Innofactor Plc Financial Statement Release February 24, 2015, at 8:30 Finnish time
Summary
| mo. 10–12/ 2014 | mo. 10–12/ 2013 | Change | mo. 1–12/ 2014 | mo. 1–12/ 2013 | Change | |||||
| Net sales, EUR thousand | 12,516 | 11,090 | +12.9% | 44,119 | 32,685 | +35.0% | ||||
| Growth of net sales | +12.9% | +76.1% | +35.0% | +73.7% | ||||||
| Operating profit before depreciation and amortization (EBITDA), EUR thousand* | 1,794 | 1,321 | +35.8% | 4,107 | 3,284 | +25.1% | ||||
| percentage of net sales* | 14.3% | 11.9% | 9.3% | 10.0% | ||||||
| Operating profit/loss (EBIT), EUR thousand* | 1,449 | 986 | +47.0% | 2,720 | 2,255 | +20.6% | ||||
| percentage of net sales* | 11.6% | 8.9% | 6.2% | 6.9% | ||||||
| Earnings before taxes, EUR thousand** | 1,214 | 1,025 | +18.4% | 2,259 | 1,863 | +21.3% | ||||
| percentage of net sales** | 9.7% | 9.2% | 5.1% | 5.7% | ||||||
| Earnings, EUR thousand** | 970 | 776 | +25.0% | 1,807 | 1,407 | +28.4% | ||||
| percentage of net sales** | 7.8% | 7.0% | 4.1% | 4.3% | ||||||
| Net gearing | 42.4% | 55.9% | 42.4% | 55.9% | ||||||
| Equity ratio | 49.0% | 43.1% | 49.0% | 43.1% | ||||||
| Personnel on average during the review period | 415 | 392 | +5.9% | 421 | 307 | +37.1% | ||||
| Earnings per share (EUR) | 0.0302 | 0.0216 | +39.7% | 0.0563 | 0.0432 | +30.4% | ||||
*) 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 last quarter of 2013 included one-off costs related to acquisitions for about EUR 182 thousand, and also costs and cost reserves related to the integration for about EUR 277 thousand, a total of about EUR 459 thousand. The last quarter of 2013 included a one-off profit of EUR 158 thousand. 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 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 last quarter of 2013 included one-off costs related to acquisitions for about EUR 662 thousand (of which the financial expenses for the additional purchase price related to the acquisition were EUR 480 thousand), and also costs and cost reserves related to the integration for about EUR 277 thousand, a total of about EUR 939 thousand. The last quarter of 2013 included one-off profit of EUR 158 thousand and also financial income of EUR 758 thousand for the additional purchase price related to the acquisition, a total of about EUR 916 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.
Innofactor’s net sales and operating margin (EBITDA) in 2015 is estimated to increase from 2014, during which the net sales were EUR 44.1 million and operating margin was EUR 4.1 million.
The annual figures in this financial statement have been audited.
Reporting
Innofactor operates on a single segment, offering software, systems and related services.
CEO Sami Ensio's review
In the last quarter of 2014, Innofactor continued profitable growth in accordance with its strategy. The growth of net sales was 12.9 percent (net sales EUR 12.5 million) and operating margin (EBITDA) was EUR 1.8 million (14.3 percent of the net sales).
For the entire year, the growth of net sales was 35.0 percent and operating margin (EBITDA) was 9.3 percent of the net sales.
Innofactor’s measures aimed at improving the efficiency of operations, which took place on the second and third quarter, had a positive effect on the last quarter. These measures included, for example, making sales more effective, improving the billing rate, cutting costs, and cutting personnel costs by means of personnel negotiations and closing the St. Petersburg office. These measures made the business operations and organization more streamlined.
Innofactor’s order book developed favorably during the last quarter of the year. Innofactor’s volume of orders was increased, for example, by the delivery of a financial management service platform based on the Microsoft Dynamics AX product to Enfo Zender Oy, with the first stage of the process valued at about EUR 0.5 million, and the delivery of cloud services to The Hospital District of Helsinki and Uusimaa, valued at about EUR 0.6 million.
We think that Innofactor has good prerequisites to continue growing its business operations profitably in 2015.
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 Innofactor’s 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.
Future outlook
Innofactor’s net sales and operating margin (EBITDA) in 2015 is estimated to increase from 2014, during which the net sales were EUR 44.1 million and operating margin was EUR 4.1 million.
Board of Directors' proposal on the dividend
Innofactor is a growing company and intends to use its operating profit on actions promoting growth, for example, on realizing mergers. Innofactor has defined a dividend distribution policy according to which the aim of the Board of Directors is to provide an opportunity for the shareholders to distribute, from the part of the operating margin (EBITDA) that exceeds 10%, the maximum dividend allowed by the state of the business. For 2014, the EBITDA was 9.3% of net sales. In making the proposal on the dividend, the Board of Directors takes into account the company's financial situation, profitability and near-term outlook.
At the end of the financial period of 2014, the distributable assets of the group's parent company were EUR 36,555,724.64.
The Board of Directors proposes that no dividend be distributed for the financial period of 2014.
Espoo, February 24, 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 financial statement of 2014
On February 24, 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 either by sending email to ir@innofactor.com or by phoning to +358 50 575 6120 (Tuija Österberg).
Innofactor will also hold a conference call in English for analysts, media and investors on February 24, 2015, at 16:00 Finnish time. Registrations to ir@innofactor.com before 12:00 Finnish time on February 24, 2015.
Financial releases in 2015
The annual report for 2014 will be published on the company's web site on Monday, March 2, 2015.
The Annual General Meeting will be held on Tuesday, March 24, 2015, at 9:00 Finnish time.
The schedule for financial releases in 2015 is as follows:
April 7–20, 2015: Silent period
April 21, 2015: Interim report January–March
July 7–20, 2015: Silent period
July 21, 2015: Interim report January–June
October 6–19, 2015: Silent period
October 20, 2015: Interim report January–September
Distribution:
NASDAQ OMX Helsinki
Main media
www.innofactor.com
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. Innofactor’s own product development is focused on Microsoft’s Windows Azure based cloud solutions. Innofactor's customers include about 1,000 private and public sector organizations in Finland, Denmark, Sweden and elsewhere in Europe. The company has about 400 motivated and skilled employees in a number of locations in Finland, Denmark, and Sweden. From 2010 to 2014, Innofactor's annual net sales growth has been 45 percent on average. Leading Finnish business publication Kauppalehti selected Innofactor as the most successful company on the Finnish stock exchange in 2013. The Innofactor Plc share is listed in the technology section of the main list of NASDAQ OMX Helsinki Oy.
