Solteq Plc's Half-Year Report January 1 - June 30, 2023

Stock Exchange Bulletin
Half-Year Report
August 23, 2023, at 8.00 am

A tough second quarter - demand decreased in the Retail & Commerce segment, heavy cost structure burdened the Utilities segment 

April-June

• Comparable revenue totaled EUR 13.6 million (14.8) and decreased by 8.2 percent. Revenue totaled EUR 14.3 million (17.9) and decreased by 20.4 percent
• Comparable EBITDA was EUR -0.5 million (1.3) and EBITDA EUR 7.7 million (1.8). Comparable EBITDA percent was -3.9 (8.8)
• Comparable operating result was EUR -1.9 million (0.0) and operating result EUR 6.3 million (0.4). Comparable operating result percent was -13.7 (0.3)
• The ERP business based on Microsoft BC and LS Retail was transferred to Azets Group as of May 2, 2023. The profit on the sale of the business transaction improved the group's EBITDA and operating result by 8.3 million euros
• Earnings per share was EUR 0.19 (0.00)

January-June

• Comparable revenue totaled EUR 27.7 million (31.0) and decreased by 10.6 percent. Revenue totaled EUR 31.2 million (37.2) and decreased by 16.1 percent
• Comparable EBITDA was EUR 0.4 million (3.6) and EBITDA EUR 9.0 million (4.5). Comparable EBITDA percent was 1.5 (11.5)
• Comparable operating result was EUR -2.2 million (1.1) and operating result EUR 6.2 million (1.8). Comparable operating result percent was -7.9 (3.5)
• The ERP business based on Microsoft BC and LS Retail was transferred to Azets Group as of May 2, 2023. The profit on the sale of the business transaction improved the group's EBITDA and operating result by 8.3 million euros
• Earnings per share was EUR 0.20 (0.04)
• Solteq Group's equity ratio was 38.4 percent (35.4)
• Net cash flow from operating activities was EUR -1.8 million (1.6)
• Solteq's revenue is expected to be EUR 60-62 million and operating result to be slightly negative excluding the one-time profit recognition of EUR 8 million on the sale of the Group's ERP business based on Microsoft BC and LS Retail solutions

Key figures

4-6/202 4-6/202 Change 1-6/202 1-6/202 Change 1-12/20 Rolling
% 2 % 22 12mos

3 2 3

Revenue, 14,273 17,937 -20.4 31,173 37,176 -16.1 68,426 62,423
TEUR
Comparable 13,609 14,824 -8.2 27,721 30,998 -10.6 57,230 53,954
revenue,
TEUR
EBITDA, 7,698 1,776 333.5 8,979 4,496 99.7 5,555 10,037
TEUR
Comparable -536 1,298 -141.3 411 3,569 -88.5 4,469 1,312
EBITDA,
TEUR
Operating 6,337 414 1,429.1 6,246 1,798 247.4 -4,406 42
result,
TEUR
Comparable -1,869 43 -4,491.4 -2,200 1,089 -302.0 -613 -3,902
operating
result,
TEUR
Result for 3,672 -90 4,162.6 3,877 705 450.2 -5,404 -2,232
the
financial
period,
TEUR
Earnings 0.19 0.00 4,162.6 0.20 0.04 450.2 -0.28 -0.12
per
share, EUR
Operating 44.4 2.3 20.0 4.8 -6.4 0.1
result,
%
Comparable -13.7 0.3 -7.9 3.5 -1.1 -7.2
operating
result,
%
Equity 38.4 35.4 30.3 36.7
ratio, %

CEO Aarne Aktan: A tough second quarter - demand decreased in the Retail & Commerce segment, heavy cost structure burdened the Utilities segment 
Solteq Plc's second quarter was weak. The Group's comparable revenue was EUR 13.6 million, down by 8.2 percent from the comparison period. This was mainly due to a weaker demand than in the comparison period affecting the Retail & Commerce segment. The downturn in the segment's revenue was due to a poorer performance in customer acquisition and certain customer deliveries being postponed to the future.

The comparable EBITDA was EUR -0.5 million, and the comparable operating result was EUR -1.9 million. Profitability decreased in both segments relative to the comparison period. In Utilities, the profitability suffered from a heavy cost structure. Utilities continued to work on solving the problems and improving efficiencies, but this did not progress as promptly as aspired. In Retail & Commerce, utilization rates didn't reach optimal levels due to the decreased order base. 

The bland beginning of the year was aligned with the company's expectations. The relation between revenue and expenses is expected to be clearly better for the rest of the year. In addition, the demand for the Retail & Commerce segment is estimated to pick up towards the end of the year.

The Retail & Commerce segment's business based on Microsoft Dynamics 365 Business Central and LS Retail was sold to Azets Group. This allowed the company to decrease its indebtedness and focus even more on the chosen software solutions, expert services, and business areas.

The instability in international politics creates uncertainties in the Nordic operating environment, for example, high inflation and increased costs. The uncertainties still reflect in the demand for the services and solutions offered by the Retail & Commerce segment. In the Nordic energy sector, demand for software solutions and expert services is driven by changes in industry regulations, the transition to renewable energy sources, and opportunities created by emerging technologies for business efficiency.

We expect the market outlook for the Retail & Commerce segment to remain moderate during the current financial year and demand to recover as the market stabilizes. We expect the long-term market outlook for the Utilities to remain good and provide opportunities for profitable growth.

Profit Guidance 2023 (updated on May 3, 2023)
Solteq's revenue is expected to be EUR 60-62 million and operating result to be slightly negative excluding the one-time profit recognition of EUR 8 million on the sale of the Group's ERP business based on Microsoft BC and LS Retail solutions.

Attachments
Solteq Plc's Half-Year Report January 1 - June 30, 2023
Further Information
CEO Aarne Aktan
Tel: +358 40 342 4440
E-mail: aarne.aktan@solteq.com
CFO Kari Lehtosalo
Tel: +358 40 701 0338
E-mail: kari.lehtosalo@solteq.com

Distribution
Nasdaq Helsinki
Key media
www.solteq.com

Solteq in brief
Solteq is a Nordic software solution and expert service provider specializing in retail and energy sectors and needs related to e-commerce. The company employs over 550 professionals and has offices in Finland, Sweden, Norway, Denmark, Poland, and the UK.