Innofactor Plc Interim Report April 26, 2022, at 9:00 Finnish time
The absences due to sickness arising from the COVID-19 pandemic made the first quarter challenging – with the net sales and operative operating margin slightly smaller than the previous year
January–March 2022 in brief:
- Net sales were approximately EUR 17.0 million (2021: 17.8), representing a decrease of 4.7%
- The net sales of 2021 include the net sales of the sold Prime business (EUR 0.6 million), without which the comparable change would have represented a decrease of 1.5%
- Operating margin was approximately EUR 2.0 million (2021: 4.7), representing a decrease of 56.2%
- The operating margin of 2021 includes a sales gain of approximately EUR 2.6 million from the sale of the Prime business, without which the comparable change of the operating margin would have represented a decrease of 2.8%
- Operating profit was EUR 1.3 million (2021: 3.8), representing a decrease of 65.4%
- The operating profit of 2021 includes a corresponding sales gain as the operating margin, without which the operating profit of 2021 would have been approximately EUR 1.3 million, in which case the comparable change would have represented an increase of 5.3%
- The order backlog at the end of the review period was EUR 71.3 million (2021: 68.9), which shows an increase of 3.5%
- Innofactor got several significant orders in the first quarter, for example,
- The case management, document management, transaction service and reference price information system of the Finnish Ministry of Social Affairs and Health, approximately EUR 1.2 million (not yet in the order backlog at the end of the review period)
- The Sequence Number Register of the Housing Finance and Development Centre of Finland (ARA), approximately EUR 0.7 million (not yet in the order backlog at the end of the review period)
- The development and maintenance of the information systems of the Finnish Safety and Chemicals Agency (Tukes), approximately EUR 6.8 million for all three areas of the framework agreement, of which Innofactor is responsible for one (not yet in the order backlog at the end of the review period)
- The configuration, development, and support services of the Microsoft Dynamics 365 solution for a Swedish bank, approximately EUR 0.8 million
- The SaaS solution of the case management system for Finnvera, approximately EUR 1.0 million (not yet in the order backlog at the end of the review period)
- The administrative case management solution for the Social Insurance Institution of Finland (Kela), approximately EUR 0.7 million (not yet in the order backlog at the end of the review period)
- A cloud migration project for a Norwegian non-profit organization, approximately EUR 1.2 million
| Key figures of the group, IFRS | ||||||||
| . | Jan 1–Mar 31, 2022 | Jan 1–Mar 31, 2021 | Change | |||||
| Net sales, EUR thousand | 16,964 | 17,807 | -4.7% | |||||
| Growth of net sales | -4.7% | 3.8% | ||||||
| Operating result before depreciation and amortization (EBITDA), EUR thousand | 2,042 | 4,657 | -56.2% | |||||
| percentage of net sales | 12.0% | 26.2% | ||||||
| Operating profit/loss (EBIT), EUR thousand* | 1,319 | 3,809 | -65.4% | |||||
| percentage of net sales | 7.8% | 21.4% | ||||||
| Earnings before taxes, EUR thousand | 1,102 | 3,357 | -67.2% | |||||
| percentage of net sales | 6.5% | 18.9% | ||||||
| Earnings, EUR thousand | 846 | 2,637 | -67.9% | |||||
| percentage of net sales | 5.0% | 14.8% | ||||||
| Order backlog | 71,336 | 68,901 | 3.5% | |||||
| Net gearing | 26.5% | 56.9% | ||||||
| Net gearing without IFRS 16 | 10.1% | 43.6% | ||||||
| Equity ratio | 51.7% | 46.6% | 10.9% | |||||
| Equity ratio without IFRS 16 | 56.5% | 44.0% | ||||||
| Active personnel on average during the review period* | 499 | 537 | -7.1% | |||||
| Active personnel at the end of the review period* | 502 | 536 | -6.3% | |||||
| Earnings per share (EUR) | 0.0231 | 0.0705 | -67.2% | |||||
*) 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: In the first quarter, there were several important orders but, at the same time, the absences due to sickness arising from the COVID-19 pandemic undermined the operative result
Net sales in the first quarter of 2022 were EUR 17.0 million, representing a year-on-year decrease of 4.7 percent. Without the Prime business sold in the first quarter of 2021, the comparable change would have been a decrease of 1.5 percent. The net sales in Denmark and Norway increased in the first quarter. However, the net sales in Finland and Sweden decreased, affected by the increase in absences due to sickness as a result of the COVID-19 pandemic. The operating margin (EBITDA) increased by 56.2 percent from the previous year and was EUR 2.0 million (12 percent of the net sales), and it was positive in all countries with the exception of Sweden. The operating margin of 2021 included a sales gain of approximately EUR 2.6 million from the sale of the Prime business, without which the comparable change would have represented a decrease of 2.8 percent. The order backlog was EUR 71.3 million at the end of the quarter, which shows an increase of 3.5 percent compared to the corresponding time in the previous year.
We saw remarkable success in our sales during the first quarter. For instance, we landed the case management, document management, transaction service, and reference price information system of the Finnish Ministry of Social Affairs and Health, approximately EUR 1.2 million; the Sequence Number Register of the Housing Finance and Development Centre of Finland (ARA), approximately EUR 0.7 million; the development and maintenance of the information systems of the Finnish Safety and Chemicals Agency (Tukes), approximately EUR 6.8 million (for all three areas of the framework agreement, of which Innofactor is responsible for one); the configuration, development, and support services of the Microsoft Dynamics 365 solution for a Swedish bank, approximately EUR 0.8 million; the SaaS solution of the case management system for Finnvera, approximately EUR 1.0 million; the administrative case management solution for the Social Insurance Institution of Finland (Kela), approximately EUR 0.7 million; as well as the cloud migration project for a Norwegian non-profit organization, approximately EUR 1.2 million. I would like to thank all our customers for your faith in Innofactor’s services as well as all of Innofactor’s sales force for your excellent work. The majority of these sales are not yet in the order backlog at the end of the quarter, which will increase the order backlog in the future.
The COVID-19 pandemic caused unforeseen challenges in the first quarter, during which period Innofactor’s absences due to sickness approximately doubled from the previous year. As Innofactor’s operations are largely based on the sale of man-hours, this resulted in a drastic reduction of our net sales. It is our belief that the worst of the wave of sicknesses is now behind us and the pandemic should not further reduce our net sales in the second quarter.
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 create solutions that make people’s 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, of which majority 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.
The net sales growth target is supported by Innofactor’s large order backlog of EUR 71.3 million (2021: 68.9). In 2022, Innofactor will pay special attention to growth management.
The operating margin (EBITDA) was 12.0 percent of the net sales (2021: 26.2%). EBITDA decreased by 56.2 percent from the corresponding period in the previous year, specifically as a result of the operating margin gained from the sale of the Prime business in 2021. Without the sale of the Prime business, the operating margin (EBITDA) would have decreased by 2.8 percent compared with the corresponding period in the previous year. Innofactor still strives to increase its operating margin percentage.
Innofactor’s operating cash flow in the review period of January 1–March 31, 2022, was EUR 2.7 million (2021 Q1: EUR 3.6 million) and the equity ratio at the end of the review period was 51.7 percent (2021: 46.6 percent). The strong operating cash flow supports Innofactor’s strategic goal of profitable growth and securing solid financial standing in all situations.
Espoo, April 26, 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 Interim Report January 1–March 31, 2022
Innofactor will publish the interim report for January–March 2022 on Tuesday, April 26, 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 approximately 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 approximately 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
