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Innofactor Plc’s Half-Yearly Report for January 1–June 30, 2022 (IFRS)

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Innofactor Oyj
Innofactor Oyj

Innofactor Plc Half-Yearly Report July 21, 2022, at 9:00 Finnish time

Innofactor’s second quarter was challenging, but we, nevertheless, expect to achieve the guidance we have issued for 2022

April–June 2022 in brief:

  • Net sales were approximately EUR 16.9 million (2021: 17.3), representing a decrease of 2.0%

    • Operating margin was approximately EUR 1.4 million (2021: 2.1), representing a decrease of 34.3%

    • Operating profit was EUR 0.7 million (2021: 1.3), representing a decrease of 47.5%

    • The order backlog at the end of the review period was EUR 77.2 million (2021: 72.7), which shows an increase of 6.1%

    • Innofactor received several significant orders in the second quarter, for example:

      • Senate Properties’ case and document management system and related maintenance and further development services, approximately EUR 2.2 million

      • Delivery of managed cloud services that support a Danish pharmaceutical company’s data integration platform, approximately EUR 2.1 million, not yet entered into the order backlog at the end of the review period

      • IT expert services to support the development and maintenance of a Microsoft Dynamics 365 CRM system for the State Treasury of Finland, approximately EUR 5.0 million, not yet entered in the order backlog at the end of the review period

      • Maintenance and development of a grant and case management system for the Funding Centre for Social Welfare and Health Organisations (STEA), approximately EUR 1.8 million, not yet entered into the order backlog at the end of the review period

      • Case and document management system, as well as related maintenance and support services, for the Greater Stockholm Fire Brigade (Storstockholms brandförsvar), approximately EUR 0.35 million, not yet entered into the order backlog at the end of the review period

    • Innofactor acquired Invenco Ltd, a Finnish company specialized in data and analytics with approximately 50 employees and net sales of approximately EUR 6 million

January–June 2022 in brief:

  • Net sales were approximately EUR 33.9 million (2021: 35.1), representing a decrease of 3.4%

    • Without the Prime business sold in the first quarter of 2021, the comparable change would have been a decrease of 1.8 percent.

  • Operating margin was approximately EUR 3.4 million (2020: 6.8), representing a decrease of 49.4%

    • The operating margin in 2021 includes a capital gain of approximately EUR 2.6 million from the sale of the Prime business, without which the operating margin would have been approximately EUR 4.2 million; the comparable change in operating margin is a decrease of 18.5%

  • Operating profit was EUR 2.0 million (2021: 5.1), representing a decrease of 60.9%

    • The operating profit in 2021 includes a corresponding capital gain as the operating margin, without which the operating profit would have been approximately EUR 2.5 million; the comparable change in operating profit is a decrease of 21.3%

Key figures of the group, IFRS

.

Apr 1–Jun 30, 2022

Apr 1–Jun 30, 2021

Change

 

Jan 1–Jun 30, 2022

Jan 1–Jun 30, 2021

Change

Net sales, EUR thousand

16,946

17,296

-2.0%

 

33,911

35,103

-3.4%

Growth of net sales

-2.0%

3.2%

 

 

-3.4%

3.5%

 

Operating result before depreciation and amortization (EBITDA), EUR thousand

1,377

2,096

-34.3%

 

3,419

6,753

-49.4%

percentage of net sales

8.1%

12.1%

 

 

10.1%

19.2%

 

Operating profit/loss (EBIT), EUR thousand

668

1,272

-47.5%

 

1,987

5,081

-60.9%

percentage of net sales

3.9%

7.4%

 

 

5.9%

14.5%

 

Earnings before taxes, EUR thousand

639

1,287

-50.4%

 

1,741

4,644

-62.5%

percentage of net sales

3.8%

7.4%

 

 

5.1%

13.2%

 

Earnings, EUR thousand

547

989

-44.7%

 

1,393

3,626

-61.6%

percentage of net sales

3.2%

5.7%

 

 

4.1%

10.3%

 

Order backlog

77,193

72,723

6.1%

 

75,193

72,723

3.4%

Net gearing

53.3%

30.5%

 

 

53.3%

30.5%

 

Net gearing without IFRS 16

35.6%

16.8%

 

 

35.6%

16.8%

 

Equity ratio

41.1%

49.9%

 

 

41.1%

49.9%

-17.6%

Equity ratio without IFRS 16

44.4%

53.6%

 

 

44.4%

53.6%

 

Active personnel on average during the review period*

527

524

0.6%

 

513

529

-3.0%

Active personnel at the end of the review period*

557

526

5.9%

 

557

526

5.9%

Earnings per share (EUR)

0.0150

0.0265

-43.5%

 

0.0381

0.0970

-60.7%

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

Innofactor’s future outlook for 2022

Innofactor’s net sales and operating margin (EBITDA) in 2022 are estimated to increase from 2021, during which net sales were EUR 66.4 million. Innofactor's operating margin (EBITDA) for 2022 is estimated to increase from EUR 7.5 million, which would have been the operating margin for 2021 without the proceeds of EUR 2.6 million from the sale of the Prime business.

CEO Sami Ensio’s review: Successes in sales and acquisitions in Q2, our focus during the second half of the year will be on improving operational activities in Finland and Sweden

Net sales in the second quarter of 2022 were EUR 16.9 million, representing a year-on-year decrease of 2.0 percent. Net sales in Denmark and Norway increased in the second quarter, but net sales in Finland and Sweden decreased due to the weakened invoicing ratio and challenges in individual project deliveries. The operating margin (EBITDA) decreased by 34.3 percent year-on-year and was EUR 1.4 million (8.1 percent of net sales). EBITDA was positive in all countries except Sweden. The decrease in EBITDA was mainly attributable to lower net sales.

Net sales in the first half of 2022 were EUR 33.9 million, representing a year-on-year decrease of 3.4 percent. Taking the sale of the Prime business in 2021 into consideration, comparable net sales decreased by 1.8 percent. In the first half of the year, net sales increased in Denmark and Norway but decreased in Finland and Sweden. The operating margin (EBITDA) decreased by 49.4 percent year-on-year and was EUR 3.4 million (10.1 percent of net sales). EBITDA was positive in all countries except Sweden. The operating margin in 2021 included a capital gain of approximately EUR 2.6 million from the sale of the Prime business, without which the comparable change would have been a decrease of 18.5 percent. The order backlog was EUR 77.2 million at the end of the quarter, which shows a year-on-year increase of 6.1 percent and is the highest in Innofactor’s history.

Our sales performance was strong in the second quarter. Contracts won by Innofactor included Senate Properties’ case and document management system and related maintenance and further development services, approximately EUR 2.2 million, the delivery of managed cloud services that support a Danish pharmaceutical company’s data integration platform, approximately EUR 2.1 million, IT expert services to support the development and maintenance of a Microsoft Dynamics 365 CRM system for the State Treasury of Finland, approximately EUR 5.0 million, the maintenance and development of a grant and case management system for the Funding Centre for Social Welfare and Health Organisations (STEA), approximately EUR 1.8 million, and a case and document management system, as well as related maintenance and support services, for the Greater Stockholm Fire Brigade (Storstockholms brandförsvar), approximately EUR 0.35 million.

The case and document management system for the Greater Stockholm Fire Brigade is a particularly important strategic achievement, as it is the first delivery of our Dynasty product outside Finland. We see very attractive opportunities in Sweden and the other Nordic countries for significant market growth over the next few years with the help of our Dynasty product, which has become the market leader in Finland.

In June, Innofactor acquired Invenco Ltd, a company that specializes in data and analytics. Invenco is a long-term Microsoft partner. Invenco has approximately 50 employees, of whom 35 are senior data professionals. The company has four offices in Finland: Vantaa, Oulu, Tampere and Kuopio. Invenco’s net sales were approximately EUR 6 million and EBITDA approximately 5 percent. Innofactor’s objective going forward is to grow Invenco’s net sales and improve its profitability through synergies, among other things. The purchase price (Enterprise Value, EV) consists of a fixed purchase price of EUR 3.0 million and an additional purchase price tied to three years’ net sales growth, which will amount to EUR 3.75 million at a maximum. We see significant growth opportunities in the area of data and analytics, and we will pursue these opportunities together with the professionals we acquired as part of the Invenco acquisition.

We cannot be satisfied with our operational performance in Finland and Sweden in the first half of 2022. We have initiated measures to improve our performance, and these measures will continue throughout the second half of the year. We see significant potential particularly in increasing our project profitability and invoicing rate by having an even stronger focus on our work with customers. During the second half of the year, we also aim to ensure the seamless integration of Invenco into Innofactor’s operations.

Innofactor’s aim is to be the leading provider of organizations’ digital transformation in each of the Nordic countries. We believe in our chosen Nordic strategy and in reaching our long-term goals. This requires perseverance and determination from the company's management and employees as well as investors. 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 the review period

Innofactor’s strategy comprises our purpose, mission, vision, strategic choices, values, working principle, and long-term financial goals.

Our purpose: Innovating to make the world work better

Our mission: Driving the modern digital organization

Our vision: Leading Nordic digital transformation partner in the Microsoft ecosystem

Our strategic choices:

  • The most competent Nordic teams

  • Productized and specialized offering

  • Proactive and agile way of working

  • Innovation with top customers

Our values:

  • Accountability

  • Empowerment

  • Innovation

  • Customer

Our working principle: Our principle is to put people first in everything we do. We want to provide solutions that make our customers’ everyday work and life run smoothly and bring a smile to their faces.

Our long-term financial goals:

  • To achieve annual growth of about 20 percent, the majority of which is intended to be achieved by organic growth

  • To achieve about 20 percent EBITDA in relation to the net sales

  • To keep the cash flow positive and secure good financial standing in all situations.

Innofactor’s net sales in the first half of the year were EUR 33.9 million (2021: 35.1), representing a year-on-year decrease of 3.4 percent. Without the Prime business sold in the first quarter of 2021, the comparable change would have been a decrease of 1.8 percent. The net sales growth target is supported by Innofactor’s large order backlog of EUR 77.2 million (2021: 72.7). The Invenco acquisition adds inorganic growth to our business, but we have also initiated measures to improve our performance and net sales in Finland and Sweden, and those measures will continue through the rest of the year.

The operating margin (EBITDA) was 10.1% of net sales (2021: 19.2%). EBITDA decreased by 49.4 percent year-on-year, which was particularly attributable to the capital gain recognized on the sale of the Prime business in 2021. Without the sale of the Prime business, the operating margin (EBITDA) would have decreased by 18.5 percent year-on-year. The measures we have initiated in Finland and Sweden to improve our performance and net sales are also aimed at improving the operating margin.

Innofactor’s operating cash flow in the review period of January 1–June 30, 2022, was EUR 3.6 million (2021: EUR 6.9 million) and the equity ratio at the end of the review period was 41.1 percent (2021: 49.9 percent). Cash flow in 2021 was affected by EUR 2.2 million in proceeds from the sale of the Prime business. In connection with the Invenco acquisition, Innofactor took out a bank loan of EUR 2.5 million. The bank loan and the effect of consolidating Invenco into Innofactor’s balance sheet on June 30, 2022, reduced the equity ratio. The strong operating cash flow supports Innofactor’s strategic goal of profitable growth and securing solid financial standing in all situations.

Espoo, July 21, 2022

INNOFACTOR PLC

Board of Directors

Additional information:
CEO Sami Ensio, Innofactor Plc
tel. +358 50 584 2029
sami.ensio@innofactor.com

Briefings concerning the Half-Yearly Report for January 1–June 30, 2022

Innofactor will publish the Half-Yearly Report for January–June 2022 on Thursday, July 21, 2022, at around 9:00 Finnish time.

A video conference in Finnish concerning the interim report will be held for media, investors and analysts on the same day at 10:00 Finnish time. The corresponding video conference in English will be held at noon Finnish time. The report will be presented by CEO Sami Ensio and CFO Markku Puolanne.

Please register for the conferences beforehand by sending email to ir@innofactor.com. The link for participating will be sent to the registered persons on the previous day.

The presentations will be available on Innofactor's web site after the conferences.

Distribution:
NASDAQ Helsinki
Main media
www.innofactor.com

Innofactor
Innofactor is the leading driver of the modern digital organization in the Nordic Countries for its over 1,000 customers in commercial, public and third sector. Innofactor has the widest solution offering and leading know-how in the Microsoft ecosystem in the Nordics. Innofactor has over 500 enthusiastic and motivated top specialists in Finland, Sweden, Denmark and Norway. The Innofactor Plc share is listed in the technology section of the main list of NASDAQ Helsinki Oy. www.innofactor.com #ModernDigitalOrganization #HybridWork #PeopleFirst #CreatingSmiles

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