Incap Oyj > News


Incap Corporation    Stock Exchange Release   6 May 2009, 8:30 a.m.      
  • The change of business structure proceeded in accordance with the company's strategy
  • Revenue during the first quarter decreased by about 9% on the corresponding period the previous year, and stood at EUR 18.5 million (Q1 2008: EUR 20.3 million)
  • The revenue increased in selected focus areas in energy efficiency and well-being technologies while the deliveries of telecommunications products decreased
  • Operating profit (EBIT) improved on the corresponding period the previous year and stood at EUR 0.5 million negative (EUR 1.3 million negative)
  • Profitability improved through cost savings in line with the reorganisation programme
  • The net loss for the report period was EUR 0.9 million (net loss of EUR 1.7 million)
  • Funding of EUR 1.9 million was received from Finnfund to finance the Indian operations
This unaudited interim financial report has been drawn up in accordance with international standards on financial statements (IFRS). The Group has taken into consideration the following new standards:
IAS 1 Presentation of Financial Statements. The change applies mainly to the presentation of Income Statement and Changes in Equity.
IFRS 8 Operating segments. The new standard replaces the IAS 14 Segment Reporting Standard. According to IFRS 8, the reporting is based on the management's internal reporting.
The Group has no segments to report.
Unless stated otherwise, the comparison figures refer to the corresponding period last year.
Sami Mykkänen, the President and CEO of Incap Group: "Our operations developed in the right direction during the first quarter. We achieved cost savings in many areas and achieved our objective in the reduction of inventories, among others.  
Once the new organisational model has become established, business units will intensively seek opportunities for deepening cooperation with our present customers. Efforts to win new customers will be intensified in the manufacture and design of devices in energy efficiency and well-being technologies, i.e. the growth areas in accordance with our strategy.
Our most important objective in 2009 is to improve profitability. We will continue to adjust the level of production capacity, boost the efficiency of materials management and reduce fixed costs. We will ensure our competitiveness by increasing the efficiency of our operations and by developing our services."
Revenue and net profit during January-March 2009
Revenue during the first quarter was EUR 18.5 million (Q1 2008: EUR 20.3 million), which was 9% less than during the corresponding period in 2008. Revenue increased from the previous year in the strategic focus areas in energy efficiency and well-being technologies. Sales of materials accounted for EUR 1.3 million of total revenue.
Operating loss fell half its previous level and the operating result amounted to EUR -0.5 million (EUR -1.3 million). As a percentage of revenue, operating profit was -2.8% (-6.5%). Costs were reduced through efficiency-improvement measures in accordance with the reorganisation programme. Personnel expenses decreased compared both with the corresponding period last year and the last quarter of 2008.
Net loss for the report period was EUR 0.9 million (EUR 1.7 million).
Earnings per share were EUR -0.08 (EUR -0.14), while equity per share stood at EUR 1.01 (EUR 1.41).
Development of operations
Most of the revenue accrued from manufacturing services related to energy efficiency technology and well-being technology products. The last deliveries of high-volume products in telecommunications technology took place in March, when cooperation with a big customer came to an end as planned.
In the Indian unit, a large number of prototypes for new customers' products were in production and the quotation base was more than doubled from the year end. Construction of the new manufacturing facilities of the Indian factory proceeded and at the end of the report period, installation started on a SMD assembly machine line transferred from the company's factory in Vuokatti, Finland, and on other manufacturing equipment. The new facilities and up-to-date capacity will boost competitiveness and improve our opportunities to start the manufacturing of new products. Due to the rapid increase in the demand for design services, the respective resources in India have been increased.
Inventories fell from EUR 16.2 million at the turn of the year to EUR 14.7 million in line with the objectives. The decrease was due to the reduction in the inventory of telecommunications components and more efficient materials management. Our objective is to reduce inventories further by improving the effectiveness of materials management, procurement and forecast practices.
The roles of various factories will be separated as much as possible to achieve the largest possible efficiency.
Financing and cash flow
The Group's equity ratio was 27.4% (33.3%). Interest-bearing net liabilities totalled EUR 18.6 million (EUR 18.3 million) and the gearing ratio was 151.1% (106.5%). Net financial expenses were EUR 0.43 million (EUR 0.35 million) and depreciation and amortisation expense was EUR 0.7 million (EUR 0.8 million). We will endeavour to improve liquidity first and foremost by improving the management of working capital. Trade receivables decreased from the turn of the year and there were no credit losses during the report period.
The Group's equity at the close of the report period was EUR 12.3 million (EUR 17.2 million). Debt totalled EUR 32.6 million (EUR 34.5 million), of which interest-bearing debt amounted to EUR 19.9 million (EUR 18.9 million).
The Group's quick ratio was 0.6 (0.6) and the current ratio was 1.3 (1.4). Cash flow from operations was EUR 0.8 million (EUR 1.8 million) and the change in cash and cash equivalents was an increase of EUR 0.8 million (a decrease of EUR 0.3 million).
In order to finance investments and working capital in India, Incap accepted in January the funding of EUR 1.9 million from Finnfund (Finnish Fund for Industrial Cooperation Ltd.). For the Indian subsidiary, the investment comprises equity financing. Due to the terms and conditions of the loan, the investment is regarded as a long-term loan in the Group's IFRS financial statement.
Capital expenditures
The Group's capital expenditures during the report period amounted to EUR 0.1 million (EUR 0.7 million).
At the end of March 2009, Incap Group had 713 employees (727 at the start of the year). The average number of employees was 728. At the end of the report period, 41 persons were temporarily laid off.
Operations were adjusted to the reduced demand by agreeing on reductions in working time and the exchange of holiday bonus for time off. These measures will mostly take place during the second quarter of the year.
Decisions of the Annual General Meeting
Incap Corporation's Annual General Meeting was held in Helsinki on 3 April 2009. The AGM approved the Group's 2008 financial statements and discharged from liability the persons responsible for accounts. No dividend was paid for 2008.
The AGM authorised the Board of Directors to decide within one year of the AGM on the increase of share capital through one or more rights issues so that the maximum number of total shares issued under the authorisation is 1,200,000.
The AGM re-elected Kalevi Laurila, Susanna Miekk-oja, Jukka Harju and Kari Häyrinen as members of the Board of Directors. Lassi Noponen was elected to the Board of Directors as a new member. The Board of Directors elected from among its members Kalevi Laurila as Chairman and Susanna Miekk-oja as Deputy Chairman.
Ernst & Young Oy was selected again as the company's auditor.
Shares and shareholders
Incap Corporation has one series of shares and the number of shares in 12,180,880. During the report period, the share price fluctuated between EUR 0.43 and EUR 0.68 and the last closing price of the period was EUR 0.47. During the report period, the trading volume was 3.2% of outstanding shares.
At the end of the report period, the company had 1,018 shareholders. Foreign or nominee-registered owners held 3.1% of all shares. The company's market capitalisation on 31 March 2009 was EUR 5.7 million. The company does not own any of its own shares.
The industry classification of Incap's shares changed in February 2009 due to a reform in the revenue structure. The share's new code is Industrial Products and Services and the industry code is 20104010 (Electrical Components and Equipment).
Share-based incentive programmes
Incap Corporation's Board of Directors launched an option programme in February 2009 which includes a total of 600,000 option rights entitling to subscribe 600,000 shares of Incap Corporation. The CEO was awarded 100,000 options in February. In addition, he will be awarded a maximum of 100,000 options in 2010 if the objectives set by the Board of Directors for the company's operating profit and return on working capital are achieved in 2009. A maximum of 400,000 options will be awarded to the company's key personnel in two issues if the objectives set by the Board of Directors for the company's operating profit and return on working capital are achieved in 2009 and 2010 and each of the key personnel meet their own individual objectives.
Short-term risks and factors of uncertainty concerning operations
The risks and factors of uncertainty relating to Incap's operations are described in more detail in the report by the Board of Directors dated 24 February 2009, and no material changes have taken place with regard to these factors during the report period.
The most significant short-term risks are connected to the volume and profitability of business as well as to the financing arrangements.
Incap's sales are spread over several customer sectors, which hedges the company against sharp seasonal changes. The outlook to the market is however very short.
In contract manufacturing, the management of material and personnel costs have a remarkable impact on the competitive edge. Incap aims at managing this risk by continuously monitoring the operational efficiency and cost levels.
The general development in the financial market and the future profitability trend affect the company's financing position. Incap aims at securing its liquidity through efficient management of working capital, and different financing options will be assessed for lowering the financing costs.
Incap's estimates of future business development are based on its customers' forecasts and the company's own evaluations. The general economic uncertainty has been reflected in Incap's operations so that some customers have downgraded their forecasts, but there have been no actual cancellations of orders.
Incap maintains its earlier estimate of the company's development in 2009 and forecasts that the Group's revenue in 2009 will be lower than in 2008 when it was EUR 93.9 million. Full-year operating profit (EBIT) is estimated to improve clearly from 2008 (EUR -3.6 million).
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 at  
Incap will hold a conference for the press and financial analysts at 10:00 a.m. on 6 May 2009 at the World Trade Center Helsinki, in Meeting Room 1 on the 2nd floor at Aleksanterinkatu 17, 00100 Helsinki. The presentation material of the press conference will be available on the company's website on the same day.
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 technology, for which the company produces new competitiveness as a strategic partner. Incap has operations in Finland, Estonia and India. The Group's revenue in 2008 amounted to around EUR 94 million, and the company currently employs approximately 710 persons. Incap's shares are listed on the NASDAQ OMX Helsinki Oy. For additional information, please contact:

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Annex 3

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Annex 5
Annex 6
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