Incap Corporation               
Interim Management Statement             7 May 2015 at 10.30 a.m. (EET)                                             


Good performance continued. Revenue and result increased. Company is proposing to extraordinary general meeting to grant an authorisation for share issue.

The information in this Interim Management Statement of Incap Group refers to the continued operations of the company without the factory in Vaasa, which was divested in December 2014. The figures of this Statement describe the development during the period of January-March 2015 and the corresponding period in the year 2014, unless otherwise stated. The figures are unaudited.

Key figures in January-March 2015

  • The Group's revenue was EUR 5.9 million, increasing approximately 52% year-on-year (1-3/2014: EUR 4.0 million).
  • The operating profit (EBIT) amounted to EUR 0.5 million (1-3/2014: EUR -0.2 million), growing both on the comparison period and the previous quarter, excluding non-recurring items recorded for the last quarter.The improvement resulted mainly from comprehensive actions to increase the efficiency.  
  • Net profit for the period improved and amounted to EUR 0.6 million (1-3/2014: EUR -0.4 million).

(EUR thousand)


Revenue 5 908 3 897 4 258 4 732 5 613 18 499
Operating profit/loss (EBIT) 541 -202 58 238 967 1 061
Profit/loss for the period 603 -385 -252 143 645 151

Key events of the period 1 January – 7 May 2015

The Group's revenue developed favourably thanks to the launch of new customers' production and the increased volumes for established customer relationships. The revenue increased by approximately 52% on the comparison period in the year 2014 and by approximately 5% on the preceding last quarter of 2014. The performance in the Indian operations continued strong.

Order intake has grown in both factories of the company. There is free manufacturing capacity both in India and especially in Estonia, and the company continues enhanced activities to increase the production volumes. The delivery accuracy stayed on a good level and the customers have given positive feedback on the operational efficiency.

The company's profitability improved further. The operating profit (EBIT) in January-March 2015 amounted to approximately EUR 0.5 million, improving remarkably from the loss in the comparison period in 2014 (1-3/2014: EUR -0.2 million). The operating profit remained lower than in the preceding quarter due to the non-recurring items of approximately EUR 0.5 million recorded in the profit for October-December 2014. Profit per share for January-March 2015 was EUR 0.01. Incap Group's equity ratio improved compared with the corresponding period in 2014 and was on 31 March 2015 approximately 19.0% (31 March 2014: 2.9%).

The cash position of the company continued challenging. To improve the financing position the company agreed in February 2015 with the Finnish bank upon new conditions and instalments of loans. The loan covenants include EBITDA and equity ratio, and their status is reviewed every six months until 30 June 2018. The first review of covenants is taking place on 30 June 2015, when the target level of EBITDA for the preceding six months is EUR 0.5 million and that of the equity ratio 7.5%. One of the conditions in the new instalment program is that the company launches a share issue to strengthen the equity of the company, and for this purpose the company has convened the extraordinary general meeting to grant a respective authorisation to the company's board of directors.

The General Meeting held on 31 March 2015 resolved to reduce the share capital of the company from the present EUR 20,486,769.50 to cover the losses and to transfer funds to unrestricted equity reserves.  
After the implementation of necessary steps the new share capital of the company would be EUR 1,000,000 and the unrestricted equity reserve EUR 6,958,257.44. The parent company's equity would accordingly exceed the level set in the Companies Act, chapter 20, section 23. Covering the losses will clarify the parent company's balance sheet structure and improve the ratio between the company's equity and share capital.

Because the respective decision of the Annual General Meeting was not entered into the trade register within the obligatory period of one month, the decision of the General Meeting has become void. Due to this, a new decision on the reduction of the share capital will be taken in the next Annual General Meeting in 2016, or in an extraordinary general meeting, in case there is a reason to organise such a meeting based on any other issue.

Short-term risks and factors of uncertainty concerning operations

General risks related to the company's business operations and sector include the development of customer demand, price competition in contract manufacturing, successful acquisition of new customers, availability and price development of raw material and components, sufficiency of funding, liquidity and exchange rate fluctuations. Of these, the most significant risks at the moment are the development of revenue, liquidity and sufficiency of funding.

Based on the cash flow estimate prepared in connection with the financial statement for 2014, the company estimated that the company's working capital will not cover the requirement for the next 12 months. According to the company's estimate, approximately EUR 1.5-2 million of additional working capital is needed and the need for working capital concerns the company's European functions. The working capital will, however, be sufficient for the next 12 months if the following criteria are met:

  • Repatriation of profits from India to the parent company succeeds as planned and/or
  • The company succeeds in acquiring new customers and the company's cash flow from operations develops positively and/or
  • The intended share issue is realised according to plan.  

The management of the company is confident that the cash flow from operations will develop favourably and the share issue is realised as planned and trusts that the company is able to fulfil its obligations.

Outlook for 2015

Incap's estimates for future business development are based both on its customers' forecasts and on the company's own assessments.

Due to the general economic uncertainty it is very hard to estimate the development of customer demand. Many customers are indicating growth in demand in 2015 but give reservations regarding their own volumes.

The electronics manufacturing volumes in Incap's factory in Kuressaare have grown steadily already for more than six months now. The development in Indian operations has been strong. After the stabilisation of the financial position the company is now able to serve the customers even better and to strengthen their trust in the company as a manufacturing partner. Based on this the revenue is expected to continue the favourable development. Due to the improved efficiency the profitability of the company is estimated to improve further in 2015.

The company repeats its previous guidance given on 18 February 2015 and estimates that the Group's revenue and operating profit (EBIT) in 2015 are higher than in 2014, when the revenue was EUR 18.5 million and the operating profit (EBIT) EUR 1.1 million.   

Ville Vuori, President and CEO of Incap Group:
"In autumn last year we initiated actions to create organic growth. We reorganised our sales operation, developed our offering and redefined our customer promise. Effects of the actions are becoming visible now: our revenue has grown properly in the beginning of the year, we have gained new customers and the present customers have given us new projects.

We have implemented new working methods to increase the operational efficiency. Even though part of the related development projects will be completed only during the latter half of this year we can already now see a remarkable improvement in the company's profitability. After the on-going projects are accomplished in a disciplined manner, our both factories are able to increase their production volumes with greater flexibility.

We have anchored a very lean organisational structure, enabling fast decision-making and allowing a clear role to everybody. This enhances the satisfaction of both our own personnel and our customers. Above all it enables short reaction times and flexibility in the customer interface. This is the very core of our operational model.

Growth and improved profitability have increased the confidence of all our stakeholders in our company. To ensure the sufficiency of financing we are today proposing to the extraordinary general meeting to grant an authorisation to arrange a share issue. With the financing gained in the share issue we shall secure the growth of our operations, for which we have now laid a very solid base."

Board of Directors


For additional information, please contact:
Ville Vuori, President and CEO, tel. +358 400 369 438
Kirsti Parvi, CFO, tel. +358 50 517 4569

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Incap Corporation is an international contract manufacturer whose comprehensive services cover the entire life-cycle of electromechanical products from design and sourcing to actual manufacture and further to maintenance services. Incap's customers are leading suppliers of high-technology equipment in their own business segments, and Incap increases their competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China, and the company currently employs approximately 420 people. Incap's share is listed on the NASDAQ OMX Helsinki Ltd. Additional information:

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Source: Incap Oyj via Globenewswire