2015-10-20 07:30:00 CEST
2015-10-20 07:30:01 CEST
REGULATED INFORMATION
Innofactor Oyj - Interim report (Q1 and Q3)
Innofactor Plc's Interim Report for January 1–September 30, 2015 (IFRS)
Innofactor Plc Interim Report October 20, 2015, at 8:30 Finnish time
Summary
mo. mo. Change mo. mo. Change mo.
7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2015 2014 2015** 2014 2014**
* *
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Net sales, EUR thousand 9,322 9,659 -3.5% 31,862 31,603 +0.8% 43,834
Growth of net sales -3.5% +16.1% +0.8% +46.3% +34.1%
Operating profit before 755 892 -15.4% 1,963 2,313 -15.1% 3,793
depreciation and
amortization (EBITDA),
EUR thousand*
percentage of net sales* 8.1% 9.2% 6.2% 7.3% 8.7%
Operating profit/loss 562 540 +4.1% 1,072 1,271 -15.7% 2,406
(EBIT), EUR thousand*
percentage of net sales* 6.0% 5.6% 3.4% 4.0% 5.5%
Earnings before taxes, 485 19 +2452. 540 1,044 -48.3% 1,945
EUR thousand** 6%
percentage of net 5.2% 0.2% 1.7% 3.3% 4.4%
sales**
Earnings, EUR thousand* 384 16 +2158. 432 835 -48.3% 1,555
7%
percentage of net sales* 4.1% 0.2% 1.4% 2.6% 3.5%
Net gearing 38.3% 55.1% 38.3% 55.1% 42.9%
Equity ratio 55.0% 47.3% 55.0% 47.3% 48.7%
Personnel on average 432 425 +1.6% 425 422 +0.7% 421
during the review
period
Earnings per share (EUR) 0.0119 0.0005 +2276. 0.0133 0.0260 -48.7% 0.0485
9%
*) The third quarter of 2014 included a one-off cost reserve related to the
closing of the St. Petersburg office for about EUR 59 thousand. The second
quarter of 2014 included a one-off cancellation of a cost reserve related to
the integration, amounting to about EUR 135 thousand.
**) The third quarter of 2014 included a one-off cost reserve related to the
closing of the St. Petersburg office for about EUR 59 thousand and a financing
cost reserve related to the Enabling acquisition for about EUR 400 thousand, a
total of about EUR 459 thousand. The second quarter of 2014 included a one-off
cancellation of a cost reserve related to the integration, amounting to about
EUR 135 thousand, and financial income of EUR 216 thousand from the additional
purchase price related to the acquisition, a total of about EUR 351 thousand.
The first quarter of 2014 included financial income of EUR 325 thousand for the
additional purchase price related to the acquisition.
***) In the group company, an error in the assessment of projects was detected
concerning the period of January 1-June 30, 2015, in the current financial
period as well as the previous financial periods. The assessment error has been
corrected for the above-mentioned periods in accordance with IAS 8: 41-42. The
total effect of the error is approximately EUR 552 thousand. Adjustments and
their effects on the Group figures are described in more detail in the
attachment to this interim report.
Innofactor's net sales and operating margin (EBITDA) in 2015 is estimated to
increase from 2014, during which the restated net sales were EUR 43.8 million
and operating margin was EUR 3.8 million.
The figures in this interim report have not been audited.
Reporting
Innofactor operates on a single segment, offering software, systems and related
services.
CEO Sami Ensio's review
In the third quarter of 2015, Innofactor's net sales were EUR 9.3 million,
which shows a decrease of 3.5% compared to the corresponding period in the
previous year. The operating margin (EBITDA) was EUR 0.8 million (8.1 percent
of the net sales), which shows a decrease of 15.4 percent since last year.
On September 16, 2015, Innofactor terminated the contract of the Country
Manager in Denmark due to suspected misconduct and lack of confidence. The
above-mentioned has been part of the reasons leading to the error in project
assessments, due to which Innofactor is correcting in this interim report the
group figures for the first and second quarter of 2015. For the time preceding
the current financial period as a whole, the figures are corrected to the last
quarter of 2014. The effect of the corrections in the Innofactor group's
operating margin for 2015 is approximately EUR -0.24 million, for the operating
margin of 2014 it is EUR -0.31 million, and in total approximately EUR -0.55
million.
Because investigations, actions with local authorities and other legal
proceedings concerning the possible misconducts in the Danish subsidiary are in
progress, it is not yet possible to estimate the potential amount of
compensation for damage. Anthony Gyursanszky (Innofactor's Chief Operating
Officer) has been appointed as the Country Manager for Denmark. He has led the
rearrangement of the operative processes and management of the Danish business
to comply with Innofactor's corporate governance principles and to ensure
profitable growth in accordance with the strategy in Denmark.
The Innofactor group has paid attention to strengthening the transparency of
its operations. One of our central actions has been to increase the resources
of the Nordic ERP process started in spring 2015, in order to complete the
project quickly. In Innofactor's business culture, a strong trust in
knowledgeable personnel and management will remain as a central factor.
Despite the above-mentioned write-offs, Innofactor's growth in the first three
quarters of 2015 was 0.8 percent (net sales EUR 31.9 million). The operating
margin (EBITDA) was EUR 2.0 million, which shows a decrease of 15.1 percent
since last year. The cash flow from business activities in the first three
quarters of the year was strong, increasing to EUR 2.5 million from the
previous year's EUR -0.5 million.
Innofactor updated its strategy in September. I am very satisfied with the
strategy process, which we went through with the Board of Directors, renewed
Executive Board, other management and personnel. Our renewed mission to
“empower organizations and people to make a difference in a digital world”
describes well the passion, which was the basis on which I founded Innofactor
16 years ago. It also describes the way we in Innofactor want to still work
daily with our customers and their customers and employees. The digital world
offers totally new possibilities for the success of both organizations and
individuals. On the basis of its renewed strategy, Innofactor has been planning
on its operations for the next few years and will next move on to budgeting.
We think that Innofactor has good prerequisites to continue growing its
business operations profitably in 2015. For Innofactor, the last quarter has
typically been stronger than the other quarters.
Innofactor is still actively looking for new strategic partnerships in the
Nordic Countries. The group will seek growth, which can be organic or based on
mergers or acquisitions.
Market outlook and business environment
Main forces affecting the markets are the transfer of software into the cloud,
increased significance of social media, mobile devices and Internet of Things,
data analytics and machine learning, and data security and protection. A clear
change in the purchase habits of customers has been observed as these business
changes are taking place. The customers expect the IT provider to focus more on
business benefits instead of technology benefits. The customers want the
providers to have solutions that are ready for use without a need to make
changes, and they want to be able to buy more continuous services instead of
large one-off projects.
Innofactor estimates that the growth of IT service market in 2015 will be 0-1%
in Finland and 1-3% in other Nordic Countries. The estimate is based on
research institutes' forecasts and Innofactor's outlook on markets.
As concerns Microsoft-based solutions, competition in the Nordic Countries is
divided between different kinds of parties. The first group is formed by large
companies that operate in all of the Nordic Countries. Typically, these
companies offer a wide range of IT solutions for companies and organizations,
using several competing technologies of which Microsoft technology is one
option. The second group is formed by companies that focus on a narrower
solution area in the Nordic level. These companies also offer IT solutions for
companies and organizations using several competing technologies of which
Microsoft technology is typically just one option. The third group is formed by
companies operating in just one country. These small or medium-sized companies
often focus on one solution area, client and/or field.
Innofactor has made a strategic choice by focusing on solutions implemented
with and utilizing the Microsoft platforms and by selecting as its solution
areas the ones in which Microsoft's growth and offering, and thus its partners'
and ecosystem's growth, has exceeded the general average growth of IT service
and software markets many times over. Innofactor is primarily focused on Nordic
large and medium-sized companies and government organizations, which have high
standards in their IT solution acquisitions. Innofactor develops solutions,
products and services suitable for this group by itself and in cooperation with
its partners. Innofactor's strategy supports well the change in the markets.
Innofactor believes it can gain market share from its competitors and utilize
possible IT market growth in the future.
Microsoft's partner network in the Nordic Countries, and also elsewhere in
Europe, is quite fragmented and mainly consists of a large number of small and
medium-sized local providers. For Innofactor, this provides interesting
potential for consolidation and globalization. Innofactor's good reputation,
unique proofs of rapid and profitable growth and successful acquisitions
together with business culture with entrepreneurial spirit make it a very
attractive partner when making reorganizations in the field in the Nordic
Countries.
Espoo, October 20, 2015
INNOFACTOR PLC
Board of Directors
Additional information:
CEO Sami Ensio, Innofactor Plc
Tel. +358 50 584 2029
sami.ensio@innofactor.com
Briefings concerning the Interim Report January 1-September 30, 2015
On October 20, 2015, at 9:00 Finnish time, Innofactor will hold a briefing
concerning the interim report in Finnish for the media, investors and analysts
at the company's premises at Keilaranta 9, Espoo. The report will be presented
by CEO Sami Ensio and CFO Janne Martola. The presentations of the briefing will
be available on Innofactor's web site after the briefing.
We ask you to register for the briefing beforehand by sending email to
ir@innofactor.com.
If required, Innofactor will also hold a conference call in English for
analysts, media and investors on October 20, 2015, at 16:00 Finnish time.
Registrations to ir@innofactor.com before 12:00 Finnish time on Monday, October
19, 2015.
Financial releases in 2016
The financial statement for 2015 and the interim report for October-December
2015 will be published on Tuesday, March 1, 2016. The annual report for 2015
will be published on the company's web site on Tuesday, March 8, 2016. The
preliminary plan for the Annual General Meeting is that the meeting will be
held on Tuesday, March 29, 2016, at 9:00 Finnish time.
The schedule for financial releases in 2016 is as follows:
April 12-25, 2016: Silent period
April 26, 2016: Interim report January-March
July 5-18, 2016: Silent period
July 19, 2016: Interim report January-June
October 11-24, 2016: Silent period
October 25, 2016: Interim report January-September
Distribution:
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