Solteq Oyj — Interim / Quarterly Report 2014

Oct 17, 2014

SOLTEQ PLC’S INTERIM REPORT 1.1.–30.9.2014 (IFRS)

SOLTEQ PLC’S INTERIM REPORT 1.1.–30.9.2014 (IFRS)

Solteq Plc Stock Exchange Bulletin 17.10.2014 at 9.00 am.

• Revenue totalled 28,7 million euros (28,3 million euros).

• The operating result for the review period was 1.581 thousand euros (1.712
  thousand euros).

• The company's operating margin was 5,5 % (6,0 %).

• Solteq Group's equity ratio was 47,4 per cent (41,7 %).

• Earnings per share was 0,08 euros (0,08 euros).

KEY FIGURES

Turnover by operation:

% 1-9/14 1-9/13 1-12/13

Softwareservices 64 67 66
Licences 28 27 27
Hardware 8 6 7

CEO Repe Harmanen:

“This year has generally progressed as planned, but demand did not increase
evenly in all the business sectors in the third quarter. Despite the overall
growth, we did not quite reach the expected net sales level. However, the change
in the third quarter was not significant. Our financial performance was the same
as in 2013, but we find it necessary to make structural stages at this stage.

In our previous Interim Report in July we already stated that we had taken
measures to ensure and improve profitability in the units in which the financial
performance had not met our expectations. In early October, towards the end of
the review period, we also started cooperation negotiations in the company, with
the aim of restructuring our business operations and thereby improving our
financial performance in the medium and long term. We will continue our cost
efficiency improvement programs, and we will also make new decisions to convert
our fixed cost into variable costs for the years to come. These measures will
also enable us to grow in our new strategic technology areas.

We will continue evaluating how the demand for our solutions will develop in the
next few years, and we will speed up the implementation of our strategy. As to
older technologies, we expect to see decreased demand and postponed investment
decisions. On the other hand, we have managed to strengthen our position in our
new strategic areas and anticipate growth in demand in them.

Even if we have seen projects being postponed, market demand has not changed
radically since the early part of the year. We also expect that, due to the
efficiency improvement needs of our client organizations, demand will pick up as
expected especially in the area of new technologies during the last few months
of the year.

In our opinion, our business will develop at the same pace in the last quarter
of the year as in the first six months. The implementation of structural changes
may cause non-recurring expenses, but we do not expect them to affect our profit
forecast for this year.

In the last few months of the year, we will speed up our measures to improve
cost flexibility and growth. We will maintain our net sales and profit forecast
for the whole year at the previous level.

I wish our stakeholders and interest groups all the best for the rest of the
year.”

BUSINESS ENVIRONMENT AND BUSINESS DEVELOPMENT

Solteq is a leading retail and service industry software service company. We
offer long-term partnership and the markets' widest range of retail and service
industry software services, from the optimisation of the entire supply chain to
the management of consumer-customer information. Our technology-independent
solutions help our customers to guide their business operations as efficiently
and profitably as possible.

Solteq Plc has three reported segments. Segmentation is based on the customer
segments of the company. The aim of the segmentation is to respond to customer
demand as a field total supplier and therefore to improve the availability of
services and ease for our customers.

Solteq's turnover totalled 28.715 thousand euros in which contains increase of
1,5 per cent compared to corresponding period in 2013. Solteq's operating result
decreased to 1.581 thousand euros from 1.712 thousand euros that was the
operating result in the corresponding period 2013. The company's operating
margin was 5,5 % (6,0 % in 2013).

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 15,0 million euros and the operating result was 0,7 million euros.

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 9,8 million euros and the operating result was 0,2 million
euros.

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 3,9 million euros and the operating result was 0,7
million euros.

REVENUE AND RESULT

Revenue totalled 28.715 thousand euros (28.303 thousand euros 2013).

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 was 1.581 thousand euros (1.712
thousand euros), result before taxes was 1.453 thousand euros (1.572 thousand
euros) and result for the review period 1.155 thousand euros (1.192 thousand
euros).

The company has started directed cost saving actions in those segments where the
profit development has been unsatisfactory.

Previously in the latest Financial Statements reported financial risks in a
single major project in Wholesale, Trade and Logistics segment, were limited
during the first quarter of the year. According to Solteq's view the project
will no longer have negative impact on result during this financial year.

BALANCE SHEET AND FINANCE

The total assets amounted to 24.555 thou­sand euros (25.686 thou­sand euros).
Liquid assets totalled 1.527 thousand euros (2.390 thousand euros). In addition
to liquid assets, the company has unused bank account limits amounting to a
total of 1.500 thousand euros in the end of the reporting period.

The Group's interest-bearing liabilities were 4.588 thousand euros (5.688
thousand euros).

Solteq Group's equity ratio was 47,4 per cent (41,7 %).

INVESTMENTS, RESEARCH AND DEVELOPMENT

Gross investment during the review period was 704 thousand euros (713 thousand
euros). The investments of the review period and the corresponding period in
2013 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 corresponding review period, either).

PERSONNEL

The number of permanent employees at the end of the review period was 278 (287).
The average number of personnel during the review period was 280 (290). In the
end of the review period the number of personnel could be divided as follows:
Grocery and special retail, HoReCa segment 108 people, Wholesale, Logistics and
Services: 80 people, Enterprise Asset & Service Business Management: 40 people
and 50 people in shared functions.

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 30.9.2014 was 1.009.154,17 euros which was represented by
14.998.061 shares. The shares have no nominal value.

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 827.489 shares. The amount of treasury shares represented 5,5
of the total amount of shares and votes at the end of the review period. The
equivalent value of acquired shares was 55.678 euros.

During the review period, 3.1.2014 one flagging announcement was made. The
Mutual Insurance Company Pension Fennia and LocalTapiola Mutual Pension
Insurance Company formed a new Pension Company starting from 1.1.2014. The
merger led to a situation where the new company Elo Mutual Pension Insurance
Company owned more than 10 % of the shares and votes in Solteq Plc on 3.1.2014.

Exchange and rate

During the review period, the exchange of Solteq's shares in the Helsinki Stock
Exchange was 0,5 million shares (0,6 million shares) and 0,8 million euros (1,0
million euros). Highest rate during the review period was 1,59 euros and lowest
rate 1,35 euros. Weighted average rate of the share was 1,46 euros and end rate
1,51 euros. The market value of the company's shares in the end of the review
period totalled 22,6 million euros (23,2 million euros).

Ownership

In the end of the review period, Solteq had a total of 1.720 shareholders (1.759
shareholders). Solteq's 10 largest shareholders owned 11.270 thousand shares
i.e. they owned 75,1 per cent of the company's shares and votes. Solteq Plc's
members of the board owned a total of 5.574 thousand shares which equals 37,2
per cent of the company's shares and votes.

ANNUAL GENERAL MEETING

At Solteq Plc's Annual General Meeting on 17 March 2014 the 2013 financial
statements were adopted and the members of the board and the managing director
were discharged from liability for the 2013 review period.

In the meeting was accepted the proposal by the board that for the financial
year 2013, 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 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 to acquire or pledge the
company's own shares in such a way that the amount of own shares can be at any
time maximum 10 per cent of the whole amount of company shares. With this
authorization, shares can be acquired or pledged in order to develop the equity
structure; or to be used as part of the personnel incentive system; or as a
funding or for the realization of acquisitions of another company; or for other
business arrangements; or they can be disclosed or invalidated. These shares can
be acquired also in other ratios than the shareowners ownership ratio. The
shares should be acquired from the public stock exchange. The board can decide
on the other conditions for this procedure. This authorization is valid until
next annual general meeting.

The Annual General Meeting authorized the board to decide on an issue of shares
for a maximum amount of 3 000 000 new or existing shares, owned by the company,
in one or several lots. The issue of shares should be implemented as a directed
issue, on the contrary to shareowners subscription rights. With this
authorization the board decides on all other conditions for the share issue.
This authorization is valid until 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 and Matti Roininen
continued as members of the board. Olli Välimäki was elected as a new member of
the board. 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

According to the stock exchange bulletin announced on 2.10.2014 Solteq Plc aims
to adjust its production and cost structure on the segments in which the need of
man-work has decreased due to technological improvement and changes in market
demand.

In consequence company started co-operation negotiations concerning the
termination of 20 employments at the most and temporary layoffs maximum of 20
persons on production and economic basis. The co-operation negotiations involve
about one third of company's personnel.

RISKS AND UNCERTAINTIES

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

PROSPECTS

Both revenue and operating result are expected to grow compared to financial
year 2013.

Financial reporting

This Interim Report has been prepared in accordance with IAS 34 Interim
Financial Reporting -standard and using the same accounting policies as the
financial statements 2013.

The financial result is reported through three business areas. Grocery and
special retail, HoReCa segment, Wholesale, Logistics and Services and Enterprise
Asset & Service Business Management. 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.

FINANCIAL
INFORMATION

CONSOLIDATED
STATEMENT OF
COMPREHENSIVE
INCOME
(TEUR)
1.7.- 1.7.- 1.1.- 1.1.- 1.1.-
30.9.2014 30.9.2013 30.9.2014 30.9.2013 31.12.2013

REVENUE 8 326 8 587 28 715 28 303 38 124

Other income 0 4 0 12 50

Materials and
services -2 375 -2 335 -7 840 -6 623 -9 151

Employee
benefit
expenses -3 945 -3 944 -13 871 -14 283 -19 386

Depreciation -337 -309 -976 -918 -1 228
and
impairments

Other expenses -1 225 -1 370 -4 447 -4 778 -6 268

OPERATING 444 632 1 581 1 712 2 141
RESULT

Financial
income and
expenses -33 -33 -128 -140 -214

RESULT BEFORE 411 599 1 453 1 572 1 927
TAXES

Income tax -95 -152 -298 -380 -306
expences

RESULT FOR THE
PERIOD
316 447 1 155 1 192 1 621

OTHER
COMPREHENSIVE
INCOME
TO BE
RECLASSIFIED
TO PROFIT
OR LOSS IN
SUBSEQUENT
PERIODS
Cash flow 6 13 6 33 27
hedges
Taxes related
to
cash flow -1 -2 -1 -7 -6
hedge
Other
comprehensive
income,
net of tax 5 11 5 26 21

TOTAL 321 458 1 160 1 218 1 642
COMPREHENSIVE
INCOME

Total profit
for the period
attributable
to
owners of the 316 447 1 155 1 192 1 621
parent

Total
comprehensive
income
attributable
to
owners of the 321 458 1 160 1 218 1 642
parent

Earnings/share,

e (undiluted) 0,02 0,03 0,08 0,08 0,11
Earnings/share,

e (diluted) 0,02 0,03 0,08 0,08 0,11

Taxes
corresponding
to the result
have been
presented as
taxes for the
period.

CONSOLIDATED BALANCE 30.9.2014 30.9.2013 31.12.2013
SHEET (TEUR)

ASSETS

NON-CURRENT ASSETS

Tangible assets 1 566 1 290 1 399

Intangible assets
   Goodwill 12 730 12 730 12 730
   Other intangible rights 2 409 3 036 2 853

Available-for-sale
financial assets 551 546 546

Trade and other receivables 17 63 32

Total
non-current assets 17 273 17 665 17 560

CURRENT ASSETS

Inventories 133 131 156

Trade and other receivables 5 622 5 500 5 303

Cash and cash equivalents 1 527 2 390 2 367

Total
current assets 7 282 8 021 7 826

TOTAL ASSETS 24 555 25 686 25 386

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
   Hedging reserve -23 -23 -28
   Reserve for own shares -1 012 -933 -933
   Distributable equity
   reserve 6 392 6 392 6 392
   Retained earnings 5 037 4 196 4 331

Total equity 11 477 10 715 10 846

Non-current liabilities
Deferred tax liabilities 551 1 217 593
Financial liabilities 2 707 3 974 3 695

Current liabilities 9 820 9 780 10 252

Total liabilities 13 078 14 971 14 540

TOTAL EQUITY
AND LIABILITIES 24 555 25 686 25 386

CASH FLOW STATEMENT (MEUR)
1-9/2014 1-9/2013 1-12/2013

Cash flow from
business operations 1,36 3,19 3,83
Cash flow from capital
expenditure -0,70 -0,72 -0,96
Cash flow from financing activities
   Own shares -0,08 0,00 0,00
   Dividend distribution -0,45 -0,60 -0,90
   Loan agreements -0,97 -0,72 -0,85
Cash flow from financing
activities -1,50 -1,32 -1,75

Change in cash and cash equivalents -0,84 1,15 1,12

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 1.1.2013 1 009 -933 75 -49 6 368 3 607 10 077

Total comprehensive income 26 1 192 1 218

Directed issue 24 24
Dividend distribution -603 -603

EQUITY 30.9.2013 1 009 -933 75 -23 6 392 4 196 10 715

EQUITY 1.1.2014 1 009 -933 75 -28 6 392 4 331 10 846

Total comprehensive income 5 1 155 1 160

Acquiring of own shares -79 -79
Dividend distribution -449 -449

EQUITY 30.9.2014 1 009 -1 012 75 -23 6 392 5 037 11 477

SEGMENT INFORMATION

Turnover by segment:

Me 1-9/14 1-9/13 Change

Grocery and special retail, HoReCa 15,0 13,2 +1,8
Wholesale, Logistics and Services 9,8 11,2 -1,4
Enterprise Asset & Service Business Management 3,9 3,9 0
Total 28,7 28,3 +0,4

Operating result by segment:

Me 1-9/14 1-9/13 Change

Grocery and special retail, HoReCa 0,7 0,8 -0,1
Wholesale, Logistics and Services 0,2 0,2 0
Enterprise Asset & Service Business Management 0,7 0,7 0
Total 1,6 1,7 -0,1

QUARTERLY KEY INDICATORS (MEUR)
4Q/12 1Q/13 2Q/13 3Q/13
Net turnover 11,21 9,99 9,73 8,59
Operating result 0,88 0,54 0,54 0,63
Result before taxes 0,84 0,48 0,49 0,60

                 4Q/13  1Q/14  2Q/14  3Q/14

Net turnover 9,82 9,87 10,52 8,33
Operating result 0,43 0,59 0,55 0,44
Result before taxes 0,36 0,51 0,54 0,41

TOTAL INVESTMENTS (TEUR)
1-9/2014 1-9/2013 1-12/2013
Continuing operations,
group total 704 713 957

LIABILITIES (MEUR) 30.9.2014 30.9.2013 31.12.2013

Business mortgages 10,00 10,00 10,00
Other lease liabilities 2,89 3,56 3,53

RELATED PARTY TRANSACTIONS (TEUR) 30.9.2014 30.9.2013 31.12.2013
Renting arrangements 62 62 83
Outsourcing expenses 0 2 2

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. Hence they are not presented in table form in the bulletin.

MAJOR SHAREHOLDERS 30.9.2014

                                        Shares and votes
                                        Number      %

1. Saadetdin Ali 3 481 383 23,2
   2. Keskinäinen Työeläkevakuutusyhtiö Elo 2 000 000 13,3
2. Profiz Business Solution Oyj 1 756 180 11,7
3. Aalto Seppo 1 662 206 11,1
   5. Keskinäinen Työeläkevakuutusyhtiö Varma 644 917 4,3
4. Roininen Matti 410 000 2,7
5. Pirhonen Jalo 408 480 2,7
6. Solteq Management Oy 400 000 2,7
7. Solteq Management Team Oy 350 000 2,3
8. Saadetdin Katiye 156 600 1,0
   10 largest shareholders total 11 269 766 75,1
   Total of nominee-registered 128 298 0,9
   Others 3 599 997 24,0
   Total 14 998 061 100,0

FINANCIAL PERFORMANCE
INDICATORS (IFRS) 1-9/2014 1-9/2013 1-12/2013

Net turnover MEUR 28,7 28,3 38,1
Change in net turnover 1,5 % 1,8 % -2,3 %
Operating result MEUR 1,6 1,7 2,1
% of turnover 5,5 % 6,0 % 5,6 %
Result
before taxes MEUR 1,5 1,6 1,9
% of turnover 5,1 % 5,6 % 5,1 %
Equity ratio, % 47,4 41,7 43,5
Gearing, % 26,7 % 30,8 % 29,4 %
Gross investments in
non current assets MEUR 0,7 0,7 1,0
Return on equity, % 13,9 % 15,8 % 15,5 %
Return on investment, % 13,4 % 14,5 % 13,2 %
Personnel at the end of
period  278 287 277
Personnel average
for period  280 290 287

KEY INDICATORS PER SHARE

Earnings/share, e 0,08 0,08 0,11
Earnings/share,
e(diluted) 0,08 0,08 0,11
Equity/share, e 0,77 0,72 0,72

CALCULATION
OF
FINANCIAL
RATIOS

Solvency
ratio, in
percentage:
equity
----------------------- x 100
-----------
balance sheet total -
advances received

Gearing:
interest bearing
liabilities - cash,
bank balancies 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
(keskim. kauden aikana)

Earnings
per share:
pre-tax result - taxes
+/- minority interest
-----------------------
-------------
diluted average share
issue corrected number
of shares

Diluted
earnings
per share:
diluted profit before
taxation - taxes -/+
minority interest
-----------------------
-----------------------
-
diluted average share
issue
corrected number of
shares

Equity per
share:
equity
-----------------------
number of shares

Financial reporting

Solteq Plc estimates to publish the financial statements bulletin from the
financial year 2014 February 13, 2015 at 9.00 am.

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

Additional information:

CEO, Repe Harmanen

Tel +358 400 467 717

E-mail repe.harmanen@solteq.com

CFO, Antti Kärkkäinen

Tel +358 40 8444 393

E-mail antti.karkkainen@solteq.com

Distribution:

NASDAQ OMX Helsinki

Key media

www.solteq.com

Attachments: