Innofactor Plc Financial Statement 2021 (IFRS)
Innofactor Plc Financial Statement February 17, 2022, at 9:00 Finnish time
*Innofactor achieved the highest-ever net sales, EBITDA, and order backlog in 2021*
January–December 2021 in brief:
· Net sales were approximately EUR 66.4 million (2020: 66.2), which shows an increase of 0.3%
· Excluding the Prime business sold on March 31, 2021, the comparable change would have been growth of 3.5%, which was entirely organic growth
· The operating margin was approximately EUR 10.1 million (2020: 7.2), which shows an increase of 41.1%
· Excluding the Prime business sold on March 31, 2021, the comparable operating margin would have been EUR 7.5 million, which shows an increase of 5.4%
· Operating profit was EUR 6.5 million (2020: 2.5), which shows an increase of 160.7%
· Excluding the Prime business sold on March 31, 2021, the comparable operating profit would have been EUR 3.9 million, which shows an increase of 58.4%
October–December 2021 in brief:
· Net sales were approximately EUR 17.5 million (2020: 18.3), representing a decrease of 4.0%
· Excluding the Prime business sold on March 31, 2021, net sales were on a par with 2020
· The operating margin was approximately EUR 1.7 million (2020: 1.6), which shows an increase of 4.9%
· Operating profit was EUR 0.5 million (2020: 0.4), which shows an increase of 29.6%
· The order backlog at the end of the review period was EUR 72.8 million (2020: 60.4),
which shows an increase of 20.6%
· Innofactor got several significant orders in the fourth quarter, for example,
· digitalizing the quotation process for a large Finnish manufacturing industry company, approximately EUR 1.2 million
*Key figures of the group, IFRS*
. *Oct 1–Dec 31, 2021* *Oct 1–Dec 31, 2020* *Change* *Jan 1–Dec 31, 2021* *Jan 1–Dec 31, 2020* *Change*
Net sales, EUR thousand 17,530 18,252 -4.0% 66,364 66,164 0.3%
Growth of net sales -4.0% 4.7% 0.3% 3.1%
Operating result before depreciation and amortization (EBITDA), EUR thousand 1,663 1,585 4.9% 10,111 7,164 41.1%
percentage of net sales 9.5% 8.7% 15.2% 10.8%
Operating profit/loss (EBIT), EUR thousand* 523 404 29.6% 6,519 2,501 160.7%
percentage of net sales* 3.0% 2.2% 9.8% 3.8%
Earnings before taxes, EUR thousand* 330 951 -65.2% 5,730 2,050 179.5%
percentage of net sales* 1.9% 5.2% 8.6% 3.1%
Earnings, EUR thousand* 297 257 15.6% 4,504 1,761 155.7%
percentage of net sales* 1.7% 1.4% 6.8% 2.7%
Order backlog 72,837 60,402 20.6% 72,837 60,402 20.6%
Net gearing* 30.9% 52.5% 30.9% 52.5%
Net gearing without IFRS 16 18.1% 35.7% 18.1% 35.7%
Equity ratio 51.1% 42.2% 51.1% 42.2%
Equity ratio without IFRS 16 54.7% 41.4% 54.7% 41.4%
Active personnel on average during the review period** 495 543 -8.8% 516 544 -5.1%
Active personnel at the end of the review period** 500 541 -7.6% 500 541 -7.6%
Earnings per share (EUR) 0.0080 0.0069 16.8% 0.1208 0.0471 156.4%
*) In accordance with IFRS 3, the operating result for October 1–December 31, 2021, includes EUR 74 thousand (2020: 473) and in January 1–December 31, 2021, EUR 464 thousand (2020: 1,894) in depreciation related to acquisitions, consisting of allocations of the purchase price to intangible assets.
**) 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 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: We expect our new offering and organization in line with the strategy to strengthen organic growth in 2022*
Innofactor revised its strategy in 2021 to provide even stronger support for growth. In our strategy work, we defined the areas in which we see the strongest growth potential regarding our business and Microsoft’s solution offering. Innofactor tightened its offering according to the growth areas in question. The new offering is built around six spearheads: Digital Services, Business Solutions, Information and Case Management, Cloud Infrastructure, Data and Analytics, and Cybersecurity. The organizational structure in Finland was changed accordingly, effective from October 1, 2021. As part of the revising of its offering, Innofactor divested the Prime business on April 1, 2021. The Prime business was mainly targeted at parishes in Finland. With the help of our new strategy, we believe that we will be able to further strengthen our organic growth in 2022.
Net sales in 2021 were a record-high EUR 66.4 million, which shows an increase of 0.3 percent compared to the previous year. The operating margin (EBITDA) improved by EUR 2.9 million from the previous year and was also a record-high figure, EUR 10.1 million (15.2 percent of net sales). The operating margin includes a sales gain of approximately EUR 2.6 million from the sale of the Prime business, without which the operating margin would have been approximately EUR 7.5 million (2020: 7.2), representing an increase of 5.4 percent.
The transition to the new organizational structure led to an unfortunate deterioration of net sales and profitability in the Finnish business during the second half of the year. The COVID-19 pandemic and organizational changes together led to Innofactor’s highest-ever rate of employee turnover in the third quarter, which had a negative effect on net sales throughout the remainder of the year. Employee turnover returned to normal in the fourth quarter and the number of personnel began to grow again thanks to successful recruitment.
Net sales in the fourth quarter of 2021 were EUR 17.5 million, which shows a decrease of 4.0 percent compared to the previous year. Excluding the Prime business sold on March 31, 2021, net sales were on a par with 2020. Net sales increased in Norway and Denmark but decreased in Finland and Sweden compared to the previous year, even though business in Sweden improved towards the end of 2021. Net sales per employee grew 5.4% from the previous year.
The operating margin (EBITDA) grew by 4.9 percent year-on-year and came to EUR 1.7 million (9.5 percent of net sales). In the final quarter of 2021, EBITDA was positive by a clear margin in all of Innofactor’s operating countries.
The order backlog grew to a new historic high, EUR 72.8 million, at the end of the quarter (2020: 60.2), which shows an increase of 21 percent compared to the same time in the previous year.
We deepened our co-operation with customers further in 2021. We received a record-high number of new orders during the year, including Azure programming for the Finnish Tax Administration, an ERP system for the Finnish Institute of Occupational Health, a case management system for Metsähallitus, a cloud solution for a Norwegian financial services company, case and document management solutions for the joint municipal authority for the county of Ostrobothnia, a case management solution for six universities, a case management application for the Finnish Forest Centre, the digitalization of the bidding process for a large Finnish manufacturing company, and several other significant projects in Finland, Sweden, Denmark, and Norway. I would like to thank our customers and partners for the trust you have shown in Innofactor. I also want to extend special thanks to our Finnish parish customers, who were passed on to capable new hands following the divestment of the Prime business.
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.
I am also pleased that we can distribute assets of EUR 0.08 per share (2021: EUR 0.04 per share) to our shareholders in accordance with our dividend distribution policy. I want to take this opportunity to thank our customers, partners, employees, and investors for the year 2021.
*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 review period of January 1–December 31, 2021, were EUR 66.4 million (2020: 66.2), representing year-on-year growth of 0.3 percent. Excluding the Prime business sold on March 31, 2021, the comparable change would have been growth of 3.5 percent, which was entirely organic growth. The strategic goal of getting net sales to grow is also supported by the favorably developed order backlog of EUR 72.8 million (2020: 60.2). As a result of thorough strategy work in 2021, we decided to revise our offering and organizational structure to focus on six spearheads and revise our operating models to provide stronger support for growth from 2022 onwards.
The operating margin (EBITDA) grew in the review period of January 1–December 31, 2021, from EUR 7.2 million in the same period the previous year to EUR 10.1 million (15.2 percent of the net sales), which includes proceeds of EUR 2.6 million from the sale of the Prime business. As regards profitability, Innofactor was able to further improve its performance substantially. However, 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 operating cash flow in the review period of January 1–December 31, 2021, was EUR 8.9 million (2020: EUR 5.0 million) and the equity ratio at the end of the review period was 51.1 percent (2020: 42.2%). 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. According to the dividend policy, Innofactor aims to pay a dividend regularly each year. The target is to pay about half of the result for the financial period in dividends, taking into account the company’s financial position, possible corporate reorganizations, and other development needs. For 2021, the Group’s result for the financial period was EUR 4,295,020.95. 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 2021, the distributable assets of the Group’s parent company amounted to EUR 27,016,921.29.
The Board of Directors proposes that Innofactor Plc distributes EUR 0.08 per share as a repayment of capital.
The Board of Directors further proposes that the Annual General Meeting authorize the Board to decide on a repayment of capital amounting to a maximum of EUR 3,279,058 (EUR 0.08 per share, taking into account the share issue authorization proposed to the Board of Directors).
Espoo, February 17, 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 financial statement of January 1–December 31, 2021*
Innofactor Plc will publish its 2021 Financial Statements Bulletin and Interim Report October–December 2021 (Q4) on Thursday, February 17, 2022, at approximately 9:00 am Finnish time.
A video conference call for media, investors and analysts will be held in Finnish on the same day beginning at 10:00. 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 participation link will be sent via e-mail to the registered participants the day before the conference.
Presentation materials will be available on Innofactor website after the conferences.
*Financial releases in 2022*
The annual report for 2021 will be published on the company's website on Thursday, March 10, 2022.
The Annual General Meeting will be held on Thursday, March 31, 2022, at 9:00 Finnish time.
The schedule for financial releases in 2022 is as follows:
· Interim report January–March 2022 (Q1) on Tuesday, April 26, 2022
· Half-Yearly Report January–June 2022 (Q2) on Thursday, July 21, 2022
· Interim report January–September 2022 (Q3) on Tuesday, October 25, 2022
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*Attachment*
· Innofactor Plc Financial Statement 2021 (IFRS)