Innofactor Plc’s Interim Report for January 1–September 30, 2023
(IFRS)
Innofactor Plc Interim Report October 24, 2023, at 9:00 Finnish
time
Innofactor swam against the current in a challenging
market and achieved its highest-ever third quarter net sales and
EBITDA in spite of the order backlog decreasing
July–September 2023 in brief:
- Net sales were approximately EUR 18.0
million (2022: 16.7), representing an increase of 8.0%
(organic)
- The operating margin was approximately
EUR 2.0 million (2022: 1.8), which shows an increase of 10.9%
- Operating profit was EUR 1.2 million
(2022: 1.0), which shows an increase of 26.0%
- The order backlog at the end of the
review period was EUR 71.4 million (2022: 77.3), representing a
decrease of 7.6%
January–September 2023 in brief:
- Net sales were approximately EUR 58.3
million (2022: 50.6), representing an increase of 15.3%
- Approximately EUR 55.7 million (10.0%)
of the growth was organic, excluding the Invenco acquisition
- The operating margin was approximately
EUR 6.2 million (2022: 5.2), which shows an increase of 19.7%
- Operating profit was EUR 3.9 million
(2022: 2.9), which shows an increase of 32.5%
Key figures of the group, IFRS |
|
|
. |
|
Jul 1–Sep 30, 2023 |
Jul 1–Sep 30, 2022 |
Change |
|
Jan 1–Sep 30, 2023 |
Jan 1–Sep 30, 2022 |
Change |
Net sales, EUR
thousand |
|
18,015 |
16,683 |
+8.0% |
|
58,332 |
50,594 |
+15.3% |
Growth of net
sales |
|
8.0% |
21.5% |
|
|
15.3% |
3.6% |
|
Operating
result before depreciation and amortization (EBITDA), EUR
thousand |
|
1,970 |
1,777 |
+10.9% |
|
6,222 |
5,196 |
+19.7% |
percentage of net sales |
|
10.9% |
10.7% |
|
|
10.7% |
10.3% |
|
Operating
profit/loss (EBIT), EUR thousand* |
|
1,209 |
959 |
+26.0% |
|
3,904 |
2,946 |
+32.5% |
percentage of net sales |
|
6.7% |
5.8% |
|
|
6.7% |
5.8% |
|
Earnings
before taxes, EUR thousand* |
|
1,428 |
759 |
+88.0% |
|
3,551 |
2,500 |
+42.0% |
percentage of net sales |
|
7.9% |
4.6% |
|
|
6.1% |
4.9% |
|
Earnings, EUR
thousand* |
|
1,064 |
599 |
+77.8% |
|
2,560 |
1,992 |
+28.5% |
percentage of net sales |
|
5.9% |
3.6% |
|
|
4.4% |
3.9% |
|
Order
backlog |
|
71,412 |
77,251 |
-7.6% |
|
71,412 |
77,251 |
-7.6% |
Net
gearing* |
|
48.6% |
56.9% |
-14.6% |
|
48.6% |
56.9% |
-14.6% |
Net gearing
without IFRS 16 |
|
35.0% |
41.8% |
-16.3% |
|
35.0% |
41.8% |
-16.3% |
Equity
ratio |
|
46.3% |
43.7% |
+6.0% |
|
46.3% |
43.7% |
+6.0% |
Equity ratio
without IFRS 16 |
|
49.5% |
46.8% |
+5.8% |
|
49.5% |
46.8% |
+5.8% |
Active
personnel on average during the review period* |
|
585 |
555 |
+5.4% |
|
577 |
527 |
+9.5% |
Active
personnel at the end of the review period* |
|
594 |
554 |
+7.2% |
|
594 |
554 |
+7.2% |
Earnings per
share (EUR) |
|
0.03 |
0.02 |
+77.8% |
|
0.07 |
0.05 |
+28.5% |
*) Innofactor Group monitors the number of active personnel. The
number of active personnel does not include employees who are on
leave for more than three months.
Innofactor’s future outlook for 2023
Innofactor’s net sales and operating margin (EBITDA) in 2023 are
estimated to increase from 2022, during which net sales were EUR
71.1 million and operating margin was EUR 7.8 million.
CEO Sami Ensio’s review: Our strong order backlog and
operational efficiency enabled growth and profitability in Q3 – we
expect new sales to pick up in Q4
Net sales in the third quarter of 2023 amounted to EUR 18.0
million, representing year-on-year growth of 8.0 percent. The
operating margin (EBITDA) grew by 10.9 percent year-on-year and
came to EUR 2.0 million (10.9 percent of net sales). Innofactor’s
net sales grew in Finland and Norway. EBITDA was positive in
Finland but negative in other countries due to the challenging
market situation.
Net sales for the first nine months of 2023 amounted to EUR 58.3
million, representing year-on-year growth of 15.3 percent. The
operating margin (EBITDA) grew by 19.7 percent year-on-year and
came to EUR 6.2 million (10.7 percent of net sales).
Price competition in the markets remained intense in the third
quarter, although the weighted average prices of new contracts
increased slightly from the preceding quarter. We anticipate prices
will continue to rise in the fourth quarter, although we expect the
situation to remain challenging until the end of the year. Carrying
out loss-making business activities is not part of Innofactor’s
strategy, which is why new sales in Q3 were still below target and
led to a decrease in the order backlog. The order backlog decreased
from the preceding quarter and amounted to EUR 71.4 million at the
end of the review period, representing a year-on-year decrease of
7.6 percent. Nevertheless, our strong existing order backlog,
framework agreements and other purchases by existing customers
enable Innofactor to operate profitably in the short term. We
expect to be able to increase the volume of new sales in Q4.
Generative artificial intelligence (ChatGPT, Microsoft Azure
Open AI and Microsoft Copilot) has received growing attention in
the market. Generative AI presents our customers – and Innofactor –
with significant opportunities for improving operational
efficiency. Above all, it opens up significant new business
opportunities for Innofactor, and we have quickly developed new
offerings in response to these opportunities. We see Microsoft 365
Copilot as particularly significant. It will become available on
November 1, 2023, and we expect it will enable us to grow our
business in co-operation with our main partner Microsoft.
The Board of Directors appointed Antti Rokala, M.Sc. (Econ.) as
Innofactor Group’s new Chief Financial Officer (CFO). He will take
up his post on January 2, 2024. At present, Rokala is working as
Group CFO at the educational company YrkesAkademin in Stockholm.
Rokala has previously worked in several financial management and
leadership positions for the elevator company Schindler, such as
Nordic CFO. Antti’s experience in Sweden and the other Nordic
countries will help Innofactor further develop our business. I want
to take this opportunity to extend a warm welcome to Antti.
Based on feedback from shareholders and analysts, we have
decided to expand our reporting starting from the financial
statements for the year 2023 by reporting key figures separately
for our four solution areas. The reportable solution areas are as
follows: 1) Digital services, 2) Business solutions, 3) Information
and case management, and 4) Secure artificial intelligence, data
and cloud platform. The following key figures will be reported for
each solution area: net sales and the distribution of net sales,
EBITDA, EBITDA margin, order backlog and the amount of product
development. The key figures will be presented for the reporting
period and the comparison period, and the percentage change for
each key figure will be indicated.
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, employer promise, 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.
Employer promise: Be the real you
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 January–September 2023 amounted to EUR
58.3 million (2022: 50.6), representing year-on-year growth of 15.3
percent. Approximately EUR 55.7 million (10.0%) of the growth was
organic, excluding the net sales derived from the Invenco
acquisition. We are lagging behind our strategic growth target. We
aim to further improve our operational performance to drive growth.
Our goal is also to increase the number of chargeable personnel,
which is slightly easier than before in the prevailing market
situation. During the review period, the number of personnel at
Innofactor increased by 9.5 percent year-on-year. We also look for
acquisition targets to enable inorganic growth.
The operating margin (EBITDA) was 10.7 percent of net sales
(2022: 10.3%). EBITDA for the review period increased by 19.7
percent year-on-year. While profitability has improved, continued
attention and efforts by the management are still needed in the
coming years to reach the long-term target of approximately 20
percent. We aim to further enhance our operational performance to
improve profitability.
Innofactor’s operating cash flow for the review period January
1–September 30, 2023, amounted to EUR 3.5 million (2022: EUR 3.0
million) and the equity ratio at the end of the review period was
46.3 percent (2022: 43.7 percent). Innofactor’s strong operating
cash flow supports the company’s strategic goal of profitable
growth and securing a solid financial standing in all
situations.
Espoo, October 24, 2023
INNOFACTOR PLC
Board of Directors
Additional information:Sami Ensio, CEOInnofactor PlcTel. +358 50
584 2029sami.ensio@innofactor.com
Briefings concerning the Interim Report for January
1–September 30, 2023Innofactor will publish the Interim
Report for January–September 2023 on Tuesday, October 24, 2023, at
approximately 9:00 Finnish time.
A video conference in English concerning the interim report will
be held for media, investors and analysts on the same day at 10:30
Finnish time. The report will be presented by CEO Sami Ensio.
Please register for the briefing in advance by sending an e-mail
to ir@innofactor.com.
The presentation materials will be available on Innofactor’s
website after the briefing.
Distribution:NASDAQ HelsinkiMain mediawww.innofactor.com
InnofactorInnofactor is the leading driver of
the modern digital organization in the Nordic Countries for its
over 1,000 customers in commercial and public sector. Innofactor
has the widest solution offering and leading know-how in the
Microsoft ecosystem in the Nordics. Innofactor has about 600
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
- Innofactor Plc’s Interim Report for January 1–September 30,
2023 (IFRS)
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