Solteq Plc's Half-Year Report January 1 - June 30, 2020

Solteq Plc, Stock Exchange Bulletin, August 13, 2020 at 8.00 am

HELSINKI, Aug. 13, 2020/PRNewswire/ --

The company's profitability improved clearly in the second quarter

April-June        

• Revenue totaled EUR 15,080 thousand (14,660).
• EBITDA was EUR 2,710 thousand (1,572).
• Operating profit was EUR 1,481 thousand (571) and comparable operating profit EUR 1,507 thousand (521).
• Earnings per share was EUR 0.04 (0.01).
• The revenue was 2.9 percent higher than in the comparison period, while the comparable revenue grew by 7.8 percent.

January-June

• Revenue totaled EUR 30,754 thousand (29,590).
• EBITDA was EUR 4,584 thousand (4,027).
• Operating profit was EUR 2,197 thousand (2,101) and comparable operating profit EUR 2,387 thousand (1,726).
• Earnings per share was EUR 0.04 (0.05).
• Solteq Group's equity ratio was 33.1 percent (30.3).
• Net cash flow from operating activities was EUR 5,345 thousand (1,939).
• The revenue was 3.9 percent higher than in the comparison period, while the comparable revenue grew by 9.7 percent.
• The company invested strongly in future growth by focusing on the development of our own cloud-based software products and services. During the review period the product development investments amounted to EUR 1.8 million (2.1). Product development during the entire financial year is expected to be less than EUR 3.0 million.
• Profit guidance for 2020: Solteq Group's comparable operating profit is expected to grow significantly.

Key figures

CEO Olli Väätäinen: The company's profitability improved clearly in the second quarter

Solteq Group's second-quarter revenue was EUR 15.1 million, up by 2.9 percent. The increase in comparable revenue -when the absence of the SAP ERP business is taken into account- is 7.8 percent. Around a fifth of this revenue was derived from outside Finland. The company's own software products and related services contributed around a third and digital services around two thirds of revenue.

The company's profitability improved clearly in the second quarter: operating profit improved, year-on-year, by 159.3 percent, standing at EUR 1.5 million. The company's EBITDA was EUR 2.7 million - growing by 72.3 percent year-on-year.

The company has been closely following and assessing the impact of the COVID-19 pandemic on its business. So far, the pandemic has had no negative effects on the company on the whole.  The good performance in the review period was based on orders secured during the year before and the capability to deliver in key business areas. Growth was also driven by successful sales efforts in the first half of 2020. Significant new customer projects, especially in the energy sector, balanced lower sales in the travel, restaurant and leisure sectors that were affected by the pandemic. Good performance in the second quarter was also improved by the streamlining measures taken earlier this year and the resulting cost savings.  

To ensure a going concern and sufficient funding, the company initiated a written procedure on April 21, 2020, concerning an amendment to the terms and conditions of its fixed-rate bond, with a nominal value of EUR 27.0 million. By permission of the bondholders on May 18, 2020, the maturity date was extended by 12 months, the new date being July 1, 2021 - six years from the date it was issued. On the half-year reporting date, the company's bond liability is EUR 24.5 million.The company has performed well in a challenging and unpredictable market situation. The organization's operational capacity and the safety of its stakeholders were ensured by measures adopted in the early stages of the pandemic. The business outlook and profitability are expected to remain favorable.

Profit guidance 2020

Solteq Group's comparable operating profit is expected to grow significantly.

Going concern principle

On April 21, 2020, the company initiated a written procedure concerning a change in the terms of an unsecured, senior bond with fixed interest and a nominal value of EUR 27.0 million (with maturity date July 1, 2020), requesting that the loan period be extended by 12 months. Amendment of the terms was accepted by means of a written procedure on May 18, 2020. The company's bond liability is EUR 24.5 million.

The prerequisite of going concern was to rearrange financing before the original maturity date of the current bond. The procedure ended successfully. Owing to the prevailing financial market situation, the company considered it prudent to request a 12-month extension to the maturity date. The company's EUR 24.5 million bond will mature on July 1, 2021. The company is prepared to carry out any refinancing arrangements required and is therefore actively following developments in the financial markets. Uncertainty caused by the COVID-19 pandemic will nevertheless increase the financing risk that is beyond the company's control, and the management estimates that the pandemic will have an impact on the financial market at least throughout 2020.

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. On this basis, the management expects operations to continue, with only a low risk of inadequate funding.

This Half-Year Report was drawn up under the going concern principle, taking account of the financial restructuring either already carried out or pending.

Attachments:

Solteq Plc Half-Year Report January 1 - June 30, 2020

Distribution:

NASDAQ OMX Helsinki
Key media
www.solteq.com

Further information:

CEO Olli Väätäinen
Tel. +358 50 5578 111
Email:olli.vaatainen@solteq.com

CFO Kari Lehtosalo
Tel: +358 40 701 0338
Email: kari.lehtosalo@solteq.com

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