Innofactor Oyj : PLC ANNUAL REPORT 2021

Annual Report 2021

2 INNOFACTOR PLC ANNUAL REPORT 2021

Innofactor Plc Annual Report January 1 to December 31, 2021

Innofactor in Brief	Content

Innofactor's purpose is to innovate to make the world work better. We are driven by a	4-33	Business Review 2021
	Year 2021 in Brief	4
mission to help our customers succeed by modernizing and digitalizing their organization.
	CEO's Review	6
Our working principle is to put people first in everything we do. We want to create solutions
that make people's everyday work and life run smoothly and bring a smile to their faces.		Market, Competition, and Strategy	8
We focus on the Microsoft ecosystem's Business-to-Business solutions whose markets		Offering and Customers	10
are growing faster than the IT market on average. We offer our customers planning		Personnel	26
services for business-critical IT solutions, project deliveries, implementation support and		Sustainability	30
maintenance services, and develop our own software and services.
		Administration	34
Our solutions are used by approximately 1,000 organizations in the private, public,
and third sectors in the Nordic countries. We are a strong and valued partner. Our long-	36-51 Report of the Board of Directors
term customer relationships are evidence of the customers' trust in Innofactor. We utilize
a proactive and flexible delivery model that creates added value and helps us establish a	52-93	Consolidated Financial Statements
superior position in the market.
Innofactor has approximately 500 enthusiastic and motivated top specialists in Finland,		Comprehensive Consolidated Profit
Sweden, Denmark, and Norway. We are united by our desire to work on the front line		and Loss Statement, IFRS	53
of innovation and new technology. We take pride in our highly competent professionals		Consolidated Balance Sheet	54
and significantly invest in competence development. Our employees	maintain and
	Consolidated Cash Flow Statement	56
improve their skills by acquiring technological qualifications, such as Microsoft Certified
	Consolidated Statement of Change
Professional, and by participating in training provided by our own Innofactor Academy.
	in Shareholders' Equity	57
Their high level of expertise is evidenced by the 16 Microsoft Gold competencies we have
	Financial Statements	58
achieved, for example.
Our net sales in 2021 amounted to EUR 66.4 million, which shows an increase of 0.3		Parent Company Financial Statement (FAS)	80
percent from the previous year in spite of the divestment of the Prime business on April 1,		Signatures	88
2021, which reduced net sales by approximately EUR 2.6 million. Our operating margin		Auditor's Report	89
(EBITDA) was EUR 10.1 million, corresponding to 15.2 percent of net sales. The long-term
goals specified in our strategy are to achieve annual growth of about 20 percent, primarily	94-95	Additional Information
through organic growth, an operating margin (EBITDA) of about 20 percent in relation to
	Key Figures per Share	94
net sales, as well as to maintain positive cash flow and ensure a solid financial standing in
	Shareholding	94
all situations.
		Calculation of Key Figures	95
Innofactor Plc share is listed on the main list of Nasdaq Helsinki Ltd. Innofactor has
approximately 12,000 shareholders.
#ModernDigitalOrganization | #HybridWork | #PeopleFirst | #CreatingSmiles
Note: The English version of Innofactor's Annual Report is a translation of the Finnish version and provided for reference only. In the event
of any conflict or discrepancy between the Finnish and English versions, the Finnish version shall prevail and be treated as the correct version.	3	3

STATEMENTS FINANCIAL CONSOLIDATED DIRECTORS OF BOARD THE OF REPORT 2021 REVIEW BUSINESS

INFORMATION ADDITIONAL

YEAR 2021 IN BRIEF

Innofactor Achieved the Highest-Ever Net Sales,

EBITDA, and Order Backlog

Innofactor revised its strategy, offering and organization in 2021 to enable even stronger organic growth in the future. Innofactor divested the Prime business, which increased the operating margin in 2021, but decreased the net sales.

The Innofactor Group's net sales in 2021 were EUR 66,364	April 1, 2021. The Prime business was mainly targeted at	record-high net sales, EBITDA and order backlog in 2021.
thousand (EUR 66,164 thousand in 2020), showing	parishes in Finland.		We appointed Martin Söderlind to the new role of
an increase of 0.3 percent. Operating profit before	The transition to the new organizational structure	Chief Innovation and Talent Officer, complementing
depreciation and amortization (EBITDA) was EUR 10,111	led to an unfortunate deterioration of net sales and	Innofactor's Executive Board. Based at our Stockholm
thousand (EUR 7,164 thousand in 2020), representing	profitability in the Finnish business during the second half	office, Söderlind took up his post on April 1, 2021. He
growth of EUR 41.1 percent. The share of EBITDA of net	of the year. The COVID-19 pandemic and organizational	is in charge of developing Innofactor's offering and the
sales was 15.2 percent (10.8 percent in 2020). The order	changes together led to Innofactor's highest-ever rate	competence of our personnel. The Finnish leadership
backlog at the end of the review period was EUR 72,837	of employee turnover in the third quarter, which had	team was joined on August 9, 2021, by Jarno Limnéll,
thousand (EUR 60,402 thousand in 2020), showing an	a negative effect on net sales for the remainder of the	Professor of Practice at Aalto University, as the head of
increase of 20.6 percent.			year. Employee turnover returned to normal in the fourth	the new Cybersecurity Solutions unit, and on September
Innofactor revised its strategy in 2021 to provide even	quarter and the number of personnel began to grow	23, 2021, by Riikka Hägg in the position of Head of HR.
stronger support for growth. In our strategy work, we	again thanks to successful recruitment.	Internal transfers effective on October 1, 2021, also saw
defined the areas in which we see the strongest growth	Norway and Denmark returned to the path of	Stella Diesen and Marko Lybeck join the Finnish leadership
potential regarding our business and Microsoft's solution	profitable growth in 2021. While net sales in Sweden again	team as the heads of the new Data and Analytics unit and
offering. Innofactor redefined its offering according to the	declined slightly, the year-on-year decrease in EBITDA was	the new Cloud Infrastructure unit, respectively.
growth areas in question. The new offering is built around	halved in 2021. In the final quarter of 2021, EBITDA was	To	support its growth targets,	Innofactor opened
six spearheads: Digital Services, Business Solutions,	positive by a clear margin in all of Innofactor's operating	a new office in Jyväskylä, Finland at the beginning of
Information and Case Management, Cloud Infrastructure,	countries. Innofactor's strong profitability in 2021 was also	November 2021. Having a sufficient number of offices
Data and Analytics, and Cybersecurity. The organizational	attributable to the sales gain of EUR 2.6 million recognized	in the Nordic countries is important for promoting the
structure in Finland was changed accordingly, effective	on the divestment of the Prime business, as well as lower	achievement of Innofactor's growth targets. We will again
from October 1, 2021. As part of the sharpening of its	travel expenses and other operating expenses due to the	consider opening new offices in 2022.
offering, Innofactor	divested the Prime business	on	COVID-19 pandemic. On the whole, Innofactor reached		Norway
							10%
		A strong customer base				Denmark
				Recurring service		6%
		in the private, public,		Delivery projects
					Sweden, Denmark, and
		and membership-		and consulting	contracts and license
Public sector	based organizations		41%	sales create a competitive		Norway represented
	Licenses
43%		provides stability against	3%	edge and stability for the	Sweden	a significant part of
Private		economic cycles			business		18%	Innofactor's net sales
sector		Recurring service			Finland
43%		Professional services		We aim to achieve a
	The 10 largest		software		66%
Third
			contracts and
sector		customers account for	maintenance	are increasingly			strong position in all of the
14%		approximately 28%		23%	moving towards frame		Nordic countries
		of net sales			agreements and
				Expert services based	continuous maintenance
				on recurring contracts

4	INNOFACTOR PLC ANNUAL REPORT 2021	33%

NET SALES

EUR million

66.1	63.1	64.2	66.2	66.4
2017	2018	2019	2020	2021

NUMBER OF PERSONNEL average

610	591		544
	534
		516
2017	2018	2019	2020	2021
EBITDA				10.1
EUR million

7.2

5.1

1.3 2018

2017	-1.0	2019	2020	2021

EQUITY RATIO

43%	41%		42%	51%
40%
2017	2018	2019	2020	2021

	2021	2020	2019	2018	2017
Net sales, EUR thousand	66,364	66,164	64,198	63,144	66,088
Operating profit before depreciation and
amortization (EBITDA), EUR thousand	10,111	7,164	5,089	-1,029	1,308
percentage of net sales	15.2%	10.8%	7.9%	-1.6%	2.0%
Operating profit (EBIT), EUR thousand	6,519	2,501	795	-3,872	-1,461
percentage of net sales	9.8%	3.8%	1.2%	-6.1%	-2.2%
Earnings before taxes, EUR thousand	5,730	2,050	12	-3,811	-1,579
percentage of net sales	8.6%	3.1%	0.0%	-6.0%	-2.4%
Earnings, EUR thousand	4,504	1,761	418	-3,462	-2,007
percentage of net sales	6.8%	2.7%	0.7%	-5.5%	-3.1%
Shareholders' equity, EUR thousand	25,404	23,444	22,145	21,303	24,764
Interest-bearing liabilities, EUR thousand	9,818	15,386	16,853	15,418	14,228
Cash and cash equivalents, EUR thousand	1,963	3,066	963	258	910
Deferred tax assets, EUR thousand	4,830	6,413	5,602	5,602	5,668
Return on equity	18.4%	7.7%	1.9%	-13.8%	-5.3%
Return on investment	20.6%	11.1%	2.3%	-7.7%	-2.4%
Net gearing	30.9%	52.5%	71.8%	71.2%	53.8%
Equity ratio	51.1%	42.2%	40.2%	41.2%	43.4%
Balance sheet total, EUR thousand	51,057	56,607	55,720	51,875	58,272
Research and development, EUR thousand	3,504	3,618	2,795	2,860	3,298
percentage of net sales	5.3%	5.5%	4.4%	4.5%	5.0%
Personnel on average during the year	516	544	534	591	610
Personnel at the end of the year	500	541	538	550	601
Number of shares at the end of the year	37,388,225	37,388,225	37,388,225	36,188,225	36,188,225
Earnings per share (EUR)	0.1208	0.0471	0.0113	-0.0880	-0.0262
Shareholders' equity per share (EUR)	0.6813	0.627	0.592	0.589	0.684

2021 REVIEW BUSINESS

5