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Solteq Oyj Interim / Quarterly Report 2021
3341_rns_2021-04-29_2216cdff-9cbf-411c-8834-8731c3097386.pdf
Interim / Quarterly Report
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SOLTEQ
Interim Report Q1 2021
JANUARY 1–MARCH 31, 2021
Solteq Plc Interim Report January 1–March 31, 2021
The company continued its strong profitable growth driven by Utilities business
January–March
- Revenue totaled EUR 17.4 million (15.7) and increased by 10.9 percent
- EBITDA was EUR 3.5 million (1.9) and EBITDA percent was 20.1 (12.0)
- Operating profit was EUR 2.2 million (0.7) and operating profit percent was 12.8 (4.6)
- Earnings per share was EUR 0.08 (0.00)
- Solteq Group’s equity ratio was 32.4 percent (31.5)
- Net cash flow from operating activities was EUR 3.5 million (3.4)
Key figures
| 1-3/2021 | 1-3/2020 | Change % | 1-12/2020 | Rolling 12mos | |
|---|---|---|---|---|---|
| Revenue, TEUR | 17,383 | 15,674 | 10.9 | 60,452 | 62,160 |
| EBITDA, TEUR | 3,490 | 1,875 | 86.2 | 10,380 | 11,995 |
| Comparable EBITDA, TEUR | 3,554 | 2,039 | 74.3 | 10,810 | 12,325 |
| Operating profit, TEUR | 2,232 | 716 | 211.6 | 5,350 | 6,866 |
| Comparable operating profit, TEUR | 2,296 | 880 | 160.8 | 5,780 | 7,196 |
| Profit for the financial period, TEUR | 1,456 | 40 | 3,540.0 | 1,980 | 3,396 |
| Earnings per share, EUR | 0.08 | 0.00 | 3,523.1 | 0.10 | 0.18 |
| Operating profit, % | 12.8 | 4.6 | 8.9 | 11.0 | |
| Comparable operating profit, % | 13.2 | 5.6 | 9.6 | 11.6 | |
| Equity ratio, % | 32.4 | 31.5 | 35.5 | 32.9 |
Profit guidance 2021
Soltaq Group’s revenue is expected to grow clearly and operating profit to improve clearly.
SOLTEQ
CEO Olli Väätäinen’s review:
Solteq Group’s revenue grew clearly, and profit improved considerably relative to the comparison period. Solteq Group’s revenue was EUR 17.4 million, an increase of 10.9 percent. The Group’s operating profit was EUR 2.2 million, up by 211.6 percent from the comparison period. The Group’s operating profit margin was 12.8 percent. The company’s EBITDA increased by 86.2 percent relative to the comparison period, amounting to EUR 3.5 million. Solteq Group’s EBITDA margin was 20.1 percent.
Solteq Group’s business operations are organized into two segments: Solteq Software (software business) and Solteq Digital (services business). The Software segment accounted for just over one-third of the Group’s revenue, and the Digital segment for just under two-thirds. The Software segment accounted for 44.3 percent of the Group’s EBITDA. The result of both segments was good. Revenue from international subsidiaries accounted for 21.6 percent of the Group’s revenue, which was slightly below the comparison period due to the COVID-19 pandemic.
Solteq Software’s revenue increased by 43.1 percent in the first quarter. The growth was significant, and mostly organic. The business transfer agreement with Partiture Oy at the beginning of March slightly increased the revenue of Utilities business area. Investments in the company’s product development amounted to EUR 0.7 million. Reporting of recurring revenue for the Software segment began at the beginning of the financial year. Recurring revenue accounted for 29.1 percent of the segment’s revenue in the first quarter. The company estimates that the share of recurring revenue will increase to about one-third of the segment’s revenue this year. The segment’s long-term financial goal is to increase revenue by at least 20 percent annually, and to increase the share of recurring revenue to more than 50 percent over the next three years.
Solteq Digital’s revenue remained almost at the level of the comparison period. The segment’s profitability improved significantly, and operating profit margin was 11.9. The growth of the segment was slowed by the COVID-19 pandemic, which continued to have a negative impact on travel, service, and leisure sectors. In addition, major customer projects were completed, while the launch of new customer projects was delayed.
Solteq Group’s business outlook is good both in Finland and internationally. Driven by the Utilities business, the Solteq Software segment is expected to continue its upward growth trend. Despite the pandemic, the outlook for the Solteq Digital segment is expected to remain at the previous financial year’s level or even to grow moderately. The digital reality is affecting everyone. Keeping up with the latest developments is therefore on the current and future agendas of companies of different sizes and in various sectors.
SOLTEQ
Operating environment
Solteq primarily operates with selected solutions in chosen sectors of the Nordic IT services and software market. The markets offer good prospects for positive business development – despite the general uncertainty created by the COVID-19 pandemic. A market research company IDC forecasts that companies are on their way to meet their ‘digital destiny’. IDC estimates that 65 percent of global GDP will be digitized by 2022, as most products and services are based on a delivery model or require digital augmentation to remain competitive. IDC forecasts that global IT spending will reach 6,800 billion dollars by 2023. IDC estimates that by 2023 up to 65 percent of European companies will modernize their core business operations using cloud services.
The digital services and software products provided by the company comprehensively cover trends that are expected to strengthen in the future. According to a recent report by Gartner, IT decision-makers in the Nordics are expected to increase their investments during 2021 particularly in terms of data utilization, cloud technology, the development of digital business, process automation, artificial intelligence, and machine learning.
Solteq offers industry-specific solutions for trade, manufacturing industry, car retail, utilities sector, hotel and restaurant business, and public sector. The company has a significant competitive edge based on long-term experience of the industry-specific needs. Demand continues to grow in these sectors for solutions that digitalize core operations and make use of artificial intelligence, data, automation and seamless omnichannel systems. The negative impact of the COVID-19 pandemic is expected to occur during the first half of the year, affecting customer projects in the travel, restaurant, and leisure sectors.
The digitalizing energy sector is one of the company’s key drivers for growth in the Nordics. Demand for digital expert services and solutions is increased by statutory obligations to renew data systems. Gartner forecasts that short-term IT investments will grow by 4.8 percent in the utilities sector in Western Europe. Solteq specializes in software and IT services in the industry, which has quickly raised the company into a strong market position. Solteq has also expanded its Utilities sector operations to Sweden, where the energy sector is awaiting the development and confirmation of a more detailed timetable for a centralized information-exchange system project, similar to Datahub in Finland.
The company will continue to invest in its own product development, in which the autonomous robotics solutions for retail trade and indoor logistics play a key role. Gartner predicts that autonomous solutions will soon become more common in a wide range of industries. The market research company forecasts growing use of autonomous robotics in US retail stores, from the current level of around one percent to 60 percent by 2025. Research company ROBO Global expects fast adoption of autonomous robotics solutions by logistics and warehouse centers due to the transformation of delivery chains and the rapid growth in online shopping. Solutions making use of automation and robotics are also expected to become more common in construction as well: Research and consulting company MarketsandMarkets expects demand to increase at an annual rate of 10 percent, while investments will reach USD 121.5 billion by 2024.
IT sector players are expected to provide more agile and scalable delivery models. Solteq meets expectations with an organization that makes use of agile methods and by focusing on the as-a-Service (aaS) model and its own software products.
SOLTEQ
Revenue and profit
January–March
Revenue increased by 10.9 percent compared to the previous year and totaled EUR 17,383 thousand (15,674). Operating profit for the review period was EUR 2,232 thousand (716). Comparable operating profit was EUR 2,296 thousand (880). Profit before taxes was EUR 1,838 thousand (108) and the profit for the financial period was EUR 1,456 thousand (40).
Solteq Digital
January–March
The Solteq Digital segment’s revenue remained almost at the level of the comparison period, and the segment’s profitability improved significantly. The segment’s revenue was EUR 11,174 thousand (11,336), a decrease of 1.4 percent from the comparison period. The segment’s EBITDA increased by 62.3 percent, to EUR 1,946 thousand (1,199). The segment’s operating profit was EUR 1,328 thousand (539), up by 146.2 percent from the comparison period.
The segment’s business consists of three solution areas: digital business and commercial solutions, data-driven solutions, and business solutions. Of the segment’s revenue, 42.0 percent was derived from digital business and commercial solutions, 22.2 percent from data-driven solutions, and 35.9 percent from business solutions.
The segment’s growth was slowed by the COVID-19 pandemic negative impact on the travel, service, and leisure sectors. In addition, major customer projects were completed, while the launch of new customer projects was delayed. Demand remained strong in key business areas such as digital operations and commerce, as well as information management and analytics services.
Business is expected to develop steadily during the current quarter.
| Solteq Digital | 1-3/2021 | 1-3/2020 | Change % | 1-12/2020 |
|---|---|---|---|---|
| Revenue, TEUR | 11,174 | 11,336 | -1.4 | 41,610 |
| Comparable EBITDA, TEUR | 1,984 | 1,313 | 51.1 | 6,236 |
| Comparable EBITDA, % | 17.8 | 11.6 | 15.0 | |
| EBITDA, TEUR | 1,946 | 1,199 | 62.3 | 5,856 |
| EBITDA, % | 17.4 | 10.6 | 14.1 | |
| Comparable operating profit, TEUR | 1,366 | 654 | 109.0 | 3,499 |
| Comparable operating profit, % | 12.2 | 5.8 | 8.4 | |
| Operating profit, TEUR | 1,328 | 539 | 146.2 | 3,119 |
| Operating profit, % | 11.9 | 4.8 | 7.5 |
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SOLTEQ
Solteq Software
January–March
The first quarter for the Solteq Software segment was a time of strong growth. Solteq Digital’s revenue was EUR 6,209 thousand (4,338), up by 43.1 percent. During the review period, EBITDA was EUR 1,545 thousand (676), an increase of 128.4 percent on the comparison period. Operating profit amounted to EUR 904 thousand (177), an increase of 411.0 percent on the comparison period.
The segment’s business primarily consists of the Utilities business and the Retail sector’s software and services. The Utilities business contributed 55.7 percent and the Retail business 37.4 percent to the segment’s revenue. The COVID-19 pandemic decelerated new business efforts of Retail solutions within the travel, restaurant, and leisure sectors.
The offering of the Utilities business expanded to consulting and professional services with the business transfer agreement with Partiture Oy on March 1, 2021. The debt-free purchase price of the business transfer agreement was EUR 2,350 thousand. The Solteq Utilities business area was organized into two parallel units: Solteq Utilities Consulting provides business strategic and data-driven expert services, and Solteq Utilities focuses on solutions utilizing the company’s own software products. As a result of the business transfer agreement, 16 experts transferred to Solteq from Partiture Oy. The Utilities sector is one of Solteq Software’s key growth drivers in the Nordic market, where digital disruption has put IT solutions and related services at the heart of the strategy for utilities companies.
The first quarter was in line with expectations for the software and services of the Retail sector business area. The company’s in-depth industry expertise has ensured the development of service-based applications that comprehensively meet digital ecosystem needs in the specialized retail sector. In particular, the omnichannel business features of the solutions, as well as cloud-based, versatile integration capabilities and open interfaces, create a significant competitive advantage for Solteq Software. During the review period, delivery agreements were also signed for the first international customer projects in the Retail business area.
In autonomous robotics, the focus was on implementing the first commercial pilot project for Solteq Retail Robot in collaboration with a Finnish retail chain. Preparations for a pilot project featuring Solteq Indoor Logistics Robot were also made in the first quarter. The project involves testing the benefits of automated internal logistics in a hospital environment. The company will continue to investigate the possibility of incorporating the Solteq Robotics business area.
Recurring revenue accounted for 29.1 percent of the segment’s revenue. This was lower than the company’s previous estimates, due to high amount of expert work related to delivery projects in the Utilities business. Recurring revenue consists of software licensing, maintenance, and support fees. The company aims to increase recurring revenue to account for more than 50 percent of the revenue within the next three years.
During the review period, Solteq invested EUR 719 thousand in product development. Product development investments are estimated to be approximately EUR 2,500 thousand for the current year. As the company’s own products are commercialized, the company’s annual product development investments will account for 10 to 15 percent of the Software segment’s revenue.
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The business outlook for Solteq Software is expected to remain positive.
| Solteq Software | 1-3/2021 | 1-3/2020 | Change % | 1-12/2020 |
|---|---|---|---|---|
| Revenue, TEUR | 6,209 | 4,338 | 43.1 | 18,842 |
| Comparable EBITDA, TEUR | 1,571 | 726 | 116.3 | 4,574 |
| Comparable EBITDA, % | 25.3 | 16.7 | 24.3 | |
| EBITDA, TEUR | 1,545 | 676 | 128.4 | 4,524 |
| EBITDA, % | 24.9 | 15.6 | 24.0 | |
| Comparable operating profit, TEUR | 930 | 227 | 310.1 | 2,281 |
| Comparable operating profit, % | 15.0 | 5.2 | 12.1 | |
| Operating profit, TEUR | 904 | 177 | 411.0 | 2,231 |
| Operating profit, % | 14.6 | 4.1 | 11.8 |
Balance sheet and financing
Total assets amounted to EUR 79,134 thousand (78,709). Liquid assets totaled EUR 5,923 thousand (8,400). The company has a standby credit limit of EUR 4,000 thousand, which at the end of the review period was unused. At the end of the comparison period, EUR 1,000 thousand of the standby credit limit was in use. The company also has a bank account credit limit of EUR 2,000 thousand which was unused at the end of both the review and the comparison period. At the end of the review period, the company had a EUR 1,463 thousand Business Finland loan for product development (1,205).
The Group's interest-bearing liabilities were EUR 31,007 thousand (34,444).
Solteq Group's equity ratio was 32.4 percent (31.5).
On October 1, 2020, Solteq issued a new fixed rate bond with a nominal value of EUR 23.0 million. The proceeds from the bond were used to redeem an old bond, issued on July 1, 2015. Annual interest of 6.0 percent will be paid on the new bond, and it will mature on October 1, 2024. The new bond can be redeemed before its final maturity date. With the new bond, the company secured its long-term financing and going concern.
The terms of the bond include financial covenants concerning the distribution of funds and incurring financial indebtedness other than permitted under the terms of the Bond (Incurrence Covenant). The covenants require that at any agreed review date, the equity ratio exceeds 27.5 percent, 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 4:1.
The maturity distribution of financial liabilities is presented in the tables section of this Interim Report.
Distribution of assets
The Annual General Meeting held on March 30, 2021 resolved that a dividend of EUR 0.15 per share will be paid based on the balance sheet that was adopted for the financial year 2020. The dividend, totaling EUR 2,909 thousand, was paid to shareholders after the review period, on April 12, 2021.
SOLTEQ
SOLTEQ
Investment, research, and development
The net investments during the review period were EUR 3,364 thousand (2,125). Of the net investments, EUR 2,350 thousand were related to the business transfer agreement with Partiture Oy on March 1, 2021. During the comparison period, no acquisitions were performed. EUR 719 thousand (1,049) of the net investments were capitalized development costs relating to continued further development of the existing software products and the development of new software products. Other investments were EUR 295 thousand (1,076). Other investments include the net change in rented premises and equipment, totaling EUR 249 thousand (867).
Capitalized development costs included EUR 426 thousand (706) of staff costs.
Personnel
The number of permanent employees at the end of the review period was 627 (597).
Key figures for Group's personnel
| 1-3/2021 | 1-3/2020 | 1-12/2020 | |
|---|---|---|---|
| Average number of personnel during period | 613 | 587 | 593 |
| Employee benefit expenses, TEUR | 8,650 | 8,191 | 31,379 |
Related party transactions
Solteq's related parties include the Board of Directors, CEO and Executive Team.
The related party actions and euro amounts are presented in the tables at the end of this Interim Report.
Shares, shareholders, and treasury shares
Solteq Plc's equity on March 31, 2021 was EUR 1,009,154.17 which was represented by 19,396,501 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.
Solteq Plc did not hold any treasury shares at the end of the review period.
On March 8, 2021 Solteq Plc directed a share issue, totaling to 89,974 shares. The share issue was related to the business transfer agreement signed with Partiture Oy during the review period. The new shares were registered into Trade Register on the March 18, 2021 and were publicly traded as of March 19, 2021. After the changes, the total number of shares is 19,396,501. The issued shares represent around 0.5 percent of the company's shares and votes. The subscription price was recorded into the invested unrestricted equity reserve of the company.
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SOLTEQ
Exchange and rate
During the review period, the exchange of Solteq's shares in the Nasdaq Helsinki Ltd was 4.6 million shares (0.7) and EUR 20.5 million (0.9). The highest rate during the review period was EUR 6.55 and lowest rate EUR 2.56. The weighted average rate of the share was EUR 4.44 and end rate EUR 5.35. The market value of the company's shares at the end of the review period totaled EUR 103.8 million (19.3).
Ownership
At the end of the review period, Solteq had a total of 4,746 shareholders (2,220). Solteq's 10 largest shareholders owned 13,229 thousand shares i.e. they owned 68.2 percent of the company's shares and votes. Solteq Plc's members of the Board of Directors and CEO owned 592 thousand shares on March 31, 2021 (592).
Annual General Meeting
Solteq's Annual General Meeting was held on March 10, 2021. The Annual General Meeting approved the financial statement for period January 1–December 31, 2020 and discharged the CEO and the Board of Directors from liability.
In accordance with the proposal of the Board of Directors, the Annual General Meeting resolved that dividend of EUR 0.15 per share is paid for the financial period ended on December 31, 2020.
The Annual General Meeting authorized the Board of Directors to decide on share issue, carried out with or without payment and on issuing share options, and other special rights referred to in Chapter 10, Section 1 of the Finnish Companies Act as follows:
The maximum total amount of shares or other rights is 3,000,000. The authorization includes the right to give new shares and special rights or convey the company's own shares. The authorization includes a right to deviate from the shareholders' pre-emptive right of subscription if there is a weighty financial reason for the company, e.g. to improve the capital structure, to execute business acquisitions and other business improvement arrangements or to implement the company's incentive schemes. The authorization includes that the Board of Directors may decide on all other terms concerning the share issue and the granting of special rights, including the subscription price and the payment of the subscription price in cash or in whole or in part by other means (subscription in kind) or by using a claim on the subscriber to offset the subscription price and to record it in the company's balance sheet.
The authorization is effective until the next Annual General Meeting, however, no longer than until April 30, 2022 (April 30, 2022 included).
In addition, the Annual General Meeting authorized the Board of Directors to decide on accepting the company's own shares as pledge as follows:
The Board of Directors is authorized to decide on accepting the company's own shares as pledge (directed) regarding business acquisitions or when executing other business arrangements. Accepting pledge may occur at once or in multiple transactions. The number of own shares to be accepted as pledge shall not exceed 2,000,000 shares. The authorization includes that the Board of Directors may
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decide on other terms concerning the pledge. The authorization is effective until the next Annual General Meeting, however, no longer than until April 30, 2022 (April 30, 2022 included).
Board of Directors and auditors
The Annual General Meeting on March 30, 2021 decided that the Board of Directors includes six members. Aarne Aktan, Lotta Kopra, Markku Pietilä, Panu Porkka, Katarina Segerståhl and Mika Uotila will continue on the Board.
In the Board meeting, held after the Annual General Meeting, Markku Pietilä was elected as the Chairman of the Board.
In addition, Aarne Aktan, Katarina Segerståhl and Markku Pietilä were appointed to the members of the Audit Committee. Aarne Aktan acts as the Chairman of the Audit Committee.
KPMG Oy Ab, Authorized Public Accountants, was re-elected as auditors, with Petri Sammalisto, APA, acting as the chief auditor.
Other events during the review period
On March 1, Solteq Plc announced the acquisition of Partiture Oy's professional services business, specialized in the utilities sector.
On March 18, Solteq Plc announced that the new shares from the share issue to Partiture Oy have been registered into Trade Register.
Events after the review period
On April 26, Solteq Plc announced that Sentica Partners Oy plans to reduce its ownership in Solteq Plc. According to the press release, no decision has yet been made on the method or the date of the possible share sale.
On April 27, Solteq Plc announced that the company revises upwards its operating profit guidance for 2021 due to better-than-expected performance during the beginning of the year. New guidance for 2021 states that Solteq Group's revenue is expected to grow clearly and operating profit to improve clearly.
Risks and uncertainties
Material uncertainties and near-term risks consist of the direct and indirect impacts of the COVID-19 pandemic on the company's business and financial position.
Other key uncertainties and risks 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, developing company's own products and their commercialization, and the company's capability to manage extensive customer contracts and deliveries.
SOLTEQ
The key business risks and uncertainties of the company are monitored constantly as a part of the Board of Directors' and Executive team's duties. In addition, the company has the Audit Committee appointed by the Board of Directors.
Impact of the COVID-19 pandemic on financial reporting
The company is continuously monitoring the COVID-19 pandemic situation, assessing its impact on the company's operations, strategy and realization of targets, performance, financial position, and cash flows. Based on information currently available, the COVID-19 pandemic is not expected to have any long-term impact on the company's financial performance.
Based on the impairment tests of goodwill and capitalized development costs were performed during the last quarter of the financial year 2020. No need for impairment was identified, but a clear margin was left for each tested unit and project. No impairment losses were recognized in 2020 related to the goodwill of the group, merger losses of the parent company or development costs. Impairment tests have been carried out at the cash-generating unit level. The recoverable amount has been determined by means of the value in use. The determined anticipated cash flows are based on the operating result budget for 2021 and operating result forecasts for the subsequent four years. The company's management has assessed the impairment tests of goodwill and capitalized development costs included in the 2020 financial statements in relation to the current financial period's performance and long-term expectations. Based on this, the company's management has not identified the need for additional testing of goodwill or development costs during the reporting period. The pandemic has had no effect on the valuation of the assets.
The company has not historically incurred material credit losses, so the probability of such losses is low, and provisions for them have been small. Considering the situation, the company prepared for any increased credit losses due to the COVID-19 pandemic in the first quarter of last year by increasing the credit loss provisions in the balance sheet. No significant changes have yet been observed in customers' payment behavior. The company is following the situation closely.
The company has also assessed the valuation of its other asset items and discovered that the pandemic has had no effect on their valuation so far.
Following the financial arrangements carried out in the final quarter of the last year, the company has a EUR 23.0 bond that matures on October 1, 2024. The company also has a EUR 4,000 thousand standby credit limit and a EUR 2,000 thousand bank account credit limit, both unused at the end of the review period on March 31, 2021. The company's operations are on a solid foundation and it is the management's view that the company has the capacity to overcome the COVID-19 pandemic's negative impacts on its business operations.
SOLTEQ
Financial reporting
This Interim Report has been prepared in accordance with the recognition and valuation principles of IFRS standards and using IAS 34 and the same accounting policies as the Financial Statements 2020. The new IFRS standards, taken into use on January 1, 2021, do not have a significant impact in the Group's Interim Report. The information presented in the Interim Report has not been audited.
Revenue from contracts with customers
Due to the change in the segment structure that took place at the beginning of the previous financial year, the company analyzed the sources of income in more detail and has decided to specify the reporting of the revenue from contracts with customers in its financial reporting.
The revenue of the Solteq Digital mainly comprises of professional services. These services include consulting, implementation of systems as projects, continuous development services, and maintenance. The reporting of revenue from contracts with customers in Solteq Digital will remain nearly the same. In the future, the revenue will be classified in either services or software and hardware sales. The services mainly consist of time and material based consulting, support and development services provided by the company, as well as projects. The company recognizes revenue over time as the customer receives the benefits of the service. In addition, Solteq Digital generates revenue of software and hardware sales, consisting mainly of third-party software license and maintenance fees.
Soltaq Software's business is based on the company's own products. The segment's revenue is mainly derived from license and maintenance fees for Solteq's own products, and related services such as integrations and implementation projects. Solteq Software's revenue from contracts with customers is classified into services, recurring revenue/SaaS, and non-recurring license and hardware sales. The services mainly consist of time and material based consulting as well as support and development services and projects provided by the company, for which the customer receives the benefits as the service is provided. Recurring revenue/SaaS includes sales related to Solteq's own products where the amount charged is not dependent on the amount of work performed and the charge is recurring or deferred over the contract period. In addition, the contract needs to be valid until further notice or the contract period is minimum 12 months in order to be classified as recurring Revenue/SaaS. Non-recurring license and hardware sales include license fees related to the company's own software and directly related products and hardware. The revenue is recognized as point in time.
The comparable data for the financial year 2020 is presented in the tables at the end of this Interim Report.
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Financial information
Consolidated statement of comprehensive income
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Revenue | 17,383 | 15,674 | 60,452 |
| Other income | 47 | 22 | 279 |
| Materials and services | -1,948 | -1,671 | -5,936 |
| Employee benefit expenses | -10,189 | -9,520 | -36,891 |
| Other expenses | -1,802 | -2,631 | -7,523 |
| Depreciations and impairments | -1,258 | -1,158 | -5,030 |
| Operating profit | 2,232 | 716 | 5,350 |
| Financial income and expenses | -394 | -608 | -2,613 |
| Profit before taxes | 1,838 | 108 | 2,737 |
| Income taxes | -382 | -68 | -757 |
| Profit for the financial period | 1,456 | 40 | 1,980 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | |||
| Currency translation differences | -44 | -80 | 1 |
| Other comprehensive income, net of tax | -44 | -80 | 1 |
| Total comprehensive income | 1,412 | -40 | 1,981 |
| Total profit for the period attributable to owners of the parent | 1,456 | 40 | 1,980 |
| Total comprehensive income attributable to owners of the parent | 1,412 | -40 | 1,981 |
| Earnings per share, EUR (undiluted) | 0.08 | 0.00 | 0.10 |
| Earnings per share, EUR (diluted) | 0.08 | 0.00 | 0.10 |
Taxes corresponding to the profit have been presented as taxes for the period.
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Consolidated statement of financial position
| TEUR | 31 Mar 2021 | 31 Mar 2020 | 31 Dec 2020 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Tangible assets | 384 | 596 | 433 |
| Right-of-use assets | 6,542 | 7,520 | 6,933 |
| Intangible assets | |||
| Goodwill | 40,918 | 38,776 | 38,949 |
| Other intangible assets | 11,911 | 10,929 | 11,277 |
| Other investments | 438 | 480 | 441 |
| Other long-term receivables | 157 | 198 | 158 |
| Non-current assets total | 60,349 | 58,499 | 58,190 |
| Current assets | |||
| Inventories | 64 | 231 | 74 |
| Trade and other receivables | 12,799 | 11,579 | 11,540 |
| Cash and cash equivalents | 5,923 | 8,400 | 4,877 |
| Current assets total | 18,785 | 20,210 | 16,492 |
| Total assets | 79,134 | 78,709 | 74,681 |
| Equity and liabilities | |||
| Equity attributable to equity holders of the parent company | |||
| Share capital | 1,009 | 1,009 | 1,009 |
| Share premium reserve | 75 | 75 | 75 |
| Distributable equity reserve | 13,260 | 12,910 | 12,910 |
| Retained earnings | 11,017 | 10,494 | 12,515 |
| Total equity | 25,361 | 24,488 | 26,509 |
| Non-current liabilities | |||
| Deferred tax liabilities | 635 | 578 | 567 |
| Financial liabilities | 24,158 | 1,205 | 24,138 |
| Lease liabilities | 4,494 | 5,338 | 4,830 |
| Non-current liabilities total | 29,287 | 7,121 | 29,536 |
| Current liabilities | |||
| Financial liabilities | 25,479 | ||
| Trade and other payables | 22,080 | 19,149 | 16,173 |
| Provisions | 51 | 51 | 61 |
| Lease liabilities | 2,356 | 2,422 | 2,402 |
| Current liabilities total | 24,487 | 47,100 | 18,636 |
| Total equity and liabilities | 79,134 | 78,709 | 74,681 |
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Consolidated cash flow statement
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit for the financial period | 1,456 | 40 | 1,980 |
| Adjustments for operating profit | 1,792 | 1,582 | 7,574 |
| Changes in working capital | 310 | 1,903 | -60 |
| Interests paid | -84 | -114 | -3,218 |
| Interests received | 4 | 4 | 25 |
| Net cash from operating activities | 3,478 | 3,415 | 6,302 |
| Cash flow from investing activities | |||
| Acquisition of subsidiaries and businesses | -1,000 | ||
| Disposal of other shares and holdings | 38 | ||
| Divested businesses | 4,071 | 4,071 | |
| Investments in tangible and intangible assets | -822 | -1,135 | -3,477 |
| Net cash used in investing activities | -1,822 | 2,936 | 631 |
| Cash flow from financing activities | |||
| Long-term loans, increase | 5 | 23,262 | |
| Short-term loans, decrease | -1,000 | -26,500 | |
| Payment of finance lease liabilities | -611 | -604 | -2,465 |
| Net cash used in financing activities | -611 | -1,599 | -5,704 |
| Changes in cash and cash equivalents | 1,045 | 4,752 | 1,230 |
| Cash and cash equivalents at the beginning of period | 4,877 | 3,648 | 3,648 |
| Cash and cash equivalents at the end of period | 5,923 | 8,400 | 4,877 |
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Consolidated statement of changes in equity
| TEUR | Share capital | Share premium account | Invested unrestricted equity reserve | Currency translation difference | Retained earnings | Total |
|---|---|---|---|---|---|---|
| Equity 1 Jan 2020 | 1,009 | 75 | 12,910 | -100 | 10,633 | 24,528 |
| Profit for the financial period | 40 | 40 | ||||
| Other items on comprehensive income | -80 | -80 | ||||
| Total comprehensive income | 0 | 0 | 0 | -80 | 40 | -40 |
| Equity 31 Mar 2020 | 1,009 | 75 | 12,910 | -180 | 10,673 | 24,488 |
| Equity 1 Jan 2021 | 1,009 | 75 | 12,910 | -99 | 12,613 | 26,509 |
| Profit for the financial period | 1,456 | 1,456 | ||||
| Other items on comprehensive income | -44 | -44 | ||||
| Total comprehensive income | 0 | 0 | 0 | -44 | 1,456 | 1,412 |
| Transactions with owners | ||||||
| Dividends paid | -2,909 | -2,909 | ||||
| Share issue | 350 | 350 | ||||
| Transactions with owners | 0 | 0 | 350 | 0 | -2,909 | -2,559 |
| Equity 31 Mar 2021 | 1,009 | 75 | 13,260 | -143 | 11,160 | 25,361 |
SOLTEQ
Revenue from contracts with customers
Solteq Digital
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Services | 10,390 | 10,583 | 38,663 |
| Software and hardware sales | 784 | 753 | 2,947 |
| Total | 11,174 | 11,336 | 41,610 |
Solteq Software
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Services | 4,123 | 2,609 | 11,739 |
| Recurring revenue / SaaS | 1,809 | 1,658 | 6,738 |
| Non-recurring sales | 277 | 71 | 365 |
| Total | 6,209 | 4,338 | 18,842 |
| Group total | 17,383 | 15,674 | 60,452 |
Comparison figures for 2020
Solteq Digital
| TEUR | 1-3/2020 | 4-6/2020 | 7-9/2020 | 10-12/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Services | 10,583 | 9,832 | 8,336 | 9,912 | 38,663 |
| Software and hardware sales | 753 | 678 | 822 | 693 | 2,947 |
| Total | 11,336 | 10,510 | 9,158 | 10,605 | 41,610 |
Solteq Software
| TEUR | 1-3/2020 | 4-6/2020 | 7-9/2020 | 10-12/2020 | 1-12/2020 |
|---|---|---|---|---|---|
| Services | 2,609 | 2,820 | 2,418 | 3,892 | 11,739 |
| Recurring revenue / SaaS | 1,658 | 1,723 | 1,652 | 1,705 | 6,738 |
| Non-recurring sales | 71 | 27 | 61 | 206 | 365 |
| Total | 4,338 | 4,570 | 4,131 | 5,803 | 18,842 |
| Group total | 15,674 | 15,080 | 13,289 | 16,408 | 60,452 |
SOLTEQ
SOLTEQ
Total investments
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Group total | 3,364 | 2,125 | 5,456 |
Maturity of financial liabilities
| Book value | Contractual cash flows | 1-12 months | 13-24 months | 25-36 months | Later | |
|---|---|---|---|---|---|---|
| TEUR | ||||||
| Financial liabilities, 31 Mar 2021 | ||||||
| Bond | 22,695 | 28,532 | 1,383 | 1,383 | 1,383 | 24,383 |
| Loans from financial institutions | 1,463 | 1,537 | 12 | 95 | 414 | 1,017 |
| Lease liabilities | 6,850 | 7,030 | 2,577 | 1,802 | 1,510 | 1,142 |
| Trade payables | 3,422 | 3,422 | 3,422 | |||
| Financial liabilities total | 34,429 | 40,522 | 7,394 | 3,279 | 3,307 | 26,542 |
| Financial assets, 31 Mar 2021 | ||||||
| Trade receivables | 11,387 | |||||
| Cash and cash equivalents | 5,923 | |||||
| Financial assets total | 17,310 |
The company has a standby credit limit of EUR 4,000 thousand and a bank account credit limit of EUR 2,000 thousand, which at the end of the review period were unused.
Fair value of financial assets and 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 Interim Report.
Liabilities
| TEUR | 31 Mar 2021 | 31 Mar 2020 | 31 Dec 2020 |
|---|---|---|---|
| Business mortgages | 10,000 | 10,000 | 10,000 |
| Off-balance sheet lease liabilities | 1,512 | 1,135 | 1,412 |
Related party transactions
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Purchases | 2 | 3 | |
| Total | 0 | 2 | 3 |
17
Transactions with the related parties have been done at the market price and are part of the company's normal business.
Major shareholders March 31, 2021
| Shares and votes | |||
|---|---|---|---|
| number | % | ||
| 1. | Sentica Buyout III Ky | 4,621,244 | 23.83 |
| 2. | Profiz Business Solution Oy | 2,060,769 | 10.62 |
| 3. | Elo Mutual Pension Insurance Company | 2,000,000 | 10.31 |
| 4. | Saadetdin Ali | 1,400,000 | 7.22 |
| 5. | Varma Mutual Pension Insurance Company | 1,245,597 | 6.42 |
| 6. | Aalto Seppo Tapio | 730,000 | 3.76 |
| 7. | Roininen Matti Juhani | 400,000 | 2.06 |
| 8. | Väätäinen Olli Pekka | 400,000 | 2.06 |
| 9. | Lamy Oy | 190,993 | 0.98 |
| 10. | Sentica Buyout III Co-Investment Ky | 180,049 | 0.93 |
| 10 largest shareholders total | 13,228,652 | 68.20 | |
| Total of nominee-registered | 843,280 | 4.35 | |
| Others | 5,324,569 | 27.45 | |
| Total | 19,396,501 | 100.00 |
Financial performance indicators
| 1-3/2021 | 1-3/2020 | 1-12/2020 | |
|---|---|---|---|
| Revenue, MEUR | 17.4 | 15.7 | 60.5 |
| Change in revenue, % | 10.9 | 5.0 | 3.7 |
| Operating profit, MEUR | 2.2 | 0.7 | 5.4 |
| % of revenue | 12.8 | 4.6 | 8.9 |
| Profit before taxes, MEUR | 1.8 | 0.1 | 2.7 |
| % of revenue | 10.6 | 0.7 | 4.5 |
| Net investments in non-current assets, MEUR | 3.4 | 2.1 | 5.5 |
| Equity ratio, % | 32.4 | 31.5 | 35.5 |
| Net debt, MEUR | 25.1 | 26.0 | 26.5 |
| Gearing, % | 98.9 | 106.4 | 99.9 |
| Return on equity, rolling 12 months, % | 13.6 | 8.6 | 7.8 |
| Return on investment, rolling 12 months, % | 11.9 | 8.6 | 9.1 |
| Personnel at end of period | 627 | 597 | 597 |
| Personnel average for period | 613 | 587 | 593 |
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SOLTEQ
19
Key indicators per share
| 1-3/2021 | 1-3/2020 | 1-12/2020 | |
|---|---|---|---|
| Earnings per share, EUR (undiluted) | 0.08 | 0.00 | 0.10 |
| Earnings per share, EUR (diluted) | 0.08 | 0.00 | 0.10 |
| Equity per share, EUR | 1.31 | 1.27 | 1.37 |
Alternative performance measures to be used by Solteq Group in financial reporting
Solteq uses alternative performance measures to describe the company's underlying financial performance and to improve the comparability between review periods. The alternative performance measures should not be regarded as indicators that replace the financial key figures as defined in IFRS standards.
Performance measures used by Solteq Group are EBITDA, equity ratio, gearing, return on equity, return on investment, net debt, and the share of recurring revenue of the total revenue of Solteq Software segment. The calculation principles of these financial key figures are presented as part of this Interim Report. The performance measures presented as rolling 12 months include the total figures of the past four quarters.
Items affecting comparability and alternative performance measures
Items affecting comparability:
Transactions that are unrelated to the regular business operations, or valuation items that do not affect the cash flow, but have an important impact on the income statement, are adjusted as items affecting comparability. These non-recurring items may include the following:
- Significant restructuring arrangements and related financial items
- Impairments
- Items related to the sale or discontinuation of significant business operations
- Costs incurred by the re-organization of operations
- Costs incurred by the integration of acquired business operations
- Non-recurring severance packages
- Fee items that are not based on cash flow
- Costs incurred by changes in legislation
- Fines and similar indemnities, damages and legal costs
Comparable operating profit (EBIT)
The reconciliation of the comparable operating profit to operating profit is presented in the table below. The same adjusting items apply when reconciling the comparable EBITDA to EBITDA.
| TEUR | 1-3/2021 | 1-3/2020 | 1-12/2020 |
|---|---|---|---|
| Operating profit (EBIT) | 2,232 | 716 | 5,350 |
| Items affecting comparability | |||
| Business acquisition costs | 64 | ||
| Non-recurring severance packages | 164 | 430 | |
| Total items affecting comparability | 64 | 164 | 430 |
| Comparable operating profit (EBIT) | 2,296 | 880 | 5,780 |
Calculation of financial ratios
Equity ratio, %: equity / (balance sheet total - advances received) x 100
Gearing, %: (interest bearing liabilities - cash and cash equivalents) / equity x 100
Return on Equity (ROE), %: profit for the financial period (rolling 12 months) / equity (average for the period) x 100
Return on investment (ROI), %: (profit before taxes + finance expenses (rolling 12 months)) / (balance sheet total - interest free debt (average for the period)) x 100
Earnings per share: (profit before taxes -/+ minority interest) / adjusted average basic number of shares
Diluted earnings per share: (profit before taxes -/+ minority interest) / adjusted average diluted number of shares
Equity per share: equity / number of shares
EBITDA: operating profit + depreciation and impairments
Net debt: interest bearing liabilities - cash and cash equivalents
Share of recurring revenue of the total revenue of Solteq Software segment: recurring revenue / SaaS / total revenue of Solteq Software segment
Business combinations
Solteq Plc acquired Partiture Oy's professional services business, specializing in utilities sector. The agreement was effective as of March 1, 2021. The utilities sector is one of the Solteq's key drivers for growth in the Nordic market. As a result of the business transfer agreement, 16 experts transferred to Solteq. The debt-free purchase price of the transfer was EUR 2.35 million.
SOLTEQ
SOLTEQ
Acquired businesses
| TEUR | Acquisition date |
|---|---|
| Intangible assets | 448 |
| Total assets | 448 |
| Deferred tax liabilities | 90 |
| Total liabilities | 90 |
| Net assets acquired | 359 |
| Total consideration | 2,350 |
| Goodwill | 1,991 |
EUR 350 thousand of the business acquisition purchase price was paid for with new Solteq shares, based on the authorization given to the Board, by the Annual General Meeting on June 10, 2020 and the rest of the purchase price with existing cash funds. EUR 1,000 thousand of the purchase price was paid at the time of signing the agreement, and the rest will be paid on December 15, 2021.
There were no acquisitions during the comparison period.
21
Financial reporting in 2021
Solteq Plc’s financial information bulletins in 2021 have been scheduled as follows:
- Half Year Report 1-6/2021 Thursday August 12, 2021 at 8.00 am
- Interim Report 1-9/2021 Thursday October 28, 2021 at 8.00 am
More investor information is available on Solteq’s website at www.solteq.com.
Further information:
CEO Olli Väätäinen
Tel: +358 50 557 8111
E-mail: [email protected]
CFO Kari Lehtosalo
Tel: +358 40 701 0338
E-mail: [email protected]
Distribution:
NASDAQ OMX Helsinki
Key media
www.solteq.com
SOLTEQ