* Revenue in January-June was EUR 46.7 million, up 29% on the same
period the previous year (Jan-Jun 2007: EUR 36.1 million)
* Operating profit (EBIT) was EUR 1.9 million negative (EUR 1.1
million negative), or 4.1% negative of revenue (3.2% negative).
* Net profit for the report period amounted to EUR 2.7 million
negative (1.5 million negative).
* Earnings per share (EPS) were EUR 0.22 negative (0.12 negative)
* Profitability was burdened by increased production costs,
non-recurring items for organisational development and delayed
revenue growth in India
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. The figures for 2007 include the Indian operations as
of 1 June 2007.
Revenue and earnings in April-June 2008
Revenue during the second quarter was EUR 26.4 million (4-6/2007: EUR
19.1 million) or 38% higher than during the comparable period in
2007. Compared to the first quarter in 2008, growth amounted to 30%.
The operating profit was EUR 0.6 million negative (EUR 0.04 million)
and as a percentage of revenue it was 2.3% negative (0.2%). Compared
to the first quarter in 2008, the operating profit improved by 55%.
Quarterly comparison 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousands) 2008 2008 2007 2007 2007 2007
Revenue 26 412 20 330 26 304 20 593 19 130 16 982
Operating profit/loss -600 -1 329 2 025 -578 44 -1 188
Net profit/loss -1 005 -1 681 1 450 -1 071 -139 -1 342
Earnings per share, EUR -0.08 -0.14 0.12 -0.09 -0.01 -0.11
Revenue and earnings in January-June 2008
Revenue for the first half of the year was EUR 46.7 million (Jan-Jun
2007: EUR 36.1 million) or 29% higher than during the comparable
period in 2007. In addition to an upswing in the demand for some
established products, revenue was increased by several new products
entering actual serial production. The figures for the comparable
period include the operations in India as from 1 June 2007.
Operating profit, EUR 1.9 million negative, was weaker than during
the comparable period in 2007 (EUR 1.1 million negative) and as a
percentage of revenue it was 4.1% negative (3.2% negative). Sales
margin was lower than expected, because the production was focused on
material-intensive products and several new products were launched
simultaneously to volume production. The revenue development in India
was slower than expected and therefore, the fixed costs were high
compared to revenue and the operations were not yet profitable. The
increase in material prices could not yet be transferred to customer
prices. Approximately EUR 1.9 million of revenue came from the
low-margin sale of materials.
The operating profit includes approx. EUR 0.5 million of
non-recurring costs connected with the development of the
organisation and Group structure. During the comparable period the
non-recurring costs amounted to EUR 0.6 million.
Net profit for the report period amounted to EUR 2.7 million negative
(EUR 1.5 million negative). Net profit was particularly affected by
an increase in financing expenses. Earnings per share amounted to EUR
0.22 negative (EUR 0.12 negative), while equity per share stood at
EUR 1.31 (EUR 1.55).
Comparison by report period 1-6/2008 1-6/2007 1-12/2007
(EUR thousands)
Revenue 46 742 36 113 83 010
Operating profit/loss -1 929 -1 144 303
Profit/loss for the period -2 686 -1 481 -1 102
Earnings per share, EUR -0.22 -0.12 -0.09
Development of operations
Incap's deliveries increased towards the end of the report period.
Integrated product entities increased their share of overall
deliveries according to targets, and revenue particularly from
customers in the energy technology industries developed favourably.
Several new delivery agreements were signed during the report period.
An agreement signed with ABB further increased Incap's share in the
manufacturing of magnetic poles for electric motors. Collaboration
with Finland's Slot Machine Association (RAY) and Rapiscan Systems
deepened to increasingly extensive product entities. During the
report period, negotiations on new collaboration in the manufacturing
of sub-assemblies for wind generators, among others, were initiated.
Collaboration with six new customers was launched in India.
Integrated product entities for the energy technology and industrial
electronics industries comprise the majority of the factory's
production. Construction of the new premises proceeded as planned.
The country organisation in India was reinforced in terms of design
services, sales and materials management.
Materials operations were made more efficient by renewing the
organisation and transferring the focus of procurement to India and
China. Sourcing cooperation with a partner operating in China got off
to a promising start, and direct material deliveries to India and
Europe were carried out on schedule.
Financing and cash flow
The Group's equity ratio was 31.2% (35.2%). Interest-bearing net
liabilities totalled EUR 19.2 million (EUR 18.8 million) and the
gearing ratio was 120.4% (99.5%). Net financial expenses were EUR 0.8
million (EUR 0.4 million) and depreciation expenses were EUR 1.5
million (EUR 1.3 million).
The Group's equity at the close of the period under review was EUR
16.0 million (EUR 18.9 million). Debt totalled EUR 35.2 million (EUR
34.8 million), of which interest-bearing debt amounted to EUR 19.7
million (EUR 20.9 million).
The Group's quick ratio was 0.7 (0.9) and the current ratio 1.3
(1.8). Cash flow from operations was EUR 0.9 million positive (EUR
1.6 million negative) and the change in cash and cash equivalents was
a decrease of EUR 0.4 million (an increase of EUR 1.7 million).
Capital expenditures
The Group's capital expenditures were EUR 1.3 million (EUR 0.6
million) or 2.7% (1.6%) of revenue.
Personnel
At the end of the report period, Incap Group had 731 employees (773)
in addition to which a total of 102 leased employees worked at the
company. The number of employees decreased the most in Estonia. In
European operations, the number of clerical workers decreased by 13
compared to the beginning of the year. At the end of the report
period, 52% of personnel worked in Finland, 27% in Estonia and 21% in
India.
The co-determination negotiations concerning Incap's material and
purchasing operations as well as the corporate support functions in
Finland concluded in April. As a result, five people were made
redundant.
Management
Sami Mykkänen was appointed President and CEO for Incap Corporation
on temporary basis as from 1 June to 31 December 2008. He joined
Incap in 2007 and has previously been responsible for the
manufacturing services and strategic sourcing of Incap as Vice
President and member of the management team. Before Incap he acted as
manufacturing Director at Powerwave Shanghai and before that among
others as production and purchasing director at REMEC and ADC.
Juhani Hanninen, President and CEO since 2003, assumed responsibility
for the development of Incap's marketing and sales. He will also
advance further internationalisation of the Group in the boards of
Incap's foreign subsidiaries.
Eeva Vaajoensuu was appointed as Chief Financial Officer of Incap
Group and as a member of the management team on 14 April. Her area of
responsibility includes the Group's administration, financing and IT
management.
Authorisations of the Board of Directors
The Annual General Meeting of 10 April 2008 authorised the Board of
Directors to decide, within one year of the Annual General Meeting,
on increasing the share capital through one or more rights issues and
on granting stock options so that the total number of new shares to
be subscribed for on the basis of the authorisation is a maximum of
4,000,000 shares, from which a maximum of 600,000 shares can be used
in stock options. At the end of the report period, the Board of
Directors had not exercised the authorisation.
Shares and shareholders
Incap Corporation has one series of shares and the number of shares
is 12,180,880. During the report period, the share price varied
between EUR 1.04 and EUR 1.60 and the closing price of the period was
EUR 1.04 (EUR 2.20). During the report period, the trading volume was
8% of outstanding shares (28%).
At the end of the report period, the company had 1,074 shareholders
(1,122). Foreign or nominee-registered owners held 4% (17%) of all
shares. The company's market capitalisation on 30 June 2008 was EUR
12.8 million (EUR 26.8 million). The company does not own any of its
own shares.
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 3 March 2008, and no significant changes have taken place with
regard to these factors during the report period.
The most significant short-term uncertainties are connected with the
volume of business, the management of the costs of materials and the
financing arrangements of the Indian operations. Deliveries to
customers operating in the telecommunications sector will decrease
during 2008 in accordance with expectations.
Events after the report period
Incap sold the entire share capital of its subsidiary Ultraprint Oy
on 16 July 2008 to the operative management of the subsidiary. The
business operations were passed over to the new owners the same day.
The sale does not have any remarkable effect on Incap's result, and
the resulting expenses have been recognised for the second quarter.
The company's revenue in 2007 amounted to about EUR 1.2 million and
it had 12 employees.
Outlook for the rest of 2008
Due to the uncertainty of general economic trends and the rapid
fluctuation of demand typical of the industry segment, market
visibility is very limited. Incap's estimates of future business
development are mainly based on its customers' estimates of the trend
in their own demand.
Incap's revenue estimate for the year as a whole remains unchanged.
Incap estimates that the Group's revenue in 2008 will increase from
last year's EUR 83.0 million. Profitability is expected to improve
during the second half of the year compared to the first half of the
year, but the operating profit from operations in 2008 is expected to
be on the same level than in 2007.
In the earlier statement on 7 May 2008 Incap estimated that the
operating profit from operations would be better than in 2007, when
it was EUR 2.8 million negative.
Incap will release its January-September Interim Report on Wednesday,
5 November 2008.
Helsinki, 6 August 2008
INCAP CORPORATION
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, Communications and Investor Relations, tel.
+358 40 504 8296
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media
The company's website www.incap.fi
PRESS CONFERENCE
Incap will arrange a conference for the press and financial analysts
today at 10.00 a.m. at the World Trade Center Helsinki, in Meeting
Room 1 on the 2nd floor at Aleksanterinkatu 17, FI-00100 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 lifecycle from design and manufacture to maintenance
services. In addition to electronics, Incap also manufactures
mechanical products and parts. The company specialises in technically
demanding products and entities that are manufactured in small and
medium-sized production series. Incap's customers are leading
equipment suppliers in telecommunications, energy, industrial
electronics, security as well as in medical and well-being sectors.
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. 730 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) 1-6/2008 1-6/2007 Change % 1-12/2007
REVENUE 46 742 36 113 29 83 010
Work performed by the enterprise
and capitalised 0 99 99
Change in inventories of
finished goods and
work in progress 917 -118 -877 -999
Other operating income 17 6 183 3 166
Raw materials and consumables
used 33 638 24 352 38 56 896
Personnel expenses 9 275 7 458 24 15 979
Depreciation and amortisation 1 510 1 277 18 2 753
Other operating expenses 5 182 4 156 25 9 343
OPERATING PROFIT/LOSS -1 929 -1 144 69 303
Financing income and expenses -757 -353 114 -1 356
PROFIT/LOSS BEFORE TAX -2 686 -1 496 80 -1 053
Income tax expense 0 15 -100 -49
PROFIT/LOSS FOR THE PERIOD -2 686 -1 481 81 -1 102
Earnings per share -0.22 -0.12 83 -0.09
Options have no dilutive effect
in accounting periods 2007 and
2008
Annex 2
CONSOLIDATED BALANCE SHEET
(IFRS)
(EUR thousands, unaudited) 30.6.2008 30.6.2007 Change % 31.12.2007
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 12 198 13 594 -10 12 883
Goodwill 1 061 1 158 -8 1 326
Other intangible assets 1 361 1 627 -16 1 575
Other financial assets 19 22 -14 21
Deferred tax assets 4 151 4 310 -4 4 223
TOTAL NON-CURRENT ASSETS 18 790 20 711 -9 20 028
CURRENT ASSETS
Inventories 15 174 17 034 -11 14 882
Trade and other receivables 16 710 13 707 22 18 367
Cash and cash equivalents 475 2 178 -78 944
TOTAL CURRENT ASSETS 32 359 32 918 -2 34 192
TOTAL ASSETS 51 149 53 629 -5 54 220
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 -486 -48 913 -216
Retained earnings -4 079 -1 627 151 -1 188
TOTAL EQUITY 15 966 18 856 -15 19 127
NON-CURRENT LIABILITIES
Deferred tax liabilities 121 132 -8 121
Interest-bearing loans and
borrowings 10 714 16 237 -34 11 188
NON-CURRENT LIABILITIES 10 835 16 369 -34 11 309
CURRENT LIABILITIES
Trade and other payables 15 369 13 711 12 14 294
Current interest-bearing
loans and borrowings 8 979 4 694 91 9 490
CURRENT LIABILITIES 24 348 18 404 32 23 784
TOTAL EQUITY AND LIABILITIES 51 149 53 629 -5 54 220
Annex 3
CONSOLIDATED CASH FLOW STATEMENT 1-6/2008 1-6/2007 1-12/2007
(EUR thousands, unaudited)
Cash flow from operating activities
Net income -1 929 -1 144 303
Adjustments to operating profit 1 299 591 -372
Change in working capital 2 503 -831 -3 070
Interest paid -1 101 -299 -977
Interest received 106 89 142
Cash flow from operating activities 878 -1 594 -3 974
Cash flow from investing activities
Capital expenditure on tangible and
intangible assets -1 160 -765 -1 974
Proceeds from sale of tangible
and intangible assets 118 0 3 118
Acquisition of subsidiary 0 -8 261 -8 261
Cash flow from investing activities -1 042 -9 026 -7 117
Cash flow from financing activities
Drawdown of loans 810 13 641 14 316
Repayments of borrowings -504 -671 -1 116
Repayments of obligations under finance -672
leases -523 -1 643
Cash flow from financing activities -217 12 298 11 557
Change in cash and cash equivalents -381 1 678 466
Cash and cash equivalents at beginning of
period 944 500 500
Effect of changes in exchange rates -88 0 -22
Cash and cash equivalents at end of
period 475 2 178 944
Annex 4
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (IFRS)
(EUR thousands, unaudited) Share
Share premium Exchange Retained
capital account differences earnings Total
Equity at 1 January 2007 20 487 44 0 -206 20 325
Options and share-based
compensation 0 0 0 60 60
Net income and losses
recognised
directly in equity 0 0 0 60 60
Profit/loss for the
period 0 0 -48 -1 481 -1 529
Total income and losses 0 0 -48 -1 421 -1 469
Equity at 30 June 2007 20 487 44 -48 -1 627 18 856
Equity at 1 January 2008 20 487 44 -216 -1 188 19 127
Options and share-based
compensation 0 0 0 -205 -205
Net income and losses
recognised
directly in equity 0 0 0 -205 -205
Profit/loss for the
period 0 0 -270 -2 686 -2 956
Total income and losses 0 0 -270 -2 891 -3 161
Equity at 30 June 2008 20 487 44 -486 -4 079 15 966
Annex 5
GROUP KEY FIGURES AND CONTINGENT
LIABILITIES (IFRS) 1-6/2008 1-6/2007 1-12/2007
Revenue, EUR millions 46.7 36.1 83.0
Operating profit, EUR millions -1.9 -1.1 0.3
% of revenue -4.1 -3.2 0.4
Profit before taxes, EUR millions -2.7 -1.5 -1.1
% of revenue -5.7 -4.1 -1.3
Return on investment (ROI), % -9.2 -6.1 1.3
Return on equity (ROE), % -30.6 -15.1 -5.6
Equity ratio, % 31.2 35.2 35.3
Gearing, % 120.4 99.5 103.2
Net debt, EUR millions 18.0 18.9 15.8
Net interest-bearing debt, EUR
millions 19.2 18.8 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 -0.22 -0.12 -0.09
Equity per share, euro 1.31 1.55 1.57
Investments, EUR millions 1.3 0.6 1.5
% of revenue 2.7 1.6 1.9
Average number of employees 729 568 678
CONTINGENT LIABILITIES, EUR millions
FOR OWN LIABILITIES
Mortgages 12.3 8.8 12.3
Other liabilities 7.7 9.6 7.4
Annex 6
QUARTERLY
KEY FIGURES (IFRS)
4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2008 2008 2007 2007 2007 2007
Revenue, EUR millions 26.4 20.3 26.3 20.6 19.1 17,0
Operating profit, EUR millions -0.6 -1.3 2.0 -0.6 0.0 -1,2
% of revenue -2.3 -6.5 7.7 -2.8 0.2 -7,0
Profit before taxes, EUR -1.0
millions -1.7 1.5 -1.1 -0.1 -1,4
% of revenue -3.8 -8.3 5.8 -5.2 -0.8 -8,0
Return on investment (ROI), % -4.9 -13.4 23.8 -6.5 1.5 -15,7
Return on equity (ROE), % -22.9 -37.0 29.4 -22.5 -2.8 -27,3
Equity ratio, % 31.2 33.3 35.3 31.2 35.2 45,3
Gearing, % 120.4 106.5 103.2 124.3 99.5 61,2
Net debt, EUR millions 18.0 19.9 15.8 22.8 18.9 12,6
Net interest-bearing debt, EUR
millions 19.2 18.3 19.7 22.0 18.8 11,6
Average number of shares
during the report
period, adjusted for share 12 80 12 80 12 180 12180 12 180 12 180
issues 880 880 880 880 880 880
Earnings per share (EPS), euro -0.08 -0.14 0.12 -0.09 -0.01 -0,11
Equity per share, euro 1.31 1.41 1.57 1.46 1.55 1,56
Investments, EUR millions 0.4 0.8 0.4 0.5 0.3 0,3
% of revenue 1.6 4.1 1.4 2.4 1.5 1,8
Average number of employees 724 733 794 776 649 530
INCAP GROUP INTERIM REPORT JANUARY-JUNE 2008: REVENUE INCREASED, OPERATING PROFIT WAS NEGATIVE
| Source: Incap Oyj
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