Innofactor Plc Interim Report January 1-June 30, 2012 (IFRS)
31.07.2012 00:00
Innofactor Plc's interim report for January 1–June 30, 2012 (IFRS)
Innofactor Plc Interim Report July 31, 2012, at 8:30 Finnish time
Summary
Innofactor group's key figures for April 1–June 30, 2012:
- Net sales EUR 3,982 thousand (2011: 4,360), decrease of 8.7%
- Operating profit before depreciation and amortization (EBITDA), EUR -108 thousand (2011: 275), decrease of 139.3%
- EBITDA percentage -2.7% (2011: 6.3%)
- Operating loss (EBIT) EUR -251 thousand (2011: 142), decrease of 276.8%
- EBIT percentage -6.3% (2011: 3.3%)
Innofactor group's key figures for January 1–June 30, 2012:
- Net sales EUR 7,954* thousand (2011: 8,303), decrease of 4.2%*
- Operating profit before depreciation and amortization (EBITDA), EUR -316** thousand (2011: 425), decrease of 174.4%
- EBITDA percentage -4.0%** (2011: 5.1%)
- Operating loss (EBIT) EUR -598** thousand (2011: 161), decrease of 471.4%**
- EBIT percentage -7.5%** (2011: 1.9%)
The future outlook for Innofactor remains the same. There are notable uncertainties related to the outlook for 2012 due to the instability of the global financial situation, so no detailed estimate of the outlook can be provided. In 2012, the organic growth of Innofactor is estimated to continue (2011: net sales were EUR 17,205 thousand). The profitability of the business operations is expected to remain positive.
The figures in this interim report have not been audited. The figures do not include the Danish company Bridgeconsulting A/S, acquired on June 25, 2012, which will be taken into account as of July 2012 according to acquisition closing date July 5, 2012. More detailed information of the acquisition can be found in report section “Acquisitions and changes in the group structure”.
* Due to the organizational change on January 2, 2012, projects were rearranged, which had a one-off effect of lowering the net sales in January by about EUR 300 thousand.
** Due to the organizational change on January 2, 2012, projects were rearranged, which had a one-off effect of lowering the net sales in January by about EUR 300 thousand. Additionally, the personnel and office space arrangements related to the organizational change led to a one-off cost of about EUR 100 thousand. In total, these reduced the net sales by about EUR 400 thousand.
Key figures of the group, IFRS
| mo. 4–6 /2012 | mo. 4–6 /2011 | Change | mo. 1–6 /2012 | mo. 1–6 /2011 | Change | mo. 1–12 /2011 | |
| Net sales, EUR thousand* | 3,982 | 4,360 | -8.7 % | 7,954 | 8,303 | -4.2 % | 17,205 |
| Operating profit before depreciation and amortization (EBITDA), EUR thousand** | -108 | 275 | -139.3 % | -316 | 425 | -174.4 % | 1,443 |
| percentage of net sales** | -2.7 % | 6.3 % | -4.0 % | 5.1 % | 8.4 % | ||
| Operating profit/loss (EBIT), EUR thousand** | -251 | 142 | -276.8% | -598 | 161 | -471.4 % | 904 |
| percentage of net sales** | -6.3 % | 3.3 % | -7.5 % | 1.9 % | 5.3 % | ||
| Earnings before taxes, EUR thousand** | -251 | 139 | -280.6 % | -598 | 155 | -485.8 % | 886 |
| percentage of net sales** | -6.3 % | 3.2 % | -7.5 % | 1.9 % | 5.1 % | ||
| Earnings, EUR thousand** | -248 | 108 | -329.6 % | -592 | 121 | -589.2 % | 687 |
| percentage of net sales** | -6.2 % | 2.5 % | -7.4 % | 1.5 % | 4.0 % | ||
| Shareholders' equity, EUR thousand | 12,846 | 12,399 | +3.6 % | 12,846 | 12,399 | +3.6 % | 12,905 |
| Return on equity*** | -7.6 % | 3.5 % | -9.2 % | 1.9 % | 5.5 % | ||
| Return on investment*** | -7.6 % | 4.6 % | -9.2 % | 2.6 % | 7.2 % | ||
| Net gearing | -7.9 % | -6.1 % | -7.9 % | -6.1 % | -5.4 % | ||
| Equity ratio | 76.8 % | 75.6 % | 76.8 % | 75.6 % | 74.5 % | ||
| Balance sheet total, EUR thousand | 18,430 | 17,967 | +2.6 % | 18,430 | 17,967 | +2.6 % | 18,324 |
| Research and development, EUR thousand | 655 | 654 | 1,347 | 1,246 | 2,086 | ||
| percentage of net sales | 16.4 % | 15.0 % | 16.9 % | 15.0 % | 12.1 % | ||
| Personnel on average during the review period | 178 | 175 | +1.7 % | 181 | 173 | +4.6 % | 177 |
| Personnel at the end of the review period | 181 | 185 | -2.2 % | 181 | 185 | -2.2 % | 189 |
| Number of shares at the end of the review period**** | 30,165,900 | 29,261,800 | +3.1 % | 30,165,900 | 29,261,800 | +3.1 % | 29,261,800 |
| Earnings per share (EUR)**** | -0.0082 | 0.0037 | -321.6 % | -0.0199 | 0.0041 | -585.4 % | 0.0235 |
| Shareholders' equity per share (EUR)**** | 0.426 | 0.424 | +0.5 % | 0.426 | 0.424 | +0.5 % | 0.441 |
* Due to the organizational change on January 2, 2012, projects were rearranged, which had a one-off effect of lowering the net sales in January by about EUR 300 thousand.
** Due to the organizational change on January 2, 2012, projects were rearranged, which had a one-off effect of lowering the net sales in January by about EUR 300 thousand. Additionally, the personnel and office space arrangements related to the organizational change led to a one-off cost of about EUR 100 thousand. In total, these reduced the net sales by about EUR 400 thousand.
*** The percentages for the return on equity and return on investment have been adjusted to correspond with the figures for a 12-month period.
**** In accordance with the decision of the Innofactor Plc's Annual General Meeting on April 28, 2011, twenty old shares were consolidated into one new share (registered in the Trade Register on May 7, 2011), which reduced the total number of shares to 1/20 of the previous number. The key figures presented in the table have been adjusted to correspond with the current number of shares.
Reporting
Innofactor operates on a single segment and mainly in Finland*, offering software, systems and related services. No distribution of net sales or earnings by segment or geographical area is therefore presented.
* On June 25, 2012, Innofactor Plc signed a contract on acquiring the Danish company Bridgeconsulting A/S. This is described in more detail in the section "Acquisitions and changes in the group structure." The company operates mainly in Denmark and will be consolidated into Innofactor information as of July, 2012.
CEO Sami Ensio's review
During April 1–June 30, 2012, Innofactor’s net sales decreased by 8.7 percent compared to the corresponding period last year.
During the review period, Innofactor signed a contract on June 25, 2012, to acquire the entire share capital of Bridgeconsulting A/S and its parent company Bridgeconsulting Holding ApS. The acquisition is significant for Innofactor's globalization strategy. High level of competence and clientele of Bridgeconsulting is a perfect complement to Innofactor’s business operations. Together we will be capable of serving our international customers faster and more extensively as well as working to expand our clientele. The expansion of our solution range in the Nordic countries will improve our competitiveness and support our strategy of international growth. Acquisition of Bridgeconsulting is the first step in international expansion of Innofactor’s system integration business and provides an excellent platform to grow a substantial Microsoft-focused business in Denmark.
The effect on net sales related to the starting of the organizational change at the beginning of 2012 continued to have an effect on Q2. In order to improve profitability, Innofactor had cooperation negotiations in May 2012 in the SharePoint Solutions unit. As a result, two persons were let go and two persons were dismissed temporarily. Additionally, some smaller changes in the organization and personnel changes in the management have been made and they are expected to improve the operation of the organization.
The organization reform is essential for securing Innofactor's competitiveness in the long run, for example, in relation to globalization and the acquisition of Bridgeconsulting A/S, and it is expected to improve Innofactor's competitiveness on the second half of the year.
There have not been any significant changes in the general market situation compared to the previous quarter.
The development of net sales was affected by research and development costs that were larger than on an average quarter. Research and development costs recognized in the profit and loss statement for April 1–June 30, 2012, were EUR 655 thousand (2011: EUR 654 thousand), which is 16.4% of the net sales (2011: 15.0%).
Operating profit before depreciation and amortization (EBITDA) during April 1–June 30, 2012, was EUR 108 thousand (-2.7%) and operating loss (EBIT) was EUR -251 thousand (-6.3%).
During the review period and after it, Innofactor secured several major deals, for example, the Resource Booking System for the City of Espoo and the SharePoint application maintenance service for VTT, which resulted in positive development in the order book.
In the longer term, Innofactor is seeking a competitive advantage and flexibility, for example, by increasing the productization level of its solutions, the share of subcontracting and the use of lower-cost labor.
Innofactor continues to seek potential strategic partnerships in Finland and neighboring countries. The group will seek growth, which can be organic or based on mergers or acquisitions.
Market outlook and business environment
There have not been changes in the market outlook and business environment.
Due to the uncertainties in economic situation, it is impossible to make a reliable estimate of the development of the IT market. During the previous recession, the IT market reacted to the change less radically than many other sectors. It can therefore be assumed that in a possible new recession, the impacts will not be very dramatic, but it is difficult to present any figures.
The IT market is experiencing a clear turning point. One of the major trends is the consumerization of information technology: an increasingly larger share of the IT purchases made by companies is based on the requirements of the consumer market. Company and corporate clients tend to purchase software that can be used on phones, tablets and computers. Another trend is the ability of public clouds to offer software in a scalable and global form to a wide range of end users and for all devices, including mobile phones. Innofactor believes that Microsoft is a strong player in this situation: it holds the leading position in the business software market and invests heavily in mobile devices.
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 as well as a provider of cloud and mobile solutions. Innofactor sees that strong commitment to Microsoft brings significant competitive advantages. As the companies focusing purely on Microsoft products are typically small, Innofactor believes that they are likely to be consolidating into larger units, and this will offer Innofactor expansion opportunities.
Espoo, July 31, 2012
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–June 30, 2012
On July 31, 2012, at 9:00 Finnish time, Innofactor will hold a briefing concerning the interim report in Finnish for the media and analysts at the company's premises at Keilaranta 19, Espoo.
Innofactor will also hold a conference call in English for analysts, media and investors on July 31, 2012, at 16:00 Finnish time. Registrations to ir@innofactor.com at least one hour before the event.
Financial releases in 2012
The schedule for financial releases in 2012 is as follows:
October 16–October 30, 2012: Silent period
October 31, 2012, at 8:30 Finnish time: Interim report for January–September
Distribution:
NASDAQ OMX Helsinki
Main media
www.innofactor.com