2013-10-31 07:30:00 CET
2013-10-31 07:30:36 CET
REGULATED INFORMATION
Incap - Interim report (Q1 and Q3)
INCAP GROUP INTERIM REPORT JANUARY-SEPTEMBER 2013
Incap Corporation Stock Exchange Release 31 October 2013 at 8:30 a.m
Decreased revenue impaired profitability year-on-year. Extensive turnaround
program has been initiated to restore profitability. Key financials improved due
to financing arrangement.
January-September 2013 in brief:
* the Group's revenue was EUR 28,7 million, down approximately 42% year-on-
year (Jan-September 2012: EUR 49.6 million) due to the transfer of material
purchases to customers and decreased manufacturing volumes especially in the
factory in Estonia
* following the decrease in revenue, the operating result (EBIT) declined
year-on-year and was EUR -2.2 million (EUR -0.05 million)
* comprehensive financing arrangement improved the financial position whereby
the equity ratio rose to 23.9% and gearing improved to 159%
* extraordinary general meeting approved the conditional merger of Incap and
Inission and elected two new members to the Board of Directors
* Fredrik Berghel was appointed acting CEO of the Group
* Incap specifies its financial guidance and estimates that the Group's
revenue in 2013 will be approximately EUR 36 million
July-September 2013 in brief:
* revenue for the third quarter amounted to EUR 8.2 million, down
approximately 17% from the second quarter and approximately 48% year-on-year
(July-September 2012: EUR 15.7 million)
* the operating result (EBIT) for the third quarter improved compared with the
first and the second quarters but remained negative at EUR -0.3 million
(July-September 2012: EUR 0.3 million).
The accounting principles for the interim report
This interim report has been prepared in accordance with international financial
reporting standards (IFRS) - IAS 34 Interim Financial Reporting standard. When
preparing the release, the same preparation principles have been used as in the
2012 financial statements. Unless otherwise stated, the comparison figures refer
to the same period in the previous year. The information in this interim report
is unaudited.
Fredrik Berghel, President and CEO of Incap Group:"Incap has been fighting head wind for quite some time now. The financial
reconstruction achieved during the summer was the first step towards getting to
a normalised situation. I wish to thank all our shareholders, financiers,
material suppliers and other cooperation partners for their valuable support and
contribution in the financing arrangement.
Due to the past bad times some of our customers have started up alternative
sources to us, and this movement has especially hurt our operations in
Kuressaare, Estonia. Therefore, our situation still is challenging and restoring
the business is now our main task.
We are now focusing on the three C. I am asking all of my employees to really
scrutinise how they spend their time. If the task cannot be found in either of
the three C, then it should not be done.
Customer: To communicate that we have a new situation and that we are back on
track is our most important task. That is of course our sales and marketing
force that do most of that work, but all of our employees have to contribute.
From when they clock in till they clock out. Confidence in us has weakened, and
now we shall restore it with all means. With some of our customers this severe
situation actually has strengthened our relation.
Cost: Our business has been shrinking. We therefore have to adapt cost
accordingly. Most of the companies in the world are a lot smaller than Incap.
There is nothing about the size that destines us for not being profitable. This
is however a mental issue, we used to be a small "big company" now we shall be a
big "small company". This change has started and is in full swing. It will be
painful but nevertheless necessary.
Cash: The financial reconstruction has given us a second chance. We need to make
sure that we bring in all cash that is ours everywhere. Parallel to our road
show visiting customers we have also been around visiting almost all of our
suppliers with the same purpose, to restore confidence. It is of outmost
importance that we minimise our net working capital in all of operations in
order to secure our liquidity.
Even though we are experiencing hard times now, the actions that we have
initiated so far are already proving their effectiveness. We shall continue with
the same determination until our business is healthy and back on profitable
track. The turnaround is possible and we will carry it through. And after having
won this battle, we are strong enough to win anything."
Incap Group's revenue and earnings in July-September 2013
Revenue for the third quarter amounted to EUR 8.2 million, down approximately
48% year-on-year. The decrease in revenue was due to the lower demand of several
customers. Further, the responsibility for the purchase of materials was not
transferred from all customers back to Incap in the desired schedule.
The operating result of the third quarter improved in comparison with the first
and second quarters thanks to the efforts aimed at enhanced productivity and
cost savings. The net result was weakened by non-recurring costs in connection
with the financing arrangement.
Quarterly comparison | 7-9/| 4-6/| 1-3/|10-12/| 7-9/| 4-6/| 1-3/
(EUR thousands) | 2013| 2013| 2013| 2012| 2012| 2012| 2012
----------------------------+------+------+------+------+------+------+------
Revenue | 8,206| 9,883|10,654|14,498|15,701|18,378|15,564
----------------------------+------+------+------+------+------+------+------
Operating profit/loss (EBIT)| -331| -415|-1,432| -628| 280| 13| -345
----------------------------+------+------+------+------+------+------+------
Net profit/loss |-1,481|-1,172|-1,885|-4,616| 44| 352| -711
----------------------------+------+------+------+------+------+------+------
Earnings per share, EUR | -0.03| -0.05| -0.09| -0.23| 0.00| 0.02| -0.04
Incap Group's revenue and earnings in January-September 2013
Revenue for the review period amounted to EUR 28.7 million, down approximately
42% year-on-year. Main reason for the decline was that materials purchased by
customers were not included in revenue. Material responsibility has been
transferred back to Incap by most of the customers, but in some volume products
the transfer has been postponed. The weakening of the Indian rupee is also
lowering the revenue volume calculated in euros.
Because of the previous difficult financial situation some customers have also
applied their dual supplier strategy and transferred part of their production to
another supplier in line with their supply chain risk management. This has
affected especially the volumes in Incap's factory in Estonia.
The operating result (EBIT) for January-September was approximately EUR -2.2
million (EUR -0.05 million). The result was impaired first and foremost by the
decline in revenue and by the overhead costs which were high in respect of
revenue.
The variable personnel expenses were decreased by approximately 46% year-on-
year. Fixed costs were reduced by approximately 5% from the comparison period.
The value of inventories decreased year-on-year by EUR 3.4 million and from the
end of 2012 by approximately EUR 2.4 million.
Net financial expenses amounted to EUR 2.0 million (EUR 0.2 million) and
depreciation to EUR 1.0 million (EUR 1.2 million). Major financing expenses were
connected with the arrangement of convertible loans, while the financing income
consisted of composition arrangement of loans, interests and payables to
suppliers. In the comparison period in 2012, net financial expenses included a
non-recurring financing income item of approximately EUR 1.0 million. EUR 0.4
million of depreciation in the review period arose from to the impairment loss
for the Vuokatti property.
Net profit/loss for the period was EUR -4.5 million (EUR -0.3 million). Earnings
per share amounted to EUR -0.10 (EUR -0.02).
Comparison by review | 1-9/| 1-9/|Change, %| 1-12/
period (EUR thousands) | 2013| 2012| | 2012
----------------------------+------+------+---------+------
Revenue |28,743|49,643| -42|64,141
| | | |
----------------------------+------+------+---------+------
Operating profit/loss (EBIT)|-2,177| -52| 4,052| -681
| | | |
----------------------------+------+------+---------+------
Net profit/loss |-4,537| -314| 1,344|-4,930
| | | |
----------------------------+------+------+---------+------
Earnings per share, EUR | -0.10| -0.02| 555| -0.25
| | | |
Turnaround to restore profitability
In the turnaround program which was launched after the end of review period the
overall strategy is to focus on core business, i.e. manufacturing and deliveries
to customers. The customer relationships are strengthened by special attention
to the improvement of delivery accuracy in terms of On-Time-Delivery and to the
enhancement of efficiency both in production and supporting functions.
In the first stage, the target is to restore the profitability of operations and
to reach total annual savings of approximately EUR 2.9 million in overhead costs
and of approximately EUR 1.8 million in factory costs. The respective actions
are estimated to cause one-time costs of approximately EUR 1.6 million, and
accordingly, the total net savings will be approximately EUR 3.1 million. The
actions have already been started and their results are scheduled to be seen
within a varying time span during 2013 and 2014. The impact of the actions will
be evaluated by the end of January 2014. In case the targeted savings have not
become evident in desired speed and intensity, the second stage of the program
will be launched.
Incap continues to focus on the customer segments Energy efficiency and Well-
being technologies. Efforts to build up in-house design services to a strategic
competitive edge are replaced with the development of design services in
cooperation with partnering R&D companies.
The factories shall operate as self-sufficient profit centres while the
corporate functions' role is minimised. Supporting and coordinating duties are
streamlined and as part of this, cooperative negotiations in the Group services
in Finland are on-going and are estimated to be concluded on 11 November.
Similar discussions are in progress also with the corporate personnel working in
the Tallinn office.
The production capacity and organisation are adopted according to demand,
especially in the Estonian subsidiary, where the termination of approximately
85 employment contracts is being considered. In the Vaasa factory in Finland,
cooperative negotiations are on-going concerning the temporary layoff of 75
persons for a maximum of 90 days. Actions to increase the efficiency and
productivity are implemented in all factories.
The need for office locations is reconsidered. The office in Bangalore will move
to smaller premises by the end of the year. To reduce the costs, the company has
initiated negotiations on the rental contracts both in Tallinn and in
Kuressaare.
Capital expenditure
Capital expenditure for the period totalled EUR 0.2 million (EUR 0.1 million).
Quality assurance and environmental issues
All of Incap Group's plants have environmental management and quality assurance
systems certified by Det Norske Veritas. The systems are used as tools for
continuous improvement. Incap's environmental management system complies with
ISO 14001:2004, and its quality assurance system complies with ISO 9001:2008. In
addition, the Kuressaare plant has ISO 13485:2003 quality certification for the
manufacture of medical devices.
Financing arrangement
On 21 July 2013, Incap Corporation completed financing negotiations that
resulted in a comprehensive arrangement that substantially enhances the
company's financial position in both the short and the long term. The
arrangement enabled the return to normal mode in the company's operations like
in the purchase of materials. At the same time the equity ratio and liquidity of
the company improved significantly. The arrangement involved a directed share
issue for raising additional capital and converted debt to the company's new
shares. In addition, loan units of the company's convertible loan issued in
2012 were converted to the company's new shares.
In the directed share issue and the conversion of debt connected with it, a
total of 64,137,000 new shares were issued, of which 45,212,000 shares were
subscribed against cash payment and 18,925,000 shares were subscribed as
conversion against loans. Furthermore, in the conversion of the convertible loan
2012, a total of 22,430,769 new shares were subscribed. After the registration
of all the new shares, the company has a total of 109,114,035 shares, each
having one vote.
Deviating from shareholders' pre-emptive subscription rights, the share issue
was directed at the company's major shareholders, an industrial investor, the
company's Finnish financiers and the company's other creditors and senior
management. The subscription price per share was EUR 0.10, based on the
agreement between the company and the subscriber.
The shares subscribed in the share issue and in loan conversions granted
dividend rights and other shareholders' rights as of 29 July 2013, when the new
shares were entered in the Trade Register. The trade with the new shares at
NASDAQ OMX Helsinki Ltd's main list started on 18 October 2013 at equal value to
the company's other shares, and for this purpose, the company published a
prospectus on 16 October 2013.
Concerning the convertible loan issued in 2012, the contracts were renewed in
the way that all holders of the convertible loan will - after the composition
arrangement - convert the remaining loan to a total of 22,430,769 new shares in
the company. The subscription price of these shares was calculated to be
approximately EUR 0.13 per share.
The company further reached an agreement with holders of the convertible loan
issued in 2007 to have half of the loan paid immediately and the remaining EUR
0.5 million on 30 June 2014. Some of the loan units were already converted to
the company's shares in the private placement arranged in January 2013.
The holders of the company's capital loan and the company's Finnish financiers
converted their loan receivables to new shares in connection with the above
mentioned directed share issue. At the same time, loan contracts and interest
repayment schedules were renegotiated. In addition, the company's other
creditors - suppliers of materials and services - supported the financing
arrangement by participating in the composition arrangement, with a total effect
of EUR 1.5 million.
The immediate cash effect of the comprehensive arrangement is approximately EUR
6 million. The subscription price paid in cash, i.e. approximately EUR 4.5
million, was recorded in the reserve for invested unrestricted equity.
Furthermore, the bank released the collateral arrangement connected with the
sales price of the Vuokatti property transaction amounting to EUR 1.5 million.
| |
EFFECT OF THE FINANCING ARRANGEMENT|30.6.2013|AFTER THE FINANCING
ON THE COMPANY'S INTEREST-BEARING | | ARRANGEMENT,
LIABILITIES | | 31 JULY 2013
(EUR THOUSANDS) | |
-----------------------------------+---------+-------------------
Capital loans | 1,050| 0
-----------------------------------+---------+-------------------
Convertible loan 2012 |2,889(1))| 0
-----------------------------------+---------+-------------------
Convertible loan 2007 | 960| 480
-----------------------------------+---------+-------------------
Bank loans | 11,377| 8,391
-----------------------------------+---------+-------------------
Finance lease liabilities | 61| 55
-----------------------------------+---------+-------------------
Other loans | 1,899| 1,899
-----------------------------------+---------+-------------------
Total | 18,234| 10,825
1) In the consolidated financial statements (IFRS), convertible loan costs of
EUR 27,000 have been deducted from the EUR 2.9 million capital of the
convertible loan and amortised as financial expenses and liabilities.
Following the financing arrangement and the directed share issue related to that
arrangement, the Swedish contract manufacturer Inission AB become the company's
largest shareholder. After registration of the new shares subscribed in the
directed share issue, Inission AB holds 28,500,000 shares in Incap Corporation,
corresponding to approximately 26% of the total share capital.
The comprehensive arrangement agreed between Inission AB and Incap Corporation
on 21 July 2013 includes an option for Inission AB to combine and unite Inission
AB's business operations with Incap Corporation. The use of this option shall be
notified by Inission AB by the end of the year 2013. If the option is used, the
uniting of Incap and Inission will be carried out by Incap Corporation acquiring
Inission AB's subsidiaries' shares and business operations. The purchase price
is based on the actual result of Inission AB for the years 2011 and 2012 and for
January-June 2013.
If the transaction is consummated in accordance with the agreement conditions,
Incap will pay the purchase price by directing a new share issue to Inission in
two phases. In the first phase, the value of the new shares issued will
correspond to 70% of the total purchase price with the new shares being issued
in connection with the consummation of the agreement. The remaining 30% of the
purchase price will be paid through a second directed share issue two weeks
after Incap has published its financial statements for 2013.
As Inission AB's share ownership in Incap Corporation will exceed the limit set
for the obligation to make a takeover bid in case the transaction is
consummated, Inission applied the Financial Supervisory Authority for an
exemption from the obligation to bid. The Financial Supervisory Authority
granted the exemption on 6 August 2013.
Incap Corporation's Extraordinary General Meeting held on 21 August 2013 decided
to approve the transaction.
Balance sheet, financing and cash flow
The balance sheet total stood at EUR 19.8 million (EUR 35.2 million). The
Group's equity at the close of the review period was EUR 4.7 million (EUR 1.7
million). The parent company's equity strengthened to EUR 17.1 million,
representing 83% of the share capital (EUR 11,6 million, 56%). The Group's
equity ratio improved to 23.9% (4.9%).
Liabilities decreased amounting to EUR 15.1 million (EUR 33.4 million), of which
EUR 9.6 million (EUR 21.1 million) were interest-bearing liabilities.
Interest-bearing net liabilities decreased from the comparison period and were
EUR 7.5 million (EUR 20.8 million), and the gearing ratio was 159% (1,205%).
| |
INTEREST-BEARING LIABILITIES |30 June 2013|30 Sep 2013
(EUR THOUSANDS) | |
| |
-------------------------------------------------------+------------+-----------
Non-current financial liabilities measured at amortised| |
cost | |
-------------------------------------------------------+------------+-----------
Capital loans | 1 050| 0
-------------------------------------------------------+------------+-----------
Convertible loan | 1 890| 0
-------------------------------------------------------+------------+-----------
Finance lease liabilities | 0| 0
-------------------------------------------------------+------------+-----------
Other liabilities | 0| 1 945
-------------------------------------------------------+------------+-----------
| 2 940| 1 945
-------------------------------------------------------+------------+-----------
Current financial liabilities measured at amortised | |
cost | |
-------------------------------------------------------+------------+-----------
Bank loans | 11 377| 7 134
-------------------------------------------------------+------------+-----------
Other liabilities | 1 899| 0
-------------------------------------------------------+------------+-----------
Convertible loans | 1 959| 479
-------------------------------------------------------+------------+-----------
Finance lease liabilities | 61| 44
-------------------------------------------------------+------------+-----------
| 15 295| 7 657
-------------------------------------------------------+------------+-----------
| |
-------------------------------------------------------+------------+-----------
Interest-bearing liabilities, total | 18 234| 9 602
-------------------------------------------------------+------------+-----------
| |
Approximately EUR 1.2 million of current financial liabilities concerns the
Indian subsidiary. Factoring financing used by the parent company in Finland and
Estonia is part of current liabilities. Other bank loans are included in current
financial liabilities on the basis of the loan period or due to the breach of
covenants.
From the loans from credit institutions, EUR 5.9 million is granted by the
Finnish bank as bank loans and lines of credit in use. Of the Finnish bank's
credit line and factoring credit line, EUR 1.9 million was in use and EUR 7.6
million was unused on 30 September 2013. For operations in India and Estonia,
the balances of bank loans and credit line totalled EUR 3.1 million, which
includes Finnfund's EUR 1.9 million investment in Incap's operations in India.
In the comprehensive financing arrangement in July 2013, the company's interest-
bearing liabilities were reduced by approximately EUR 6.0 million.
The amount of the convertible loan of 2007 at the end of the period was EUR 0.5
million and it will mature on 30 June 2014. The convertible loan issued in 2012
(EUR 2.9 million in total) was converted in its entirety to the company's shares
in the financing arrangement.
On 30 September 2013, EUR 7.1 million of the loans were guaranteed, and the rest
were unguaranteed. The securities for these loans are the EUR 12.1 million
mortgages on company assets and a EUR 0.6 million mortgage on the production
facilities in India. According to the financing arrangement made in July, the
bank released the collateral arrangement connected with the sales price of the
Vuokatti plant property.
On 30 September 2013, the loans, credit line and factoring credit line granted
by Incap's Finnish bank involved the following covenants: equity ratio of at
least 15% and net IBD/EBITDA up to 5. Based on the company's estimate on 25
September 2013 these covenants are not met in the forthcoming review on 31
December 2013. The company has agreed with the bank upon negotiations on the
covenants and their target levels in November 2013, when the company's
preliminary targets for operations in the year 2014 are known. In case the
covenants are not met and the negotiations with the bank do not result in an
agreement on new covenant levels so that the bank uses its right to terminate
the loans, the company would most probably not be able to meet its commitments
but should initiate negotiations for rearrangement of financing.
There are no covenants involved with the investment of Finnfund made in 2009 or
with other foreign debt. However, a standby letter of credit as a guarantee of a
foreign bank loan involves covenants.
Incap has reached an agreement with the Finnish Tax Administration on the
payment arrangement related to overdue value-added taxes, withholding taxes and
social security contributions. On 30 September 2013, the total amount of tax
liabilities within the scope of this arrangement is EUR 0.7 million, and
according to the agreement, the last payment will take place in August 2014.
According to the provisions of the agreement, if an installment is late, the
Finnish Tax Administration has the right to terminate the agreement with
immediate effect.
During the review period, approximately EUR 0.3 million of deferred tax assets
have been utilised from the consolidated balance sheet on the basis of the
taxable income accumulated by the Indian subsidiary. On 30 September 2013,
confirmed tax losses for which no deferred tax asset was recognised amounted to
EUR 11.2 million.
The Group's quick ratio was 0.7 (0.5), and the current ratio was 1.2 (0.8).
Cash flow from operations was positive: EUR 0.4 million (EUR 1.6 million). On
30 September 2013, the Group's cash and cash equivalents totalled EUR 2.1
million (EUR 0.2 million). The change in cash and cash equivalents showed an
increase of EUR 1.1 million (a decrease of EUR 0.1 million).
Management and personnel
The CEO of Incap was changed on 20 September 2013, when the former CEO Sami
Mykkänen left his duties as CEO. Fredrik Berghel, M.Sc. (Eng.), born in 1967,
was appointed new acting President and CEO. Berghel is one of Inission AB's two
owners and he was elected to Incap Corporation's Board of Directors on 21 August
2013. Berghel has a long experience in several technology companies and today,
he is the CEO of Inission.
At the end of September 2013, the Incap Group had a payroll of 570 employees
(666). Some 57% (56%) of the personnel worked in India, 27% (30%) in Estonia and
16% (14%) in Finland.
Extraordinary General Meeting
The Extraordinary General Meeting of Incap Corporation was held on Wednesday,
21 August 2013 in Helsinki. A total of 22 shareholders participated in the
meeting, representing a total of 81.3% of all shares and votes.
The Extraordinary General Meeting elected Fredrik Berghel and Olle Hulteberg as
new members to the Board of Directors, and of the previous members of the Board
of Directors Raimo Helasmäki, Susanna Miekk-oja and Lassi Noponen were re-
elected to the Board of Directors. The members of the Board of Directors were
elected for a period beginning in the Extraordinary General Meeting and ending
in the first Annual General Meeting following the General Meeting, in which they
were elected.
The Extraordinary General Meeting resolved to approve, in line with the Board's
proposal, the conditional transaction between Incap Corporation and Inission AB,
in which the uniting of Incap and Inission will be carried out by Incap
Corporation acquiring Inission AB's subsidiaries' shares and business
operations. The realisation of the transaction is conditional to the exercising
of the related option by Inission AB.
The Extraordinary General Meeting further resolved to approve the consulting
agreement arrangement between Incap Corporation and Inission AB and authorised
the Board of Directors to negotiate and decide on further details of the
agreement.
The new Board of Directors held a meeting after the Extraordinary General
Meeting and elected Lassi Noponen as the Chairman of the Board.
Shares and shareholders
Incap Corporation has one series of shares, and the number of shares at the end
of the period was 109,114,035, out of which 22,546,266 were traded in the Stock
Exchange. The new shares issued in connection with the share issue and
conversion of loans came into trade after the end of the review period on 18
October 2013.
During the period, the share price varied between EUR 0.10 and 0.25 (EUR 0.27
and 0.65). The closing price for the period was EUR 0.17 (EUR 0.27). During the
review period, the trading volume was 4,756,878 shares, or 4.4% of outstanding
shares (1,499,294, or 7.2%).
At the end of the review period, Incap had 1,300 shareholders (1,101). Nominee-
registered or foreign owners held 27.1% (0.5%) of all shares. The company's
market capitalisation on 30 September 2013 was EUR 3.8 million (EUR 5.6
million). The company does not hold any of its own shares.
THE LARGEST SHAREHOLDERS ON 30 | NO. OF| SHARE OF
SEPTEMBER 2013 (INCLUDING THE | SHARES|OWNERSHIP, %
SUBSCRIBERS OF NEW SHARES ISSUED| |
IN JULY 2013): | |
--------------------------------+----------+------------
Inission AB (nominee-registered)|28,500,000| 26.1
--------------------------------+----------+------------
Oy Etra Invest Ab |16,934,547| 15.5
--------------------------------+----------+------------
Ingman Finance Oy Ab | 8,780,769| 8.1
--------------------------------+----------+------------
Ilmarinen | 8,307,692| 7.6
--------------------------------+----------+------------
Varma | 7,684,615| 7.0
--------------------------------+----------+------------
Finnvera Oyj | 6,238,600| 5.7
--------------------------------+----------+------------
Onvest Oy | 5,197,286| 4.8
--------------------------------+----------+------------
Nordea Pankki Suomi Oyj | 3,761,400| 3.5
--------------------------------+----------+------------
Laurila Kalevi | 2,735,429| 2.5
--------------------------------+----------+------------
JMC Finance Oy | 2,402,286| 2.2
Announcements in accordance with Section 10 of Chapter 9 of the Securities
Market Act on a change in holdings
Following the directed share issue arranged in January 2013, there were the
following changes in holdings exceeding the announcement limit on 11 February
2013: The number of shares held by Mandatum Life increased to 1,116,059 and
their holding after the registration of the share issue is 4.95% of all shares
of the company. The holding of Onvest Oy increased to 1,697,286 shares, or
7.53% of all shares. The holding of Suomen Teollisuussijoitus Oy decreased to
9.69%.
On 11 March 2013, Oy Ingman Finance Ab's holding in Incap shares decreased to
1,081,485 shares, or 4.80% of total number of shares and votes.
Following the directed share issue and conversion of loans as announced on 22
July 2013, the following changes in holdings exceeding the announcement limit
took place:
SHAREHOLDER |SHARE OF OWNERSHIP |NUMBER OF |SHARE OF
|AND NUMBER OF SHARES|NEW SHARES|OWNERSHIP
|PRIOR TO THE SHARE |SUBSCRIBED|AFTER THE
|ISSUE |AND |SHARE ISSUE
| |CONVERTED |AND
| | |CONVERSION
----------------------------+-----+--------------+----------+-----------
| %| shares| shares| %
----------------------------+-----+--------------+----------+-----------
Inission AB | 0| 0|28,500,000| 26.12
----------------------------+-----+--------------+----------+-----------
Oy Etra Invest Ab |21.44| 4,834,547|12,100,000| 15.52
----------------------------+-----+--------------+----------+-----------
Ilmarinen | 0| 0| 8,307,692| 7.61
----------------------------+-----+--------------+----------+-----------
Varma | 0| 0| 7,684,615| 7.04
----------------------------+-----+--------------+----------+-----------
Finnvera | 0| 0| 6,238,600| 5.72
----------------------------+-----+--------------+----------+-----------
Oy Ingman Finance Ab | 0| 0| 8,780,769| 8.05
----------------------------+-----+--------------+----------+-----------
Onvest Oy | 7.53| 1,697,286| 3,500,000| 4.76
----------------------------+-----+--------------+----------+-----------
JMC Finance Oy |10.65| 2,402,286| 0| 2.20
----------------------------+-----+--------------+----------+-----------
Suomen Teollisuussijoitus Oy| 9.69| 2,185,509| 0| 2.00
----------------------------+-----+--------------+----------+-----------
Göran Sundholm | 6.57| 1,481,113| 0| 1.36
----------------------------+-----+--------------+----------+-----------
Kalevi Laurila | 6.48| 1,460,429| 1,275,000| 2.51
Short-term risks and factors of uncertainty concerning operations
A substantial change took place in the risks related to Incap's business
operations on 21 July 2013 when the company realised the comprehensive financing
arrangement that had long been negotiated. The arrangement stabilised the
company's financial position.
General risks related to the company's business operations and sector include
the development of customer demand, price competition in contract manufacturing,
successful acquisition of new customers, availability and price development of
raw material and components, sufficiency of funding, liquidity and exchange rate
fluctuations. Of these, the most significant risks at the moment are the
execution of the actions to improve profitability and inventories as well as
global economic development and its impact on the company's customers' market
situation and demand.
To assess its liquidity, Incap has prepared a 12-month cash flow projection for
the Group, based on its performance forecast for 2013 and the actual turnover of
its sales receivables, accounts payable and inventories. Since the profit levels
used in calculations do not reflect the actual past development, there is an
element of uncertainty associated with them.
Based on the cash flow estimate Incap does not have sufficient working capital
for the company's needs for the forthcoming 12 months. The Company estimates
that the additionally needed working capital amounts to approximately EUR
1.5-2.5 million. The working capital is, however, sufficient for the
forthcoming 12 months, if the following provisions are met:
* The action plan launched by the company is successful and the company
reaches the targets set for efficiency improvement and cost savings
* The company reaches the estimated profitability targets in the way that the
company has sufficient means to cover the debt installment of EUR 1.3
million by the end of September 2014
* The covenants for the bank loans are met or in case the covenants are not
met, the bank does not use its right to call in the loans.
Incap published on 15 October an action plan, which is aimed at ensuring the
sufficiency of working capital. Major actions of the plan are the adaption of
production capacity according to demand and the increase of efficiency by
streamlining organisation structure, thinning administration and cutting costs.
Demand for Incap's services as well as the company's financial position are
affected by international economic trends and economic trends among Incap's
customer industries. In 2013, the business environment is estimated to develop
steadily in the sectors where Incap and its customers operate, and the general
economic uncertainty has not had - at least not yet - a particularly negative
effect on demand from or the solvency of the company's customers.
The company's sales are spread over several customer sectors, which balances out
the impact of the economic trends in different industrial sectors. In 2012, the
biggest single customer's share of the Group revenue was 17%. The company's
sector, contract manufacturing, is highly competitive, and there are major
pressures on cost level management. In the challenging market situation the
management of customer relationships is of special importance. The cost
structure has been made more flexible by distributing production activities into
several countries: Finland, Estonia and India. The focus of production
activities is in countries where wage and general cost levels are competitive.
Outlook for 2013
Incap's estimates for future business development are based both on its
customers' forecasts and on the company's own assessments.
The company specifies its financial guidance given on 13 September 2013 and
estimates that the Group's revenue in 2013 will be approximately EUR 36 million.
The revenue is as previously announced significantly lower than in 2012 when it
was EUR 64,1 million. The revenue for the second half of the year is estimated
to be smaller than the one of the first half of the year, when the revenue
amounted to EUR 20.5 million. The full-year operating result (EBIT) is estimated
to be negative.
In its estimate given on 13 September 2013, the company said that the revenue
for the latter part of the year will be approximately on the same level than for
the first half of the year, when the revenue was EUR 20.5 million. Accordingly,
the full-year revenue for 2013 was estimated to be significantly lower than in
2012. The Group's full-year operating result 2013 was estimated to be negative.
Publication of the financials for full-year 2013 and the interim report for
October-December 2013
Incap Group's interim report for the fourth quarter will be published on 25
February 2014 in connection with the announcement concerning financials for full
year 2013.
Helsinki, 31 October 2013
INCAP CORPORATION
Board of Directors
For additional information, please contact:
Fredrik Berghel, President and CEO, tel. +46 73 202 2210
Kirsti Parvi, CFO, tel. +358 50 517 4569
Hannele Pöllä, Director, Communications and Investor Relations, tel.
+358 40 504 8296
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
The company's home page www.incap.fi
NEWS CONFERENCE
Incap will arrange a conference for the press and financial analysts on 31
October 2013 at 10:00 a.m. at BANK (Unioninkatu 20, 00130 Helsinki). The results
are presented by the Group's CEO Fredrik Berghel.
ANNEXES
1 Consolidated Statement of Comprehensive Income
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
7 Calculations of Key Figures
INCAP IN BRIEF
Incap Corporation is an international 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 technologies, for which
the company produces competitiveness as a strategic partner. Incap has
operations in Finland, Estonia, India and China. The Group's revenue in 2012
amounted to approximately EUR 64.1 million, and the company currently employs
approximately 570 people. Incap's share has been listed on the NASDAQ OMX
Helsinki Ltd since 1997. Additional information: www.incap.fi.
Annex 1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
(EUR
thousands, 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 1-9/ 2013 1-9/ Cha- 1-12/
unaudited) 2013 2013 2013 2012 2012 2012 2012 2012 nge 2012
, %
--------------------------------------------------------------------------------
REVENUE 8, 9, 10, 14, 15, 18, 15, 28, 49, -39 64,
206 883 654 498 701 378 564 743 643 141
Work 0 0 0 0 0 0 0 0 0 0 0
performed
by the
enterprise
and
capitalised
Change -256 -97 -260 -323 -169 -327 176 -613 -320 138 -643
in
inventories
of finished
goods
and work
in
progress
Other 8 -12 51 49 136 134 85 48 355 -82 404
operating
income
Raw 4, 5, 7, 9, 10, 12, 10, 16, 34, -46 44,
materials 120 617 112 968 978 568 801 848 347 315
and
consu-
mables
used
Personnel 2, 2, 2, 2, 2, 3, 3, 7, 8, -19 11,
expenses 067 428 527 538 419 119 011 022 548 087
Depre- 115 227 628 231 378 435 415 970 1,229 1 1,460
ciation,
amorti-
sation
and
impairment
losses
Other 1, 1, 1, 2, 1, 2, 1, 5, 5, -12 7,
operating 987 917 611 114 612 051 944 515 606 721
expenses
OPERATING -331 -415 -1,432 -628 280 13 -345 -2, -52 456 -681
PROFIT 177
/LOSS
Finan- -1, -595 -439 -569 -156 339 -366 -2, -182 3, -751
cing 000 034 829
income
and
expenses
PROFIT/ -1, -1, -1, -1, 124 352 -711 -4, -235 703 -1,
LOSS 331 010 871 197 211 432
BEFORE
TAX
Income -150 -162 -14 -3,418 -79 0 0 -326 -79 -3,
tax 498
expense
PROFIT/ -1, -1, -1, -4, 44 352 -711 -4, -314 753 -4,
LOSS 481 172 885 616 537 930
FOR
THE
PERIOD
Earnings -0.03 -0.05 - - 0.00 0.02 -0.04 - - 600 -
per 0.09 0.23 0.10 0.02 0.25
share
Options have no dilutive effect in financial periods 2012 and 2013.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OTHER 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 1-9/ 1-9/ Change, % 1-12/
COMPREHENSIVE 2013 2013 2013 2012 2012 2012 2012 2013 2012 2012
INCOME
--------------------------------------------------------------------------------
PROFIT/LOSS -1, -1, -1, -4, 44 352 -711 -4, -314 753 -4,
FOR 481 172 885 616 537 930
THE PERIOD
OTHER
COMPREHENSIVE
INCOME:
Items that may be
recognised in
profit or
loss at a later
date:
Translation -190 -285 91 -129 63 -50 -2 -384 11 278 -118
differences from
foreign units
Other -190 -285 91 -129 63 -50 -2 -384 11 278 -118
comprehensive
income, net
TOTAL -1, -1, -1, -4, 107 302 -712 -4, -303 693 -5,
COMPREHENSIVE 671 457 793 745 922 048
INCOME
Attributable to:
Shareholders of -1, -1, -1, -4, 107 302 -712 -4, -303 693 -5,
the parent 671 457 793 745 922 048
company
Non-controlling 0 0 0 0 0 0 0 0 0 0
interest
--------------------------------------------------------------------------------
Annex 2
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE
SHEET (IFRS)
(EUR thousands, 30 September 30 September Change, % 31 December
unaudited) 2013 2012 2012
--------------------------------------------------------------------------------
ASSETS
NON-CURRENT ASSETS
Property, plant and 1,867 2,863 -35 2,578
equipment
Goodwill 869 969 -10 940
Other intangible 80 194 -59 178
assets
Other financial 471 311 51 311
assets
Deferred tax assets 187 4,014 -95 560
TOTAL NON-CURRENT 3,474 8,351 -58 4,568
ASSETS
CURRENT ASSETS
Inventories 6,929 10,339 -33 9,352
Trade and other 7,304 14,295 -49 12,815
receivables
Cash and cash 2,087 231 804 613
equivalents
TOTAL CURRENT ASSETS 16,320 24,864 -34 22,780
Non-current assets 0 1,936 -100 1,936
held-for-sale
TOTAL ASSETS 19,794 35,151 -44
29,283
EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF
THE PARENT COMPANY
Share capital 20,487 20,487 0 20,487
Share premium 44 44 0 44
account
Reserve for invested 17,471 4,809 263 4,818
unrestricted equity
Exchange differences -1,301 -788 65 -917
Retained earnings -31,978 -22,825 40 -27,440
TOTAL EQUITY 4,723 1,728 173 -3,008
NON-CURRENT
LIABILITIES
Deferred tax 0 0 0
liabilities
Interest-bearing 1,945 1,915 2 2,492
loans and borrowings
NON-CURRENT 2,492
LIABILITIES
CURRENT LIABILITIES
Trade and other 5,469 12,369 -56 11,841
payables
Current interest- 7,657 19,097 -60 17,959
bearing loans and
borrowings
CURRENT LIABILITIES 13,126 31,466 -58 29,800
Liabilities relating 0 43 -100 0
to non-current
assets held-for-sale
TOTAL EQUITY AND 19,794 35,151 -44 29,283
LIABILITIES
--------------------------------------------------------------------------------
Annex 3
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
(EUR thousands, unaudited) 1-9/2013 1-9/2012 1-12/2012
--------------------------------------------------------------------------------
Cash flow from operating activities
Operating profit/loss -2,177 -52 -681
Adjustments to operating profit 1,122 867 728
Change in working capital 2,375 2,354 4,188
Interest paid and payments made -954 -1,580 -1,814
Interest received 10 19 27
Cash flow from operating activities 376 1,608 2,448
Cash flow from investing activities
Capital expenditure on tangible and intangible -182 -69 -124
assets
Proceeds from sale of tangible and intangible assets 1,488 134 139
Other investments 0 -61 -61
Loans granted -2 -4 0
Sold shares of subsidiary 0 0 0
Repayments of loan assets 0 3 3
Cash flow from investing activities 1,304 3 -43
Cash flow from financing activities
Proceeds from share issue 4,282 725 734
Drawdown of loans 1,246 1,309 1,819
Repayments of borrowings -6,051 -3,158 -4,201
Repayments of obligations under finance leases -51 -566 -594
Cash flow from financing activities -574 -1,690 -2,242
Change in cash and cash equivalents 1,106 -79 163
Cash and cash equivalents at beginning of period 613 369 369
Effect of changes in exchange rates 212 -28 99
Changes in fair value (cash and cash equivalents) 156 -31 -18
Cash and cash equivalents at end of period 2,087 231 613
--------------------------------------------------------------------------------
Annex 4
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EUR thousands,
unaudited)
Share Share Reserve for Exchange Retained Total
capital premium invested differences earnings
account unrestricted
equity
--------------------------------------------------------------------------------
Equity at 1 20,487 44 4,084 -799 -22,506 1,311
January 2012
Issue premium 0 0 0 0 759
759
Transaction 0 0 -34 0 0 -34
costs for
equity
Change in 0 0 0 11 0 11
exchange
differences
Options and 0 0 0 0 -5 -5
share-based
compensation
Other changes 0 0 0 0 0 0
Net income and 0 0 725 11 -5 731
losses
recognised
directly in
equity
Net profit/loss 0 0 0 0 -314 -314
0 0 725 11 -319 417
Equity at 30 20,487 44 4,809 -788 -22,825 1,728
September 2012
Equity at 1 20,487 44 4,818 -917 -27,440 -3,008
January 2013
Share issue 0 0 12,938 0 0 12,938
Transaction 0 0 -286 0 0 -286
costs for
equity
Change in 0 0 0 -384 0 -384
exchange
differences
Options and 0 0 0 0 0 0
share-based
compensation
Other changes 0 0 0 0 0 0
Net income and 0 0 12,653 -384 0 12,268
losses
recognised
directly in
equity
Net profit/loss 0 0 0 0 -4,537 -4,537
Total income 0 0 12,653 -384 -4,537 7,731
and losses
Equity at 30 20,487 44 17,471 -1,301 -31,978 4,723
September 2013
--------------------------------------------------------------------------------
Annex 5
--------------------------------------------------------------------------------
GROUP KEY FIGURES AND CONTINGENT
LIABILITIES 30 Sep 2013 30 Sep 2012 31 Dec 2012
--------------------------------------------------------------------------------
Revenue, EUR million 28.7 49.6 64.1
Operating profit, EUR million -2.2 -0.1 -0.7
% of revenue -7.6 -0.1 -1.1
Profit before taxes, EUR million -4.2 -0.2 -1.4
% of revenue -14.7 -0.5 -2.2
Return on investment (ROI), % 4.7 6.8 -12.6
Return on equity (ROE), % (²) -705.8 -27.6 580.8
Equity ratio, % 23.9 4.9 -10.3
Gearing, % 159.1 1205.2 -659.4
Net debt, EUR million 5.7 18.9 18.9
Net interest-bearing debt, EUR million 7.5 20.8 19.8
Quick ratio 0.7 0.5 0.5
Current ratio 1.2 0.8 0.8
Average number of shares during the review 20,067,042.3
period, adjusted for share issues 43,605,321 19,804,494
Earnings per share (EPS), EUR -0.10 -0.02 -0.25
Equity per share, EUR 0.04 0.08 -0.14
P/E ratio -1.6 -17 -0.8
Trend in share price
Minimum price during the period, EUR 0.10 0.27 0.15
Maximum price during the period, EUR 0.25 0.65 0.65
Mean price during the period, EUR 0.15 0.39 0.3
Closing price at the end of the period, 0,17 0.27 0.19
EUR
Total market capitalisation, EUR million 4 6 4
Trade volume, no. of shares 4,756,878 1,499,294 2,952,411
Trade volume, % 4.4 7.2 14.2
Investments, EUR million 0.2 0.1 0.1
% of revenue 0.6 0.1 0.2
Average number of employees 569 713 697
CONTINGENT LIABILITIES, EUR million
FOR OWN LIABILITIES
Mortgages(¹) and pledges 12.7 14.4 14.3
Off-balance sheet liabilities 3.5 7.7((2)) 7.1
Nominal value of currency options, EUR 0 0 0
thousand
Fair values of currency options, EUR 0 0 0
thousand
¹ In the calculation of return on equity,
the numerator and the
denominator are negative.
² The repurchase obligation of invoiced
receivables has been added to
off-balance sheet liabilities on 30
September 2012.
--------------------------------------------------------------------------------
Annex 6
QUARTERLY KEY FIGURES (IFRS)
--------------------------------------------------------------------------------
7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2013 2013 2013 2012 2012 2012 2012
--------------------------------------------------------------------------------
Revenue, 8.2 9.9 10.7 14.5 15.7 18.4 15.6
EUR million
Operating profit, -0.3 -0.4 -1.4 -0.6 0.3 0.0 -0.3
EUR million
% of revenue -4.0 -4.2 -13.4 -4.3 1.8 0.1 -2.2
Profit before taxes, -1.3 -1.0 -1.9 -1.2 0.1 0.4 -0.7
EUR million
% of revenue -16.2 -10.2 -17.6 -8.3 0.8 1.9 -4.6
Return on 56.2 -12.1 -31.2 -73.2 3.3 17.8 -1.5
investment (ROI), %
Return on equity -691.1 105.3 202.5 2,175.3 11.7 95 -297.7
(ROE), %²
Equity ratio, % 23.9 -25.8 -17.7 -10.3 4.9 4.3 1.6
Gearing, % 159.1 -266.1 -393.5 -659.4 1,205.2 1,372.9 4,103.2
Net debt, 5.7 16.5 18.7 18.9 18.9 20.3 23.2
EUR million
Net interest-bearing 7.5 15.7 17.5 19.8 20.8 22.7 24.6
debt, EUR million
Average number of 43, 22 21, 20, 19, 19, 18,
shares during the 605,321 ,264,948 980,504 067,042 804,494 276,512 680,880
review period,
adjusted for share
issues
Earnings per -0.03 -0.05 -0.09 -0.23 0.00 0.02 -0.04
share (EPS), EUR
Equity per share, EUR 0.04 -0.26 -0.20 -0.14 0.08 0.08 0.03
Investments, 0.05 0.1 0 0.1 0.0 0.1 0.0
EUR million
% of revenue 0.59 0.9 0.4 0.3 -0.1 0.3 0.2
Average number 563 556 590 652 698 710 727
of employees
--------------------------------------------------------------------------------
Annex 7
CALCULATION OF KEY FIGURES
100 x (profit/loss for the period +
Return on investment, % financial expenses)
-------------------------------------------
equity + interest-bearing financing loans
Return on equity, % 100 x profit/loss for the period
-------------------------------------------
average equity during the financial period
Equity ratio, % 100 x equity
-------------------------------------------
balance sheet total - advances received
Gearing, % 100 x interest-bearing net financing loans
-------------------------------------------
equity
Net liabilities liabilities - current assets
Quick ratio current assets
------------------------------------------- short-term liabilities - short-term
advances received
Current ratio current assets + inventories
-------------------------------------------
short-term liabilities
Earnings per share net profit/loss for the period
-------------------------------------------
average number of shares during the
period, adjusted for share issues
Equity per share equity
-------------------------------------------
number of shares at the end of the period,
adjusted for share issues
VAT-exclusive working capital
acquisitions, without deduction of
Capital expenditure investment subsidies
average of personnel numbers calculated at
Average number of employees the end of each month
closing price for the period x number of
Total market capitalisation shares available for public trading
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