Innofactor Oyj - Interim report (Q1 and Q3)

Innofactor Plc's Interim Report for January 1–March 31, 2016 (IFRS)

Innofactor Plc Interim Report April 26, 2016, at 8:30 Finnish time



The best first quarter in history in terms of net sales and operating margin

January–March 2016 in brief:

  -- The net sales were EUR 14.6 million, which shows an increase of 30.5%.
  -- The operating margin was EUR 0.9 million, which was 6.3 percent of the net
     sales.
  -- Innofactor’s operating cash flow in the review period continued to be
     strong and was EUR 3.5 million.
  -- Innofactor made significant changes in its management.
  -- The deal, signed by Innofactor in December 2015, on acquiring the Swedish
     company Cinteros AB (net sales in 2015 approximately EUR 11 million and
     over 100 employees) was realized in January 8, 2016, and it strengthened
     significantly Innofactor’s Nordic growth strategy.



                                       Jan 1–Mar   Jan 1–Mar  Change   Jan 1–Dec
                                         31 2016    31 2015*            31 2015*
--------------------------------------------------------------------------------
Net sales, EUR thousand                   14,597      11,188   30.5%      44,452
Growth of net sales                        30.5%        0.9%                1.4%
Operating profit before depreciation         915         722   26.7%       3,705
 and amortization (EBITDA), EUR                                                 
 thousand*                                                                      
percentage of net sales*                    6.3%        6.5%                8.3%
Operating profit/loss (EBIT), EUR            306         372  -17.7%       2,542
 thousand*                                                                      
percentage of net sales*                    2.1%        3.3%                5.7%
Earnings before taxes, EUR thousand*         171         260  -34.2%       1,935
percentage of net sales*                    1.2%        2.3%                4.4%
Earnings, EUR thousand*                      142         208  -31.6%       1,548
percentage of net sales*                    1.0%        1.9%                3.5%
Net gearing                                49.6%       26.6%               34.1%
Equity ratio                               40.5%       50.3%               56.9%
Active personnel on average during           500         397   25.9%         427
 the review period**                                                            
Earnings per share (EUR)                  0.0041      0.0065  -36.3%      0.0475

*) During the third quarter, an error in the assessment of projects was
detected in the Group company concerning the period of January 1–June 30, 2015,
for the year 2015 as well as the previous financial periods. The assessment
error was corrected for the above-mentioned periods in accordance with IAS 8:
41–42. The total effect of the error was a decrease of approximately EUR 552
thousand in the operating margin. Of this, approximately EUR 83 thousand was
for the period of January 1–March 31, 2015, and approximately EUR 238 thousand
for the entire year 2015. Adjustments and their effects on the Group figures
are described in more detail in the attachment to the interim report for
January 1–September 30, 2015, which was published on October 20, 2015. 

**) The Innofactor Group monitors the number of active personnel. The number of
active personnel does not include employees who are on a leave of over 3
months. 



Innofactor’s future outlook for 2016 remains the same

Innofactor’s net sales and operating margin (EBITDA) in 2016 are estimated to
increase significantly from 2015, during which the net sales were EUR 44.5
million and operating margin was EUR 3.7 million. 



CEO Sami Ensio's review

In the first quarter of 2016, Innofactor continued profitable growth in
accordance with its strategy. The net sales grew 30.5 percent (net sales EUR
14.6 million). Innofactor estimates that the Nordic IT market will grow
slightly faster in 2016 than in the previous year. 

The operating margin (EBITDA) was EUR 0.9 million (6.3 percent of the net
sales) and grew 26.7 percent from the previous year. In Innofactor’s history,
the end of the year has typically been better in terms of operating margin than
the beginning of the year. 

The cash flow from business activities in the first quarter remained strong and
was EUR 3.5 million. In February 2016, Innofactor redeemed the EUR 3.2 million
hybrid bond, which significantly lessens the future financing risk. 

During the first quarter, Innofactor strengthened its management. The Executive
Board got new members: in January, Robert Erlandsson, Innofactor’s Managing
Director in Sweden; in February, Jørgen Kaufmann, Innofactor’s Managing
Director in Denmark; and also in February, Jari Hahl, the Group’s Chief Sales
Officer. CEO Sami Ensio was on sick leave for approximately two months in
January–March due to an operation, and during this time, his deputy was CFO
Janne Martola. 

During the review period, three former Microsoft Country Managers from Sweden,
Denmark and Norway joined the newly formed Nordic Advisory Board to accelerate
Innofactor’s Nordic growth strategy. The newly appointed Nordic Advisory Board
members will contribute their insights to the company on market, strategy,
business development and M&A insights in Sweden, Denmark and Norway, key
recruitments, and Microsoft relationships. The members of the Advisory Board
are Jonas Persson, Niels Soelberg and Knut Aasrud. 

The acquisition of the Swedish company Cinteros AB was realized on January 8,
2016. The integration of the company as part of Innofactor began immediately
and has progressed as planned. The company’s name is planned to be changed to
Innofactor AB at the end of May 2016. 

Innofactor got some major deals during the first quarter. Innofactor’s order
book grew, for example, due to the deal for providing a web content management
system and related services for it for Keva, valued at approximately EUR 0.5
million, and the deal for providing the Hospital District of Helsinki and
Uusimaa (HUS) with transfer of application and infrastructure solutions into
cloud services and the continuous services and expert services related to the
cloud services, valued at approximately EUR 1.5 million. 

We think that Innofactor has good prerequisites to continue growing its
business operations profitably in 2016. 

Innofactor is still actively looking for new strategic partnerships in the
Nordic Countries. The Group’s goal is to grow both organically and through
acquisitions. 



Strategy and its realization in January–March 2016

Innofactor strengthens its customers’ competitiveness by providing outstanding
IT solutions, products and services. Innofactor focuses on Microsoft-based
solutions and the Microsoft ecosystem. Innofactor’s customers include companies
and public and third sector organizations. At the moment, Innofactor’s
operations are focused on Finland, Sweden and Denmark. Innofactor’s strategy is
to actively expand its operations in the Nordic Countries, which may happen
either organically or through acquisitions. 

Innofactor's mission: We empower organizations and people to make a difference
in the digital world. 

Innofactor's vision: We are the number one Microsoft-based solution provider in
the Nordic Countries. 

Innofactor’s strategy is to build competitive advantage as the leading provider
focused on Microsoft-based solutions and the Microsoft ecosystem. Innofactor's
strategy is to differentiate itself from the competitors in the following ways: 

• Deep understanding of companies, public sector and third sector customers in
the Nordic Countries 

• The best Nordic professionals in the Microsoft ecosystem

• Comprehensive Microsoft-based offering, products and services

• Fast delivery and value-adding customer support

Innofactor's long-term financial goal is to grow profitably:

• By achieving over 10 percent operating margin (EBITDA) every year in 2014–2017

• By achieving an average annual growth of 25–35 percent in 2014–2017 through
organic growth as well as acquisitions 

• By keeping the cash flow positive and by securing solid financial standing in
all situations 

The growth of 30.5 percent in Innofactor's net sales in the review period
matched the planned growth rate stated in the strategy. 

Innofactor's operating margin (EBITDA) in relation to net sales was 6.3
percent. According to the strategy, the annual EBITDA must be over 10 percent.
Typically, Innofactor’s profitability has improved towards the end of the year. 

Innofactor’s operating cash flow in the review period was EUR 3.5 million
positive, but was slightly lower than the corresponding figure for 2015 (2014:
EUR 3.7 million). Innofactor’s financial stability is good. Net gearing at the
end of the review period was 49.6 percent (2015: 45.7 percent). 

The acquisition of Cinteros AB, agreed on in December 2015, was realized on
January 8, 2016. 



Espoo, April 26, 2016

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–March 31, 2016

On April 26, 2016, 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 either by sending email to
ir@innofactor.com or by phoning to +358 50 575 6120 (Tanja Eskolin). 

Innofactor will also hold a conference call in English for analysts, media and
investors on April 26, 2016, at 16:00 Finnish time. Registrations to
ir@innofactor.com before 12:00 Finnish time on April 26, 2016. 



Financial releases in 2016

The schedule for financial releases in 2016 is as follows:

July 5–18, 2016: Silent period

July 19, 2016: Interim report January–June 2016

October 11–24, 2016: Silent period

October 25, 2016: Interim report January–September 2016



Distribution:
NASDAQ OMX Helsinki
Main media
www.innofactor.com



Innofactor
Innofactor is one of the leading Nordic IT solution providers focused on
Microsoft platforms. Innofactor delivers business critical solutions and
maintenance services as a system integrator and develops its own software
products and services. The focus area in Innofactor’s own product development
is Microsoft’s cloud solutions. Innofactor's customers include over 1,200
private and public sector organizations in the Nordic Countries. The company
has over 500 motivated and skilled employees in a number of locations in
Finland, Sweden and Denmark. In 2011–2015, the annual growth of Innofactor’s
net sales has been approximately 35%. Microsoft named Innofactor Plc as the
Finnish Partner of the Year in 2015. Innofactor was also selected into the
Microsoft’s international finals in two categories. The Innofactor Plc share is
listed in the technology section of the main list of NASDAQ OMX Helsinki Oy. 
www.innofactor.com

Viðhengi:

Innofactor Plcs Interim Report for January 1-March 31 2016 IFRS.pdf