Innofactor Plc — Interim / Quarterly Report 2013

Jul 30, 2013

Innofactor Plc's interim report for January 1–June 30, 2013 (IFRS)

Innofactor Plc's interim report for January 1–June 30, 2013 (IFRS)

Innofactor Plc Interim Report July 30, 2013, at 8:30 Finnish time

Innofactor Plc's interim report for January 1-June 30, 2013 (IFRS)

Summary

                    mo.     mo.      Change  mo.     mo.      Change  mo.   
                     4-6     4-6/             1-6     1-6/             1-12 
                     /2013  2012              /2013  2012              /2012

--------------------------------------------------------------------------------

Net sales, EUR 7,737 3,982 +94.3% 13,278 7,954 +66.9% 18,818
thousand
Growth of net sales +94.3% -8.7% +66.9% -4.2% +9.4%
Operating profit 665 -108 +715.7 1,249 -316 +495.3 1,215
before depreciation % %
and amortization
(EBITDA) , EUR
thousand*
percentage of net 8.6% -2.7% 9.4% -4.0% 6.5%
sales*
Operating profit/loss 442 -251 +276.2 866 -598 +244.7 620
(EBIT), EUR thousand* % %
percentage of net 5.7% -6.3% 6.5% -7.5% 3.3%
sales*
Earnings before taxes, 156 -251 +162.2 568 -598 +194.9 591
EUR thousand** % %
percentage of net 2.0% -6.3% 4.3% -7.5% 3.1%
sales**
Earnings, EUR 117 -248 +147.2 427 -592 +172.1 449
thousand** % %
percentage of net 1.5% -6.2% 3.2% -7.4% 2.4%
sales**
Net gearing 61.2% -7.9% 61.2% -7.9% 5.4%
Equity ratio 41.3% 76.8% 41.3% 76.8% 66.1%
Personnel on average 261 178 +46.6% 229 181 +26.5% 189
during the review
period
Earnings per share 0.0039 -0.0082 +147.6 0.0142 -0.0199 +171.1 0.0150
(EUR) % %

* The second quarter of 2013 included one-off costs related to the atBusiness
Oy acquisition for about EUR 164 thousand, and also cost reserves related to
the integration for about EUR 200 thousand, a total of about EUR 364 thousand.

** The second quarter of 2013 included one-off costs related to the atBusiness
Oy acquisition for about EUR 370 thousand (of which EUR 206 thousand were costs
related to organizing the loans), and also cost reserves related to the
integration for about EUR 200 thousand, a total of about EUR 570 thousand.

There are uncertainties related to the outlook for 2013 due to the integration
of a major acquisition, so no detailed estimate of the outlook can be provided.
Innofactor's net sales in 2013 are expected to be about EUR 34-37 million
(2012: EUR 18.8 million). Operating profit before depreciation and amortization
(EBITDA) in 2013 is expected to be about EUR 3-5 million (2012: EUR 1.2
million).

The figures in this interim report have not been audited. The figures include
the acquired atBusiness Oy (current Innofactor Business Solutions Oy) as of
June 1, 2013. Further details about the acquisition can be found in this
interim report's section "Acquisitions and changes in the group structure."

Reporting

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

CEO Sami Ensio's review

The most notable single event in the review period was the acquisition on June
6, 2013, in which Innofactor acquired the entire share capital of atBusiness
Oy. The net sales of atBusiness Oy in 2012 were EUR 17.4 million and profit
margin (EBITDA) was EUR 2.7 million (15.3% of the net sales). Along with
Innofactor, it has been one of the Finland's leading providers of solutions
based on Microsoft technologies for commercial and public sector clients.
atBusiness Oy's strategy was almost the same as Innofactor's strategy. The
acquisition made Innofactor one of the five largest Nordic providers focused on
Microsoft technologies. The new size will give Innofactor improved conditions
to operate as a public limited company, implement its growth strategy in the
Nordic Countries and to offer its own software products and services to its
customers through its own channel. The arrangement is believed to result in
significant synergy benefits. The arrangement is a major step in the story of
Innofactor's growth.

The arrangement finalized during the reporting period with atBusiness will
bring significant growth in 2013 and 2014 and will create an excellent base for
growth also in the future. In the second quarter, Innofactor continued
profitable growth in accordance with its strategy. The growth of net sales was
at 94.3 percent and profit margin (EBITDA) was 8.6 percent. Measured in net
sales (EUR 7.7 million) and EBITDA (EUR 0.7 million), this was the best second
quarter in the company's history. Without the one-off costs related to the
acquisition, the profitability would have been even better: EBITDA would have
been about EUR 1.0 million, which would have been 13.3 percent of the net
sales.

Innofactor expects 2013 to be a year of profitable growth due to the
acquisition of atBusiness and due to other business as well. Our personnel is
committed and motivated to work even harder for our customers, which can also
be seen in the personnel satisfaction, which improved significantly during the
review period. The integration of atBusiness and Innofactor has progressed as
planned. However, Innofactor has prepared for the possible challenges presented
by the integration, for example, by ensuring a high utilization rate of sales
and personnel, by trying to utilize quickly the new possibilities of
cross-selling among the clientele of both companies, and by ensuring successful
communication in all stages of the integration.

Innofactor is still actively looking for new strategic partnerships in the
Nordic Countries. The group will seek growth, which can be organic or based on
mergers or acquisitions.

Market outlook and business environment

Due to long-standing uncertainties in the economic situation, it is challenging
to make a reliable estimate on the development of the IT market in the near
future. According to research companies monitoring the IT market, the IT
service markets grew globally about 1-2 percent in 2012 and they are expected
to grow about 3-5 percent in 2013. The growth of software market in 2012-2013
is estimated to be about one percentage point faster, that is, 4-6 percent in
2013.

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 individuals,
that is, the consumer market. Commercial clients tend to purchase software that
can be used in 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 has made a strategic choice by focusing on solutions that use
Microsoft technology. Innofactor believes that Microsoft is a strong player in
the IT market change: it holds the leading position in the business software
market, a significant position in the consumer software market, and invests
heavily in mobile devices and cloud technologies.

Innofactor has selected as its application areas those areas where Microsoft's
growth and, correspondingly, its partners' growth has exceeded manifold the
growth of general global IT service and software markets. For example, in 2012,
Microsoft repeatedly reported annual growth figures of over 30 percent in the
sales of Dynamics CRM solutions and Microsoft SQL Server Premium servers (used
in Microsoft-based BI solutions), and annual growth figures of over 10 percent
in the sales of SharePoint, Lync and Exchange solutions. The above-mentioned
Microsoft solution areas, which are growing significantly faster than other IT
markets, form a significant part of Innofactor's business operations.

Additionally, the publishing of the Windows 8 operating system in October 2012
is significant for the Microsoft ecosystem and it is believed to strengthen
Microsoft's competitiveness.

The company feels that 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 locally in the Nordic
Countries and as a provider of cloud and mobile solutions globally.

Companies strongly committed to Microsoft in the Nordic Countries are mainly
small companies. Innofactor believes that size gives a competitive edge for a
company also in the Microsoft ecosystem, making mergers of small companies
focused on Microsoft solutions probable. This gives Innofactor opportunities to
grow.

Espoo, July 30, 2013

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-June 30, 2013
On July 30, 2013, at 9:00 Finnish time, Innofactor will hold
a briefing concerning the Interim Report in Finnish for the media, investors
and analysts at the company's premises at Keilaranta 19, Espoo. The report will
be presented by CEO Sami Ensio and CFO Mikko Karvinen. The presentations of the
briefing will be available on Innofactor's web site after the briefing.We ask
you to register for the briefing beforehand either by sending email to
ir@innofactor.com or by phoning to +358 50 554 3832 / Salla Tähtinen.Innofactor
will also hold a conference call in English for analysts, media and investors
on July 30, 2013, at 16:00 Finnish time. Registrations to ir@innofactor.com at
least one hour before the event.Financial releases in 2013

The schedule for financial releases in 2013 is as follows:

October 15-October 28, 2013: Silent period

October 29, 2013, at 8:30 Finnish time: Interim Report for January-September

Distribution:
NASDAQ OMX Helsinki
Main media
www.innofactor.com

Attachments: