2013-10-16 17:45:00 CEST
2013-10-16 17:46:11 CEST
REGULATED INFORMATION
Incap - Company Announcement
INCAP CORPORATION PUBLISHES IN THE PROSPECTUS ITS WORKING CAPITAL STATEMENT AND PRO FORMA INFORMATION ON THE INCAP-INISSION GROUP
Incap Corporation Stock Exchange Release 16 October 2013 at 6.45 p.m.
INCAP CORPORATION PUBLISHES IN THE PROSPECTUS ITS WORKING CAPITAL STATEMENT AND
PRO FORMA INFORMATION ON THE INCAP-INISSION GROUP
Incap Corporation ("Incap" or "the Company") has published preliminary pro forma
information on the conditional business restructuring ("the Transaction")
between Incap and Inission AB ("Inission") on 20 August 2013. Further, on 29
July 2013, the Company issued a stock exchange release, in which it announced
that the new shares subscribed for in the previously announced directed share
issue and in the conversion of the convertible loan issued in 2012, would be
listed for public trading on NASDAQ OMX Helsinki, and to serve this purpose, the
Company would prepare a Prospectus.
In its stock exchange release of 20 August 2013, the Company announced that it
would complement the preliminary pro forma figures in the Prospectus. Today, the
Company announced that the Prospectus has been approved by the Financial
Supervisory Authority and will be published.
With this release, the Company presents the working capital statement, which has
not been disclosed previously and complements the preliminary pro forma
information published on 20 August 2013 on the Transaction. The working capital
statement and the complementary pro forma information are included in the
Prospectus approved by the Financial Supervisory Authority on 16 October 2013.
Working capital statement
Based on the cash flow estimate Incap does not have sufficient working capital
on this date of the Prospectus 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 Company's 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 instalment 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.
The Company 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.
Pro forma information included in the Prospectus
Most essential change in the complementary pro forma information published in
the Prospectus, when compared with the preliminary pro forma information
published on 20 August 2013, is that the pro forma figures released now include
all IFRS-adjustments caused by the arrangement. The respective clarifications
were not finished yet when preliminary pro forma information was given to the
General Meeting held on 21 August 2013. As a result of the clarifications the
consolidation is considered to fill the criteria of a reverse acquisition in
line with the IFRS 3 standard.
The following tables present unaudited pro forma financial information on the
Incap-Inission Group as though the Transaction had been completed:
* on 1 January 2012 (unaudited pro forma income statement for the 12-month
period that ended on 31 December 2012 and unaudited pro forma income
statement for the 6-month period that ended on 30 June 2013); and
* on 30 June 2013 (unaudited pro forma balance sheet).
The unaudited pro forma financial information presented below has been prepared
in accordance with the IFRS standards adopted by the EU.
The unaudited pro forma financials are based on financial information from the
following sources:
* The unaudited pro forma balance sheet of 30 June 2013 is based on Incap's
unaudited consolidated balance sheet of 30 June 2013 and Inission's
unaudited balance sheet of 30 June 2013.
* The unaudited pro forma income statement for the 12-month period that ended
on 31 December 2012 is based on Incap's audited consolidated income
statement for the financial period that ended on 31 December 2012 and
Inission's unaudited income statement for the financial period that ended on
31 December 2012.
* The unaudited pro forma income statement for the 6-month period that ended
on 30 June 2013 is based on Incap's unaudited consolidated income statement
of 30 June 2013 and Inission's unaudited income statement of 30 June 2013.
The unaudited pro forma financial information presented below has been prepared
for the purpose of illustration. The information describes a hypothetical
situation. Accordingly, the information does not describe Incap's actual
financial position or result. For this reason, the unaudited pro forma financial
information does not constitute an exact description of what Incap's financial
position and result would have been if the Transaction had been carried out at
the time or what Incap's or the Incap-Inission Group's result would be for a
future period of time or what their financial position would be at a given time.
The unaudited pro forma financial information does not describe the effects of
the estimated synergies and increased efficiency resulting from the Transaction.
The Inission figures include the subsidiaries of Inission (Inission TRIAB AB,
Inission Göteborg AB, Inission Munkfors AB, Inission Tallinn OÜ and Inission
MikroMakarna AB) but not the parent company Inission AB.
In Inission's income statement 2012 the subsidiaries's figures are audited, but
neither the exchange from Swedish Crown to Euro nor the consolidation has been
separately audited. The average exchange rates used are as follows: in
Inission's income statement 2012 8.684, in income statement 2013 8.556 and in
balance sheet 30 June 2013 8.777. The figures in column "Inission's income
statement 2012" include eliminations amounting to 5,365,000 Euros, and the
figures in column " Inission's income statement 1-6/2013" include eliminations
amounting to 3,023,000 Euros. Eliminations of the trade between Inission's
subsidiaries are related to the eliminations of Inission Group's internal
revenue and internal material use. There are no eliminations included in the
balance sheet items.
PRO Incap's Inission's IFRS Pro Note Pro Consoli-
FORMA income income adjust- forma forma dated
INCOME state- state- ments adjust- adjust- pro
STATEMENT ment ment ments ments/ forma
2012 2012 Mikro figures
Ma-karna 2012
(IFRS) (SAS*) (IFRS)
(audited) (audited) (unaudited)
|
(EUR 1,000) |
|
|
|
64,141 23,580| 0 6,704 94,425
Revenue |
|
|
Change in |
inventories of -643 0| 0 -55 -698
finished goods |
and work in |
progress |
|
|
Other operating 404 0| 0 10 414
income |
|
|
Raw materials 44,315 12,940| 0 3,766 61,021
and consumables |
used |
|
|
Personnel 11,087 6,263| 0 1,717 19,067
expenses |
|
|
Other operating 7,721 2,973| -39 577 4 305 11,537
expenses |
|
|
Operating |
profit/loss |
before 779 1,404| 39 -577 871 2,516
depreciation, |
amortisation |
and impairment |
losses (EBITDA) |
|
|
Depreciation, |
amortisation 1,460 112| 33 0 80 1,685
and impairment |
losses |
|
|
Operating -681 1,292| 6 -577 791 831
profit/loss |
(EBIT) |
|
|
Financial -751 349| -335 -772 2 171 -1,338
income and |
expenses |
|
|
Profit/loss -1,432 1,641| -329 -1,349 962 -507
before tax |
|
-3,498 428| -331 -405 -3,807
Income tax |
|
|
Profit/loss for -4,930 2,069| -660 -1,349 556 -4,314
the period |
PRO Incap's Inission's IFRS Pro Note Pro Consoli-
FORMA income income adjust- forma forma dated
INCOME state- state- ments adjust- adjust- pro
STATEMENT ment ment ments ments/ forma
1-6/2013 1-6/2013 Mikro figures
Makarna 1-6/2013
(IFRS) (SAS*) (IFRS)
(unaudited) (unaudited) (unaudited)
|
(EUR 1,000) |
|
|
|
20,537 14,525| 0 0 35,062
Revenue |
|
|
Change in |
inventories |
of finished -357 0| 0 0 -357
goods |
and work in |
progress | |
|
Other 41 0| 0 0 41
operating |
income |
|
|
Raw materials |
and 12,729 7,116| 0 0 19,845
consumables |
used |
|
|
Personnel 4,955 4,088| 0 0 9,043
expenses |
|
|
Other 3,528 1,733| -20 0 5,241
operating |
expenses |
|
|
Operating |
profit/loss |
before |
depreciation, -991 1,588| 20 0 617
amortisation |
and |
impairment |
losses |
(EBITDA) |
|
|
Depreciation, |
amortisation 855 75| 17 0 947
and |
impairment |
losses |
|
|
Operating -1,846 1,513| 3 0 -330
profit/loss |
(EBIT) |
|
|
Financial -1,034 -5| 28 199 2 -813
income and |
expenses |
|
|
Profit/loss -2,880 1,507| 31 199 -1,143
before tax |
|
-176 -55| -283 -514
Income tax |
|
|
Profit/loss -3,056 1,452| -252 199 -1,657
for the |
period |
|
|
PRO FORMA Incap Inission IFRS Pro Note Consoli-
BALANCE 30/6/2013 30/6/2013 adjustments forma dated
SHEET adjustments pro
forma
30/6/2013
(IFRS) (SAS*) (IFRS)
(unaudited) (unaudited) (unaudited)
|
(EUR 1,000) |
|
|
|
NON-CURRENT |
ASSETS |
|
Goodwill 905 0| 0 9,878 1 10,783
|
Other |
intangible 64 2| 0 0 66
assets | |
Property, |
plant and 2,093 432| 99 0 2,624
equipment |
|
Other |
financial 470 13| 0 0 483
assets |
|
Deferred 356 375| -141 0 590
tax assets |
|
Total non- |
current 3,888 823| -42 9,878 14,547
assets |
|
|
|
CURRENT |
ASSETS |
|
Inventories 6,695 5,657| 0 0 12,352
|
Trade and |
other 9,705 6,285| -9 0 15,982
receivables |
|
Cash and |
cash 2,551 1,773| 0 4,092 1,2 8,415
equivalents |
|
Total |
current 18,951 13,715| -9 4,092 36,748
assets |
|
|
Total 22,839 14,537| -51 13,970 51,295
assets |
|
|
|
EQUITY |
|
Share 20,487 408| 0 -408 1 20,487
capital |
|
Restricted 44 928| 1,541 -2,469 1 44
reserves |
|
Invested |
non- |
restricted 5,182 0| 0 25,075 1,2,3 30,257
equity |
reserve |
|
Translation -1,111 3| 0 -3 1 -1,111
differences |
|
Retained -30,497 3,688| -124 -1,136 1,2,3,4 -28,069
earnings |
|
Total -5,895 5,027| 1,418 21,059 21,609
equity |
|
|
|
NON-CURRENT |
LIABILITIES |
|
Provisions 0 1,976| -1,976 0 0
|
Deferred |
tax 0| 493 493
liabilities |
|
Interest- |
bearing 2,940 3,223| -43 -2,967 2 3,153
liabilities |
|
Total non- |
current 2,940 5,199| -1,526 -2,967 3,646
liabilities |
|
|
|
CURRENT |
LIABILITIES |
|
Interest- |
bearing 15,295 369| 45 -3,029 2 12,681
liabilities |
|
Trade and |
other 10,499 3,942| 13 -1,093 2,4 13,360
payables |
|
Total |
current 25,794 4,311| 58 -4,122 26,041
liabilities |
|
|
|
Total 28,734 9,510| -1,469 -7,089 29,686
liabilities |
|
Total |
equity and 22,839 14,537| -51 13,970 51,295
liabilities |
------------------------------------+-------------------------------------------
* Swedish Accounting Standards
The unaudited pro forma income statement and balance sheet information on the
entity created through the merger of Incap's and Inission's subsidiaries
includes the following adjustments that are estimated to be non-recurring:
1) Acquisition cost estimate
Legally, Incap Corporation will be the parent company of the entity created
through the business restructuring, and Inission's subsidiaries will become
Incap Corporation's subsidiaries. In terms of accounting, however, the situation
is different, as the business restructuring is regarded as a reverse acquisition
in accordance with IFRS 3. In accounting, Incap Corporation will be the object
of the acquisition, and Inission will be the subject of the acquisition. For
this reason, the consolidated balance sheet at the time of the acquisition will
consist of the adjusted consolidated balance sheet of Incap Corporation and the
IFRS-adjusted balance sheets of the business operations transferred from
Inission to Incap.
All of the pro forma adjustments to the balance sheets in accordance with IFRS
3 are tentative in nature and based on the assumption that the second phase of
the business restructuring will be carried on as planned. Any adjustments to
Incap Corporation's balance sheet at the time of the acquisition require the
fair value of the Incap Group's identifiable assets and liabilities to be
determined for the time of the acquisition. In accordance with IFRS 3, any asset
items not included in Incap Corporation's present consolidated balance sheet
that fulfil the recognition criteria will be included in the consolidated
balance sheet. The determination of the fair value of such identifiable assets,
such as Incap Corporation's customer relationships, cannot be completed until
the second phase of the business restructuring (the phase related to the
execution of the share option). For this reason, customer relationships have not
been recognised as identifiable asset items in the pro forma calculations, and
it is possible that the preliminary goodwill presented here will decrease when
the acquisition cost estimate is complemented.
The acquisition cost is determined to be EUR 15.6 million, which is equal to the
fair value of the consideration issued in conjunction with the merger of the
business operations. It covers the first and second phases of the merger
arrangement in progress. The fair value of the consideration has been determined
in accordance with IFRS 3.B20. The consideration is based on the estimated
number of shares that the accounting acquirer would have to transfer to the
shareholders of the legal parent company in order to acquire a percentage of the
new entity equal to that in the reverse acquisition if the second phase of the
arrangement is carried out as planned.
The acquisition cost calculation is based on the following information and
assumptions:
a) Incap Corporation's market capitalisation on 30 June 2013.
b) The increase in Incap Corporation's market capitalisation resulting from the
pro forma adjustments. This increase is based on the immediate increase in cash
and cash equivalents and decrease in debt resulting from the arrangement
described in the pro forma adjustments, totalling EUR 11.6 million.
c) The estimated total number of shares issued in conjunction with the
arrangement. The total number is based on the projected execution of the share
subscription option in the second phase of the arrangement and on the Incap
share price of EUR 0.17 at the time of pro forma calculations. The price level
has been determined based on the fair value at the preparation date of the
calculations and based on the probable price level. In the calculations, the
total number of Incap Corporation shares at the end of the arrangement is
approximately 165 million, of which Inission holds approximately 51%.
Preliminary acquisition cost calculation of 30 June 2013 for pro forma
information:
Acquisition cost measured at fair value EUR 15.6 million
The identifiable assets and liabilities of the accounting acquiree
measured at fair value in accordance with IFRS 3 EUR 5.7 million*
Goodwill EUR 9.9 million
*The net assets of EUR 5.7 million include a goodwill of EUR 0.9 million before
the arrangement.
2) Decrease in liabilities
The following debt cuts were included in the acquisition and merger agreement of
21 July 2013 as a condition for Inission's participation in the share issue in
the first phase of the arrangement (Inission had a holding of 26% at the time).
In the pro forma information, these remissions of debts are recognised as
transactions immediately resulting from the arrangement.
As a result, the debts in Incap Corporation's balance sheet of 30 June 2013 have
been cut (composition arrangement) as follows:
Non-current interest-bearing liabilities EUR 0.2 million
Current interest-bearing liabilities EUR 0.5 million
Current non-interest-bearing liabilities EUR 2.0 million
In addition, the pro forma calculations include, in accordance with the
agreement mentioned above, the conversion of EUR 4.8 million in interest-bearing
liabilities into Incap Corporation's invested non-restricted equity reserve and
a repayment of EUR 0.5 million of the convertible loan with funds from the share
issue in the first phase of the arrangement.
Incap Corporation's interest-bearing and non-interest-bearing liabilities
decreased by approximately EUR 8.0 million in the first phase of the
arrangement. After expert fees, the net decrease in liabilities amounted to EUR
7.1 million. Of the decrease approximately EUR 2.7 million fell to the
composition of loans, interests and payables, approximately EUR 4.8 million to
the conversion of convertible loan, bank loan and capital loan to shares, and
approximately EUR 0.5 million to the repayment of convertible loan. The debt
cuts and conversions into the invested non-restricted equity reserve in
accordance with IAS 32 AG35, IAS 39.41 and IFRIC 19 resulted in a financial
expense of EUR 3.2 million. Most of the expense consisted of changes in the
share conversion conditions of the convertible loan in conjunction with the
arrangement. In the pro forma information, the expense is recognised in
financial expenses for 2012.
3) Share issues
A share issue was carried out in the first phase of the arrangement in July
2013, with Incap issuing approximately 86.6 million shares, of which Inission
subscribed for 28.5 million shares. In conjunction with the share issue, EUR
4.8 million was recognised in the invested non-restricted equity reserve as a
result of debt conversion and EUR 4.5 million from shares subscribed in cash. A
total of seven investors subscribed the shares against cash, and of them
Inission AB, Etra Invest AB and Onvest Oy made the biggest subscriptions. The
Company's management subscribed new shares by approximately EUR 0.1 million.
The pro forma information also includes the assumption that Inission will use
its share subscription option in full in the second phase of the arrangement in
accordance with the acquisition and merger agreement of 21 July 2013. For this
reason, the estimated effect of the share issues (EUR 12.7 million) to be
carried out in the second phase of the arrangement is included in Incap's
invested non-restricted equity reserve, based on the estimate of the fair value
of the consideration in the acquisition cost estimate. Other items in the pro
forma adjustment were related to the elimination of the equity of Inission's
subsidiaries on 30 June 2013, retained earnings on 30 June 2013 and goodwill.
4) Expert fees
The full execution of the acquisition and merger agreement is estimated to
result in approximately EUR 0.9 million in non-recurring expert fees after 1
July 2013. This has been added to current non-interest-bearing liabilities as a
pro forma adjustment on 30 June 2013. Expert fees from the share issue in the
first phase have been recognised as a deduction of EUR 0.2 million in the
invested non-restricted equity reserve. The rest are regarded as having been
caused by a business combination in accordance with IFRS 3 and have been
recognised through profit and loss in the pro forma information for the 2012
financial period. Of these non-recurring items, EUR 0.6 million is included in
other operating expenses and EUR 0.1 million in financial expenses.
5) Pro forma adjustment related to MikroMakarna AB in the pro forma income
statement for 2012
MikroMakarna AB is a subsidiary of Inission and will be transferred under the
ownership of Incap in the second phase of the arrangement. Inission acquired
MikroMakarna on 5 December 2012. Consequently, the company is included in
Inission's consolidated financial statements only for December 2012.
MikroMakarna's income and expenses for 1 January to 30 November 2012 were
included as a pro forma adjustment in the income statement of the new entity for
2012 in accordance with the Swedish Accounting Standards. The adjustment is
based on MikroMakarna's unaudited information for 1 January to 30 April 2012 and
the subsidiary's audited financial statements for 1 May to 31 December 2012. The
IFRS adjustments based on MikroMakarna's income and expenses are presented in
the pro forma information as part of the adjustments in the "IFRS adjustments"
column."IFRS adjustments" column
The information in the column is based directly, without adjustments, on an IFRS
review prepared by Inission's local auditor on 5 September 2013. The report was
prepared for the purposes of the registration document and intended to identify
key differences between subsidiaries' local accounting practices and IFRS
standards that have an effect on the result and balance sheet. An auditing firm
has served as the auditor of Inission and its subsidiaries for the periods
covered by the pro forma information.
The IFRS review describes key standards in need of IFRS adjustments and the
related amounts in euros if the income statements and balance sheets of
Inission's subsidiaries for 1 January to 31 December 2012 and 1 January to 30
June 2013, prepared in accordance with the Swedish Accounting Standards, had
been converted into IFRS. Inission has not prepared complete IFRS financial
statements. For this reason, when the pro forma information was prepared,
audited IFRS financial statements were not available for Inission's subsidiaries
that will be transferred to the new entity in the second phase of the
arrangement.
Explanations of the most significant IFRS adjustments related to Inission's
subsidiaries:
Income statement for 2012
An increase of EUR 0.5 million in deferred tax liabilities in 2012 was recorded
in deferred tax assets related to temporary differences. The adjustment
eliminates the increase in deferred tax assets in Inission Munkfors AB's income
statement for 2012. After the adjustment, the subsidiary's tax expenses for
2012 comply with IAS 12.
Appropriations made in subsidiaries' local accounting for tax reasons have been
eliminated through IFRS adjustments, which decreased deferred tax liabilities
for 2012 by approximately EUR 0.2 million.
In the income statements of the Inission Group's companies for 2012, prepared in
accordance with local accounting practices, local appropriations increase
financial income in the related column by EUR 0.3 million. This income item is
not compliant with IFRS and has been eliminated in the "IFRS adjustments"
column.
The rest of the IFRS adjustments are minor in amount and related to IAS
32/IAS 39 (Financial Instruments) and IAS 17 (Leases).
Income statement for 1 January to 30 June 2013
Key pro forma adjustments are based on the further effects of tax adjustments to
the income statements for 2012. The increase in Inission Munkfors AB's deferred
tax liabilities is EUR 0.1 million, and the effect of the elimination of local
appropriations made for tax reasons is an increase of EUR 0.2 million in tax
liabilities for the period.
The rest of the IFRS adjustments are minor in amount and related to IAS
32/IAS 39 (Financial Instruments) and IAS 17 (Leases).
The Prospectus includes a report on the pro forma information prepared by the
Company's auditor.
INCAP CORPORATION
Fredrik Berghel
President and CEO
More information:
Kirsti Parvi, CFO, tel. +358 50 517 4569 or +372 555 620 35
Hannele Pöllä, Director, Communications and Investor Relations, tel.
+358 40 504 8296
DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
www.incap.fi
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 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 EUR 64.1 million, and the company currently employs approximately
600 people. Incap's share is listed on the NASDAQ OMX Helsinki. Additional
information: www.incap.fi.
PLEASE NOTE
The information in this stock exchange release is not intended to be published
or distributed, directly or indirectly, in the United States, Canada, Australia,
Hong Kong, South Africa, Singapore or Japan. These written materials do not
constitute an offer to sell securities in the United States, and securities must
not be offered or sold in the United States unless they have been registered in
accordance with the Securities Act of 1933 (including amendments) and provisions
and regulations issued under the Act or unless the registration requirement has
been waived. No part of the securities issue will be registered in the United
States, and securities will not be offered to the public in the United States.
Certain states have special legal and legislative restrictions on the issue, use
and sales of securities. The Company will not be responsible of any breaches of
such restrictions.
This document must not be interpreted as an offer to sell or buy the securities
mentioned in this document, and none of the securities will be sold in areas
where it is illegal to offer, acquire or sell securities before their
registration or before an exception has been made or approval has been issued in
accordance with local securities legislation. Investors must not accept an offer
on the securities or acquire any of the securities mentioned in this document
unless their decision to do so is based on information included in a relevant
prospectus published or distributed by the Company.
The Company has not issued an authorisation to offer securities to the public in
any other member state of the European Economic Area than Finland. With the
exception of Finland, no measures have been or will be taken to offer securities
to the public in any member state of the European Economic Area that has adopted
the Prospectus Directive (each "Relevant Member State") in a manner that would
necessitate the publication of a prospectus in a Relevant Member State.
Consequently, securities can only be offered in Relevant Member States (a) to
legal entities defined as "qualified investors" in the Prospectus Directive or
(b) in any of the situations described in Article 3.2 of the Prospectus
Directive. In this paragraph, the expression "offer securities to the public"
refers to all forms of communication and the provision of sufficient information
on the conditions of the offer and the securities for investors to be able to
decide on the use, purchase or subscription of securities, covering all
variations of the expression that ensue from the implementation measures carried
out in a member state. The expression "Prospectus Directive" refers to Directive
2003/71/EC (including amendments and the Amendment Directive of 2010 to the
extent in which it has been implemented in a Relevant Member State) and includes
all relevant implementation measures in Relevant Member States. Furthermore, the
expression "Amendment Directive of 2010" refers to Directive 2010/73/EU.
The information presented here is only intended for "relevant persons", meaning
(i) persons outside Great Britain or (ii) "investment professionals", as
described in Article 19.5 of the Financial Markets and Services Act 2000
(Financial Promotion) Order 2005 ("Order") and (iii) "high net worth companies",
as described in Article 49.2 of the Order or other persons to whom the document
can legally be communicated. All investment activities related to this document
are only available to relevant persons and will only be carried out with
relevant persons. Anyone who is not a relevant person must not act based on this
document or trust its content.
[HUG#1736156]
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