25.02.2020 09:00 CEST/EET (UTC +2)
Innofactor Plc Financial Statement February 25, 2020, at 9:00 Finnish time
Innofactor's operating margin and order backlog improved significantly from the previous year – also the net sales started to grow again after the dip in 2018
January–December 2019 in brief:
- The net sales were approximately EUR 64.2 million (2018: 63.1), which shows an increase of 1.7%.
- The operating margin was approximately EUR 5.1 million (2018: -1.0), which shows an increase of EUR 6.1 million
- The operating profit was approximately EUR 0.8 million (2018: -3.9), which shows an increase of EUR 4.7 million
- The measures for improving profitability, carried out near the end of 2018, had the planned effect in 2019
October–December 2019 in brief:
- The net sales were approximately EUR 17.4 million (2018: 15.9), which shows an increase of 9.7%
- The operating margin was approximately EUR 1.6 million (2018: -0.9), which shows an increase of EUR 2.5 million
- The operating profit was approximately EUR 0.5 million (2018: -1.7), which shows an increase of EUR 2.2 million
- The order backlog at the end of the review period was EUR 49.8 million (2018: 30.6),
which shows an increase of 62.4% - Innofactor did not receive any significant individual orders exceeding the limit for requiring a stock exchange release in the fourth quarter as several decisions were delayed until the turn of the year (significant orders received in 2020 can be found in the section "Events after the review period")
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Key figures of the group, IFRS |
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Oct 1–Dec 31, 2019 |
Oct 1–Dec 31, 2018 |
Change |
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Jan 1–Dec 31, 2019 |
Jan 1–Dec 31, 2018 |
Change |
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Net sales, EUR thousand |
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17,432 |
15,890 |
9.7% |
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64,198 |
63,144 |
1.7% |
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Growth of net sales |
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9.7% |
-7.3% |
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1.7% |
-3.8% |
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Operating profit before depreciation and amortization (EBITDA), EUR thousand* |
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1,559 |
-902 |
272.9% |
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5,089 |
-1,029 |
594.5% |
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percentage of net sales* |
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8.9% |
-5.7% |
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7.9% |
-1.6% |
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Operating profit/loss (EBIT), EUR thousand* |
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480 |
-1,693 |
128.4% |
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795 |
-3,872 |
120.5% |
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percentage of net sales* |
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2.8% |
-10.7% |
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1.2% |
-6.1% |
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Earnings before taxes, EUR thousand* |
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271 |
-1,329 |
120.4% |
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12 |
-3,811 |
100.3% |
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percentage of net sales* |
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1.6% |
-8.4% |
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0.0% |
-6.0% |
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Earnings, EUR thousand* |
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372 |
-1,200 |
130.9% |
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418 |
-3,186 |
113.1% |
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percentage of net sales* |
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2.1% |
-7.6% |
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0.7% |
-5.0% |
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Order backlog |
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49,753 |
30,642 |
62.4% |
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49,753 |
30,642 |
62.4% |
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Net gearing* |
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71.8% |
71.2% |
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71.8% |
71.2% |
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Net gearing without IFRS 16 |
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49.9% |
71.2% |
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49.9% |
71.2% |
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Equity ratio |
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40.2% |
41.2% |
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40.2% |
41.2% |
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Equity ratio without IFRS 16 |
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44.0% |
41.2% |
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44.0% |
41.2% |
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Active personnel on average during the review period** |
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538 |
567 |
-5.1% |
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534 |
591 |
-9.7% |
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Active personnel at the end of the review period** |
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538 |
550 |
-2.2% |
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538 |
550 |
-2.2% |
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Earnings per share (EUR) |
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0.0100 |
-0.0332 |
129.9% |
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0.0113 |
-0.0880 |
112.9% |
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*) In accordance with IFRS 3, the operating result for October 1–December 31, 2019, includes EUR 507 thousand (2018: 507) and the result for January 1–December 31, 2019, EUR 2,030 thousand (2018: 2,030) in depreciations related to acquisitions, consisting of allocations of the purchase price to intangible assets. The implementation of the IFRS 16 standard affects extensively the key figures for 2019. The handling of lease liabilities in a new way in accordance with IFRS 16 had a positive effect of EUR 411 thousand in October 1–December 31, 2019, and of EUR 1,676 thousand in January 1–December 31, 2019, in the operating margin (EBITDA). Additional information on the standard’s implementation and effects can be found in the "Accounting policies" section of "Financial statement summary and appendixes January 1–December 31, 2019 (IFRS)."
**) The Innofactor Group monitors the number of active personnel. The number of active personnel does not include employees who are on a leave of over 3 months.
Innofactor’s future outlook for 2020
Innofactor’s net sales and operating margin (EBITDA) in 2020 is estimated to increase from 2019, during which the net sales were EUR 64.2 million and operating margin was EUR 5.1 million.
CEO Sami Ensio's review: In 2019, we reached our goal of improving the profitability significantly and turning the net sales back to growth
The net sales in 2019 were EUR 64.2 million, which shows an increase of 1.7 percent compared to the previous year. The operating margin (EBITDA) improved by EUR 6.1 million from the previous year and was EUR 5.1 million (7.9 percent of the net sales). The year 2019 offered a significant positive turning point for our business. I am especially happy that we managed to keep the promise about a significant change we gave our shareholders at the beginning of the year. During the year, we succeeded in sales and our order backlog grew fantastically. For example, we got the biggest deal in Innofactor's history, when the Tax administration selected Innofactor as the primary provider of IT specialist services in the area of cloud specialists. The total value of the deal is approximately EUR 10–20 million.
The net sales in the fourth quarter of 2019 were EUR 17.4 million, which shows an increase of 9.7 percent compared to the previous year. The net sales in the local currency grew in all countries compared to the previous year. The low exchange rates of the Swedish krona and Norwegian krone affected the net sales in euros by EUR -0.2 million. The net sales per employee grew 15.6% from the previous year. The operating margin (EBITDA) improved by EUR 2.5 million from the previous year and was EUR 1.6 million (8.9 percent of the net sales), in which the effect of changes in handling lease costs due to the IFRS 16 standard were EUR 0.4 million. The order backlog remained good and was at the end of the review period EUR 49.8 million (2018: 30.6), which shows an increase of 62% compared to the same time in the previous year.
We hired a new Country Manager in Sweden, Marcus Hasselblad, who started in his position on February 5, 2020. I am convinced that he will lead our business in Sweden to strong growth in the coming years. The net sales in Sweden, measured in the local currency, already grew slightly in the last quarter of 2019 and the operating margin was positive.
In January 2020, we appointed the Country Manager in Norway, Jørn Ellefsen, to also be responsible for the business in Denmark as the Country Manager. Jørn Ellefsen has done great work in Norway, and I believe that under his control, also the business in Denmark will undergo significant growth.
I founded Innofactor 20 years ago. The journey from a one man company to a Nordic Microsoft solution provider employing over 500 people has included speed and dangerous turns, but we have been going forward with a plan. 2020 is our anniversary, and I believe that during it, we will achieve significant business results.
Innofactor's vision 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 vision is to be the leading provider of organizations' digital transformation in each of the Nordic countries (Finland, Sweden, Denmark and Norway). The long-term financial goal is to grow profitably by achieving an annual growth of approximately 20 percent, of which majority is intended to be achieved by organic growth, by achieving approximately 20 percent operating margin (EBITDA) in relation to the net sales, and by keeping the cash flow positive and by securing solid financial standing in all situations.
The operating margin (EBITDA) grew in the review period of January 1–December 31, 2019, from EUR -1,0 million in the same period in the previous year to EUR 5.1 million (7.9 percent of the net sales), of which EUR 1.7 million was due to the implementation of IFRS 16. As regards profitability, Innofactor was able to improve its performance substantially, but a significant amount of management effort and work are still needed in order to reach the long-term goal of approximately 20 percent. The required actions are clear and known, so we believe that reaching this goal is entirely possible.
Innofactor’s net sales in the review period of January 1–December 31, 2019, were EUR 64.2 million (2018: 63.1), which shows an increase of 1.7 percent compared to the previous year. The net sales grew 9.7% in the last quarter of 2019, and growth was seen in all countries. The strategic goal of getting the net sales to grow is also supported by the well developed order backlog of EUR 49.8 million (2018: 30.6). In 2020, Innofactor will pay special attention to management of growth and sales. As regards this, we have, for example, already renewed our sales model and sales management at the beginning of 2020.
Innofactor’s operating cash flow in the review period of January 1–December 31, 2019, was EUR 6.2 million (2018: -0.6) and the equity ratio at the end of the review period was 40.2 percent (2018: 41.2%). The handling of lease liabilities in a new way in accordance with IFRS 16 had a positive effect of approximately EUR 1.5 million in the operating cash flow and approximately 3.9 percentage point negative effect in the equity ratio. The strong operating cash flow supports Innofactor’s strategic goal of profitable growth and securing solid financial standing in all situations.
Board of Directors' proposal on the distribution of profits
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 2019, the operating margin (EBITDA) was 7.9% of the 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 2019, the distributable assets of the Group's parent company were EUR 28,238,839.
The Board of Directors proposes that no dividend be distributed for the financial period of 2019.
Espoo, February 25, 2020
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 January 1–December 31, 2019
Innofactor publishes the financial statement 2019 and interim report for October–December 2019 (Q4) on Tuesday, February 25, 2020, at approximately 9:00 Finnish time.
A briefing in Finnish concerning the financial statement will be held for media, investors and analysts on the same day at 10:00 Finnish time, at the company's premises at Keilaranta 9, Espoo. The report will be presented by CEO Sami Ensio and CFO Markku Puolanne. The corresponding conference call in English will be held at 12:00 Finnish time.
Please register for the briefings beforehand by sending email to ir@innofactor.com.
The presentations will be available on Innofactor's web site after the briefings.
Financial releases in 2020
The annual report for 2019 will be published on the company's web site on Tuesday, March 10, 2020.
The Annual General Meeting will be held on Tuesday, March 31, 2020, at 9:00 Finnish time.
The schedule for financial releases in 2020 is as follows:
- Interim report January–March 2020 (Q1) on Tuesday, May 5, 2020
- Half-Yearly Report January–June 2020 (Q2) on Tuesday, July 28, 2020
- Interim report Report January–September 2020 (Q3) on Tuesday, October 27, 2020
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 1,500 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. In 2015–2019, the annual growth of Innofactor's net sales has been approximately 10%. The Innofactor Plc share is listed in the technology section of the main list of NASDAQ Helsinki Oy. www.innofactor.com #ModernDigitalOrganization #PeopleFirst
Attachment: Innofactor Plc Financial Statement 2019 (IFRS)