2013-10-29 07:30:00 CET
2013-10-29 07:30:04 CET
REGULATED INFORMATION
Innofactor Oyj - Interim report (Q1 and Q3)
Innofactor Plc's interim report for January 1–September 30, 2013 (IFRS)
Innofactor Plc Interim Report October 29, 2013, at 8:30 Finnish time
Summary
mo. mo. Change mo. mo. Change mo.
7-9 7-9/ 1-9 1-9/ 1-12
/2013 2012 /2013 2012 /2012
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--------------------------------------------------------------------------------
Net sales, EUR thousand 8,317 4,567 +82.1% 21,595 12,521 +72.5% 18,818
Growth of net sales +82.1% +21.3% +72.5% +3.7% +9.4%
Operating profit before 714 495 +44.2% 1,963 180 +990.6 1,215
depreciation and %
amortization (EBITDA),
EUR thousand*
percentage of net 8.6% 10.8% 9.1% 1.4% 6.5%
sales*
Operating profit/loss 403 348 +15.8% 1,269 -249 +609.6 620
(EBIT), EUR thousand* %
percentage of net 4.8% 7.6% 5.9% -2.0% 3.3%
sales*
Earnings before taxes, 270 328 -17.7% 838 -269 +411.5 591
EUR thousand** %
percentage of net 3.2% 7.2% 3.9% -2.1% 3.1%
sales**
Earnings, EUR 204 224 -8.9% 631 -367 +271.9 449
thousand** %
percentage of net 2.5% 4.9% 2.9% -2.9% 2.4%
sales**
Net gearing 62.3% 8.6% 62.3% 8.6% 5.4%
Equity ratio 45.7% 66.1% 45.7% 66.1% 66.1%
Personnel on average 384 196 +95.9% 279 186 +50.0% 189
during the review
period
Earnings per share 0.0059 0.0074 -20.3% 0.0200 -0.0123 +262.3 0.0150
(EUR) %
* The second quarter of 2013 included one-off costs related to the atBusiness
Oy acquisition for about EUR 164 thousand, and also cost reserves related to
the integration for about EUR 200 thousand, a total of about EUR 364 thousand.
** The second quarter of 2013 included one-off costs related to the atBusiness
Oy acquisition for about EUR 370 thousand (of which EUR 206 thousand were costs
related to organizing the loans), and also cost reserves related to the
integration for about EUR 200 thousand, a total of about EUR 570 thousand.
There continue to be slight uncertainties related to the outlook for 2013 due
to the finalization of the integration of a major acquisition. Innofactor's net
sales in 2013 are expected to be about EUR 32-34 million (2012: EUR 18.8
million). Operating profit before depreciation and amortization (EBITDA) in
2013 is expected to be about EUR 3-4 million (2012: EUR 1.2 million).
The figures in this interim report have not been audited. The figures include
the acquired atBusiness Oy (current Innofactor Business Solutions Oy) as of
June 1, 2013. Further details about the acquisition can be found in this
interim report's section "Acquisitions and changes in the group structure."
Reporting
Innofactor operates on a single segment, offering software, systems and related
services.
CEO Sami Ensio's review
One of the major issues on the review period was starting the integration of
atBusiness Oy, acquired on June 6, 2013, as part of Innofactor's operation in
Finland. The atBusiness Oy integration process will continue until January 31,
2014. The Espoo offices, in which over 60% of Innofactor's personnel work, will
be combined as of January 1, 2014, which is expected to realize a major part of
the synergy benefits. Innofactor has decided to transfer part of the recruiting
planned for the end of 2013 to the year 2014, which decreases the net sales of
2013, but has no significant effect on EBITDA.
In the third quarter, Innofactor continued profitable growth in accordance with
its strategy. The growth of net sales was 82.1 percent and profit margin
(EBITDA) was 8.6 percent. Measured in net sales (EUR 8.3 million) and EBITDA
(EUR 0.7 million), this was the best third quarter in the company's history. As
a significant part of Innofactor's net sales comes from selling human labor,
the net sales of the third quarter are typically the lowest of the year due to
summer vacations.
The merger of Innofactor and atBusiness has been received enthusiastically
among our customers, personnel, major partners, and investors. During the
review period, Innofactor won, for example, the tender for delivering
centralized data warehouse maintenance and further development for Aalto
University, valued at EUR 568,490, and after the review period, the tender for
maintaining FICORA's (The Finnish Communications Regulatory Authority)
eServices platform for a period of four years including the option of one
additional year, valued at EUR 2,257,800.
According to our new published strategy, Innofactor's goal is to achieve EBITDA
of over 10% in each year during 2014-2017. In order to achieve this goal,
Innofactor will at the end of 2013 focus on ensuring the speedy realization of
the synergy benefits - related among others things to cross selling and cross
resourcing - resulting from the atBusiness acquisition.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
Due to long-standing uncertainties in the economic situation, it is challenging
to make a reliable estimate on the development of the IT market in the near
future. According to research companies monitoring the IT market, the IT
service markets grew globally about 1-2 percent in 2012 and they are expected
to grow about 3-5 percent in 2013. The growth of software market in 2012-2013
is estimated to be about one percentage point faster, that is, 4-6 percent in
2013.
The IT market is experiencing a clear turning point. Among central trends are
mobility and the consumerization of information technology: an increasingly
larger share of the IT purchases made by companies is based on the requirements
of individuals, that is, the consumer market. Commercial clients tend to
purchase software that can be used in phones, tablets and computers. Another
central trend consists of the new environments offered by cloud computing and
the possibility of offering software from a cloud globally to a wide range of
end users and for all devices, including mobile phones. The third trend is the
intensive growth of the amount of information and analyzing it, that is, big
data. The fourth trend is the increase of social media and other communications
in information systems.
Innofactor has made a strategic choice by focusing on solutions that use
Microsoft technology. The company believes that Microsoft is a strong player in
the IT market change. Microsoft has the leading position in business software
and a significant position in consumer software. It also has a strong position
in services and devices, especially after the acquisition of the Nokia mobile
phone business. Microsoft has the world's largest software and service
offering, and it invests annually about 10 billion dollars into research and
development, for example, in cloud and mobile software. Many Microsoft
programs, such as Windows and Office, are de facto standards. Microsoft also
has the world's largest IT business partner network, which innovates new
solutions continuously. Microsoft is growing considerably faster than the
markets.
Innofactor has selected as its application areas especially those areas where
Microsoft's growth and, correspondingly, its partners' growth has exceeded
manifold the growth of general global IT service and software markets. For
example, on the financial period that ended in June 2013, Microsoft reported
growth in two-figure percentages, for example, in the areas of Dynamics CRM
solutions, Microsoft SQL servers used in Microsoft-based BI solutions, and
SharePoint, Lync and Exchange solutions. In many cloud solutions, Microsoft
reported an even faster growth. The above-mentioned Microsoft solution areas,
which are growing significantly faster than other IT markets, form a
significant part of Innofactor's business operations.
The company feels that for companies like Innofactor, which is strongly
committed to Microsoft, this development creates growing global markets in the
long term, both as a traditional system integrator locally in the Nordic
countries and as a solution provider in wider areas.
Companies strongly committed to Microsoft in the Nordic countries are mainly
small companies. Innofactor believes that size gives a competitive edge for a
company also in the Microsoft ecosystem, making mergers of small companies
focused on Microsoft solutions probable. This gives Innofactor opportunities to
grow.
Espoo, October 29, 2013
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, 2013
On October 29, 2013, 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 19, Espoo. The report will be presented
by CEO Sami Ensio and CFO Mikko Karvinen. 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 50 554 3832 / Salla Tähtinen.
Innofactor will also hold a conference call in English for analysts, media and
investors on October 29, 2013, at 16:00 Finnish time. Registrations to
ir@innofactor.com at least one hour before the event.
Financial releases in 2014
The 2013 Financial Statements Bulletin and Interim Report October-December 2013
will be published on Tuesday February 25, 2014. The Annual Report for 2013 will
be published on Innofactor's web site on Febuary 27, 2014. The Annual General
Meeting is tentatively scheduled to be held on March 20, 2014.
The schedule for financial releases in 2014 is as follows:
April 9-April 22, 2014: Silent Period
April 23, 2014: Interim Report for January-March
July 8-July 21, 2014: Silent Period
July 22, 2014: Interim Report for January-June
October 7-October 20, 2014: Silent Period
October 21, 2014: Interim Report for January-September
Distribution:
NASDAQ OMX Helsinki
Main media
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