Incap Oyj > News


Incap Corporation           Stock Exchange Release           4 August 2010 at 8:30 a.m.        



  • revenue in January-June stood at EUR 29.3 million, down 17% compared with corresponding period in 2009 (1-6/2009: EUR 35.4 million)
  • operating profit (EBIT) in January-June was EUR -2.8 million (EUR -1.0 million)
  • earnings per share were EUR -0.26 (EUR -0.16)
  • the second-quarter revenue increased and the loss clearly decreased compared to the first quarter
  • structural change was implemented as scheduled, and the planned savings will begin to take effect in the latter part of the year
  • the directed share issue was subscribed in full, and EUR 1.3 million was recognised in the reserve for invested non-restricted equity

This unaudited interim report has been prepared in accordance with the international financial reporting standards (IFRS). Unless otherwise stated, the comparison figures refer to the same period the previous year.



Sami Mykkänen, the President and CEO of Incap Group: "The period's revenue fell short of expectations, since demand was slack due to the general economic recession, especially at the beginning of the year. In the second quarter, demand picked up markedly and many customers estimated that their needs would increase in the latter part of the year."


"The merger of the operations of our two electronics factories, in line with the company's strategy, has progressed according to schedule. Product transfers from Vuokatti to Kuressaare have required us to maintain partly overlapping resources, which has made it impossible to fully adjust operations to match the revenue. We expect the cost savings targeted with the structural change to have an impact on the result from the third quarter onward.


"Many customers have growing order books, and demand looks to be taking a positive turn. We have also signed new delivery agreements, which are expected to generate significant revenue in the next few years. To secure future growth, we launched cooperation with Cleantech Invest and expect it to bring us new customers from growing technology companies that market applications based on energy efficiency and renewable forms of energy." 


Revenue and earnings in April-June 2010


The second-quarter revenue amounted to EUR 15.8 million, up nearly 18% from the first quarter. The positive development was mainly driven by the recovery in demand for well-being technology as well as energy and electrotechnology equipment manufacturing in India. The second-quarter revenue was 6% lower than in the comparable period last year, when it totalled EUR 16.9 million.


The second-quarter operating profit improved clearly from the first quarter but dropped from the comparable period last year. Operating profit (EBIT) for April-June was EUR -1.1 million (4-6/2009: EUR -0.5 million), representing -6.9% (-2.8%) of revenue. Net profit for the second quarter amounted to EUR -1.5 million (EUR -1.0 million). Earnings per share were EUR -0.12 (EUR -0.16).


Revenue and earnings in January-June 2010


Revenue in the first quarter stood at EUR 29.3 million, which was 17% lower than in the comparable period in 2009 (1-6/2009: EUR 35.4 million). The trend in revenue was affected especially by the decline in demand caused by the general uncertainty in the economy. Consequently, in this period the order volumes of many big customers fell clearly short of last year's level.


Profitability dropped from last year's comparable period. The operating profit amounted to EUR -2.8 million (EUR -1.0 million), representing -9.5% of revenue (-2.8%). Profitability was mainly affected by the decline in revenue. It was impossible to fully adjust the cost structure to match the lower revenue, since the merger of two electronics factories, related to the structural change, required the Group to maintain partly overlapping resources.



Quarterly comparison
(EUR thousands)








Operating profit/loss







Net profit/loss

-1,490 -1,899 -3,926 -810 -1,035 -949
Earnings per share, EUR  









The revenue from Indian operations was growing towards the end of the review period. The delivery volumes of our biggest customers have increased and the demand for design services is brisk.


The cooperation agreement signed in June with Kenyan Thames Electricals Ltd opens new opportunities for marketing electrotechnical products of Incap's own design in the growing markets in Africa. Inverters designed and manufactured by Incap are currently sold besides the Thames brand also under two other brands. Incap's design unit in Bangalore currently employs 25 designers, the goal being to increase the team's size to 35 designers in the latter part of the year.


The delivery contract of rotor components for electrical motors and generators between Incap and ABB was renewed, thus ensuring continuing of a long span cooperation.


The availability of electronics materials and components weakened clearly, raising market prices and increasing logistics costs. The shortage of some electronics components postponed Incap's deliveries to customers, which led to a rise in the value of the material inventory.


To boost new customer acquisition in the company's strategic focus areas, Incap signed an agreement in June on participating in a venture capital fund. The fund, managed by Cleantech Invest Oy, invests in cleantech growth companies, which are Incap's potential customers. In accordance with the agreement, Incap will invest a total of EUR 0.3 million, which is recognised under other non-current assets.


Net profit for the period totalled EUR -3.4 million (EUR -2.0 million). Net finance costs decreased as a result of the Indian rupee strengthening. Depreciation stood at EUR 1.5 million (EUR 1.4 million). Losses before tax amounted to EUR -3.4 million (EUR -2.0 million).


Return on investment was -18% (-4%) and return on equity was -127% (-33%). Earnings per share were EUR -0.26 (EUR -0.16), while equity per share stood at EUR 0.30 (EUR 0.92).


The Group's balance sheet total rose to EUR 2.8 million in the period, amounting to EUR 42.5 million. The Group's equity at the close of the period was EUR 4.3 million (EUR 4.5 million on 31 March 2010 and EUR 11.3 million on 30 June 2009). Liabilities totalled EUR 38.2 million (EUR 36.3 million on 31 March 2010, EUR 31.5 million on 30 June 2009), of which EUR 22.9 million comprised interest-bearing liabilities (EUR 22.1 million on 31 March 2010, EUR 19.3 million on 30 June 2009). Of liabilities, current liabilities took up EUR 27.9 million (EUR 25.5 million on 31 March 2010, and EUR 19.9 million on 30 June 2009). The parent company's equity totalled EUR 11.6 million, representing 57% of the share capital. The directed share issue offered on the basis of the Annual General Meeting's decision, totalling 2,000,000 new shares, was subscribed in full and the subscription price of some EUR 1.3 million was recognised in the reserve for invested non-restricted equity.


The Group's equity ratio was 10.1% (26.4%). Interest-bearing net liabilities totalled EUR 22.3 million (EUR 18.6 million) and the gearing ratio was 523% (165%).


Financing and cash flow

The Group's quick ratio was 0.5 (0.6) and the current ratio 1.0 (1.3). Cash flow from operating activities was EUR -2.4 million (EUR 1.0 million) and the change in cash and cash equivalents showed an increase of EUR 0.1 million (an increase of EUR 0.07 million).


Capital expenditures

Cash flow from investing activities was EUR 0.4 million positive (EUR -0.4 million) and included the sale of production equipment based on a customer contract.



At the end of the review period, Incap Group employed 800 people. The average number of personnel was 783 (730). The number of employees grew in India. At the end of the review period, 39% of the personnel worked in Finland, 38% in India and 23% in Estonia.


Operations were adjusted through temporary layoffs in all of the company's operations at the beginning of the year. When the demand for some mechanics products declined, cooperation negotiations were launched at the Helsinki plant in June. They resulted in the decision to lay off eight people, starting in August, until further notice.


Owing to the merger of the electronics factories, the headcount at the Vuokatti plant will gradually decrease, as the periods of notice expire at the end of the year. In the beginning of 2010, the plant employed 131 persons, and after the holiday season, only 20 persons are working there.


The criteria set for the option programme targeting of the President and CEO, and the other management team in 2009 were not met in terms of the 2009 operating profit and working capital. In March 2010, the Board of Directors changed the option programme's distribution principles, emphasising the fulfilment of each personal objective, and distributed 25,000 B-options to the President and CEO, and a total of 100,000 C-options to the management team members.


The subscription period of B options in the 2004 option programme ended on 30 April 2010. No option rights were used for subscriptions, since the target share price defined in the terms was not realised.


Annual General Meeting 
Incap Corporation's Annual General Meeting was held in Helsinki on 13 April 2010. The Annual General Meeting confirmed the consolidated financial statements over the financial period ended on 31 December 2009. Following the Board of Directors' decision, the Annual General Meeting decided that no dividend would be paid and the loss for the accounting period (EUR 3,825,364.79) be left in equity.


The AGM discharged the Board members and the President and CEO from liability. Kari Häyrinen, Kalevi Laurila, Susanna Miekk-oja and Lassi Noponen were re-elected as Board members, and Raimo Helasmäki was elected as a new member. In the new Board's organisation meeting, Kalevi Laurila was elected as Chairman and Susanna Miekk-oja as Deputy Chairman.


After a competitive bidding, Ernst & Young Oy, Authorised Public Accountants, was again selected as the company's auditor.


The Annual General Meeting decided to amend the Articles of Association so that the notice of meeting is to be sent no later than 21 days before the AGM.


The Annual General Meeting authorised the Board to decide upon an increase in share capital by one or more new issues within one year from the Annual General Meeting so that the aggregate number of shares subscribed on the basis of the authorisation will be no more than 1,500,000 shares.


Directed share issue
The Annual General Meeting held on 13 April 2010 decided, according to the Board of Directors' proposal, upon increasing the share capital through a directed share issue where a maximum of 2,000,000 new shares were, deviating from the pre-emptive right of the current shareholders, offered to the company's Board of Directors, President and CEO, management team members, and those of the current shareholders who, at the beginning of the directed share issue on 13 April 2010, held at least 100,000 shares in the company. Before the share issue, new shares accounted for 16.4% of all of the company's shares, and for 14.1% after it.


The subscription price of the shares was EUR 0.64, which was the volume-weighted average price of the company's share on the Helsinki Exchanges in March 2010.


The Board of Directors approved the subscriptions on 3 May 2010. Seven of the biggest shareholders subscribed a total of 1,812,200 shares, which represented 90.6% of all the new shares. The Board of Directors, President and CEO, and management team members subscribed a total of 9.4% of the new shares.


The company's biggest shareholders and their holdings were as follows on 30 June 2010:
Oy Etra Invest Ab 29.2%, JMC Finance Oy 15.4%, Oy Ingman Finance Ab 12.5%, Sundholm Göran 7.9% and Laurila Kalevi 2.1%.


Incap drew up a prospectus in order to have the new shares admitted for public trading on the Helsinki Exchanges. The prospectus was published in electronic format on 29 June 2010 and trading in the new shares started on 30 June 2010.


Announcement in accordance with Chapter 2, Section 10, of the Securities Market Act on a change in holdings

After the registration of the shares subscribed in the directed share issue, Göran Sundholm's holdings in Incap exceeded the notification limit of 5%. Göran Sundholm subscribed a total of 500,000 new shares, after which he held a total of 1,123,263 Incap shares on 30 June 2010, which represents 7.9% of the company's shares and votes.


Shares and shareholders

Incap Corporation has one series of shares and the number of shares at the end of the period is 14,180,880. During the period, the share price varied between EUR 0.57 and EUR 0.75 (EUR 0.43 and 0.99). The closing price for the period was EUR 0.60 (EUR 0.66). During the review period, the trading volume was 26% of outstanding shares (17%).


At the end of the period, the company had 1,230 shareholders (1,153). Foreign or nominee-registered owners held 0.8% (2.8%) of all shares. The company's market capitalisation on 30 June 2010 was EUR 8.5 million (EUR 8.0 million). The company does not own any of its own shares.


Short-term risks and factors of uncertainty concerning operations


The risks and uncertainty factors related to Incap's operations are described in more detail in the prospectus published on 29 June 2010. The prospectus is available in Finnish on the company's website at


Fluctuations in the global economy and customer sectors affect Incap's demand and financial position. The recession has also had an impact on Incap's revenue and profitability. The time and speed of recovery of the global economy will affect the company's future revenue and, as a result, its profitability. To date, the recession has not had a negative effect on the solvency of Incap's customers.


Quality, manufacturing and distribution difficulties of material suppliers, as well as changes in the market prices of materials influence Incap's delivery ability and production costs. Most material prices are linked to customer agreements, which reduces material price risks. Changes in material prices will be transferred over to the customers' prices, though with a delay. The availability of materials is considered to be the most significant material-related risk in the near future. This may also lead to a rise in the level of costs.


The general financial market situation affects the financing of Incap. The acquisition of the Indian business unit in 2007 increased the Group's external financing and financial risks. The financing basis of Indian operations was boosted in 2009 by an equity investment that Finnfund made in Incap's Indian subsidiary.


One of Incap Group's financing agreements contains covenants set by a financier, concerning equity ratio and the ratio between interest-bearing liabilities and EBITDA. The financier has the right to terminate the agreements if equity ratio drops under 30% or IBD/EBITDA exceeds 3.5. The equity ratio on 30 June 2010 was 10.1% and IBD/EBITDA was -6.1. These covenants concerned a EUR 5.2 million share of the Group's interest-bearing net liabilities. The financier has not referred to these covenants and negotiations with the financier are on-going.


The company's financial position will continue to be influenced by the trends in the general financial market and the company's future earnings development. To strengthen its financial position, the company carried out a directed share issue in spring 2010. The goal is to also ensure the company's liquidity through efficient administration of working capital and negotiations concerning different forms of financing.


The deferred tax assets recognised in the consolidated balance sheet amounted to EUR 4.2 million on 30 June 2010 and are based on the Board of Directors' assessment of the companies' future earnings development. Should future development not correspond to the Board's estimate, the ensuing write-down would have a considerable impact on the Group's equity ratio and consequently on some of the covenants in the financing agreements.  


Outlook for the rest of 2010
Incap's estimates on future business development are based on its customers' forecasts and the company's own assessments. Demand is showing signs of recovery in several customer sectors and the outlook for new customer acquisition is also positive. However, it is difficult to assess with certainty the impact that these factors have on Incap's revenue.


By the end of 2010, the company will have implemented most of the strategic change process initiated in autumn 2008, which will form the basis for profitable international business. Centralising the Group's European electronics manufacturing in a single plant will make it possible to considerably boost profitability. The cost savings targeted with the merger of the company's two plants will affect the profitability beginning from August 2010.


Incap specifies its previous guidance and estimates that the company's revenue in 2010 is smaller or at the same level than 2009, when it was EUR 70 million. Profitability is expected to improve in the third quarter, and operating profit (EBIT) is estimated to be positive in the latter half of 2010. The Group's full-year operating profit is expected to be in the red, yet clearly better than in 2009 (EUR -5.0 million).


In the January-March interim report, dated 5 May 2010, and the prospectus published on 29 June 2010, the company estimated its revenue in 2010 to increase from 2009 and its operating profit (EBIT) to be clearly higher than in 2009.



Board of Directors



For additional information, please contact:
Sami Mykkänen, President and CEO, tel. +358 40 559 9047
Eeva Vaajoensuu, Chief Financial Officer, tel. +358 40 763 6570
Hannele Pöllä, Director of Communications and Human Resources, tel. +358 40 504 8296


NASDAQ OMX Helsinki Oy
Principal media


The company's website: 


Incap will arrange a conference for the press and financial analysts on 4 August 2010 at 10:00 a.m. at the World Trade Center Helsinki, in Meeting Room 4 on the 2nd floor at Aleksanterinkatu 17, FI-00100 Helsinki.


1 Consolidated Income Statement
2 Consolidated Balance Sheet
3 Consolidated Cash Flow Statement
4 Consolidated Statement of Changes in Equity
5 Group Key Figures and Contingent Liabilities
6 Quarterly Key Figures




Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire lifecycle of electromechanical products from design and manufacture to maintenance services. Incap's customers are leading equipment suppliers in energy-efficiency and well-being technology, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia and India. The Group's revenue in 2009 amounted to around EUR 70 million, and the company currently employs approximately 800 people. Incap's shares are listed on the NASDAQ OMX Helsinki Oy. For additional information, please contact


Annex 1


(EUR thousands, unaudited) 1-6/2010 1-6/2009 Change % 1-12/2009
REVENUE 29,272 35,407 -17  

Work performed by the enterprise and capitalised 0 0    
Change in inventories of finished goods and        
work in progress 604 -264 -329 -1,499
Other operating income 307 114 168 342
Raw materials and consumables used 20,424 23,204 -12 45,654
Personnel expenses 7,511 7,433 1 16,132
Depreciation and amortisation 1,524 1,424 7 2,869
Other operating expenses 3,491 4,187 -17 8,924
OPERATING PROFIT/LOSS -2,767 -990 180 - 4,970
Financing income and expenses -622 -992 -37 -1,780
PROFIT/LOSS BEFORE TAX -3,390 -1,982 71 -6,750
Income tax expense 0 -3 -100 29
PROFIT/LOSS FOR THE PERIOD -3,390 -1,984 71 -6,721
Earnings per share -0.26 -0.16 63 -0.55
Options have no dilutive effect        
in accounting periods 2009 and 2010        


OTHER COMPREHENSIVE INCOME 1-6/2010 1-6/2009 Change % 1-12/2009
PROFIT/LOSS FOR THE PERIOD -3,390 -1,984 71 -6,721
Translation differences from foreign units -29 42 -168 19
Other comprehensive income, net -29 42 -169 19
TOTAL COMPREHENSIVE INCOME -3,418 -1,942 76 -6,702
Attributable to:        
Shareholders of the parent company -3,418 - 1,942 76 -6,702
Minority interest 0 0   0


Annex 2


(EUR thousands, unaudited) 30 June 2010 30 June 2009 Change % 31 Dec. 2009
Property, plant and equipment 8,908 10,565 -16 10,247
Goodwill 1,070 973 10 977
Other intangible assets 905 1,170 -23 1,008
Other financial assets 314 14 2 078 14
Deferred tax assets 4,234 4,152 2 4,156
TOTAL NON-CURRENT ASSETS 15,432 16,874 -9 16,402
Inventories 13,526 14,099 -4 11,381
Trade and other receivables 12,978 11,043 18 11,261
Cash and cash equivalents 534 707 -25 661
TOTAL CURRENT ASSETS 27,038 25,849 5 23,303
TOTAL ASSETS 42,469 42,723 -1 39,706
Share capital 20,487 20,487 0 20,487
Share premium account 44 44 1 44
Reserve for invested non-restricted equity 1,264 0   0
Exchange differences -488 -435 12 -459
Retained earnings -17,035 -8,838 93 -13,629
TOTAL EQUITY 4,272 11,257 -62 6,443
Deferred tax liabilities 70 99 -29 70
Interest-bearing loans and borrowings 10,246 11,495 -11 10,999
NON-CURRENT LIABILITIES 10,316 11,595 -11 11,069
Trade and other payables 15,245 12,097 26 11,925
Current interest-bearing loans and borrowings 12,635 7,774 63 10,269
CURRENT LIABILITIES 27,881 19,871 89 22,194
TOTAL EQUITY AND LIABILITIES 42,469 42,723 -1 39,706


Annex 3



(EUR thousands, unaudited)      
Cash flow from operating activities      
Net income -2,767 -990 -4,970
Adjustments to operating profit 1,151 1,441 4,342
Change in working capital 138 2,133 2,929
Interest paid -970 -1,580 -1,812
Interest received 11 21 40
Cash flow from operating activities -2,437 1,024 529
Cash flow from investing activities      
Capital expenditure on tangible and      
intangible assets -119 -603 -1,064
Proceeds from sale of tangible      
and intangible assets 499 158 17
Acquisition of subsidiary 0 0 0
Loans granted -2 -4 -9
Shares of subsidiaries sold 0 0  
Repayments of loan receivables 5 2 2
Cash flow from investing activities 383 -448 -1,054
Cash flow from financing activities      
Private placement 1,264    
Drawdown of loans 2,039 1,917 5,683
Repayments of borrowings -513 -1,847 -3,868
Repayments of obligations under finance leases -604 -573 -1,255
Cash flow from financing activities 2,186 -503 560
Change in cash and cash equivalents 132 73 35
Cash and cash equivalents at beginning of period 661 641 641
Effect of changes in exchange rates -250 -8 -17
Changes in fair value (cash and cash equivalents) -9 0 2
Cash and cash equivalents at end of period 534 707 661


Annex 4


(EUR thousands, unaudited)
  Share capital Share premium account Reserve for invested non-restricted equity Exchange differences earnings Total
Equity on 1 Jan. 2009 20,487 44 0 -478 - 6,864 13,189
Change in exchange differences       42   42
Options and share-based compensation         10 10
Net income and losses recognised       42 10 52
directly in equity            
Net profit/loss         -1,984 -1,984
Total income and losses       42 -1,975 -1,932
Equity on 30 June 2009 20,487 44 0 -435 -8,838 11,257
Equity on 1 Jan.2010 20,487 44 0 -459 -13,629 6,443
Share premium     1,280     1,280
Transaction costs for equity      

Change in exchange differences       -29   -29
Options and share-based compensation         -17 -17
Other changes                        
Net income and losses recognised            
directly in equity     1 264 -29 -17 1,219
Profit or loss for the period         -3,390 -3,390
Total income and losses                 -29 -3,407 -2,171
Equity on 30 June 2010 20,487 44 1,264 -488 -17,035 4,272



Annex 5



30 June 2009
31 Dec. 2009
Revenue, EUR million 29.3 35.4 69.8
Operating profit, EUR million -2.8 -1.0 -5.0
  % of revenue -9.5 -2.8 -7.1
Profit before taxes, EUR million -3.4 -1.9 -6.7
  % of revenue -11.6 -5.6 -9.7
Return on investment (ROI), % -18.0 -3.6 -15.9
Return on equity (ROE), % -126.5 -32.5 -68.5
Equity ratio, % 10.1 26.4 16.2
Gearing, % 523.1 164.9 319.8
Net debt, EUR millions 24.7 19.7 21.3
Net interest-bearing debt, EUR millions 22.3 18.6 20.6
Average number of shares during the report      
period, adjusted for share issues 12,854,913 12,180,880 12,180,880
Earnings per share (EPS), euro -0.26 -0.16 -0.55
Equity per share, euro 0.30 0.92 0.53
Investments, EUR million 0.1 0.7 1.1
  % of revenue 0.4 2.0 1.5
Average number of employees 783 730 751
Mortgages 12.0 12.0 12.0
Other liabilities 2.8 6.5 4.6
Nominal value of currency options EUR thousands 511.8 0 0
Fair values of currency options, EUR thousands -5.5 0 0




Annex 6

15.8 13.4 17.7 16.6 16.9 18.5
-1.1 -1.7 -3.7 -0.3 -0.5 -0.5
  % of
-6.9 -12.4 -20.7 -1.9 -2.8 -2.8
Profit before
EUR million
-1.5 -1.9 -4 -0.8 -1.0 -0.9
  % of
-9.4 -14.1 -22.3 -4.9 -6.1 -5.1
Return on
(ROI), %
-111.3 -21.5 -47.3 -4 -2.1 -4.9
Return on
(ROE), %
-14.6 -138.3 -160 -27.5 -33.9 -29.8
Equity ratio, % 10.1 11.1 16.2 24.6 26.4 27.4
Gearing, % 523.1 477.3 319.8 173.8 164.9 151.1
Net debt,
EUR millions
24.7 24.4 21.3 20.6 19.7 19.6
Net interest-
debt, EUR millions
22.3 21.7 20.6 18.1 18.6 18.6
Average number
of share
during the
12,854,913 12,180,880 12,180,880 12,180,880 12,180,880 12,180,880
Earnings per
share (EPS),
-0.12 -0.16 -0.32 -0.07 -0.08 -0.08
Equity per
0.3 0.37 0.53 0.86 0.92 1.01
EUR million
0.1 0.1 0.1 0.4 0.5 0.1
  % of revenue 0.4 0.4 0.6 2.2 2.9 0.6
of employees
791 734 776 770 732 728


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