Incap Oyj > News


Incap Corporation                       Stock Exchange Release                      


23 February 2011 at 8:30 a.m.



  • full-year revenue for 2010 amounted to EUR 59.2 million, down about 15% year-on-year (2009: EUR 69.8 million)
  • full-year operating profit (EBIT) was EUR -3.2 million (EUR -5.0 million)
  • profitability improved clearly: operating loss (EBIT) contracted evenly in each quarter, and EBIT for the final quarter of the year was in the black
  • full-year earnings per share stood at EUR -0.33 (EUR -0.55)
  • the company's electronics manufacturing was centralised in Estonia and India
  • the directed share issues were subscribed in full, and about EUR 4.1 million were recognised in the reserve for invested unrestricted equity
  • the company's most remarkable short-term risk is the financing of capital employed for future growth

These unaudited financial statements have been prepared in compliance with the international financial reporting standards (IFRS). Unless otherwise mentioned, the comparison figures refer to the same period in 2009.



Sami Mykkänen, President and CEO of Incap Group: "Incap has now completed the strategic structural change that started three years ago.  We have organised our operations based on the chosen customer segments, cut the number of factories, shifted the focus of operation to lower-cost areas and made design services an integral part of our service portfolio."


"In early 2010, demand was slack because of the international recession but picked up towards the end of the year. However, revenue was held back by a global shortage of semiconductor components. The shortage complicated the planning of production and led to prolonged delivery times."


"The merger of the operations of our two electronics factories was completed as a part of our structural change process. Products were transferred from Vuokatti to Kuressaare on a very strict schedule. In order to ensure successful product transfers, we had to maintain partly overlapping resources. This made it impossible to fully adjust production costs to match the level of revenue. However, the cost savings we aimed for with the centralisation of electronics manufacturing began to affect our result in the third quarter.


"In mechanics manufacturing, the structural change was not implemented as planned. The negotiations on selling the sheet-metal business of the Helsinki plant to Lankapaja Corporation ended unsuccessfully in February 2011. We continue developing the Helsinki plant into a unit that specialises in end-product assembly.


"In terms of financing, the past year was very challenging. Incap's shareholders have shown trust in us in a difficult situation, and this was demonstrated by the success of the share issues. The share issues strengthened the company's capital and financing structures as intended. We were also pleased to welcome Finnish Industry Investment Ltd among our major shareholders.


"The order book and outlook have clearly improved compared with the same time last year, and European demand seems to be returning back to normal. We have positive expectations: now that the company's structural change has been completed, we can fully concentrate on growth."


Revenue and earnings in October-December 2010
Revenue for the final quarter of 2010 amounted to EUR 16.1 million, down 9% year-on-year. Revenue was held back, particularly by shortages of materials for well-being technology products which led to delays in deliveries. Revenue from energy efficiency products developed favourably. 


Profitability clearly improved, and operating result (EBIT) for the fourth quarter was slightly positive, amounting to about EUR 0.01 million (10-12/2009: EUR -3.7 million). The operating result includes a non-recurring provision of about EUR 0.3 million for the closure of the Vuokatti plant.


Net profit for the fourth quarter was EUR -0.4 million (EUR -3.9 million). Earnings per share were EUR -0.03 (EUR -0.32).



Quarterly comparison
(EUR thousand)










Operating profit/loss (EBIT)   










Net profit/loss









Earnings per share, EUR -0.03 -0.08 -0.12 -0.16 -0.32

-0.07 -0.08 -0.08



Revenue and earnings in 2010
Incap Group's revenue for 2010 amounted to EUR 59.2 million, down about 15% year-on-year (2009: EUR 69.8 million). Because of the global recession, demand for Incap's services remained low, particularly in the first part of the year. Delivery volumes both for energy efficiency and well-being technology products clearly increased towards the end of the year. However, revenue was held back by a global shortage of semiconductor components, which had a negative impact on the company's delivery capacity and led to delays in deliveries.


The Indian unit's revenue increased strongly year-on-year, amounting to EUR 12.0 million (EUR 7.9 million). Profitability of operations clearly improved from the previous year, but operating result still remained negative.


Incap Group's loss contracted clearly: full-year operating profit was EUR 3.2 million negative (5.0 million negative), representing -5.4% of revenue (-7.1%).  The result for the comparison year includes a non-recurring provision of about EUR 2.5 million for the closing down of the Vuokatti plant. Of the provision made for the closure of the Vuokatti plant in 2009, a provision of about EUR 1.0 million is recognised in the operating result for 2010, and the corresponding costs have not been entered into accounts. It was impossible to fully adjust production costs to match revenue, because the merger of two electronics factories required the Group to maintain partly overlapping resources. In addition, a global shortage of components led to higher component prices, which had an impact on profitability.


The cost-cutting programme to improve profitability continued. Personnel expenses and other operating expenses, for example, were about EUR 5.8 million lower than in 2009.


Net financial expenses stood at EUR 1.7 million (EUR 1.8 million) and depreciation and amortisation expenses at EUR 2.8 million (EUR 2.9 million). Losses before tax amounted to EUR 4.9 million (EUR 6.8 million). Loss for the period was EUR 4.9 million (6.7 million).


Return on investment was -11% (-16%) and return on equity -81% (-69%). Earnings per share were EUR -0.33 (EUR -0.55).


Developing operations and implementing structural change
In 2010, development of operations focused on improving the efficiency of materials functions, completing the change in production structure and honing processes.


In order to ensure parallel material management goals at Group and factory levels, the procurement organisation was reformed and purchasing operations for factories were included in the responsibilities of the Director, Sourcing and materials.


The value of inventories rose from EUR 11.4 million at the beginning of the year to EUR 13.1 million at year-end, reflecting the increase in demand seen early in 2011. In addition, the value of inventories was increased by the poor availability of components, which had a slowing effect on the entire material flow.


A major structural change was implemented in Incap Group's production by centralising the company's European electronics manufacturing in one manufacturing plant.  Starting in the spring, the manufacturing of products at the Vuokatti plant was gradually transferred to Estonia, and manufacturing in Vuokatti ended in August. Most of the production equipment was taken to the Estonian and Indian plants.


The structural change was implemented to achieve cost savings, and the effects began to show in the result in the third quarter of 2010. Electronics production was centralised in order to improve operational efficiency and achieve annual cost savings of about EUR 3 million compared with 2009.


After the transfer of production, revenue from deliveries by the Kuressaare plant doubled, while only slightly more than ten new employees were recruited. The 124 employment relationships at the Vuokatti plant were terminated as a result of co-operation negotiations. At the end of 2010, Incap still had 36 people at Vuokatti on notice but without an obligation to work.


In order to further streamline the production structure, Incap wants to develop the Helsinki plant into a production unit that specialises in assembly. Toward this end, the company was engaged in negotiations with Lankapaja Corporation, a company specialising in mechanics manufacturing, to sell the Helsinki plant's sheet-metal business. However, the negotiations ended unsuccessfully after the end of the reporting period in February 2011. 


Development of services focused on the honing of production processes and on design services. The Group's product design is centralised in Bangalore, India, where Incap has built up a competence centre for the design of energy efficiency products. The products designed for customers included, among others, charging systems for electric cars and UPS equipment for uninterrupted and undisturbed electrical current input in households.


Incap continued target-oriented acquisition of new customers in Europe and Asia. The co-operation with a local partner in China, launched in 2009, did not yet bring us any significant new customers, but we continued studying business opportunities in the region. In addition, Incap is investigating into launching its own operations in China. 


To boost customer acquisition in the company's strategic focus areas, Incap signed an agreement in June on participating in a venture capital fund managed by Cleantech Invest Oy. The fund invests in Cleantech growth companies, to which Incap can offer various manufacturing services in Europe and Asia.


Balance sheet
The balance sheet total rose by EUR 2.9 million from the end of 2009, amounting to EUR 42.6 million. The Group's equity at the close of the financial period was EUR 5.6 million (EUR 6.4 million). Debt totalled EUR 37.0 million (EUR 33.3 million), of which interest-bearing debt made up EUR 22.0 million (EUR 21.3 million).  Of the total debt, EUR 27.4 million (22.2 million) were current liabilities. Equity of the parent company totalled EUR 15.2 million, representing 74% of share capital.


The Group's equity ratio was 13.2% (16.2%). Interest-bearing net liabilities totalled EUR 21.5 million (EUR 20.6 million) and the gearing ratio was 383% (320%). The earnings development and financing of the business operations acquisition in India in 2007 contributed to the high gearing ratio.


Incap Group did not take out any new loans in 2010. The amount of long-term loans fell by EUR 1.5 million and the amount of short-term loans increased by EUR 2.2 million year-on-year. On 31 December 2010, the Group's cash and cash equivalents totalled EUR 0.5 million, compared with EUR 0.7 million at year-end 2009.


At the end of 2010, EUR 2.0 million of the Group's long-term and short-term loans were guaranteed and the rest were unguaranteed. Of the loans, EUR 7.7 million were secured loans. The securities for these loans are the EUR 8.1 million mortgages on company assets and a EUR 1.5 million mortgage on the Vuokatti factory property. 


Financing and cash flow
The Group's quick ratio was 0.6 (0.5) and the current ratio 1.0 (1.1). Cash flow from operations was EUR -4.4 million (EUR 0.5 million) and the change in cash and cash equivalents showed an increase of EUR 0.08 million (an increase of EUR 0.04 million).


Cash and cash equivalents remained at a low level because of the operating loss. The funds acquired through the directed share issues - about EUR 4.1 million - were used for the financing of working capital, repayment of a short-term loan and the development of international operations.


Directed share issues
On 13 April 2010, Incap Corporation's Annual General Meeting decided on a directed share issue. A total of 2,000,000 new shares were, deviating from the pre-emptive right of shareholders, offered to the Board members, the President and CEO, the management team members and those shareholders who held at least 100,000 shares in the company at the beginning of the offering.


The subscription price was EUR 0.64, which was the volume-weighted average price of the company's share on the NASDAQ OMX Helsinki in March 2010. The subscription period was from 13 to 27 April 2010 and the subscription price was paid to the company by 30 April 2010.  All the offered 2,000,000 new shares were subscribed. The issued and subscribed new shares represented about 14.1% of the company's all shares and votes following the share issue. The new shares became available for public trading at NASDAQ OMX Helsinki on 30 June 2010 with similar conditions to the company's other shares.


Incap's Extraordinary General Meeting on 9 September 2010 decided to carry out another directed share issue. A minimum of 4,000,000 and a maximum of 4,500,000 new shares were, deviating from the pre-emptive right of shareholders, offered to professional investors, the Board members, the President and CEO, the management team members and those shareholders who held at least 100,000 shares in the company on 14 September 2010.


The subscription price was EUR 0.64, which was the volume-weighted average price of the company's share on the NASDAQ OMX Helsinki in August 2010. The subscription period was from 20 to 28 September 2010 and the subscription price was to be paid by 28 September 2010. A total of 4,500,000 shares were subscribed. The issued and subscribed new shares represented about 24.1% of the company's total shares and voting rights following the share issue. The new shares became available for public trading on 16 December 2010.


Research and development
Incap's R&D expenses are connected to the development of the company's own processes. They amounted to EUR 0.05 million (EUR 0.1 million).


Capital expenditure
Investments amounted to EUR 0.5 million in 2010 (EUR 1.1 million) and includes the sale of production equipment based on a customer contract. The Vaasa, Kuressaare and Tumkur plants modernised their machinery. 


The most significant investment was the eccentric press production line for the Vaasa plant. It is used for the manufacturing of large generator and electric motor components and stressed-skin structures for various devices used in the energy industry.

Quality assurance and environmental issues
All of Incap Group's plants have environmental management and quality assurance systems certified by Det Norske Veritas or TÜV Rheinland. The systems are used as tools for continuous improvement. In October 2010, the quality assurance and environmental management systems of the European plants were for the first time recertified simultaneously in accordance with the multisite principle. The goal of multisite certification is to standardise operational processes in the entire Group and efficiently enable flexible manufacturing of the same products at the company's different production plants.


Incap's environmental management system complies with ISO 14001:2004 and the quality assurance system with ISO 9001:2008. In addition, the Helsinki and Kuressaare plants have certifications in accordance with the ISO 13485:2003 quality standard for the manufacture of medical devices, and the Indian plant has a TS 16949 quality certification required by the automotive industry.


At the beginning of year, the Incap Group had a payroll of 783 employees, and at the end of the year it had 767 employees. In 2010, Incap employed 780 (751) people on average. The number of employees increased by nearly 50 in India and by 13 in Estonia. At the end of the year, about 49% of personnel worked in India, 27% in Estonia and 24% in Finland.


At the end of the year, 250 of Incap's employees were women and 517 men; 611 were permanently employed staff and 156 were fixed-term employees. There were five part-time employment contracts at the end of the year. The average age of the personnel is 40 years.


The closing down of the Vuokatti plant led to the termination of 124 employment contracts. In the European units, operations were adjusted to match demand mostly through temporary layoffs. However, some of the temporary layoffs were cancelled once demand picked up in late autumn.


Company management and organisation
The company's President and CEO during the financial period was Sami Mykkänen, B.Sc. (Eng.). In addition to the CEO, the Group management team included Kimmo Akiander (Well-being), Mikko Hirvinen (operations), Jarmo Kolehmainen (Energy Efficiency Asia), Jari Koppelo (Energy Efficiency Europe), Hannele Pöllä (communications and HR) and Eeva Vaajoensuu (finance and administration).


At the end of 2010, the Asian and European operations of Energy efficiency were organised under joint business management. At the same time, a local director was appointed to the Indian subsidiary, and representatives from India were included in the Group's expanded management team. The purpose of the changes is to harmonise operations and improve Group management.


In addition to the members of the actual Management Team, the Extended Management team includes K.R. Vasantha (Managing Director and in charge of production at the Indian subsidiary), Sami Kyllönen (production services), Murthy Munipalli (Energy Efficiency Asia), Pekka Laitila (materials management), Päivi Luotola (IT) and Riitta Pönniö (quality and environment).


Events after the end of the financial period
The negotiations initiated by Incap and Lankapaja Corporation in September 2010 on selling the sheet-metal business of Incap's Helsinki plant were unsuccessful and ended in February 2011. 


Annual General Meeting 2010
Incap Corporation's Annual General Meeting was held in Helsinki on 13 April 2010. The Annual General Meeting approved the Group's financial statements for the financial period that ended on 31 December 2009 and decided, in accordance with the Board of Directors' proposal, that no dividend be paid and the loss for the financial period (EUR 3,825,364.79) be left in equity.


The Annual General Meeting elected five members to the Board of Directors. Authorised Public Accountant Ernst & Young Oy was re-elected as the company 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 Annual General Meeting.


The Board's authorisation
At the end of the financial period, the Board of Directors held an authorisation granted by the Annual General Meeting on 13 April 2010 to decide on an increase in share capital, so that the aggregate number of shares subscribed on the basis of the authorisation will be up to 1,500,000 shares. The authorisation includes a right to deviate from shareholders' pre-emptive subscription right and to decide on the subscription price and other terms and conditions of subscription. It is possible to deviate from shareholders' pre-emptive subscription rights providing that there is a weighty economic reason for the company to do so, such as developing the company's business, financing business restructuring, making an arrangement in association with capital funding, or a reason related to HR policy. The Board of Directors has the right to decide that the share subscription price can be paid using property given as subscription in kind or subscriber-held claim or otherwise under specific conditions. The authorisation is valid for one year but no later than the next Annual General Meeting.


Board of Directors and auditor
The Annual General Meeting re-elected Kalevi Laurila, Susanna Miekk-oja, Kari Häyrinen and Lassi Noponen as members of the Board of Directors. Raimo Helasmäki was elected to the Board as a new member. The Board elected from among its members Kalevi Laurila as Chairman and Susanna Miekk-oja as Deputy Chairman. The secretary of the Board was Jari Pirinen, LL.M. The Board convened 20 times in 2010, and the average attendance rate of the Board members was 93%.


The auditor was auditing firm Ernst & Young Oy with Jari Karppinen, Authorised Public Accountant, as the principal auditor.


Report on corporate governance
Incap releases a report on the company's corporate governance in compliance with the Securities Market Act as a separate document, in connection with the publication of the report of the Board of Directors and the Annual Report.


Shares and shareholders
Incap Corporation has one series of shares and the number of shares at the end of the period is 18,680,880. During the financial period, the share price varied between EUR 0.49 and EUR 0.75 (EUR 0.43 and 0.99). The closing price for the year was EUR 0.57 (EUR 0.67). During the financial period, the trading volume was 39% of outstanding shares (25%).


At the end of the financial period, Incap had 1,085 shareholders (1,089). Nominee-registered owners held 0.6% (2.8%) of all shares. The company's market capitalisation on 31 December 2010 was EUR 10.6 million (EUR 8.2 million). The company does not hold any of its own shares.


Incap's share has been listed on Helsinki Stock Exchange (now NASDAQ OMX Helsinki) since 1997 with the trading code ICP1V. The sector classification on the OMX Nordic Exchange Helsinki is "Industrial products and services" and the sector code is 20104010 (Electrical supplies and equipment).


The company's share capital as recorded in the trade register on 31 December 2010 is EUR 20,486,769.50. The share has no nominal value. The company does not hold any of its own shares, and the Board of Directors is not aware of any shareholder agreements concerning holdings in company shares and the exercise of voting rights.


Share-based incentive systems
Incap has two on-going option schemes:


Option scheme 2004:
The option scheme implemented in 2004 includes a maximum of 630,000 stock options. Of these, a total of 315,000 of 2004C stock options are currently valid. The maximum proportion of shares to be subscribed on the basis of them is 1.7% of company shares and votes after possible increase in share capital.


The subscription price for the 2004C stock options is the trade-weighted average price of Incap share on Helsinki Stock Exchange from 1 to 31 March 2006, i.e., EUR 2.05. The share subscription period is from 1 April 2009 to 30 April 2011. The option scheme is associated with a shareholding scheme, according to which option holders are obliged to acquire company shares with 20% of the gross income gained from realised stock options.


Option scheme 2009:
The option scheme implemented in February 2009 includes a total of 600,000 stock options entitling their holders to subscribe for an equal number of Incap shares. The stock options are broken into three categories: 2009A, 2009B and 2009C. There are 100,000 "A" options, 100,000 "B" options and 400,000 "C" options. The subscription price for all stock options is EUR 1. The subscription period is from 1 April 2010 to 31 January 2014 for 2009A stock options and from 1 April 2011 to 31 January 2014 for 2009B and 2009C stock options.


When the option scheme was implemented, the CEO received 100,000 "A" stock options and in February 2010 he received 25,000 "B" stock options. In February 2010, the company's key employees received a total of 100,000 "C" stock options.


The proportion of shares to be subscribed on the basis of stock options is up to 3.1% of the company's shares and votes after possible increase in share capital. Undistributed stock options will be given to Euro-Ketju Oy, a subsidiary fully owned by Incap. The Board of Directors will make a separate decision of distributing these.


Announcements in accordance with Chapter 2, Section 9, of the Securities Market Act on changes in holdings
After the registration of the shares subscribed in the directed share issue in April, Göran Sundholm's holdings in Incap exceeded the notification limit of 5%. In Sampo Group, the holdings of Mandatum Life Insurance Company Ltd in Incap Corporation's shares and votes exceeded 5%. The holdings of Oy Etra Invest Ab in Incap Corporation's shares fell below 25%. After the directed share issue's subscription in September and the registration of the new shares, the holdings of Finnish Industry Investment Ltd. exceeded 10%. After the directed share issue's subscription in September and the registration of the new shares, the holdings of JMC Finance Oy fell below 15%. According to the announcement made by OP Pohjola Group Central Cooperative, the combined holdings of OP Pohjola Group Central Cooperative and entities controlled by it as well as its subsidiaries and investment funds administered by such subsidiaries, based on Incap's convertible promissory notes, is below 5% if the subscription right based on the convertible promissory notes is realised.


Short-term risks and factors of uncertainty concerning operations
The Risk Management Policy approved by the Incap Board classifies risks as risks connected to the operating environment, operational risks and damage and funding risks. Risk management at Incap is mainly focused on risks that threaten the company's business objectives and continuity of operations. In order to improve its business opportunities, Incap is willing to take on managed risks within the scope of the Group's risk management capabilities. Incap regularly reviews its insurance policies as part of the risk management system. 


Demand for Incap's services and the company's financial position are affected by international economic trends and economic trends among Incap's customer industries. In 2011, the business environment is expected to develop favourably compared with 2010. Incap's sales are spread over several customer sectors, which balances out the impact of the economic trends in different industrial sectors.


In 2010, Incap's largest single customer accounted for 30% of the Group's revenue. The company will continue to expand its customer base so that dependence on a single customer or several customers in the same sector will not expose the company to a significant financial risk. The revival of the global economy is expected to increase revenue from many customers and in this way decrease dependence on a single customer. Risks associated with customer agreements are regularly reviewed and their combined effect is being monitored. Risks associated with customers are managed through contract terms and insurance policies. The recession has not had a negative effect on the solvency of Incap's customers.


Incap's sector, contract manufacturing, is highly competitive and there are major pressures on cost level management. Incap manages the risk through continuous monitoring and management of operational efficiency and cost levels. Flexibility of the cost structure has been improved by distributing production activities into several countries, and by managing manufacturing operations between Finland and other countries.


The company continuously assesses the organisation of different activities as well as the sufficiency and level of human resources in order to ensure that the organisation is efficient, the correct competencies are available and the company can provide its customers with the high-quality services they require without interruptions, and take care of its commitments to other stakeholders. An essential element for the company's competitive edge is the development of labour costs in the Incap countries. We manage the personnel risk with an efficient substitute system.


Material suppliers' quality, manufacturing and distribution problems, as well as changes in the market prices of materials, influence Incap's delivery ability and costs. Most material prices are linked to customer agreements to reduce material price risks. The availability of materials is considered to be the most significant material-related risk in the near future. Problems with availability can increase costs. We aim to influence the risk by signing framework agreements with parties we know well and by focusing on the predictability of business and capacity management. With critical suppliers, we aim to agree on buffer inventories within the limits set by agreements between Incap and the end customer.


The nature of Incap Group's business exposes the company to foreign exchange, interest rate, credit and liquidity risks. The aim of the Group's risk management policy is to minimise the negative effects of changes in the financing markets on the Group's earnings and cash flow. Forward exchange agreements, foreign currency loans and interest rate swaps are used for the management of financing risks as required. Subsidiaries' financing structures are planned, evaluated and directed, taking into account the management of financing risks.


The acquisition of the Indian business unit in 2007 has increased the Group's external financing and financial risks. The financing base of the operations in India was enforced in 2009 through a share capital investment of Finnfund in Incap's Indian subsidiary. The Group's interest and foreign exchange risks are managed by means of a selected financing structure based on both fixed and floating rate financial instruments in selected currencies. The Group's future earnings development affects equity and, consequently, the equity ratio, which is an important indicator in terms of financing.


In order to strengthen Incap Group's financial position, the company carried out directed share issues in spring and autumn 2010, and EUR 4.1 million were recognised in the reserve for invested unrestricted equity.


In order to estimate its liquidity Incap has drawn up a cash flow forecast by quarter, expanding up to the financial statements for the year 2011. The cash flow forecast is based on the result estimate for 2011 as given in connection with the consolidated financial statements and on the actual turnover of sales receivables and accounts payable, as well as on the targeted turnover of inventories. Based on this cash flow forecast, Incap's need for working capital is increasing towards the year end.  The company's existing working capital on the balance sheet date will be sufficient for the next 12 months if the Group achieves its budgeted result and inventory turnover rate. If the goals are not achieved, the gap must be covered with additional financing. The company management has initiated negotiations with various parties to ensure additional financing and is confident that it will be able to cover any needs for extra financing. Providing that the negotiations are successful, the company's working capital will be sufficient for the next 12 months. Furthermore, Incap has at the end of the financial period started actions to sell the factory real estate in Vuokatti. Real estate and the loans related to it have been described as non-current assets held-for-sale in the financial statements. Estimated price as given in the certificate of valuation of an external surveyor exceeds clearly the book value of the real estate.


Incap has a financing agreement in force until 31 May 2012 which covers the loans related to the financing of the Indian subsidiary (totalling about EUR 5.6 million) and Incap's credit line (EUR 1 million) and a factoring credit line (up to EUR 7 million), of which EUR 5.5 million were in use on 31 December 2010. The financing agreement contains covenants, of which net IBD/EBITDA was not met on the balance sheet date, but before the balance sheet date the financier informed Incap in writing that it will not exercise its right to terminate the agreement on 31 December 2010. The covenants will be tested again on 30 June 2011. Should the financier call for immediate payment of the loans based on the covenants, Incap is not able to meet the obligation.


The deferred tax assets recognised in the consolidated balance sheet (EUR 4.2 million on 31 December 2010) are based on the Board of Directors' assessment of future earnings development at Incap Corporation and the Indian subsidiary. On 31 December 2010, confirmed tax losses for which no deferred tax asset was recognised amounted to EUR 8.0 million. Should future development not correspond to the Board's estimate, the ensuing write-down of deferred tax assets in the consolidated balance sheet would have a considerable impact on Incap Group's equity ratio and, consequently, on the Group's equity and, for example, the covenants in the above financing agreements.  


Goals in 2011
In 2011, Incap aims for an increase in revenue and considerably improved profitability. Demand from the company's key customer segments is anticipated to develop favourably, and Incap is aiming to extend the scope of deliveries to current customers and establish new customer accounts in the chosen industries. Revenue is expected to grow most vigorously in Asia, where the company intends to expand its business into China. The offering of design services will be increased and their role emphasised. The means to boost profitability include more efficient material management and harmonisation of operating processes.


Outlook for 2011
Incap's estimates for future business development are based on its customers' forecasts and the company's own assessments. The general economic situation has improved, and the majority of Incap's customers are predicting that their revenue will increase in 2011, which has a positive effect on Incap's revenue. However, the shortage of components is predicted to continue, which can affect Incap's deliveries and revenue development. 


Incap estimates that its revenue in 2011 will increase from the EUR 59.2 million achieved in 2010. The Group's full-year operating result (EBIT) in 2011 is expected to be positive and, thus, clearly higher than in 2010 (EUR -3.2 million).


Board of Directors' proposal on measures related to the net profit/loss
The parent company's loss for the financial period totalled EUR 1,561,513.95. The Board will propose to the Annual General Meeting on 13 April 2011 that no dividend be paid and the loss for the accounting period be recognised in equity.


Annual General Meeting 2011
Incap Corporation's Annual General Meeting will take place on Wednesday 13 April 2011 starting at 3:00 p.m. at Restaurant Bank, Unioninkatu 20, 00310 Helsinki.


Helsinki, 22 February 2011


Board of Directors



Further information:
Sami Mykkänen, President and CEO, tel. +358 40 559 9047
Eeva Vaajoensuu, CFO, tel. +358 40 763 6570
Hannele Pöllä, Director, Communications and HR, tel. +358 40 504 8296


NASDAQ OMX Helsinki Ltd
Principal media 


Incap will arrange a conference for the press and financial analysts on 23 February 2011 at 10:00 a.m. at the World Trade Center Helsinki, in Meeting Room 4 on the 2nd floor at Aleksanterinkatu 17, 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 life-cycle of electromechanical products from design and manufacture to maintenance services. Incap's customers include leading equipment suppliers in energy-efficiency and well-being technologies, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia and India. The Group's revenue in 2010 amounted to EUR 59 million, and the company currently employs approximately 770 people. Incap's share is listed on the NASDAQ OMX Helsinki. Additional information:


Annex 1


(EUR thousand, unaudited) 1-12/2010 1-12/2009 Change %
REVENUE 59,162  

Work performed by the enterprise and capitalised      
Change in inventories of finished goods and      
work in progress 188 -1,499 -113
Other operating income 372 342 9
Raw materials and consumables used 40,828 45,654 -11
Personnel expenses 12,437 16,132 -23
Depreciation and amortisation 2,831 2,869 -1
Other operating expenses 6,849 8,924 -23
OPERATING PROFIT/LOSS - 3,223 - 4,970 -35
Financing income and expenses - 1,724 -1,780 -3
PROFIT/LOSS BEFORE TAX - 4,947 -6,750 -27
Income tax expense 64 29 117
PROFIT/LOSS FOR THE PERIOD -4,884 -6,721 -27
Earnings per share -0.33 -0.55 -40
Options have no dilutive effect      
in accounting periods 2009 and 2010      


OTHER COMPREHENSIVE INCOME 1-12/2010 1-12/2009 Change %
PROFIT/LOSS FOR THE PERIOD -4,884 -6,721 -27
Translation differences from foreign units -24 19 -229
Other comprehensive income, net -24 19 -229
Attributable to:      
Shareholders of the parent company -4,908 -6,702 -27
Non-controlling interest      

Annex 2


(EUR thousand, unaudited) 31.12.2010 31.12.2009 Change %
Property, plant and equipment 6,026 10,247 -41
Goodwill 1,040 977 6
Other intangible assets 705 1,008 -30
Other financial assets 314 14 2,115
Deferred tax assets 4,209 4,156 1
TOTAL NON-CURRENT ASSETS 12,294 16,402 -25
Inventories 13,062 11,381 15
Trade and other receivables 14,823 11,261 32
Cash and cash equivalents 476 661 -28
TOTAL CURRENT ASSETS 28,362 23,303 22
Non-current assets held-for-sale 1,936    
TOTAL ASSETS 42,592 39,706 7
Share capital 20,487 20,487 0
Share premium account 44 44 0
Reserve for invested unrestricted equity 4,084 0  
Exchange differences -483 -459 5
Retained earnings -18,510 -13,629 36
TOTAL EQUITY 5,622 6,443 -13
Deferred tax liabilities 0 70 -100
Interest-bearing loans and borrowings 9,403 10,999 -15
Trade and other payables 14,961 11,925 25
Current interest-bearing loans and borrowings 12,007 10,269 17
CURRENT LIABILITIES 26,969 22,194 22
Liabilities relating to non-current assets held-for-sale 598    


Annex 3


(EUR thousand, unaudited)    
Cash flow from operating activities    
Net income -3,223 -4,970
Adjustments to operating profit 23 4,342
Change in working capital 644 2,929
Interest paid -1,840 -1,812
Interest received 27 40
Cash flow from operating activities -4,369 529
Cash flow from investing activities    
Capital expenditure on tangible and    
intangible assets -486 -1,064
Proceeds from sale of tangible    
and intangible assets 591 17
Other investments -159 0
Loans granted -5 -9
Sold shares of subsidiary 0 0
Repayments of loan assets 0 2
Cash flow from investing activities -59 -1,054
Cash flow from financing activities    
Proceeds from share issue 4,084  
Drawdown of loans 5,825 5,683
Repayments of borrowings -4,338 -3,868
Repayments of obligations under finance leases -1,064 -1,255
Cash flow from financing activities 4,507 560
Change in cash and cash equivalents 79 35
Cash and cash equivalents at beginning of period 661 641
Effect of changes in exchange rates -228 -17
Changes in fair value (cash and cash equivalents) -36 2
Cash and cash equivalents at end of period 476 661


Annex 4


(EUR thousand, unaudited)
  Share capital Share premium account Reserve for invested unrestricted equity Exchange differences Retained
Equity at 1 January 2009 20,487 44 0 -478 - 6,864 13,189
Change in exchange differences       19   19
Options and share-based compensation 0 0   0 -10 -10
Other changes 0 0   0 -35 -35
Net income and losses recognised       19 -45 -26
directly in equity            
Net profit/loss 0 0     -6,721 -6,721
Total income and losses 0 0   19 -6,765 -6,747
Equity at 31 December 2009 20,487 44 0 -459 -13,629 6,443
Equity at 1 January 2010 20,487 44 0 -459 -13,629 6,443
Share issue     4,160     4,160
Transaction costs for equity      

Change in exchange differences       -24                -24
Options and share-based compensation       0 2 2
Other changes       0                 0
Net income and losses recognised            
directly in equity     4,084 -24 2 4,062
Net profit/loss 0 0     -4,884 -4,884
Total income and losses 0 0 4,084               -24 -4,882 -821
Equity at 31 December 2010 20,487 44 4,084 -483 -18,510 5,622



Annex 5


Revenue, EUR million 59.2 69.8
Operating profit, EUR million -3.2 -5.0
  % of revenue -5.4 -7.1
Profit before taxes, EUR million -4.9 -6.7
  % of revenue -8.4 -9.7
Return on investment (ROI), % -10.6 -15.9
Return on equity (ROE), % -81.0 -68.5
Equity ratio, % 13.2 16.2
Gearing, % 383.0 319.8
Net debt, EUR million 21.7 21.3
Net interest-bearing debt, EUR million 21.5 20.6
Average number of shares during the report    
period, adjusted for share issues 14,682,250 12,180,880
Earnings per share (EPS), EUR -0.33 -0.55
Equity per share, EUR 0.30 0.53
Investments, EUR million 0.5 1.1
  % of revenue 0.8 1.5
Average number of employees 780 751
Mortgages 14.5 12.0
Other liabilities 2.4 4.6
Nominal value of currency options, EUR thousand 1 881 0
Fair values of currency options, EUR thousand -5.5 0


Annex 6

EUR million
16.1 13.7 15.8 13.4 17.7 16.6 16.9 18.5
Operating profit,
EUR million
0.0 -0.5 -1.1 -1.7 -3.7 -0.3 -0.5 -0.5
  % of revenue 0.1 -3.4 -6.9 -12.4 -20.7 -1.9 -2.8 -2.8
Profit before taxes,
EUR million
-0.5 -1.1 -1.5 -1.9 -4 -0.8 -1.0 -0.9
  % of revenue -3.0 -7.8 -9.4 -14.1 -22.3 -4.9 -6.1 -5.1
Return on investment
(ROI), %

-6.8 -111.3 -21.5 -47.3 -4 -2.1 -4.9
Return on equity (ROE), %  

-68.0 -14.6 -138.3 -160 -27.5 -33.9 -29.8
Equity ratio, % 13.2 14.6 10.1 11.1 16.2 24.6 26.4 27.4
Gearing, % 383 338.1 523.1 477.3 319.8 173.8 164.9 151.1
Net debt, EUR million 21.7 23.1 24.7 24.4 21.3 20.6 19.7 19.6
Net interest-bearing
debt, EUR million
21.5 20.7 22.3 21.7 20.6 18.1 18.6 18.6
Average number
of share
shares during the financial period

Earnings per share (EPS), EUR -0.03 -0.08 -0.12 -0.16 -0.32 -0.07 -0.08 -0.08
Equity per share, EUR 0.30 0.30 0.30 0.37 0.53 0.86 0.92 1.01
Investments, EUR million 0.2 0.1 0.1 0.1 0.1 0.4 0.5 0.1
  % of revenue 1.3 1.1 0.4 0.4 0.6 2.2 2.9 0.6
Average number of employees 767 787 791 734 776 770 732 728


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