Innofactor Plc Interim Report January 1-September 30, 2012 (IFRS)
31.10.2012 00:00
Innofactor Plc Interim Report October 31, 2012, at 8:30 Finnish time
Summary
Innofactor group's key figures for July 1–September 30, 2012:
- Net sales EUR 4,567 thousand (2011: 3,766), increase of 21.3%
- Operating profit before depreciation and amortization (EBITDA), EUR 496* thousand (2011: 412), increase of 20.4%*
- EBITDA percentage 10.9%* (2011: 10.9%)
- Operating profit (EBIT) EUR 348* thousand (2011: 280), increase of 24.3%*
- EBIT percentage 7.6%* (2011: 7.4%)
Innofactor group's key figures for January 1–September 30, 2012:
- Net sales EUR 12,521** thousand (2011: 12,069), increase of 3.7%**
- Operating profit before depreciation and amortization (EBITDA), EUR 180*** thousand (2011: 837), decrease of 78.5%***
- EBITDA percentage 1.4%*** (2011: 6.9%)
- Operating loss (EBIT) EUR -249*** thousand (2011: 441), decrease of 156.5%***
- EBIT percentage -2.0%*** (2011: 3.7%)
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 acquired Danish company Bridgeconsulting A/S (current Innofactor A/S) has been included in the figures as of July 1, 2012. Further details about the acquisition can be found in this interim report's section "Acquisitions and changes in the group structure."
* The acquisition made on July 5, 2012, resulted in a one-off cost of about EUR 150 thousand in the review period July 1–September 30, 2012.
** 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. Additionally, the acquisition made on July 5, 2012, resulted in a one-off cost of about EUR 150 thousand in the review period July 1–September 30, 2012.
Key figures of the group, IFRS
| mo. 7–9 /2012 | mo. 7–9 /2011 | Change | mo. 1–9 /2012 | mo. 1–9 /2011 | Change | mo. 1–12 /2011 | |
| Net sales, EUR thousand* | 4,567 | 3,766 | +21.3% | 12,521 | 12,069 | +3.7% | 17,205 |
| Operating profit before depreciation and amortization (EBITDA), EUR thousand** | 496 | 412 | +20.4% | 180 | 837 | -78.5% | 1,443 |
| percentage of net sales** | 10.9% | 10.9% | 1.4% | 6.9% | 8.4% | ||
| Operating profit/loss (EBIT), EUR thousand** | 348 | 280 | +24.3% | -249 | 441 | -156.5% | 904 |
| percentage of net sales** | 7.6% | 7.4% | -2.0% | 3.7% | 5.3% | ||
| Earnings before taxes, EUR thousand** | 328 | 274 | +19.9% | -269 | 429 | -162.7% | 886 |
| percentage of net sales** | 7.2% | 7.3% | -2.1% | 3.6% | 5.1% | ||
| Earnings, EUR thousand** | 224 | 205 | +9.5% | -367 | 326 | -212.6% | 687 |
| percentage of net sales** | 4.9% | 5.4% | -2.9% | 2.7% | 4.0% | ||
| Shareholders' equity, EUR thousand | 13,039 | 12,604 | +3.5% | 13,039 | 12,604 | +3.5% | 12,905 |
| Return on equity*** | 6.9% | 6.6% | -3.8% | 3.5% | 5.5% | ||
| Return on investment*** | 10.3% | 8.9% | -3.3% | 4.7% | 7.2% | ||
| Net gearing | 8.5% | -0.9% | 8.5% | -0.9% | -5.4% | ||
| Equity ratio | 66.1% | 76.5% | 66.1% | 76.5% | 74.5% | ||
| Balance sheet total, EUR thousand | 20,856 | 17,539 | +18.9% | 20,856 | 17,539 | +18.9% | 18,324 |
| Research and development, EUR thousand | 593 | 468 | +26.7% | 1,940 | 1,716 | +13.1% | 2,086 |
| percentage of net sales | 13.0% | 12.4% | 15.5% | 14.2% | 12.1% | ||
| Personnel on average during the review period | 196 | 178 | +10.1% | 186 | 175 | +6.3% | 177 |
| Personnel at the end of the review period | 198 | 184 | +7.6% | 198 | 184 | +7.6% | 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)**** | 0.0074 | 0.0070 | +6.1% | -0.0123 | 0.0111 | -210.4% | 0.0235 |
| Shareholders' equity per share (EUR)**** | 0.433 | 0.431 | +0.6% | 0.433 | 0.431 | +0.6% | 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. Additionally, the acquisition made on July 5, 2012, resulted in a one-off cost of about EUR 150 thousand in the review period July 1–September 30, 2012.
*** 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, offering software, systems and related services.
CEO Sami Ensio's review
During July 1–September 30, 2012, Innofactor’s net sales grew by 21.3 percent compared to the corresponding period last year. Operating profit before depreciation and amortization (EBITDA) during July 1–September 30, 2012, was EUR 496 thousand (10.9%) and earnings before interest and taxes (EBIT) were EUR 348 thousand (7.6%).
The over 20% growth in net sales was due to consolidating the figures of the Danish Innofactor A/S (former Bridgeconsulting A/S) into the Innofactor figures as of July 1, 2012. Integrating the company as part of Innofactor has gone according to the plan.
The negative effects of the organization reform done at the beginning of 2012 did not show anymore in Q3, but thanks to the corrective actions made, Innofactor returned to the profitability level of over 10% (EBITDA), which is the same as in the previous year. The goal of the organization reform is to support growth and globalization in accordance with the strategy.
During Q3, the software and systems market has developed slower than estimated in the main market area in Finland. This can be seen in delaying of purchases by both corporate and public administration customers. In this situation, Innofactor focuses especially in sales in Finland in order to keep the order book on the level required by the business growth goals.
Although the current market situation is challenging, Innofactor estimates that it will achieve organic growth by the end of year 2012 and achieve targets for full year 2012 because of the current order backlog.
Innofactor continues to actively seek potential strategic partnerships in Finland, Denmark and other Nordic Countries. The group will seek growth, which can be organic or based on mergers or acquisitions.
Market outlook and business environment
The software and systems market has developed slower than estimated in the Nordic Countries in July 1–September 30, 2012. This can be seen in delaying of purchases by both corporate and public administration customers. At this stage, it cannot be estimated, whether the purchases will be delayed until the beginning of the next year or whether the delay will be longer. For the entire 2012, Innofactor estimates that the software and systems market in the Nordic Countries will not grow compared to 2011.
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. The publishing of the Windows 8 operating system on October 26, 2012, is significant for the Microsoft ecosystem and it is believed to strengthen Microsoft's competitiveness.
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 October 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–September 30, 2012
On October 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 held a conference call in English for analysts, media and investors on October 31, 2012, at 16:00 Finnish time. Registrations to ir@innofactor.com at least one hour before the event.
Financial releases in 2013
The financial statement for 2012 will be published on February 26, 2013. The schedule for other financial information in 2013 will be published by the end of 2012.
Distribution:
NASDAQ OMX Helsinki
Main media
www.innofactor.com