Solteq Plc Half Year Financial Report 1 January – 30 June 2017

From a digital commerce house to an industry-independent expert in digital customer engagement

Brief look at January – June 2017

- As a strategic alignment we are continuing on the path of profitable growth and internationalisation. Nevertheless, some policies are further defined to help reach our strategic objective. Solteq is an expert in digital customer engagement. We operate in industries where the foundations are being shaken by the digital revolution.

- We expanded our operations to the rapidly digitising Utilities industry (electricity, heating and water) by acquiring inPulse Works Ltd on 12 June 2017. Company is consolidated to Solteq Group as of 1 June 2017.

- Solteq’s sector-independent BI- and analytics competencies were strengthened significantly by the acquisition of inPulse Works Ltd. We have already invested in the business earlier this year by buying the majority of Analyteq Ltd, who specialise in product replenishment analytics services.

- We focused our offering of ERP solutions by partnering up with eCraft Oy Ab and selling our Microsoft AX business, customers and personnel to eCraft.

- Revenue was 31,2 million euros (31,8 million euros).

- Operating profit was 838 thousand euros (5 735 thousand euros).

- Adjusted operating profit was 1 850 thousand euros (1 606 thousand euros).

- Group’s equity ratio was 34,8% (32,4 %).

- Earnings per share was -0,01 euros (0,29 euros).

Key figures and ratios

4-6/17 4-6/16 1-6/17 1-6/16 1-12/16 Rolling 12kk
Revenue, TEUR 15 820 16 402 31 224 31 775 63 049 62 498
Operating profit, TEUR 649 816 838 5 735 6 444 1 548
Adjusted operating profit, TEUR 827 874 1 850 1 606 3 114 3 358
Profit for the financial period, TEUR 112 487 -169 4 879 4 612 -435
Earnings/share, e 0,01 0,02 -0,01 0,29 0,26 -0,03
Operating profit-% 4,1 5,0 2,7 18,0 10,2 % 2,5 %
Adjusted operating profit 5,2 5,3 5,9 5,1 4,9 % 5,4 %
Equity ratio, % 34,8 32,4 34,8 32,4 33,5 % 34,8 %


Olli Väätäinen, CEO of Solteq: From a digital commerce house to an industry-independent expert in digital customer engagement

My journey as the CEO began on 1 April 2017. As I stated in my review of the first quarter, we are continuing on the path of profitable growth and internationalisation. We have further defined some policies that will help us reach our strategic objective.

Solteq is an expert in digital customer engagement. We operate in industries where the foundations are being shaken by the digital revolution. Commerce and its related solutions will remain important to us, but now they will be accompanied by other strong mainstays.

One of the new mainstays will be built in the rapidly digitising Utilities industry where efficient use of information is a fast-growing trend. We started this operation by acquiring inPulse Works Ltd on 12 June 2017. As the deal was closed, we made an agreement with Fingrid the same week to have inPulse Works Ltd provide the data conversion service and its related support service for the Finnish Datahub. The Datahub is a centralised information exchange system for the electricity retail market, containing the information of Finland's 3.5 million electricity use sites.

Our second area of growth is analytics services, which we have started building up in the past year. Our existing competence base in analytics was substantially bolstered by the acquisition of inPulse, as their offering included industry-independent business intelligence and analytics services. We have already invested in the business earlier this year by buying the majority of Analyteq Ltd, who specialise in product replenishment analytics services.

In line with the strategy's specification, we partnered up with eCraft Oy Ab and sold our Microsoft AX business, customers and personnel to eCraft. The partnership agreement focused our offering of ERP solutions.

Our own software products are a key elements of our organic growth. We will make sure our software products stay competitive in the constantly developing markets. We have started further development of our existing software products to introduce cloud-based operation and to enable them to integrate into a digital customer and operating environment. We have also started the development of new cloud-based software services for the industries where we have strong expertise. From the second quarter onwards, the company will invest between €150,000 and €200,000 in its internal development operations each quarter. Development projects in their commercial phase will be capitalized by quarter, starting from Q3 in 2017.

We will shift the focus of our operations towards the business areas and industries where the digital revolution is having the most impact, and we will develop our own software services to support this policy. Our specified strategy will require enhanced expertise, which is why the management team underwent changes during this quarter. Matti Djateu was named the Chief Digital Officer, who will be responsible for our digital marketing service business and Solteq's marketing. Juha Rokkanen was appointed as the Executive Vice President of the Digital Services business unit.

Solteq's offering has worked well for our customer base. I am satisfied by our sales performance in this quarter. The company netted many more new sales in the review period than we did at the same time last year. 

During the review period, we have completed significant projects in the commerce sector and are happy to see satisfied customers. As large projects are completed and move to the continuous business support and maintenance phase, our role in these projects is changing which may have a temporary negative effect on the revenue of these business areas. Thanks to our excellent sales performance, I strongly believe that our strategic goal of profitable growth can be met.

Our business has a solid foundation in the skills and competencies of Solteq employees. We have already broken the news that we will be recruiting 100 new employees in 2017. We are on schedule with the hiring.

We will maintain our earlier guidance concerning the adjusted operating result for 2017.

Guidance on Group outlook

Solteq Group’s adjusted operating profit is expected to grow compared to financial year 2016.

Online-briefing about the half year financial report will not be broadcasted

The online-briefing about interim report will not be broadcasted July 14th, 2017 unlike earlier communicated.

Further information

Olli Väätäinen, CEO
tel.
+358 50 5578 111
e-mail olli.vaatainen@solteq.com

Antti Kärkkäinen, CFO
tel. +358 40 8444 393
e-mail antti.karkkainen@solteq.com

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NASDAQ OMX Helsinki
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www.solteq.com

Solteq in brief

Solteq is a Nordic IT provider and software house that specialises in digital customer engagement. We are the partner to our customer, who knows what it takes to win in digital disruption. We offer comprehensive solutions for both business enhancement by means of digitalisation and for omnicommerce: from back end processes all the way to the customer’s purchasing experience and from supply chain management to digital marketing. Over 500 experts, who work in three countries, develop and implement solutions for clients in Europe, North America, Asia and Australia.

About Us

Solteq is a Nordic IT provider and software house that specialises in digital customer engagement. We offer total solutions for both business enhancement by means of digitalisation and for omnicommerce: from back end processes all the way to the customer’s purchasing experience and from supply chain management to digital marketing. Our 450 experts, who work in three countries, develop and implement solutions for clients in Europe, North America, Asia and Australia. In 2016, Solteq’s net sales amounted to 63 million euro.

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