Innofactor Plc — Interim / Quarterly Report 2012

Oct 31, 2012

Innofactor Plc's Interim Report for January 1–September 30, 2012 (IFRS)

Innofactor Plc's Interim Report for January 1–September 30, 2012 (IFRS)

Innofactor Plc Interim Report October 31, 2012, at 8:30 Finnish time

Summary

Innofactor group's key figures for July 1-September 30, 2012:

-- Net sales EUR 4,567 thousand (2011: 3,766), increase of 21.3%
-- Operating profit before depreciation and amortization (EBITDA), EUR 496*
thousand (2011: 412), increase of 20.4%*
-- EBITDA percentage 10.9%* (2011: 10.9%)
-- Operating profit (EBIT) EUR 348* thousand (2011: 280), increase of 24.3%*
-- EBIT percentage 7.6%* (2011: 7.4%)

Innofactor group's key figures for January 1-September 30, 2012:

-- Net sales EUR 12,521** thousand (2011: 12,069), increase of 3.7%**
-- Operating profit before depreciation and amortization (EBITDA), EUR 180***
thousand (2011: 837), decrease of 78.5%***
-- EBITDA percentage 1.4%*** (2011: 6.9%)
-- Operating loss (EBIT) EUR -249*** thousand (2011: 441), decrease of
156.5%***
-- EBIT percentage -2.0%*** (2011: 3.7%)

The future outlook for Innofactor remains the same. There are notable
uncertainties related to the outlook for 2012 due to the instability of the
global financial situation, so no detailed estimate of the outlook can be
provided. In 2012, the organic growth of Innofactor is estimated to continue
(2011: net sales were EUR 17,205 thousand). The profitability of the business
operations is expected to remain positive.

The figures in this interim report have not been audited. The acquired Danish
company Bridgeconsulting A/S (current Innofactor A/S) has been included in the
figures as of July 1, 2012. Further details about the acquisition can be found
in this interim report's section "Acquisitions and changes in the group
structure."

* The acquisition made on July 5, 2012, resulted in a one-off cost of about EUR
150 thousand in the review period July 1-September 30, 2012.

** Due to the organizational change on January 2, 2012, projects were
rearranged, which had a one-off effect of lowering the net sales in January by
about EUR 300 thousand.

*** Due to the organizational change on January 2, 2012, projects were
rearranged, which had a one-off effect of lowering the net sales in January by
about EUR 300 thousand. Additionally, the personnel and office space
arrangements related to the organizational change led to a one-off cost of
about EUR 100 thousand. In total, these reduced the net sales by about EUR 400
thousand. Additionally, the acquisition made on July 5, 2012, resulted in a
one-off cost of about EUR 150 thousand in the review period July 1-September
30, 2012.

Key figures of the group, IFRS

                      mo.     mo.     Change  mo.     mo.     Change  mo.   
                       7-9     7-9             1-9     1-9             1-12 
                       /2012   /2011           /2012   /2011          /2011

Net sales, EUR thousand* 4,567 3,766 +21.3% 12,521 12,069 +3.7% 17,205
Operating profit before 496 412 +20.4% 180 837 -78.5% 1,443
depreciation and
amortization (EBITDA),
EUR thousand**
percentage of net 10.9% 10.9% 1.4% 6.9% 8.4%
sales**
Operating profit/loss 348 280 +24.3% -249 441 -156.5 904
(EBIT), EUR thousand** %
percentage of net 7.6% 7.4% -2.0% 3.7% 5.3%
sales**
Earnings before taxes, 328 274 +19.9% -269 429 -162.7 886
EUR thousand** %
percentage of net 7.2% 7.3% -2.1% 3.6% 5.1%
sales**
Earnings, EUR thousand** 224 205 +9.5% -367 326 -212.6 687
%
percentage of net 4.9% 5.4% -2.9% 2.7% 4.0%
sales**
Shareholders' equity, 13,039 12,604 +3.5% 13,039 12,604 +3.5% 12,905
EUR thousand
Return on equity*** 6.9% 6.6% -3.8% 3.5% 5.5%
Return on investment*** 10.3% 8.9% -3.3% 4.7% 7.2%
Net gearing 8.5% -0.9% 8.5% -0.9% -5.4%
Equity ratio 66.1% 76.5% 66.1% 76.5% 74.5%
Balance sheet total, EUR 20,856 17,539 +18.9% 20,856 17,539 +18.9% 18,324
thousand
Research and 593 468 +26.7% 1,940 1,716 +13.1% 2,086
development, EUR
thousand
percentage of net sales 13.0% 12.4% 15.5% 14.2% 12.1%
Personnel on average 196 178 +10.1% 186 175 +6.3% 177
during the review
period
Personnel at the end of 198 184 +7.6% 198 184 +7.6% 189
the review period
Number of shares at the 30,165 29,261 +3.1% 30,165 29,261 +3.1% 29,261
end of the review ,900 ,800 ,900 ,800 800
period****
Earnings per share 0.0074 0.0070 +6.1% -0.012 0.0111 -210.4 0.0235
(EUR)**** 3 %
Shareholders' equity per 0.433 0.431 +0.6% 0.433 0.431 +0.6% 0.441
share (EUR)****

* Due to the organizational change on January 2, 2012, projects were
rearranged, which had a one-off effect of lowering the net sales in January by
about EUR 300 thousand.

** Due to the organizational change on January 2, 2012, projects were
rearranged, which had a one-off effect of lowering the net sales in January by
about EUR 300 thousand. Additionally, the personnel and office space
arrangements related to the organizational change led to a one-off cost of
about EUR 100 thousand. In total, these reduced the net sales by about EUR 400
thousand. Additionally, the acquisition made on July 5, 2012, resulted in a
one-off cost of about EUR 150 thousand in the review period July 1-September
30, 2012.

*** The percentages for the return on equity and return on investment have been
adjusted to correspond with the figures for a 12-month period.

**** In accordance with the decision of the Innofactor Plc's Annual General
Meeting on April 28, 2011, twenty old shares were consolidated into one new
share (registered in the Trade Register on May 7, 2011), which reduced the
total number of shares to 1/20 of the previous number. The key figures
presented in the table have been adjusted to correspond with the current number
of shares.

Reporting

Innofactor operates on a single segment, offering software, systems and related
services.

CEO Sami Ensio's review

During July 1-September 30, 2012, Innofactor's net sales grew by 21.3 percent
compared to the corresponding period last year. Operating profit before
depreciation and amortization (EBITDA) during July 1-September 30, 2012, was
EUR 496 thousand (10.9%) and earnings before interest and taxes (EBIT) were EUR
348 thousand (7.6%).

The over 20% growth in net sales was due to consolidating the figures of the
Danish Innofactor A/S (former Bridgeconsulting A/S) into the Innofactor figures
as of July 1, 2012. Integrating the company as part of Innofactor has gone
according to the plan.

The negative effects of the organization reform done at the beginning of 2012
did not show anymore in Q3, but thanks to the corrective actions made,
Innofactor returned to the profitability level of over 10% (EBITDA), which is
the same as in the previous year. The goal of the organization reform is to
support growth and globalization in accordance with the strategy.

During Q3, the software and systems market has developed slower than estimated
in the main market area in Finland. This can be seen in delaying of purchases
by both corporate and public administration customers. In this situation,
Innofactor focuses especially in sales in Finland in order to keep the order
book on the level required by the business growth goals.

Although the current market situation is challenging, Innofactor estimates that
it will achieve organic growth by the end of year 2012 and achieve targets for
full year 2012 because of the current order backlog.

Innofactor continues to actively seek potential strategic partnerships in
Finland, Denmark and other Nordic Countries. The group will seek growth, which
can be organic or based on mergers or acquisitions.

Market outlook and business environment

The software and systems market has developed slower than estimated in the
Nordic Countries in July 1-September 30, 2012. This can be seen in delaying of
purchases by both corporate and public administration customers. At this stage,
it cannot be estimated, whether the purchases will be delayed until the
beginning of the next year or whether the delay will be longer. For the entire
2012, Innofactor estimates that the software and systems market in the Nordic
Countries will not grow compared to 2011.

The IT market is experiencing a clear turning point. One of the major trends is
the consumerization of information technology: an increasingly larger share of
the IT purchases made by companies is based on the requirements of the consumer
market. Company and corporate clients tend to purchase software that can be
used on phones, tablets and computers. Another trend is the ability of public
clouds to offer software in a scalable and global form to a wide range of end
users and for all devices, including mobile phones. Innofactor believes that
Microsoft is a strong player in this situation: it holds the leading position
in the business software market and invests heavily in mobile devices. The
publishing of the Windows 8 operating system on October 26, 2012, is
significant for the Microsoft ecosystem and it is believed to strengthen
Microsoft's competitiveness.

For companies like Innofactor, which is strongly committed to Microsoft, this
development creates growing global markets in the long term both as a
traditional system integrator as well as a provider of cloud and mobile
solutions. Innofactor sees that strong commitment to Microsoft brings
significant competitive advantages. As the companies focusing purely on
Microsoft products are typically small, Innofactor believes that they are
likely to be consolidating into larger units, and this will offer Innofactor
expansion opportunities.

Espoo October 31, 2012

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-September 30, 2012

On October 31, 2012, at 9:00 Finnish time, Innofactor will hold a briefing
concerning the interim report in Finnish for the media and analysts at the
company's premises at Keilaranta 19, Espoo.

Innofactor will also held a conference call in English for analysts, media and
investors on October 31, 2012, at 16:00 Finnish time. Registrations to
ir@innofactor.com at least one hour before the event.

Financial releases in 2013

The financial statement for 2012 will be published on February 26, 2013. The
schedule for other financial information in 2013 will be published by the end
of 2012.

Distribution:

NASDAQ OMX Helsinki
Main media
www.innofactor.com

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