2009-08-05 07:30:00 CEST
2009-08-05 07:31:59 CEST
REGULATED INFORMATION
Incap - Interim report (Q1 and Q3)
INCAP GROUP INTERIM REPORT JANUARY-JUNE 2009: REVENUE DECREASED AS PLANNED - RESULT IMPROVED CLEARLY DESPITE DECREASE IN REVENUE
Incap Corporation Stock Exchange Release 5 August 2009 at 8:30 a.m.
* Revenue in January-June decreased by approximately 24% on the
same period the previous year, amounting to EUR 35.4 million
(Jan-Jun 2008: EUR 46.7 million)
* Focus of business volume shifted over to energy efficiency and
well-being technology products, whereas business with
telecommunications products was decreased strongly according to
the restructuring plan
* Operating profit (EBIT) improved on the same period the previous
year, amounting to EUR 1.0 million negative (EUR 1.9 negative)
* Capacity and cost structure were adjusted in line with the
reorganisation programme, while at the same time creating
prerequisites for growth in selected business areas in energy and
well-being, which provide good prospects for improved
profitability
* Net profit for the report period amounted to EUR 2.0 million
negative (EUR 2.7 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 decrease in
revenue was due to a planned and controlled winding down of the
high-volume manufacturing of telecommunications products. Other
customer industries have developed positively, without any surprises.
We continued with our reorganisation and restructuring programme and
managed to cut costs and develop our business operations as planned
compared with the first half of last year. The increase in financing
costs continued to burden net profit.
The restructuring has proceeded as planned and we have made advances
in new customer acquisition. New inquiries are at an active phase in
India, in particular, where the quotation base and demand for design
services by global customers have grown sharply. The introduction of
modern production premises has further enhanced the opportunities for
business growth in India.
Improving profitability is still our key challenge, so we will
continue to adjust the production capacity, improve the efficiency of
materials management and cut fixed costs. At the same time we
continue with strong development of our business operations in
selected focus areas."
Revenue and earnings in April-June 2009
Revenue during the second quarter totalled EUR 16.9 million
(4-6/2008: EUR 26.4 million), or 36% less than in the same period in
2008. Decrease in revenue was due to the expected discontinuation of
volume production in telecommunications. Revenue developed positively
especially in well-being technology products, whose sales increased
in the second quarter compared with both the first quarter and the
corresponding period the previous year.
Operating profit for April-June was EUR 0.5 million negative (EUR 0.6
million negative), representing 2.8% negative (2.3% negative) of
revenue. Net profit for the second quarter amounted to EUR 1.0
million negative (1.0 million negative). In particular, net profit
was reduced by the increase in financing expenses by about 40%
compared with the same period the previous year. Earnings per share
were EUR 0.08 negative (EUR 0.08 negative).
Revenue and earnings in January-June 2009
Revenue for January-June totalled EUR 35.4 million (1-6/2008: EUR
46.7 million), or 24% less than in the same period in 2008.The main
reason behind the decline in revenue was the planned decrease in
revenue from the high-volume manufacturing of telecommunications
products by about EUR 9 million on the same period the previous year.
Revenue developed steadily in the strategic focus areas in energy
efficiency and well-being technology. Of the revenue for the first
half of the year, EUR 1.6 million represented the sale of materials
of products to be discontinued to customers.
Operating loss reduced by almost one half with operating profit
amounting to EUR 1.0 million negative (EUR 1.9 million negative),
representing 2.8% negative (4.1% negative) of revenue. The efficiency
measures in line with the reorganisation programme reduced costs,
fixed costs being EUR 1.6 million lower than in the same period the
previous year.
Net profit for the report period amounted to EUR 2.0 million negative
(EUR 2.7 million negative). Net profit was particularly affected by
the sharp increase in financing costs.
Earnings per share amounted to EUR 0.16 negative (EUR 0.22 negative),
while equity per share stood at EUR 0.92 (EUR 1.31).
Quarterly comparison 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousands) 2009 2009 2008 2008 2008 2008
Revenue 16,928 18,479 25,789 21,395 26,412 20,330
Operating profit/loss -472 -518 -1,241 -442 -600 -1,329
Net profit/loss
-1,035 -949 -1,915 -800 -1,005 -1,681
Earnings per share,
EUR -0.08 -0.08 -0.16 -0.07 -0.08 -0.14
Development of operations
The demand for the Indian unit's services picked up, and the
quotation base showed strong growth. The new production facilities,
the modern capacity and extensive design services will improve the
unit's competitiveness further.
The value of inventories fell from EUR 16.2 million to EUR 14.1
million at the end of June. The positive development reflected both
the decrease in telecommunications component stocks and higher
efficiency in materials management.
The production capacity and the cost structure were adapted to the
market situation. The electronics factories adopted reduced working
hours. The work situation at the mechanical factories was good during
the report period, and the production of sheet-metal parts is
concentrated in Vaasa, while the Helsinki factory is focusing on
product assembly. Due to the decreased demand in certain mechanics
products, statutory cooperation negotiations concerning eventual
temporary lay-offs were launched in the Vaasa factory after the end
of the report period in August.
Incap is investigating possibilities to concentrate the company's
electronics production in Europe in the Kuressaare factory. For this
purpose, the company will during autumn explore if part of the
products manufactured in the Vuokatti factory can be transferred to
Kuressaare and if part of the operations could be taken over by a
third party.
Financing and cash flow
The Group's equity ratio was 26.4% (31.2%). Interest-bearing net
liabilities totalled EUR 18.6 million (EUR 19.2 million) and the
gearing ratio was 164.9% (120.4%). Net financial expenses stood at
EUR 0.99 million (EUR 0.76 million) and depreciation and amortisation
expense at EUR 1.4 million (EUR 1.5 million). Incap aims to improve
liquidity primarily by enhancing working capital management. Trade
receivables continued to decline compared with the beginning of the
year, and no credit losses arose during the report period.
The Group's equity at the close of the report period was EUR 11.3
million (EUR 16.0 million). Debt totalled EUR 31.5 million (EUR 35.2
million), of which interest-bearing debt amounted to EUR 19.3 million
(EUR 19.7 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 1.0 million (EUR 0.9
million), and the change in cash and cash equivalents was an increase
of EUR 73,000 (a decrease of EUR 0.4 million).
Capital expenditures
The Group's capital expenditures amounted to EUR 0.7 million (EUR 1.3
million). The majority of these were related to the operations of the
Indian company.
Personnel
Incap Group employed 757 people at the end of June (727 people at the
beginning of the year). The number of personnel in India increased by
49 persons and was 243 at the end of the report period. At the end of
June, 35 people were temporarily laid off.
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 0.66. During the report period, the trading volume was
16.8% of outstanding shares.
At the end of the report period, the company had 1,153 shareholders.
Foreign or nominee-registered owners held 2.8% of all shares. The
company's market capitalisation on 30 June 2009 was EUR 8.0 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, the profitability as well as the financing.
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 investigate different
financing options in order to enhance the financial position.
Outlook
Incap's estimates of the future business development are based on its
customers' forecasts and the company's own assessments. Customers'
views of the future market development vary, and the forecasts are
still very cautious.
In line with the earlier estimate, Incap expects that the Group's
revenue in 2009 will be lower than in 2008, when it totalled EUR 93.9
million. Operating profit for the latter half of the year is
estimated to be better than during the first half of the year.
Full-year operating profit (EBIT) is 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 the press and financial analysts
on 5 August 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 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 760 people. Incap's shares are listed
on the NASDAQ OMX Helsinki Oy. For additional information, please
visit our website, www.incap.fi.
Annex 1
CONSOLIDATED INCOME STATEMENT (IFRS)
(EUR thousands, unaudited)
1-6/2009 1-6/2008 Change % 1-12/2008
REVENUE 35,407 46,742 -,24 93,925
Work performed by the enterprise
and capitalised
Change in inventories of
finished goods and
work in progress -264 917 -129 791
Other operating income 114 17 573 53
Raw materials and consumables
used 23,204 33,638 -31 66,672
Personnel expenses 7,433 9,275 -20 18,722
Depreciation and amortisation 1,424 1,510 -6 2,823
Other operating expenses 4,187 5,182 -19 10,165
OPERATING PROFIT/LOSS -990 -1,929 -49 -3,612
Financing income and expenses -992 -757 31 -1,810
PROFIT/LOSS BEFORE TAX -1,982 -2,686 -26 -5,422
Income tax expense -3 0 21
PROFIT/LOSS FOR THE PERIOD -1,984 -2,686 -26 -5,401
Earnings per share -0.16 -0.22 -27 -0.44
Options have no dilutive effect
in report periods 2008 and 2009
OTHER COMPREHENSIVE
INCOME 1-6/2009 1-6/2008 Change % 1-12/2008
PROFIT/LOSS FOR THE
PERIOD -1,984 -2,686 -43 -5,401
OTHER COMPREHENSIVE
INCOME:
Translation differences
from foreign
units 42 -270 -116 -262
Other comprehensive
income, net 42 -270 -124 -262
TOTAL COMPREHENSIVE
INCOME -1,942 -2,956 -34 -5,663
Attributable to:
Shareholders of the
parent company -1,942 -2,956 -34 -5,663
Minority interest 0
Annex 2
CONSOLIDATED BALANCE SHEET (IFRS)
(EUR thousands, unaudited)
31
30 June 30 June December
2009 2008 Change % 2008
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10,565 12,198 -13 11,250
Goodwill 973 1,061 -8 969
Other intangible assets 1,170 1,361 -14 1,311
Other financial assets 14 19 -24 16
Deferred tax assets 4,152 4,151 0 4,148
TOTAL NON-CURRENT ASSETS 16,874 18,790 -10 17,693
CURRENT ASSETS
Inventories 14,099 15,174 -7 16,153
Trade and other receivables 11,043 16,710 -34 14,444
Cash and cash equivalents 707 475 49 641
TOTAL CURRENT ASSETS 25,849 32,359 -20 31,239
TOTAL ASSETS 42,723 51,149 -16 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 0 44
Exchange differences -435 -486 -10 -478
Retained earnings -8,838 -4,079 117 -6,864
TOTAL EQUITY 11,257 15,966 -29 13,190
NON-CURRENT LIABILITIES
Deferred tax liabilities 99 121 -18 99
Interest-bearing loans and
borrowings 11,495 10,714 7 12,977
NON-CURRENT LIABILITIES 11,595 10,835 7 13,077
CURRENT LIABILITIES
Trade and other payables 12,097 15,369 -21 15,731
Current interest-bearing loans and
borrowings 7,774 8,979 -13 6,935
CURRENT LIABILITIES 19,871 24,348 -35 22,666
TOTAL EQUITY AND LIABILITIES 42,723 51,149 -16 48,932
Annex 3
CONSOLIDATED CASH FLOW STATEMENT
(EUR thousands, unaudited)
1-6/2009 1-6/2008 1-12/2008
Cash flow from operating activities
Net income -990 -1,929 -3,612
Adjustments to operating profit 1,441 1,299 2,760
Change in working capital 2,133 2,503 3,702
Interest paid -1,580 -1,101 -1,640
Interest received 21 106 143
Cash flow from operating activities 1,024 878 1,353
Cash flow from investing activities
Capital expenditure on tangible and
intangible assets -603 -1,160 -1,699
Proceeds from sale of tangible
and intangible assets 158 118 160
Loans granted -4 0 0
Shares of subsidiaries sold 0 0 50
Repayments of loan receivables 2 0 1
Cash flow from investing activities -448 -1,042 -1,488
Cash flow from financing activities
Drawdown of loans 1,917 810 1,753
Repayments of borrowings -1,847 -504 -838
Repayments of obligations under finance
leases -573 -523 -1,063
Cash flow from financing activities -503 -217 -148
Change in cash and cash equivalents 73 -381 -283
Cash and cash equivalents at beginning of
period 641 944 944
Effect of changes in exchange rates -8 -88 -20
Cash and cash equivalents at end of
period 707 475 641
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 -270 -270
Options and share-based
compensation -205 -205
Net income and losses
recognised
directly in equity -270 -205 -475
Net profit/loss -2,686 -2,686
Total income and losses -270 -2,891 -3,161
Equity on 30 June 2008 20,487 44 -486 -4,079 15,966
Equity on 1 January 2009 20,487 44 -478 -6,864 13,189
Change in exchange
differences 42 42
Options and share-based
compensation 10 10
Net income and losses
recognised
directly in equity 42 10 52
Net profit/loss -1 984 -1 984
Total income and losses 42 -1 975 -1 932
Equity on 30 June 2009 20 487 44 -435 -8 838 11 257
Annex 5
GROUP KEY FIGURES AND CONTINGENT LIABILITIES (IFRS)
31
30 June 30 June December
2009 2008 2008
Revenue, EUR millions 35.4 46.7 93.9
Operating profit, EUR millions -1.0 -1.9 -3.6
% of revenue -2.8 -4.1 -3.9
Profit before taxes, EUR millions -1.9 -2.7 -5.4
% of revenue -5.6 -5.7 -5.8
Return on investment (ROI), % -3.6 -9.2 -8.6
Return on equity (ROE), % -32.5 -30.6 -33.4
Equity ratio, % 26.4 31.2 27.0
Gearing, % 164.9 120.4 146.1
Net debt, EUR millions 19.7 18.0 20.7
Net interest-bearing debt, EUR
millions 18.6 19.2 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 -0.16 -0.22 -0.44
Equity per share, euro 0.92 1.31 1.08
Investments, EUR millions 0.7 1.3 1.8
% of revenue 2.0 2.7 1.9
Average number of employees 730 729 735
CONTINGENT LIABILITIES, EUR millions
FOR OWN LIABILITIES
Mortgages 12.0 12.3 12.0
Other liabilities 6.5 7.7 8.8
Nominal value of currency options
EUR thousands 0 0 0
Fair values of currency options, EUR
thousands 0 0 0
Annex 6
QUARTERLY KEY FIGURES (IFRS)
4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2009 2009 2008 2008 2008 2008
Revenue, EUR millions 16.9 18.5 25.8 21.4 26.4 20.3
Operating profit, EUR
millions -0.5 -0.5 -1.2 -0.4 -0.6 -1.3
% of revenue -2.8 -2.8 -4.8 -2.1 -2.3 -6.5
Profit before taxes, EUR
millions -1.0 -0.9 -1.9 -0.8 -1.0 -1.7
% of revenue -6.1 -5.1 -7.5 -3.7 -3.8 -8.3
Return on investment (ROI),
% -2.1 -4.9 -11.1 -4.1 -4.9 -13.4
Return on equity (ROE), % -33.9 -29.8 -47.4 -18.7 -22.9 -37.0
Equity ratio, % 26.4 27.4 27.0 29.43 31.2 33.3
Gearing, % 164.9 151.1 146.1 132.6 120.4 106.5
Net debt, EUR millions 19.7 19.6 20.7 21.7 18.0 19.9
Net interest-bearing debt,
EUR millions 18.6 18.6 19.3 20.1 19.2 18.3
Average number of share
issue-adjusted 12,180 12,180 12,180 12,180 12,180 12,180
shares during report period ,880 ,880 ,880 880 ,880 ,880
Earnings per share (EPS),
euro -0.08 -0.08 -0.16 -0.07 -0.08 -0.14
Equity per share, euro 0.92 1.01 1.08 1.24 1.31 1.41
Investments, EUR millions 0.5 0.1 0.3 0.3 0.4 0.8
% of revenue 2.9 0.6 1.3 1.2 1.6 4.1
Average number of employees 732 728 743 739 724 733
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