Incap Corporation Interim Report 7 May
2008 8.30 a.m.
* Revenue stood at EUR 20.3 million or 20% higher than during the
comparable period of the previous year (Q1/2007: EUR 17.0
million)
* Operating profit (EBIT) was EUR 1.3 million negative (EUR 1.2
million negative), or 6.5% negative of revenue (7.0% negative)
* Net profit for the report period amounted to EUR 1.7 million
negative (1.3 million negative)
* Earnings per share (EPS) were EUR 0.14 negative (0.11 negative)
This unaudited interim financial report has been prepared in
compliance with the recognition and measurement principles of the
IFRS standards. The tables in the report have been prepared in
compliance with the requirements of the IAS 34 standard approved by
the EU. The accounting principles and methods of the interim report
are the same as in the last annual financial statements. Unless
mentioned otherwise, the comparison figures used in the text portion
of the report are the figures for the comparable period during the
previous year.
Revenue and earnings in January-March 2008
Revenue during the first quarter was EUR 20.3 million (EUR 17.0
million) or 20% higher than during the comparable period in 2007. The
period's operating profit, EUR 1.3 negative, was slightly lower than
during the comparable period last year (EUR 1.2 million negative) and
as a percentage of revenue it was 6.5% negative (7.0% negative). The
comparable operating profit from actual operations during the final
quarter of 2007 was EUR 1.1 million negative. The profitability of
the report period was affected particularly by the focus of
manufacturing on material-intensive products, which have a relatively
low sales margin. The comparable period in 2007 does not include
operations in India, which were consolidated into the Group on 1 June
2007.
Net profit for the report period amounted to EUR 1.7 million negative
(1.3 million negative). The decline in net profit was affected by
increased financing expenses. Earnings per share amounted to EUR 0.14
negative (EUR 0.11 negative), while equity per share stood at EUR
1.41 (EUR 1.56).
Quarterly comparison 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousands) 2008 2007 2007 2007 2007
Revenue 20 330 26 304 20 593 19 130 16 982
Operating profit/loss -1 329 2 025 -578 44 -1 188
Profit/loss for the period -1 681 1 450 -1 071 -139 -1 342
Earnings per share, EUR -0.14 0.12 -0.09 -0.01 -0.11
Development of operations
The company won new customer accounts during the report period and
the products of some important customers moved from the prototype and
preliminary series stage into actual production. A contract was
concluded in February with ABB Oy Electrical Machines concerning the
manufacturing of flat bar copper windings for the magnetic poles of
electric motors which starts in June 2008 at Incap's factory in
Vaasa.
The materials management organisation was reformed. To improve the
efficiency of sourcing and procurement operations and to reduce the
cost of materials, a cooperation concerning procurement of
electronics and mechanics was started with a partner operating in
Shanghai, Suzhou and Hong Kong. The material and purchasing
operations of the Indian subsidiary were strengthened to serve the
needs of the whole Group.
Indian operations
The active acquisition of new customers continued in India and
cooperation with six new customers started during the report period.
Most of the new products are at the prototype stage at the moment.
The new customers are equipment manufacturers in energy technology
and industrial electronics for which Incap supplies both electronics
and product entities.
Construction work has started on the new factory in Tumkur, India and
production is due to move to the new premises in November/December.
On 1 January 2008, Jarmo Kolehmainen started as the managing director
of Incap's Indian subsidiary and as a member of Incap Group's
Management Team. Kolehmainen has wide experience in the electronics
industry and business operations in Asia.
Financing and cash flow
The Group's equity ratio was 33.3% (45.3%). Interest-bearing net
liabilities totalled EUR 18.3 million (EUR 11.6 million) and the
gearing ratio was 106.5% (61.2%). Net financial expenses were EUR 0.4
million (EUR 0.2 million) and depreciation expenses were EUR 0.8
million (EUR 0.7 million).
The balance sheet total at the end of the report period stood at EUR
51.7 million (EUR 41.9 million). The increase was a result of the
change in the Group structure on 1 June 2007 when the operations of
the acquired business in India were consolidated into the Group. The
delay of some deliveries increased the inventory compared with the
turn of the year.
The Group's equity at the close of the report period was EUR 17.2
million (EUR 19.0 million). Debt totalled EUR 34.5 million (EUR 22.9
million), of which interest-bearing debt amounted to EUR 18.9 million
(EUR 11.7 million).
The Group's liquidity was satisfactory: the quick ratio was 0.6 (0.6)
and the current ratio 1.4 (1.5). Cash flow from operations was EUR
1.8 million positive (EUR 2.6 million negative) and the change in
cash and cash equivalents was a decrease of EUR 0.3 million (a
decrease of EUR 0.4 million).
Capital expenditures
The Group's capital expenditures were EUR 0.8 million (EUR 0.3
million) or 4.1% (1.8%) of revenue.
Personnel and management
At the end of the report period, Incap Group had 724 employees (525)
in addition to which a total of 91 leased employees worked at the
company. At the end of the report period, 51% of personnel worked in
Finland, 27% in Estonia and 22% in India.
Eeva Vaajoensuu, M.Sc. (Econ.), was appointed as the Chief Financial
Officer of Incap Group and as a member of the Management Team after
the end of report period on 14 April. Her area of responsibility
includes the Group's administration, financing and IT management.
On 11 February 2008, layoff negotiations pursuant to the Co-operation
Act started in the material and purchasing operations of the Finnish
units and the Group support operations, which ended after the report
period on 2 April 2008. The negotiations on temporary layoffs that
were started at the Vuokatti unit on 28 February were interrupted on
3 April 2008 due to an improvement in demand.
Decisions of the Annual General Meeting
Incap Corporation's Annual General Meeting was held in Oulu on 10
April 2008. The AGM approved the 2007 financial statements of the
Group and parent company and discharged the Board of Directors and
CEO from liability. No dividend was paid for the 2007 and the loss
for the financial year was transferred to retained earnings.
The AGM approved the Board of Director's proposal for a change to the
Articles of Association. The company's domicile was moved from Oulu
to Helsinki.
The AGM re-elected Jukka Harju, Kalevi Laurila and Susanna Miekk-oja
as members of the Board of Directors. Kari Häyrinen was elected to
the Board of Directors as a new member. The Board of Directors
elected Kalevi Laurila as Chairman and Susanna Miekk-oja as Deputy
Chairman from among its members. Authorised Public Accountants Ernst& Young Oy was selected again as the company's auditor.
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 and on granting of stock options so that on the basis
of the authorisation the total number of new shares to be subscribed
is a maximum of 4,000,000, of which a maximum of 600,000 shares can
be used in stock options.
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 varied
between EUR 1.09 and EUR 1.60 and the closing price of the period was
EUR 1.10. During the report period, the trading volume was 3% of
outstanding shares.
At the end of the report period, the company had 1,052 shareholders.
Foreign or nominee-registered owners held 5.9% of all shares. The
company's market capitalisation on 31 March 2008 was EUR 13.4
million. The company does not own any of its own shares.
Short-term risks and factors of uncertainty concerning operations
Even though Incap's sales come from several customer sectors, which
evens out the effect of industry sectors' cyclical fluctuations, the
loss of a single large customer can have a significant impact on the
company's revenue and profitability. Incap's demand and financial
position are also affected by the international economic trends.
In Incap's industry segment, contract manufacturing, there is
continuous pressure on the management of cost levels and the company
strives to reduce the respective risk through the improvement of
operational efficiency and cost competitiveness. Rapid changes can
occur in the market prices of materials and in particular there are
clear signs of increases in the prices of metals.
The acquisition of a new business unit in India has increased the
Group's exposure to financing risks. The interest and currency rate
risks are managed with a special financing structure, based on
financing instruments with fixed and variable interest rates and
denominated in selected currencies.
Outlook for the rest of 2008
Incap's customers have given mainly positive estimates of the trend
in their own demand. The prediction of the future development of the
market is difficult due to the short visibility and the weakening of
the global economic outlook.
Incap continues to expect that the Group's revenue in 2008 will
increase from last year (2007: EUR 83.0 million). The profitability
is expected to improve during the second half of the year and
operating profit from operations in 2008 is expected to be better
than in 2007 in line with the company's earlier statement. Operating
profit from operations was EUR 2.8 million negative in 2007.
Incap will release its January-June Interim Report on Wednesday, 6
August 2008.
Helsinki, 7 May 2008
INCAP CORPORATION
Board of Directors
For additional information, please contact:
Juhani Hanninen, President and CEO, tel. +358 50 556 7199
Eeva Vaajoensuu, Chief Financial Officer, tel. +358 40 763 6570
Hannele Pöllä, Director, Communications and Investor Relations, tel.
+358 40 504 8296
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media
PRESS CONFERENCE
Incap will arrange a conference for the press and financial analysts
today at 10.00 a.m. at the World Trade Centre Helsinki, in Meeting
Room 1 on the 2nd floor at Aleksanterinkatu 17,
Helsinki.
ANNEXES
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 IN BRIEF
Incap Corporation is an internationally operating electronics
contract manufacturer whose comprehensive service covers the entire
product life cycle from design and manufacture to repair and
maintenance services. In addition to electronics, Incap also
manufactures mechanical products and parts. The company specialises
in technically demanding products and product entities that are
manufactured in small and medium-sized production series. Incap's
main customers are leading equipment suppliers in telecommunication,
energy, industrial electronics, security as well as in medical and
well-being. Incap has operations in Finland, Estonia and India. The
Group's revenue in 2007 amounted to EUR 83 million and the company
currently employs approx. 720 persons. Incap's share is listed on the
OMX Nordic Exchange Helsinki. For additional information, please
visit www.incap.fi
Annex 1
CONSOLIDATED INCOME STATEMENT
(IFRS)
(EUR thousands, unaudited) 1-3/2008 1-3/2007 Change % 1-12/2007
REVENUE 20 330 16 982 20 83 010
Work performed by the enterprise
and capitalised 0 0 99
Changes in inventories of
finished goods and
work in progress 882 150 488 -999
Other operating income 6 1 500 3 166
Raw materials and consumables
used 14 847 11 652 27 56 896
Personnel expenses 4 485 3 898 15 15 979
Depreciation and amortisation 759 659 15 2 753
Other operating expenses 2 456 2 112 16 9 343
OPERATING PROFIT/LOSS - 1 329 - 1 188 12 303
Financing income and expenses -352 -165 113 -1 356
PROFIT/LOSS BEFORE TAX -1 681 -1 352 24 -1 053
Income tax expense 0 10 -100 -49
PROFIT/LOSS FOR THE PERIOD -1 681 -1 342 25 -1 102
Earnings per share -0,14 -0,11 27 -0,09
Options have no dilutive effect
in accounting periods 2007 and
2008
Annex 2
CONSOLIDATED BALANCE SHEET
(IFRS)
(EUR thousands, unaudited) 31.3.2008 31.3.2007 Change % 31.12.2007
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 12 670 11 162 14 12 883
Goodwill 1 271 164 675 1 326
Other intangible assets 1 466 374 292 1 575
Other financial assets 21 15 40 21
Deferred tax assets 4 183 4 310 -3 4 223
TOTAL NON-CURRENT ASSETS 19 611 16 025 22 20 028
CURRENT ASSETS
Inventories 17 425 15 579 12 14 882
Trade and other receivables 13 993 10 274 36 18 367
Cash and cash equivalents 630 62 916 944
TOTAL CURRENT ASSETS 32 048 25 915 24 34 192
TOTAL ASSETS 51 659 41 940 23 54 220
EQUITY AND LIABILITIES
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
COMPANY
Share capital 20 487 20 487 0 20 487
Share premium account 44 44 0 44
Exchange differences -365 0 -216
Retained earnings -2 985 -1 518 97 -1 188
TOTAL EQUITY 17 181 19 013 -10 19 127
NON-CURRENT LIABILITIES
Deferred tax liabilities 121 137 -12 121
Interest-bearing loans and
borrowings 10 904 6 000 82 11 188
NON-CURRENT LIABILITIES 11 025 6 137 80 11 309
CURRENT LIABILITIES
Trade and other payables 15 436 11 086 39 14 294
interest-bearing loans and
borrowings 8 017 5 704 41 9 490
CURRENT LIABILITIES 23 453 16 790 40 23 784
TOTAL EQUITY AND LIABILITIES 51 659 41 940 23 54 220
Annex 3
CONSOLIDATED CASH FLOW STATEMENT 1-3/2008 1-3/2007 1-12/2007
(EUR thousands, unaudited)
Cash flow from operating activities
Net income -1 329 -1 188 303
Adjustments to operating profit 643 647 -372
Change in working capital 2 733 -1 979 -3 070
Interest paid -287 -129 -977
Interest received 79 2 142
Cash flow from operating activities 1 839 -2 647 -3 974
Cash flow from investing activities
Capital expenditure on tangible and
intangible assets -696 -290 -1 974
Proceeds from sales of tangible
and intangible assets 0 0 3 118
Acquisitions of subsidiary 0 0 -8 261
Cash flow from investing activities -696 -290 -7 117
Cash flow from financing activities
Drawdown of loans 0 3 205 14 316
Repayments of borrowings -1 115 -418 -1 116
Repayments of obligations under finance -288
leases -313 -1 643
Cash flow from financing activities -1 428 2 499 11 557
Change in cash and cash equivalents -285 -438 466
Cash and cash equivalents at beginning of
period 944 500 500
Effect of changes in exchange rates -29 0 -22
Cash and cash equivalents at end of
period 630 62 944
Annex 4
CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY (IFRS)
(EUR thousands, unaudited)
Share
Equity premium Exchange Retained Total
capital account differences earnings equity
Equity at 1 January 2008 20 487 44 -216 -1 188 19 127
Options and share-based
compensation 0 0 0 -116 -116
Net income and losses
recognised
directly in equity 0 0 0 -116 -116
Profit/loss for the
period 0 0 -149 -1 681 -1 830
Total income and losses 0 0 -149 -1 797 -1 946
Equity at 31 March 2008 20 487 44 -365 -2 985 17 181
Equity at 1 January 2007 20 487 44 0 -206 20 325
Options and share-based
compensation 0 0 0 30 30
Net income and losses
recognised
directly in equity 0 0 0 30 30
Profit/loss for the
period 0 0 0 -1 342 -1 342
Total income and losses 0 0 0 -1 312 -1 312
Equity at 31 March 2007 20 487 44 0 -1 518 19 013
Annex 5
GROUP KEY FIGURES AND CONTINGENT
LIABILITIES (IFRS) 1-3/2008 1-3/2007 1-12/2007
Revenue, EUR millions 20.3 17.0 83.0
Operating profit, EUR millions -1.3 -1.2 0.3
% of revenue -6.5 -7.0 0.4
Profit before taxes, EUR millions -1.7 -1.4 -1.1
% of revenue -8.3 -8.0 -1.3
Return on investment (ROI), % -13.4 -15.7 1.3
Return on equity (ROE), % -37.0 -27.3 -5.6
Equity ratio, % 33.3 45.3 35.3
Gearing, % 106.5 61.2 103.2
Net debt, EUR millions 19.9 12.6 15.8
Net interest-bearing debt, EUR
millions 18.3 11.6 19.7
Average number of shares during the
report
period, adjusted for share issues 12 180 880 12 180 880 12 180 880
Earnings per share (EPS), euro -0.14 -0.11 -0.09
Equity per share, euro 1.41 1.56 1.57
Investments, EUR millions 0.8 0.3 1.5
% of revenue 4.1 1.8 1.9
Average number of employees 733 530 678
CONTINGENT LIABILITIES, EUR millions
FOR OWN LIABILITIES
Mortgages 12.3 6.0 12.3
Other liabilities 7.5 9.2 7.4
Annex 6
QUARTERLY
KEY FIGURES (IFRS)
Q1/2008 Q4/2007 Q3/2007 Q2/2007 Q1/2007
Revenue, EUR millions 20.3 26.3 20.6 19.1 17.0
Operating profit, EUR
millions -1.3 2.0 -0.6 0.0 -1.2
% of revenue -6.5 7.7 -2.8 0.2 -7.0
Profit before taxes, EUR
millions -1.7 1.5 -1.1 -0.1 -1.4
% of revenue -8.3 5.8 -5.2 -0.8 -8.0
Return on investment (ROI), % -13.4 23.8 -6.5 1.5 -15.7
Return on equity (ROE), % -37.0 29.4 -22.5 -2.8 -27.3
Equity ratio, % 33.3 35.3 31.2 35.2 45.3
Gearing, % 106.5 103.2 124.3 99.5 61.2
Net debt, EUR millions 19.9 15.8 22.8 18.9 12.6
Net interest-bearing debt,
EUR millions 18.3 19.7 22.0 18.8 11.6
Average number of shares
during the report
period, adjusted for share 12 180 12 180 12 180 12 180 12 180
issues 880 880 880 880 880
Earnings per share (EPS),
euro -0.14 0.12 -0.09 -0.01 -0.11
Equity per share, euro 1.41 1.57 1.46 1.55 1.56
Investments, EUR millions 0.8 0.4 0.5 0.3 0.3
% of revenue 4.1 1.4 2.4 1.5 1.8
Average number of employees 733 794 776 649 530
INCAP GROUP INTERIM REPORT JANUARY-MARCH 2008: REVENUE INCREASED FROM THE COMPARABLE PERIOD OF THE PREVIOUS YEAR, OPERATING PROFIT WAS NEGATIVE
| Source: Incap Oyj
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