Solteq Plc Interim Report 1 January – 30 September 2016

The year of sowing the seeds and sprouting the new greenish crop of international growth – focusing on omnichannel and digital commerce continues Brief look at January – September 2016 - Revenue totalled 45,3 million euros (33,9 million euros) - Operating profit was 5.742 thousand euros (1.058 thousand euros). The impact of the business divested in the first quarter on the operating result was –212 thousand euros. - Adjusted operating profit was 2.209 thousand euros (1.847 thousand euros). - Solteq Group’s equity ratio was 32.4 % (27.1 %). - Earnings per share was 0.26 euros (0,03 euros). - In the review period, Solteq published the new strategy, in which the key elements are digital commerce, growth and internationalization. - As part of its strategic focus on multi-channel and digital commerce, Solteq decided to sell its subsidiary MainIoT Software Oy, which supplied service and maintenance systems, in the first quarter of the year. In the third quarter of the year, it decided to establish a dedicated omnicommerce competence centre of excellence that would serve Nordic retailers. - During the third quarter of the year we won many new customer projects in Finland as well as internationally. After the review period, at the same time with the interim report, we published that we have acquired the entire share capital of Swedish Aponsa AB. The acquisition executes the strategy focusing on digital commerce and international growth. A separate stock exchange bulletin on the acquisition has been published on 25 October 2016. Related to another discontinued acquisition an adjustment item totaling to 503 thousand euros is recognized during the review period. Key figures and ratios +---------------------+-----+-----+------+-----+-----+------+-----+-------+ | |7-9 /|7-9 /|Change|1-9 /|1-9 /|Change|1-12/|Rolling| | | 2016| 2015| -%| 2016| 2015| -%| 2015| 12 m| +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Revenue, EUR million | 13,6| 14,9|-8,9 %| 45,3| 33,9|33,9 %| 54,2| 65,7| +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Adjusted operating | 0,6| 0,7| -17,2| 2,2| 1,8|19,6 %| 3,0| 3,4| |profit, EUR million | | | %| | | | | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Operating profit, EUR| 0,0| -0,1|-111,5| 5,7| 1,1| 442,7| 1,3| 6,0| |million | | | %| | | %| | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Profit for the | -0,5| -0,4| 9,7 %| 4,4| 0,4| 900,9| 0,1| 4,1| |financial period, EUR| | | | | | %| | | |million | | | | | | | | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Earnings/share, eur |-0,03|-0,03| 0,0 %| 0,26| 0,03| 766,7| 0,01| 0,25| | | | | | | | %| | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Operating profit -% |0,1 %| -0,4| | 12,7|3,1 %| |2,4 %| 9,1 %| | | | %| | %| | | | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Adjusted operating |4,4 %|4,9 %| |4,9 %|5,5 %| |5,5 %| 5,1 %| |profit -% | | | | | | | | | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ |Equity ratio, % | 32,4| 27,1| | 32,4| 27,1| | 24,4| 32,4 %| | | %| %| | %| %| | %| | +---------------------+-----+-----+------+-----+-----+------+-----+-------+ Repe Harmanen, CEO of Solteq: Strategic actions, new projects and focus on the final spurt towards the end of the year During the third quarter of the year, we won several new client projects. We have released information on some of them, but the contractual extent of others has not reached the limit set in our stock exchange release policy. At the review period level, our revenue grew as expected, and our operative profitability improved. The slight decline in the revenue for the third quarter was partly due to the changes that took place in the operating environments of some of our long-term clients, but the rationalisation programmes and more flexible cost structures have maintained and improved relative profitability. The key elements of our strategy are digital commerce, growth and internationalisation. In the Nordic countries, we will focus on solutions for chain-based and digital commerce. Globally, digital commerce solutions will be in the core of our strategy. In Finland, we will mainly grow organically, but in the Nordic countries and globally, we also aim at being active in mergers and acquisitions to implement our strategy. From strategic point of view, our most significant client project was the framework agreement with the Musti ja Mirri Group Oy concerning the delivery of a retail business solution to the Finnish, Swedish and Norwegian markets that we published in the review period. This is an excellent example of the implementation of our strategy and its goals. We will continue this work systematically and strengthen these areas both geographically and operationally. At the same time, we have also started collaboration with a few new digital commerce clients in Europe. At the end of the past quarter, a total of about 10 new top experts joined Solteq and started to work in our key business areas in Finland, Sweden and Poland. During the last few months of the year, we will continue recruiting in these areas. The establishment and the expansion of the Magento Omnicommerce Competence Center, which we published some time ago, will also increase the number of employees both in Finland and abroad. A significant factor related to the third quarter is a non-recurring cost item for a company acquisition project. However, we decided to discontinue the process due to the risks involved. The risk of a negative development was also too high in terms of the owner value. At the same time with this interim report we published a release of another, successful company acquisition. The last quarter of the year will be full of activity, and our aim is to successfully complete several concurrent digital commerce projects with our clients. During the last few months of the year, we will continue our investments in strategic areas in Finland, Sweden and Poland. In this way, we will create growth for years to come. We will maintain our earlier profit guidance concerning the revenue and operating profit for 2016. Guidance on Group outlook Solteq Group’s revenue is expected to grow significantly compared to financial year 2015. The operating profit and the adjusted operating profit are expected to grow compared to financial year 2015 as well. The expected growth of revenue and operating profit is mainly related to the M&A activity completed during the previous financial year and during the review period. In addition, the cost synergies arising from the M&A activity are expected to be realized mainly during the year 2016. Online-briefing for investors and media October 25th, 2016 The media and investor briefing for the announcement of financial performance of the first three quarters of 2016 will be broadcasted on Periscope October 25th, 2016 at 13.00 on channel @SolteqTweets. The briefing will be recorded and can be accessed on the Solteq’s website later on the same day. The online-briefing will also be broadcasted at the same time at Solteq Facebook as live-video. Briefing for investors and media November 16th, 2016 The media and investors are welcome to participate in a briefing on Wednesday, November 16th at 8.30 at Allas SeaPool in Helsinki. The briefing focuses on digital commerce and Solteq strategy. For additional information please see https://www.solteq.com/en/investors/investor-...-calendar/ Further information Repe Harmanen, CEO tel. +358 400 467 717 e-mail repe.harmanen@solteq.com Antti Kärkkäinen, CFO tel. +358 40 8444 393 e-mail antti.karkkainen@solteq.com DISTRIBUTION NASDAQ OMX Helsinki Key media www.solteq.com Solteq in brief Solteq is an expert in digital commerce. We deliver comprehensive solutions for digital commerce under one roof: from back-office processes to customer experience ­­– from supply chain management to online marketing. We have the passion to deliver the unexpected – in a fast-changing world our customers need a partner who can deliver today what they need tomorrow. We employ ca. 500 experts in three different countries and we make deliveries to Europe, North America, Asia and Australia.