment - Information Management
Solteq's Information Management business unit offers harmonization of information system master data (product, customer and supplier information). The objective for harmonization is to improve quality of the data that is recorded to the IT- systems. Leading by information is going rise as a megatrend, and Information Management business unit offers its services to respond to the demand that is generated through above-mentioned trend.
During the third quarter the demand for services remained almost unchanged. The decision-making related to investments in industrial companies has clearly become slower, that is shown in the start-ups of new harmonization projects.
Instead the companies in trade have been more and more activated. Interest towards harmonization services is shown especially among companies in retail business and wholesale. Increased awareness related to the business advantages of leading by information is influencing in the background of increased interest.
Business development - Industry
The business operations of Industry unit developed satisfactory during the review period and unit remained a bit from its financial objectives due to changes in time schedule of one large project.
Among ERP-systems significant single projects have been Componenta's SAP-project, whose execution was started in company's unit in Netherlands during the review period. SAP-project that was carried out to University of Helsinki Funds proceeded into production stage as planned. In addition Solteq started renewal for Kiilto Oy in which solution related to speech picking based on voice recognition is integrated to client's existing ERP-system.
The finalization of Ruukki's project's adjustment work was the most important one among IT-maintenance projects. In November this massive project proceeds into production.
In September Solteq announced maintenance solution delivery to Kotkan Energia, which covers all the power plants of Kotka Energia, district heating centers and pumping stations as well as wind farms. This solution consists of maintenance system, server equipments, and database and implementation project. In addition maintenance system renewal that was delivered to Vantaa Energia was completed during the review period.
The activities of Solteq's Russian unit were developed by strengthening project resources. Unit's sales project backlog increased intensively during the third quarter. There are ongoing sales projects both in maintenance IT-systems and ERP-systems.
During the review period the focus of strong product development was on the development work of IT-maintenance systems. Investments in product development will be increased from before during the last quarter of 2008.
Business development - Information Management
During the review period the business operations of Information Management unit developed like previous quarter. Unit lags behind its annual objectives due to below par sales.
TURNOVER AND RESULT
Turnover increased by 12,1% compared to the previous year and totalled 21.730 thousand euros (19.382 thousand euros).
Turnover consists of several individual customerships. At the most, one client corresponds to a less than five percentages from the turnover.
The operating profit for the review period totalled 803 thousand euros (758 thousand euros), result before taxes was 562 thousand euros (630 thousand euros) and the profit for the review period 393 thousand euros (719 thousand euros).
BALANCE SHEET AND FINANCING
The total assets amounted to 20.758 thousand euros (20.101 thousand euros). Liquid assets totalled 277 thousand euros (108 thousand euros).
The company's interest-bearing liabilities were 6.589 thousand euros (6.996 thousand euros).
The company's equity ratio was 44,8% (46,0%).
INVESTMENTS, RESEARCH AND DEVELOPMENT
Gross investments during the review period were 704 thousand euros (1.702 thousand euros).
The additional price 200 thousand euros, due to the acquisition of Fulmentum Oy, is included in the gross 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, 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 under IFRS have been capitalized in the amount of 408 thousand euros (95 thousand euros). Mainly the costs relating to research and development are presented due to their nature as yearly costs in profit and loss account. Capitalized costs relate to two product development projects. The depreciation according to plan will be started along with the commercial implementation of the projects.
PERSONNEL
The number of permanent employees at the end of the review period was 264 (257). Average number of personnel during the review period was 264 (243). At the end of the review period the number of personnel divided as follows: trade 126, industry and services 111 and shared functions 27.
RELATED PARTY TRANSACTIONS
The company has related party relationships with members of the Board of Directors, the managing director and the management group of the Solteq group of companies. There haven't been significant changes in the company's related party transactions after the issue of financial statements from year 2007.
SHARES, SHAREHOLDERS AND TREASURY SHARES
Solteq Plc's equity on 30.9.2008 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 63.600 shares. The amount of treasury shares represented 0,52 % from total amount of shares and votes in the end of the review period. The equivalent value of acquired shares was 5.283 euros.
Exchange and rate
During the review period, the exchange of Solteq's shares in the Helsinki Stock Exchange was 0,8 million shares (1,9 million shares) and 1,2 million euros (3,0 million euros). Highest rate during the review period was 1,77 euros and lowest rate 1,28 euros. Weighted average rate of the share was 1,51 euros and end rate 1,36 euros. The market value of the company's shares at the end of the review period totalled 16,5 million euros (19,3 million euros). Ownership
At the end of the review period, Solteq had a total of 2.033 shareholders (2.258 shareholders). Solteq's 10 largest shareholders owned 7.996 thousand shares i.e. they owned 65,8 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 28.3.2008 adopted the financial statements for 2007 and the members of the board and the managing director were discharged from liability for the financial year 2007.
The annual general meeting decided in accordance with the board's proposal a dividend of 0,06 euros per share. The balancing date of dividend was 2.4.2008 and payment date 9.4.2008.
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 and at market price. The acquiring is to be done with the unrestricted shareholders' equity. The authorization is valid until the beginning of 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 and Jukka Sonninen will continue as members of the board. Markku Pietilä was elected as new member of the board of directors. The board elected Ali Saadetdin to act as the chairman of the board.
From August 2008 Seppo Aalto, member of the board, has been prevented to participate the work of board of directors until further notice. He is on a sick leave and recovering from a fit.
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
There have been no reportable matters since after the review period.
RISKS AND UNCERTAINITIES
The key uncertainties and risks are related to the timing and pricing of the business deals that are the basis of the turnover, changes in the level of costs and to the company's ability to manage extensive contract agreements and deliveries. The reflections from the ongoing financial crisis form a question mark, the impact of which is hard to estimate.
The key business risks and uncertainties of the company are monitored constantly as a part of the board and management group work. The company has not organized a separate internal audit organization or committee.
PROSPECTS
In the interim review 8.8.2007 Solteq Plc set a long-term objective for years 2008-2010 that is to achieve 10 % yearly organic growth of turnover. Additional growth is sought by allocated acquisitions.
Company's objective for yearly operating profit is to significantly improve the level of operating profit compared to previous years, as the objective is 10 % of turnover. There are still realistic conditions for achieving these objectives. The reflections of the potential recession on the profit making ability of the company are impossible to estimate at the moment. The company will do all efforts to ensure that the profit targets will be achieved.
The operating profit for 2008 is expected to improve even though it will not reach the above-mentioned target level of 10 %.
FINANCIAL INFORMATION
GROUP PROFIT AND LOSS ACCOUNT (TEUR) 1.7.- 1.7.- 1.1.- 1.1.- 1.1.- 30.9.2008 30.9.2007 30.9.2008 30.9.2007 31.12.2007
NET TURNOVER 6 291 5 857 21 730 19 382 27 926
Other operating income 2 10 41 65 69
Raw materials and services -1 409 -1 426 -5 424 -4 099 -6 398
Investments Other shares and similar rights of ownership 93 117 117
Deferred tax assets 493 801 661
Total non-current assets 13 878 13 879 13 676
CURRENT ASSETS
Short-term debtors 6 602 6 114 8 025
Cash in hand and at banks 277 108 345
Total current assets 6 879 6 222 8 370
TOTAL ASSETS 20 758 20 101 22 046
EQUITY AND LIABILITIES
CAPITAL AND RESERVES ATTRIBUTABLE TO THE SHAREHOLDERS OF THE PARENT COMPANY Share capital 1 009 1 001 1 002 Share issue 0 3 64 Company's own shares -86 0 0 Share premium account 75 4 18 Unrestricted equity fund 7 213 7 213 7 213 Retained earnings 693 302 304 Profit for the financial period 393 719 1 118
Net turnover MEUR 21,73 19,38 27,93 Change in net turnover 12,12 % 16,81 % 20,55 % Operating result MEUR 0,80 0,76 1,30 % of turnover 3,70 % 3,91 % 4,67 % Result before taxes MEUR 0,56 0,63 1,09 % of turnover 2,59 % 3,25 % 3,90 % Equity ratio, % 44,79 45,98 44,08 Gearing, % 67,89 % 74,53 % 69,01 % Gross investments in non-current assets MEUR 0,70 1,70 1,83 Return on equity, % 5,66 % 10,38 % 11,50 % Return on investment, % 6,73 % 6,95 % 8,72 % Personnel at end of period 264 257 259 Personnel average for period 264 243 252
Taxes corresponding to the result have been presented as taxes for the financial period.
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
This financial statements bulletin has been prepared in accordance with IAS 34 -standard and the same accounting policies as in the annual financial statements 2007.
All forecasts and estimates presented in the financial interim review 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 economic market and competitive conditions, changes in the regulatory environment and other government actions.
The interim review is unaudited.
SOLTEQ'S FINANCIAL INFORMATION IN 2008
Solteq Plc will publish the financial statements bulletin from the financial year 2008 January 28, 2009.
More information for investors at 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: Helsinki Stock Exchange Key media
This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
