Incap Corporation Stock Exchange Release 4 November 2009 at 8:30
a.m.
* Revenue in January-September was approximately EUR 52.0 million,
down approximately 24% from the same period the previous year
(Jan-Sep 2008: EUR 68.1 million)
* The focus of manufacturing activities shifted from
telecommunications products to energy efficiency and well-being
technology products in accordance with the strategy
* Operating profit (EBIT) improved from the same period the
previous year, amounting to EUR 1.3 million negative (EUR 2.4
negative)
* The improvement of efficiency and adjustment of cost structure
were continued in accordance with the reorganisation programme
* Prerequisites for future business growth were built in selected
business areas in energy and well-being
* Net profit for the report period amounted to EUR 2.8 million
negative (3.5 million negative).
This unaudited interim report has been prepared in accordance with
international financial reporting standards (IFRS). Unless otherwise
stated, the comparison figures refer to the same period the previous
year.
Sami Mykkänen, the President and CEO of Incap Group: "The overall
demand for Incap's services remained fairly steady despite the
general economic recession. However, there was much customer-specific
fluctuation in delivery volumes. The decrease in revenue was mainly
due to a controlled winding down of the high-volume manufacturing of
telecommunications products.
Profitability developed in the positive direction, and operating
result improved each quarter of the year. Increased operational
efficiency according to the reorganisation programme is beginning to
show in the result.
The strategy selected last year has proven to be successful, and we
can move on to developing profitable growth supported by it. In the
selected business segments - energy efficiency and well-being
technologies - the future prospects are good and the growth potential
especially in Asia is of great interest to us. One step in this
direction was concentrating product design activities on India,
where we serve our customers globally. "
Revenue and earnings in July-September 2009
Revenue during the third quarter totalled EUR 16.6 million, or
approximately 22% less than in the same period the year before
(7-9/2008: EUR 21.4 million). Despite the holiday season and
production shutdowns, revenue remained at nearly the same level as
during the second quarter. The demand for well-being technology
products in particular was good.
Operating profit (EBIT) for July-September, EUR 0.3 million negative,
was better than during the previous quarters of the year and the
corresponding period the year before (EUR 0.4 million negative). Net
profit for the third quarter was EUR 0.8 million negative, the same
as a year before (EUR 0.8 million negative) despite the decrease in
revenue. Net profit was burdened by an increase in financing costs
compared to the corresponding period last year. Earnings per share
were EUR 0.07 negative (EUR 0.07 negative).
Revenue and earnings in January-September 2009
Revenue for January-September was EUR 52.0 million, or about 24%
lower than during the comparable period the year before (Jan-Sep
2008: EUR 66.1 million). The decline in revenue was the predicted
decrease in manufacturing of telecommunications products by
approximately EUR 12 million compared with the same period the
previous year. Revenue also declined due to cutting down on small or
unprofitable customer accounts at the beginning of the year in order
to improve profitability.
The recession did not have a significant impact on the demand for
Incap's services. Revenue from well-being technology products
increased considerably compared with the year before, while the
demand in the energy efficiency sector decreased somewhat in Europe.
Deliveries from the Indian unit increased, but revenue in euros
remained at last year's level due to exchange rate differences.
Operating loss was clearly reduced with operating profit amounting to
EUR 1.3 million negative (EUR 2.4 million negative), representing
2.5% negative (3.5% negative) of revenue. The reorganisation
programme was continued and cost savings were achieved in personnel
and material costs and administrative expenses among others. Fixed
costs for the period were approximately EUR 2.2 million lower than
for the same period the previous year.
Net profit for the report period amounted to EUR 2.8 million negative
(EUR 3.5 million negative). In particular, the net profit was
burdened by net financing costs, which were approximately EUR 0.4
million higher than during the corresponding period the year before.
Earnings per share amounted to EUR 0.23 negative (EUR 0.29 negative),
while equity per share stood at EUR 0.86 (EUR 1.24).
Quarterly comparison 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousands) 2009 2009 2009 2008 2008 2008 2008
Revenue 16,613 16,928 18,479 25,789 21,395 26,412 20,330
Operating -314 -472 -518 -1,241 -442 -600 -1,329
profit/loss
Net profit/loss -810 -1,035 -949 -1,915 -800 -1,005 -1,681
Earnings per share, -0.07 -0.08 -0.08 -0.16 -0.07 -0.08 -0.14
EUR
Development of operations in January-September 2009
Incap developed its capacity for future growth in the company's
business. The new production facilities in India were inaugurated
during the period. The updated capacity of the plant will improve
Incap's competitiveness significantly, as globally operating
customers require their partner to provide local service near their
main markets.
In order to improve the efficiency of its service capacity, Incap
concentrated its product design in India and aims to double the
number of designers to over 30 persons during next year. The Indian
design team also serves customers located in Europe and the United
States. All plants continue developing production-related
manufacturability design in order to decrease product manufacturing
costs.
The acquisition of new customers was expanded to China, where the
company launched sales cooperation with a local partner. The aim is
to secure new customers in Asia, mainly for Incap's Indian plant. In
addition, the partner is surveying the overall market situation and
Incap's business opportunities in China.
The development of materials management and procurement continued.
The value of inventories fell from EUR 16.2 million at the turn of
the year to EUR 14.7 million at the end of September.
The structural change in Incap's manufacturing capacity proceeded as
planned. The operation of the Helsinki plant will focus on assembly
and product integration in the future, and the manufacturing of
certain high-volume sheet-metal parts is being transferred to Vaasa.
Incap is investigating the possibilities of centralising the
company's European electronics manufacturing in Estonia so that some
of the products manufactured at the Vuokatti plant would be
transferred to the Kuressaari plant and another party would be sought
to continue some of the business activities in Vuokatti. The transfer
of some products is already underway, and negotiations have been
begun on other transfers with customers. Preliminary negotiations on
a possible business transaction are currently underway.
Strategy
The strategy that Incap selected last year has proven to be
successful. Incap will focus on contract manufacturing of energy
efficiency and well-being products where outlook on growth is
favourable thanks to global mainstream trends. The company aims to be
a leading manufacturing and technology partner for customer accounts
in these sectors, providing them with life-cycle services of
electromechanics and product entities. The company sees considerable
growth potential for its services in Asia.
Incap develops its services according to the needs of its key
customers. In sales and marketing, special focus will be on active
management of customer relationships, expanding the service portfolio
with existing customers and systematic acquisition of new customers.
Incap will reinforce its product design activities that serve the
customers globally.
Incap will continue measures aimed at improving profitability. The
main emphasis in the improvement of efficiency will be on developing
materials functions, completing the change in production structure,
and productisation of services.
Financing and cash flow
The Group's equity ratio was 24.6% (29.4%). Interest-bearing net
liabilities totalled EUR 18.1 million (EUR 20.1 million) and the
gearing ratio was 174% (133%). Net financial expenses stood at EUR
1.5 million (EUR 1.1 million) and depreciation and amortisation
expense at EUR 2.1 million (EUR 2.1 million). Trade receivables
continued to decline compared with the beginning of the year as well
as the end of the second quarter, and no credit losses arose during
the report period.
The Group's equity at the close of the period under review was EUR
10.4 million (EUR 15.2 million). Debt totalled EUR 32.0 million (EUR
36.4 million), of which interest-bearing debt amounted to EUR 19.3
million (EUR 20.7 million).
The Group's quick ratio was 0.6 (0.7) and the current ratio 1.3
(1.3). Cash flow from operations was EUR 1.9 million positive, or
considerably better than for the corresponding period the previous
year, when it was EUR 0.3 million. The change in cash and cash
equivalents was an increase of EUR 0.5 million (a decrease of EUR 0.3
million).
Capital expenditures
The Group's capital expenditures during the period amounted to EUR
1.0 million (EUR 1.5 million), of which the majority was connected
with the operation of the Indian subsidiary.
Personnel
Incap Group employed 773 people at the end of September 2009 (727
people at the beginning of the year). Of the personnel, 43% worked in
Finland, 34% in India and 23% in Estonia. The number of personnel
increased in India, where there were over 50 employees more at the
end of September than at the beginning of the year. In addition to
Incap employees, there were 59 employees hired from staffing agencies
at the end of September.
Operations and capacity were adjusted to the demand, and at the end
of September, 34 people were temporarily laid off. After the report
period in October, the personnel of Group services and the plants in
Helsinki and Vaasa were temporarily laid off for a week in December
2009 and for a week in January 2010. In addition, the personnel can
be temporarily laid off based on monthly review until the end of May
2010 so that the maximum total duration of the temporary layoff is 64
working days. At the Vuokatti plant, the white-collar personnel were
laid off for three weeks while the statutory negotiations with regard
to the blue-collar workers will continue in November.
Shares and shareholders
Incap Corporation has one series of shares, and the number of shares
in 12,180,880. During the period under review, the share price varied
between EUR 0.43 and EUR 0.99, and the last closing price of the
period was EUR 0.69. During the period under review, the trading
volume was 19.7% of outstanding shares.
At the end of the period under review, the company had 1,145
shareholders. Foreign or nominee-registered owners held 2.8% of all
shares. The company's market capitalisation on 30 September 2009 was
EUR 8.4 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 24 February 2009, and no significant changes have taken place
with regard to these factors during the report period.
The most significant short-term risks are connected with the volume
of business, profitability as well as financing arrangements. Incap's
sales are spread over several customer sectors, which hedges the
company against sharp seasonal changes. However, market visibility is
very limited.
The company's financial position is influenced by the trends in the
general financial market and the company's future earnings
development. Incap aims at ensuring the company's liquidity by
efficient working capital management and investigates different
financing options in order to enhance the financial position. As one
action to ensure its liquidity, Incap signed an agreement on
factoring concerning its trade receivables in Finland with a
financing company after the close of the report period.
Outlook
Incap's estimates of the future business development are based on its
customers' forecasts and the company's own assessments. Due to the
continued uncertain economic situation, customers' views of the
future market development are still cautious. Some device
manufacturers in the electric power industry have predicted a slight
decline in demand.
Incap expects that its revenue in 2009 will be approximately EUR 70
million. The operating profit for the latter half of the year will be
better than during the first half of the year. Full-year operating
profit (EBIT) is estimated to be clearly better compared with 2008.
According to Incap's previous estimate on 5 August 2009, the Group's
revenue in 2009 would be lower than in 2008, when it totalled EUR
93.9 million. Operating profit for the latter half of the year was
estimated to be better than during the first half of the year.
Full-year operating profit (EBIT) was estimated to be clearly better
compared with 2008 (EUR 3.6 million negative).
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 of Communications and Human Resources, tel.
+358 40 504 8296
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
The company's website: www.incap.fi
PRESS CONFERENCE
Incap will arrange a conference for financial analysts, investors,
and the press on 4 November 2009 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. The presentation material
will be available on the company's website the same day.
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 contract
manufacturer whose comprehensive services cover the entire life-cycle
of electromechanical products from design and manufacture to
maintenance services. Incap's customers are leading equipment
suppliers in energy-efficiency and well-being technology, for which
the company produces 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 770 people. Incap's shares are listed on the
NASDAQ OMX Helsinki Ltd. For additional information, please visit our
website, www.incap.fi.
Annex 1
CONSOLIDATED INCOME STATEMENT (IFRS)
(EUR thousands, unaudited)
1-9/2009 1-9/2008 Change % 1-12/2008
REVENUE 52,021 68,136 -24 93,925
Work performed by the enterprise
and capitalised
Change in inventories of
finished goods and
work in progress -301 1,190 -125 791
Other operating income 281 30 826 53
Raw materials and consumables
used 34,050 48,245 -29 66,672
Personnel expenses 10,725 13,630 -21 18,722
Depreciation and amortisation 2,146 2,125 1 2,823
Other operating expenses 6,383 7,727 -17 10,165
OPERATING PROFIT/LOSS -1,304 -2,371 -45 -3,612
Financing income and expenses -1,488 -1,115 33 -1,810
PROFIT/LOSS BEFORE TAX - 2,792 -3,486 -20 -5,422
Income tax expense -3 0 21
PROFIT/LOSS FOR THE PERIOD - 2,795 -3,486 -20 -5,401
Earnings per share -0.23 -0.29 -21 -0.44
Options have no dilutive effect
in report periods 2008 and 2009
OTHER COMPREHENSIVE
INCOME 1-9/2009 1-9/2008 Change % 1-12/2008
PROFIT/LOSS FOR THE
PERIOD - 2,795 -3,486 -43 -5,401
OTHER COMPREHENSIVE
INCOME:
Translation differences
from foreign units 20 -271 -107 -262
Other comprehensive
income, net 20 -271 -124 -262
TOTAL COMPREHENSIVE
INCOME -2,775 -3,757 -26 -5,663
Attributable to:
Shareholders of the
parent company - 2,775 -3,757 -26 -5,663
Minority interest 0
Annex 2
CONSOLIDATED BALANCE SHEET (IFRS)
(EUR thousands, unaudited)
30.9.2009 30.9.2008 Change % 31.12.2008
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10,225 11,496 -11 11,250
Goodwill 954 972 -2 969
Other intangible assets 1,069 1,370 -22 1,311
Other financial assets 14 17 -17 16
Deferred tax assets 4,136 4,151 0 4,148
TOTAL NON-CURRENT ASSETS 16,398 18,006 -9 17,693
CURRENT ASSETS
Inventories 14,675 18,833 -22 16,153
Trade and other receivables 10,262 14,069 -27 14,444
Cash and cash equivalents 1,136 615 85 641
TOTAL CURRENT ASSETS 26,074 33,518 -22 31,239
TOTAL ASSETS 42,472 51,523 -18 48,932
EQUITY ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
COMPANY
Share capital 20,487 20,487 0 20,487
Share premium account 44 44 1 44
Exchange differences -458 -494 -7 -478
Retained earnings -9,644 -4,876 98 -6,864
TOTAL EQUITY 10,430 15,161 -31 13,190
NON-CURRENT LIABILITIES
Deferred tax liabilities 99 121 -18 99
Interest-bearing loans and
borrowings 11,363 13,496 -16 12,977
NON-CURRENT LIABILITIES 11,463 13,617 -16 13,077
CURRENT LIABILITIES
Trade and other payables 12,678 15,527 -18 15,731
Current interest-bearing
loans and borrowings 7,901 7,218 9 6,935
CURRENT LIABILITIES 20,579 22,745 -9 22,666
TOTAL EQUITY AND LIABILITIES 42,472 51,523 -18 48,932
Annex 3
CONSOLIDATED CASH FLOW STATEMENT
(EUR thousands, unaudited)
1-9/2009 1-9/2008 1-12/2008
Cash flow from operating activities
Net income -1,304 -2,371 -3,612
Adjustments to operating profit 2,162 2,101 2,760
Change in working capital 2,688 1,601 3,702
Interest paid -1,642 -1,087 -1,640
Interest received 32 104 143
Cash flow from operating activities 1,936 348 1,353
Cash flow from investing activities
Capital expenditure on tangible and
intangible assets -961 -1,501 -1,699
Proceeds from sale of tangible 177
and intangible assets 0 101 160
Loans granted -8 0
Shares of subsidiaries sold 0 50 50
Repayments of loan receivables 2 3 1
Cash flow from investing activities -790 -1,347 -1,488
Cash flow from financing activities
Drawdown of loans 2,135 2,453 1,753
Repayments of borrowings -1,896 -942 -838
Repayments of obligations under finance
leases -886 -805 -1,063
Cash flow from financing activities -647 706 -148
Change in cash and cash equivalents 499 -293 -283
Cash and cash equivalents at beginning of
period 641 944 944
Effect of changes in exchange rates -7 -36 -20
Changes in fair value (cash and cash
equivalents) 3
Cash and cash equivalents at end of
period 1,136 615 641
Annex 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)
(EUR thousands, unaudited)
Retained
Share
Share premium Exchange
capital account differences earnings Total
Equity on 1 January 2008 20,487 44 -216 -1,188 19,127
Change in exchange
differences -278 -278
Options and share-based
compensation -202 -202
Net income and losses
recognised
directly in equity -278 -202 -480
Net profit/loss - 3,486 -3,486
Total income and losses -278 -3,688 -3,966
Equity on 30 September
2008 20,487 44 -494 -4,876 15,161
Equity on 1 January 2009 20,487 44 -478 -6,864 13,189
Change in exchange
differences 20 20
Options and share-based
compensation 15 15
Net income and losses
recognised
directly in equity 20 15 35
Net profit/loss -2,795 -2,795
Total income and losses 20 -2,780 -2,760
Equity on 30 September
2009 20,487 44 -458 -9,644 10,430
Annex 5
GROUP KEY FIGURES AND CONTINGENT LIABILITIES (IFRS)
30.9.2009 30.9.2008 31.12.2008
Revenue, EUR millions 52.0 68.1 93.9
Operating profit, EUR millions -1.3 -2.4 -3.6
% of revenue -2.5 -3.5 -3.9
Profit before taxes, EUR millions -2.8 -3.5 -5.4
% of revenue -5.4 -5.1 -5.8
Return on investment (ROI), % -5.3 -7.5 -8.6
Return on equity (ROE), % -31.6 -27.1 -33.4
Equity ratio, % 24.6 29.4 27.0
Gearing, % 173.8 132.6 146.1
Net debt, EUR millions 20.6 21.7 20.7
Net interest-bearing debt, EUR
millions 18.1 20.1 19.3
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 -0.23 -0.29 -0.44
Equity per share, euro 0.86 1.24 1.08
Investments, EUR millions 1.0 1.5 1.8
% of revenue 1.9 2.2 1.9
Average number of employees 743 732 735
CONTINGENT LIABILITIES, EUR millions
FOR OWN LIABILITIES
Mortgages 12.0 12.1 12.0
Other liabilities 6.3 8.2 8.8
Nominal value of currency options,
EUR thousands -12.4 0 0
Fair values of currency options, EUR
thousands 460.7 0 0
Annex 6
QUARTERLY KEY FIGURES (IFRS)
7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2009 2009 2009 2008 2008 2008 2008
Revenue, EUR
millions 16.6 16.9 18.5 25.8 21.4 26.4 20.3
Operating profit,
EUR millions -0.3 -0.5 -0.5 -1.2 -0.4 -0.6 -1.3
% of revenue -1.9 -2.8 -2.8 -4.8 -2.1 -2.3 -6.5
Profit before taxes,
EUR millions -0.8 -1.0 -0.9 -1.9 -0.8 -1.0 -1.7
% of revenue -4.9 -6.1 -5.1 -7.5 -3.7 -3.8 -8.3
Return on investment
(ROI), % -4 -2.1 -4.9 -11.1 -4.1 -4.9 -13.4
Return on equity
(ROE), % -27.5 -33.9 -29.8 -47.4 -18.7 -22.9 -37.0
Equity ratio, % 24.6 26.4 27.4 27.0 29.43 31.2 33.3
Gearing, % 173.8 164.9 151.1 146.1 132.6 120.4 106.5
Net debt, EUR
millions 20.6 19.7 19.6 20.7 21.7 18.0 19.9
Net interest-bearing
debt, EUR millions 18.1 18.6 18.6 19.3 20.1 19.2 18.3
Average number of
share
issue-adjusted
shares during 12,180 12,180 12,180 12,180 12,180 12,180 12,180
report period ,880 ,880 ,880 ,880 ,880 ,880 ,880
Earnings per share
(EPS), euro -0.07 -0.08 -0.08 -0.16 -0.07 -0.08 -0.14
Equity per share,
euro 0.86 0.92 1.01 1.08 1.24 1.31 1.41
Investments, EUR 0.4
millions 0.5 0.1 0.3 0.3 0.4 0.8
% of revenue 2.2 2.9 0.6 1.3 1.2 1.6 4.1
Average number of 770
employees 732 728 743 739 724 733
INCAP GROUP INTERIM REPORT JANUARY-SEPTEMBER 2009: RESULT IMPROVED DESPITE DECREASE IN REVENUE
| Quelle: Incap Oyj
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