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2009-05-06 07:30:00 CEST 2009-05-06 07:31:26 CEST REGULATED INFORMATION Incap - Interim report (Q1 and Q3)INCAP GROUP INTERIM REPORT JANUARY-MARCH 2009: REVENUE DECREASED, RESULT IMPROVEDIncap Corporation Stock Exchange Release 6 May 2009, 8:30 a.m. * The change of business structure proceeded in accordance with the company's strategy * Revenue during the first quarter decreased by about 9% on the corresponding period the previous year, and stood at EUR 18.5 million (Q1 2008: EUR 20.3 million) * The revenue increased in selected focus areas in energy efficiency and well-being technologies while the deliveries of telecommunications products decreased * Operating profit (EBIT) improved on the corresponding period the previous year and stood at EUR 0.5 million negative (EUR 1.3 million negative) * Profitability improved through cost savings in line with the reorganisation programme * The net loss for the report period was EUR 0.9 million (net loss of EUR 1.7 million) * Funding of EUR 1.9 million was received from Finnfund to finance the Indian operations This unaudited interim financial report has been drawn up in accordance with international standards on financial statements (IFRS). The Group has taken into consideration the following new standards: IAS 1 Presentation of Financial Statements. The change applies mainly to the presentation of Income Statement and Changes in Equity. IFRS 8 Operating segments. The new standard replaces the IAS 14 Segment Reporting Standard. According to IFRS 8, the reporting is based on the management's internal reporting. The Group has no segments to report. Unless stated otherwise, the comparison figures refer to the corresponding period last year. Sami Mykkänen, the President and CEO of Incap Group: "Our operations developed in the right direction during the first quarter. We achieved cost savings in many areas and achieved our objective in the reduction of inventories, among others. Once the new organisational model has become established, business units will intensively seek opportunities for deepening cooperation with our present customers. Efforts to win new customers will be intensified in the manufacture and design of devices in energy efficiency and well-being technologies, i.e. the growth areas in accordance with our strategy. Our most important objective in 2009 is to improve profitability. We will continue to adjust the level of production capacity, boost the efficiency of materials management and reduce fixed costs. We will ensure our competitiveness by increasing the efficiency of our operations and by developing our services." Revenue and net profit during January-March 2009 Revenue during the first quarter was EUR 18.5 million (Q1 2008: EUR 20.3 million), which was 9% less than during the corresponding period in 2008. Revenue increased from the previous year in the strategic focus areas in energy efficiency and well-being technologies. Sales of materials accounted for EUR 1.3 million of total revenue. Operating loss fell half its previous level and the operating result amounted to EUR -0.5 million (EUR -1.3 million). As a percentage of revenue, operating profit was -2.8% (-6.5%). Costs were reduced through efficiency-improvement measures in accordance with the reorganisation programme. Personnel expenses decreased compared both with the corresponding period last year and the last quarter of 2008. Net loss for the report period was EUR 0.9 million (EUR 1.7 million). Earnings per share were EUR -0.08 (EUR -0.14), while equity per share stood at EUR 1.01 (EUR 1.41). Quarterly Q1/ Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ comparison 2009 2008 2008 2008 2008 2007 2007 2007 2007 (EUR thousands) Revenue 18,479 25,789 21,395 26,412 20,330 26,304 20,593 19,130 16,982 Operating -518 -1,241 -442 -600 -1,329 2,025 -578 44 -1,188 profit/loss Net -949 -1,915 -800 -1,005 -1,681 1,450 -1,071 -139 -1,342 profit/loss Earnings per share, -0.08 -0.16 -0.07 -0.08 -0.14 0.12 -0.09 -0.01 ,-0.11 EUR Development of operations Most of the revenue accrued from manufacturing services related to energy efficiency technology and well-being technology products. The last deliveries of high-volume products in telecommunications technology took place in March, when cooperation with a big customer came to an end as planned. In the Indian unit, a large number of prototypes for new customers' products were in production and the quotation base was more than doubled from the year end. Construction of the new manufacturing facilities of the Indian factory proceeded and at the end of the report period, installation started on a SMD assembly machine line transferred from the company's factory in Vuokatti, Finland, and on other manufacturing equipment. The new facilities and up-to-date capacity will boost competitiveness and improve our opportunities to start the manufacturing of new products. Due to the rapid increase in the demand for design services, the respective resources in India have been increased. Inventories fell from EUR 16.2 million at the turn of the year to EUR 14.7 million in line with the objectives. The decrease was due to the reduction in the inventory of telecommunications components and more efficient materials management. Our objective is to reduce inventories further by improving the effectiveness of materials management, procurement and forecast practices. The roles of various factories will be separated as much as possible to achieve the largest possible efficiency. Financing and cash flow The Group's equity ratio was 27.4% (33.3%). Interest-bearing net liabilities totalled EUR 18.6 million (EUR 18.3 million) and the gearing ratio was 151.1% (106.5%). Net financial expenses were EUR 0.43 million (EUR 0.35 million) and depreciation and amortisation expense was EUR 0.7 million (EUR 0.8 million). We will endeavour to improve liquidity first and foremost by improving the management of working capital. Trade receivables decreased from the turn of the year and there were no credit losses during the report period. The Group's equity at the close of the report period was EUR 12.3 million (EUR 17.2 million). Debt totalled EUR 32.6 million (EUR 34.5 million), of which interest-bearing debt amounted to EUR 19.9 million (EUR 18.9 million). The Group's quick ratio was 0.6 (0.6) and the current ratio was 1.3 (1.4). Cash flow from operations was EUR 0.8 million (EUR 1.8 million) and the change in cash and cash equivalents was an increase of EUR 0.8 million (a decrease of EUR 0.3 million). In order to finance investments and working capital in India, Incap accepted in January the funding of EUR 1.9 million from Finnfund (Finnish Fund for Industrial Cooperation Ltd.). For the Indian subsidiary, the investment comprises equity financing. Due to the terms and conditions of the loan, the investment is regarded as a long-term loan in the Group's IFRS financial statement. Capital expenditures The Group's capital expenditures during the report period amounted to EUR 0.1 million (EUR 0.7 million). Personnel At the end of March 2009, Incap Group had 713 employees (727 at the start of the year). The average number of employees was 728. At the end of the report period, 41 persons were temporarily laid off. Operations were adjusted to the reduced demand by agreeing on reductions in working time and the exchange of holiday bonus for time off. These measures will mostly take place during the second quarter of the year. Decisions of the Annual General Meeting Incap Corporation's Annual General Meeting was held in Helsinki on 3 April 2009. The AGM approved the Group's 2008 financial statements and discharged from liability the persons responsible for accounts. No dividend was paid for 2008. The AGM authorised the Board of Directors to decide within one year of the AGM on the increase of share capital through one or more rights issues so that the maximum number of total shares issued under the authorisation is 1,200,000. The AGM re-elected Kalevi Laurila, Susanna Miekk-oja, Jukka Harju and Kari Häyrinen as members of the Board of Directors. Lassi Noponen was elected to the Board of Directors as a new member. The Board of Directors elected from among its members Kalevi Laurila as Chairman and Susanna Miekk-oja as Deputy Chairman. Ernst & Young Oy was selected again as the company's auditor. Shares and shareholders Incap Corporation has one series of shares and the number of shares in 12,180,880. During the report period, the share price fluctuated between EUR 0.43 and EUR 0.68 and the last closing price of the period was EUR 0.47. During the report period, the trading volume was 3.2% of outstanding shares. At the end of the report period, the company had 1,018 shareholders. Foreign or nominee-registered owners held 3.1% of all shares. The company's market capitalisation on 31 March 2009 was EUR 5.7 million. The company does not own any of its own shares. The industry classification of Incap's shares changed in February 2009 due to a reform in the revenue structure. The share's new code is Industrial Products and Services and the industry code is 20104010 (Electrical Components and Equipment). Share-based incentive programmes Incap Corporation's Board of Directors launched an option programme in February 2009 which includes a total of 600,000 option rights entitling to subscribe 600,000 shares of Incap Corporation. The CEO was awarded 100,000 options in February. In addition, he will be awarded a maximum of 100,000 options in 2010 if the objectives set by the Board of Directors for the company's operating profit and return on working capital are achieved in 2009. A maximum of 400,000 options will be awarded to the company's key personnel in two issues if the objectives set by the Board of Directors for the company's operating profit and return on working capital are achieved in 2009 and 2010 and each of the key personnel meet their own individual objectives. 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 material changes have taken place with regard to these factors during the report period. The most significant short-term risks are connected to the volume and profitability of business as well as to the financing arrangements. Incap's sales are spread over several customer sectors, which hedges the company against sharp seasonal changes. The outlook to the market is however very short. In contract manufacturing, the management of material and personnel costs have a remarkable impact on the competitive edge. Incap aims at managing this risk by continuously monitoring the operational efficiency and cost levels. The general development in the financial market and the future profitability trend affect the company's financing position. Incap aims at securing its liquidity through efficient management of working capital, and different financing options will be assessed for lowering the financing costs. Outlook Incap's estimates of future business development are based on its customers' forecasts and the company's own evaluations. The general economic uncertainty has been reflected in Incap's operations so that some customers have downgraded their forecasts, but there have been no actual cancellations of orders. Incap maintains its earlier estimate of the company's development in 2009 and forecasts that the Group's revenue in 2009 will be lower than in 2008 when it was EUR 93.9 million. Full-year operating profit (EBIT) is estimated to improve clearly from 2008 (EUR -3.6 million). 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 Oy Principal media The company's website at www.incap.fi PRESS CONFERENCE Incap will hold a conference for the press and financial analysts at 10:00 a.m. on 6 May 2009 at the World Trade Center Helsinki, in Meeting Room 1 on the 2nd floor at Aleksanterinkatu 17, 00100 Helsinki. The presentation material of the press conference will be available on the company's website on 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 include 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 710 persons. Incap's shares are listed on the NASDAQ OMX Helsinki Oy. For additional information, please contact: www.incap.fi. Annex 1 CONSOLIDATED INCOME STATEMENT (IFRS) (EUR thousands, unaudited) Q1/2009 Q1/2008 Change % FY/2008 REVENUE 18,479 20,330 -9 93,925 Work performed by the enterprise and capitalised 0 0 Change in inventories of finished goods and work in progress -26 882 -103 791 Other operating income 55 6 862 53 Raw materials and consumables used 12,506 14,847 -16 66,672 Personnel expenses 3,831 4,485 -15 18,722 Depreciation and amortisation expense 700 759 -8 2,823 Other operating expenses 1,988 2,456 -19 10,165 OPERATING PROFIT/LOSS -518 -1,329 -61 -3,612 Financing income and expenses -429 -352 22 -1,810 PROFIT/LOSS BEFORE TAX -947 -1,681 -44 -5,422 Income tax expense -2 0 21 PROFIT/LOSS FOR THE PERIOD -949 -1,681 -44 -5,401 Earnings per share -0.08 -0.14 -43 -0.44 Options have no dilutive effect during the 2008 and 2009 periods OTHER COMPREHENSIVE INCOME Q1/2009 Q1/2008 Change % FY/2008 PROFIT/LOSS FOR THE PERIOD -949 -1,681 -43 -5,401 OTHER COMPREHENSIVE INCOME: Translation differences from foreign units 35 -149 -124 -262 Other comprehensive income net 35 -149 -124 -262 TOTAL COMPREHENSIVE INCOME -914 -1,830 -50 -5,663 Total comprehensive income attributable to: Equity holders of the parent company -914 -1,830 -50 -5,663 Minority interest 0 0 0 Annex 2 CONSOLIDATED BALANCE SHEET (IFRS) 31 31 March 31 March December (EUR thousands, unaudited) 2009 2008 Change % 2008 ASSETS NON-CURRENT ASSETS Property, plant and equipment 10,759 12,670 -15 11,250 Goodwill 974 1,271 -23 969 Other intangible assets 1,253 1,466 -15 1,311 Other financial assets 15 21 -26 16 Deferred tax assets 4,153 4,183 -1 4,148 TOTAL NON-CURRENT ASSETS 17,155 19,611 -13 17,693 CURRENT ASSETS Inventories 14,740 17,425 -15 16,153 Trade and other receivables 11,585 13,993 -17 14,444 Cash and cash equivalents 1,388 630 120 641 TOTAL CURRENT ASSETS 27,713 32,048 -14 31,239 TOTAL ASSETS 44,868 51,659 -13 48,932 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT CAPITAL Share capital 20,487 20,487 0 20,487 Share premium account 44 44 0 44 Exchange differences -442 -365 21 -478 Retained earnings -7,806 -2,985 162 -6,864 TOTAL EQUITY 12,283 17,181 -29 13,190 NON-CURRENT LIABILITIES Deferred tax liabilities 99 121 -18 99 Interest-bearing loans and debt 11,649 10,904 7 12,977 NON-CURRENT LIABILITIES 11,748 11,025 7 13,077 CURRENT LIABILITIES Trade and other payables 12,544 15,436 -19 15,731 Current interest-bearing loans and debt 8,293 8,017 3 6,935 CURRENT LIABILITIES 20,837 23,453 -15 22,666 TOTAL EQUITY AND LIABILITIES 44,868 51,659 -13 48,932 Annex 3 CONSOLIDATED CASH FLOW STATEMENT Q1/2009 Q1/2008 FY/2008 (EUR thousands, unaudited) Cash flow from operating activities Net income -518 -1,329 -3,612 Adjustments to operating profit 713 643 2,760 Change in working capital 1,034 2,733 3,702 Interest paid -409 -287 -1,640 Interest received 11 79 143 Cash flow from operating activities 832 1,839 1,353 Cash flow from investing activities Capital expenditure on tangible and intangible assets -296 -696 -1,699 Proceeds from sale of tangible and intangible assets 120 160 Acquisition of subsidiary 0 Shares of subsidiaries sold 0 50 Refunds of loans receivable 1 1 Cash flow from investing activities -175 -696 -1,488 Cash flow from financing activities Drawdown of loans 1,940 1,753 Repayments of loans -1,558 -1,115 -838 Repayments of obligations under finance leases -252 -313 -1,063 Cash flow from financing activities 130 -1,428 -148 Change in cash and cash equivalents 787 -285 -283 Cash and cash equivalents at beginning of period 641 944 944 Effect of changes in exchange rates -41 -29 -20 Cash and cash equivalents at end of period 1,388 630 641 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 -149 -149 Options and share-based compensation -116 -116 Net income and losses recognised directly in equity -149 -116 -265 Net profit/loss -1,681 -1,681 Total income and losses -149 -1,797 -1,946 Equity on 31 March 2008 20,487 44 -365 -2,985 17,181 Equity on 1 January 2009 20,487 44 -478 -6,864 13,189 Change in exchange differences 35 35 Options and share-based compensation 7 7 Net income and losses recognised directly in equity 35 7 42 Profit for the period -949 -949 Total income and losses 35 -943 -907 Equity on 31 March 2009 20,487 44 -442 -7,806 12,283 Annex 5 31 GROUP KEY FIGURES AND CONTINGENT 31 March 31 March December LIABILITIES (IFRS) 2009 2008 2008 Revenue, EUR millions 18.5 20.3 93.9 Operating profit, EUR millions -0.5 -1.3 -3.6 % of revenue -2.8 -6.5 -3.9 Profit before taxes, EUR millions -0.9 -1.7 -5.4 % of revenue -5.1 -8.3 -5.8 Return on investment (ROI), % -4.9 -13.4 -8.6 Return on equity (ROE), % -29.8 -37.0 -33.4 Equity ratio, % 27.4 33.3 27.0 Gearing, % 151.1 106.5 146.1 Net debt, EUR millions 19.6 19.9 20.7 Net interest-bearing debt, EUR millions 18.6 18.3 19.3 Average number of shares during the period under review, adjusted for share issues 12,180,880 12,180,880 12,180,880 Earnings per share (EPS), euro -0.08 -0.14 -0.44 Equity per share, euro 1.01 1.41 1.08 Investments, EUR millions 0.1 0.8 1.8 % of revenue 0.6 4.1 1.9 Average number of employees 728 733 735 CONTINGENT LIABILITIES, EUR millions FOR OWN LIABILITIES Mortgages 12.0 12.3 12.0 Other liabilities 7.8 7.0 8.8 Nominal value of currency options, EUR thousands 842.4 0 0 Fair value of currency options, EUR thousands -0.2 0 0 Annex 6 GROUP QUARTERLY KEY FIGURES (IFRS) Q1/ Q4/ Q3/ Q2/ Q1/ 2009 2008 2008 2008 2008 Revenue, EUR millions 18.5 25.8 21.4 26.4 20.3 Operating profit, EUR millions -0.5 -1.2 -0.4 -0.6 -1.3 % of revenue -2.8 -4.8 -2.1 -2.3 -6.5 Profit before taxes, EUR millions -0.9 -1.9 -0.8 -1.0 -1.7 % of revenue -5.1 -7.5 -3.7 -3.8 -8.3 Return on investment (ROI), % -4.9 -11.1 -4.1 -4.9 -13.4 Return on equity (ROE), % -29.8 -47.4 -18.7 -22.9 -37.0 Equity ratio, % 27.4 27.0 29.43 31.2 33.3 Gearing, % 151.1 146.1 132.6 120.4 106.5 Net debt, EUR millions 19.6 20.7 21.7 18.0 19.9 Net interest-bearing debt, EUR millions 18.6 19.3 20.1 19.2 18.3 Average number of share issue-adjusted shares during report period 12,180,880 12,180,880 12,180,880 12,180,880 12,180,880 Earnings per share (EPS), euro -0.08 -0.16 -0.07 -0.08 -0.14 Equity per share, euro 1.01 1.08 1.24 1.31 1.41 Investments, EUR millions 0.1 0.3 0.3 0.4 0.8 % of revenue 0.6 1.3 1.2 1.6 4.1 Average number of employees 728 743 739 724 733 |
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