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2009-08-05 07:30:00 CEST 2009-08-05 07:31:59 CEST REGULATED INFORMATION Incap - Interim report (Q1 and Q3)INCAP GROUP INTERIM REPORT JANUARY-JUNE 2009: REVENUE DECREASED AS PLANNED - RESULT IMPROVED CLEARLY DESPITE DECREASE IN REVENUEIncap Corporation Stock Exchange Release 5 August 2009 at 8:30 a.m. * Revenue in January-June decreased by approximately 24% on the same period the previous year, amounting to EUR 35.4 million (Jan-Jun 2008: EUR 46.7 million) * Focus of business volume shifted over to energy efficiency and well-being technology products, whereas business with telecommunications products was decreased strongly according to the restructuring plan * Operating profit (EBIT) improved on the same period the previous year, amounting to EUR 1.0 million negative (EUR 1.9 negative) * Capacity and cost structure were adjusted in line with the reorganisation programme, while at the same time creating prerequisites for growth in selected business areas in energy and well-being, which provide good prospects for improved profitability * Net profit for the report period amounted to EUR 2.0 million negative (EUR 2.7 million negative) This unaudited interim report has been prepared in accordance with international financial reporting standards (IFRS). Unless otherwise stated, the comparison figures refer to the same period the previous year. Sami Mykkänen, the President and CEO of Incap Group: "The decrease in revenue was due to a planned and controlled winding down of the high-volume manufacturing of telecommunications products. Other customer industries have developed positively, without any surprises. We continued with our reorganisation and restructuring programme and managed to cut costs and develop our business operations as planned compared with the first half of last year. The increase in financing costs continued to burden net profit. The restructuring has proceeded as planned and we have made advances in new customer acquisition. New inquiries are at an active phase in India, in particular, where the quotation base and demand for design services by global customers have grown sharply. The introduction of modern production premises has further enhanced the opportunities for business growth in India. Improving profitability is still our key challenge, so we will continue to adjust the production capacity, improve the efficiency of materials management and cut fixed costs. At the same time we continue with strong development of our business operations in selected focus areas." Revenue and earnings in April-June 2009 Revenue during the second quarter totalled EUR 16.9 million (4-6/2008: EUR 26.4 million), or 36% less than in the same period in 2008. Decrease in revenue was due to the expected discontinuation of volume production in telecommunications. Revenue developed positively especially in well-being technology products, whose sales increased in the second quarter compared with both the first quarter and the corresponding period the previous year. Operating profit for April-June was EUR 0.5 million negative (EUR 0.6 million negative), representing 2.8% negative (2.3% negative) of revenue. Net profit for the second quarter amounted to EUR 1.0 million negative (1.0 million negative). In particular, net profit was reduced by the increase in financing expenses by about 40% compared with the same period the previous year. Earnings per share were EUR 0.08 negative (EUR 0.08 negative). Revenue and earnings in January-June 2009 Revenue for January-June totalled EUR 35.4 million (1-6/2008: EUR 46.7 million), or 24% less than in the same period in 2008.The main reason behind the decline in revenue was the planned decrease in revenue from the high-volume manufacturing of telecommunications products by about EUR 9 million on the same period the previous year. Revenue developed steadily in the strategic focus areas in energy efficiency and well-being technology. Of the revenue for the first half of the year, EUR 1.6 million represented the sale of materials of products to be discontinued to customers. Operating loss reduced by almost one half with operating profit amounting to EUR 1.0 million negative (EUR 1.9 million negative), representing 2.8% negative (4.1% negative) of revenue. The efficiency measures in line with the reorganisation programme reduced costs, fixed costs being EUR 1.6 million lower than in the same period the previous year. Net profit for the report period amounted to EUR 2.0 million negative (EUR 2.7 million negative). Net profit was particularly affected by the sharp increase in financing costs. Earnings per share amounted to EUR 0.16 negative (EUR 0.22 negative), while equity per share stood at EUR 0.92 (EUR 1.31). Quarterly comparison 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ (EUR thousands) 2009 2009 2008 2008 2008 2008 Revenue 16,928 18,479 25,789 21,395 26,412 20,330 Operating profit/loss -472 -518 -1,241 -442 -600 -1,329 Net profit/loss -1,035 -949 -1,915 -800 -1,005 -1,681 Earnings per share, EUR -0.08 -0.08 -0.16 -0.07 -0.08 -0.14 Development of operations The demand for the Indian unit's services picked up, and the quotation base showed strong growth. The new production facilities, the modern capacity and extensive design services will improve the unit's competitiveness further. The value of inventories fell from EUR 16.2 million to EUR 14.1 million at the end of June. The positive development reflected both the decrease in telecommunications component stocks and higher efficiency in materials management. The production capacity and the cost structure were adapted to the market situation. The electronics factories adopted reduced working hours. The work situation at the mechanical factories was good during the report period, and the production of sheet-metal parts is concentrated in Vaasa, while the Helsinki factory is focusing on product assembly. Due to the decreased demand in certain mechanics products, statutory cooperation negotiations concerning eventual temporary lay-offs were launched in the Vaasa factory after the end of the report period in August. Incap is investigating possibilities to concentrate the company's electronics production in Europe in the Kuressaare factory. For this purpose, the company will during autumn explore if part of the products manufactured in the Vuokatti factory can be transferred to Kuressaare and if part of the operations could be taken over by a third party. Financing and cash flow The Group's equity ratio was 26.4% (31.2%). Interest-bearing net liabilities totalled EUR 18.6 million (EUR 19.2 million) and the gearing ratio was 164.9% (120.4%). Net financial expenses stood at EUR 0.99 million (EUR 0.76 million) and depreciation and amortisation expense at EUR 1.4 million (EUR 1.5 million). Incap aims to improve liquidity primarily by enhancing working capital management. Trade receivables continued to decline compared with the beginning of the year, and no credit losses arose during the report period. The Group's equity at the close of the report period was EUR 11.3 million (EUR 16.0 million). Debt totalled EUR 31.5 million (EUR 35.2 million), of which interest-bearing debt amounted to EUR 19.3 million (EUR 19.7 million). The Group's quick ratio was 0.6 (0.7) and the current ratio 1.3 (1.3). Cash flow from operations was EUR 1.0 million (EUR 0.9 million), and the change in cash and cash equivalents was an increase of EUR 73,000 (a decrease of EUR 0.4 million). Capital expenditures The Group's capital expenditures amounted to EUR 0.7 million (EUR 1.3 million). The majority of these were related to the operations of the Indian company. Personnel Incap Group employed 757 people at the end of June (727 people at the beginning of the year). The number of personnel in India increased by 49 persons and was 243 at the end of the report period. At the end of June, 35 people were temporarily laid off. Shares and shareholders Incap Corporation has one series of shares, and the number of shares in 12,180,880. During the period under review, the share price varied between EUR 0.43 and EUR 0.99 and the last closing price of the period was EUR 0.66. During the report period, the trading volume was 16.8% of outstanding shares. At the end of the report period, the company had 1,153 shareholders. Foreign or nominee-registered owners held 2.8% of all shares. The company's market capitalisation on 30 June 2009 was EUR 8.0 million. The company does not own any of its own shares. Short-term risks and factors of uncertainty concerning operations The risks and factors of uncertainty relating to Incap's operations are described in more detail in the report by the Board of Directors dated 24 February 2009, and no significant changes have taken place with regard to these factors during the report period. The most significant short-term risks are connected with the volume of business, the profitability as well as the financing. Incap's sales are spread over several customer sectors, which hedges the company against sharp seasonal changes. However, market visibility is very limited. The company's financial position is influenced by the trends in the general financial market and the company's future earnings development. Incap aims at ensuring the company's liquidity by efficient working capital management and investigate different financing options in order to enhance the financial position. Outlook Incap's estimates of the future business development are based on its customers' forecasts and the company's own assessments. Customers' views of the future market development vary, and the forecasts are still very cautious. In line with the earlier estimate, Incap expects that the Group's revenue in 2009 will be lower than in 2008, when it totalled EUR 93.9 million. Operating profit for the latter half of the year is estimated to be better than during the first half of the year. Full-year operating profit (EBIT) is estimated to be clearly better compared with 2008 (EUR 3.6 million negative). INCAP CORPORATION Board of Directors For additional information, please contact: Sami Mykkänen, President and CEO, tel. +358 40 559 9047 Eeva Vaajoensuu, Chief Financial Officer, tel. +358 40 763 6570 Hannele Pöllä, Director of Communications and Human Resources, tel. +358 40 504 8296 DISTRIBUTION NASDAQ OMX Helsinki Ltd Principal media The company's website: www.incap.fi PRESS CONFERENCE Incap will arrange a conference for the press and financial analysts on 5 August 2009 at 10:00 a.m. at the World Trade Center Helsinki, in Meeting Room 1 on the 2nd floor at Aleksanterinkatu 17, FI-00100 Helsinki. The presentation material will be available on the company's website the same day. ANNEXES 1 Consolidated Income Statement 2 Consolidated Balance Sheet 3 Consolidated Cash Flow Statement 4 Consolidated Statement of Changes in Equity 5 Group Key Figures and Contingent Liabilities 6 Quarterly Key Figures INCAP IN BRIEF Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire life-cycle of electromechanical products from design and manufacture to maintenance services. Incap's customers are leading equipment suppliers in energy-efficiency and well-being technology, for which the company produces new competitiveness as a strategic partner. Incap has operations in Finland, Estonia and India. The Group's revenue in 2008 amounted to around EUR 94 million, and the company currently employs approximately 760 people. Incap's shares are listed on the NASDAQ OMX Helsinki Oy. For additional information, please visit our website, www.incap.fi. Annex 1 CONSOLIDATED INCOME STATEMENT (IFRS) (EUR thousands, unaudited) 1-6/2009 1-6/2008 Change % 1-12/2008 REVENUE 35,407 46,742 -,24 93,925 Work performed by the enterprise and capitalised Change in inventories of finished goods and work in progress -264 917 -129 791 Other operating income 114 17 573 53 Raw materials and consumables used 23,204 33,638 -31 66,672 Personnel expenses 7,433 9,275 -20 18,722 Depreciation and amortisation 1,424 1,510 -6 2,823 Other operating expenses 4,187 5,182 -19 10,165 OPERATING PROFIT/LOSS -990 -1,929 -49 -3,612 Financing income and expenses -992 -757 31 -1,810 PROFIT/LOSS BEFORE TAX -1,982 -2,686 -26 -5,422 Income tax expense -3 0 21 PROFIT/LOSS FOR THE PERIOD -1,984 -2,686 -26 -5,401 Earnings per share -0.16 -0.22 -27 -0.44 Options have no dilutive effect in report periods 2008 and 2009 OTHER COMPREHENSIVE INCOME 1-6/2009 1-6/2008 Change % 1-12/2008 PROFIT/LOSS FOR THE PERIOD -1,984 -2,686 -43 -5,401 OTHER COMPREHENSIVE INCOME: Translation differences from foreign units 42 -270 -116 -262 Other comprehensive income, net 42 -270 -124 -262 TOTAL COMPREHENSIVE INCOME -1,942 -2,956 -34 -5,663 Attributable to: Shareholders of the parent company -1,942 -2,956 -34 -5,663 Minority interest 0 Annex 2 CONSOLIDATED BALANCE SHEET (IFRS) (EUR thousands, unaudited) 31 30 June 30 June December 2009 2008 Change % 2008 ASSETS NON-CURRENT ASSETS Property, plant and equipment 10,565 12,198 -13 11,250 Goodwill 973 1,061 -8 969 Other intangible assets 1,170 1,361 -14 1,311 Other financial assets 14 19 -24 16 Deferred tax assets 4,152 4,151 0 4,148 TOTAL NON-CURRENT ASSETS 16,874 18,790 -10 17,693 CURRENT ASSETS Inventories 14,099 15,174 -7 16,153 Trade and other receivables 11,043 16,710 -34 14,444 Cash and cash equivalents 707 475 49 641 TOTAL CURRENT ASSETS 25,849 32,359 -20 31,239 TOTAL ASSETS 42,723 51,149 -16 48,932 EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY Share capital 20,487 20,487 0 20,487 Share premium account 44 44 0 44 Exchange differences -435 -486 -10 -478 Retained earnings -8,838 -4,079 117 -6,864 TOTAL EQUITY 11,257 15,966 -29 13,190 NON-CURRENT LIABILITIES Deferred tax liabilities 99 121 -18 99 Interest-bearing loans and borrowings 11,495 10,714 7 12,977 NON-CURRENT LIABILITIES 11,595 10,835 7 13,077 CURRENT LIABILITIES Trade and other payables 12,097 15,369 -21 15,731 Current interest-bearing loans and borrowings 7,774 8,979 -13 6,935 CURRENT LIABILITIES 19,871 24,348 -35 22,666 TOTAL EQUITY AND LIABILITIES 42,723 51,149 -16 48,932 Annex 3 CONSOLIDATED CASH FLOW STATEMENT (EUR thousands, unaudited) 1-6/2009 1-6/2008 1-12/2008 Cash flow from operating activities Net income -990 -1,929 -3,612 Adjustments to operating profit 1,441 1,299 2,760 Change in working capital 2,133 2,503 3,702 Interest paid -1,580 -1,101 -1,640 Interest received 21 106 143 Cash flow from operating activities 1,024 878 1,353 Cash flow from investing activities Capital expenditure on tangible and intangible assets -603 -1,160 -1,699 Proceeds from sale of tangible and intangible assets 158 118 160 Loans granted -4 0 0 Shares of subsidiaries sold 0 0 50 Repayments of loan receivables 2 0 1 Cash flow from investing activities -448 -1,042 -1,488 Cash flow from financing activities Drawdown of loans 1,917 810 1,753 Repayments of borrowings -1,847 -504 -838 Repayments of obligations under finance leases -573 -523 -1,063 Cash flow from financing activities -503 -217 -148 Change in cash and cash equivalents 73 -381 -283 Cash and cash equivalents at beginning of period 641 944 944 Effect of changes in exchange rates -8 -88 -20 Cash and cash equivalents at end of period 707 475 641 Annex 4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS) (EUR thousands, unaudited) Retained Share Share premium Exchange capital account differences earnings Total Equity on 1 January 2008 20,487 44 -216 -1,188 19,127 Change in exchange differences -270 -270 Options and share-based compensation -205 -205 Net income and losses recognised directly in equity -270 -205 -475 Net profit/loss -2,686 -2,686 Total income and losses -270 -2,891 -3,161 Equity on 30 June 2008 20,487 44 -486 -4,079 15,966 Equity on 1 January 2009 20,487 44 -478 -6,864 13,189 Change in exchange differences 42 42 Options and share-based compensation 10 10 Net income and losses recognised directly in equity 42 10 52 Net profit/loss -1 984 -1 984 Total income and losses 42 -1 975 -1 932 Equity on 30 June 2009 20 487 44 -435 -8 838 11 257 Annex 5 GROUP KEY FIGURES AND CONTINGENT LIABILITIES (IFRS) 31 30 June 30 June December 2009 2008 2008 Revenue, EUR millions 35.4 46.7 93.9 Operating profit, EUR millions -1.0 -1.9 -3.6 % of revenue -2.8 -4.1 -3.9 Profit before taxes, EUR millions -1.9 -2.7 -5.4 % of revenue -5.6 -5.7 -5.8 Return on investment (ROI), % -3.6 -9.2 -8.6 Return on equity (ROE), % -32.5 -30.6 -33.4 Equity ratio, % 26.4 31.2 27.0 Gearing, % 164.9 120.4 146.1 Net debt, EUR millions 19.7 18.0 20.7 Net interest-bearing debt, EUR millions 18.6 19.2 19.3 Average number of shares during the report period, adjusted for share issues 12,180,880 12,180,880 12,180,880 Earnings per share (EPS), euro -0.16 -0.22 -0.44 Equity per share, euro 0.92 1.31 1.08 Investments, EUR millions 0.7 1.3 1.8 % of revenue 2.0 2.7 1.9 Average number of employees 730 729 735 CONTINGENT LIABILITIES, EUR millions FOR OWN LIABILITIES Mortgages 12.0 12.3 12.0 Other liabilities 6.5 7.7 8.8 Nominal value of currency options EUR thousands 0 0 0 Fair values of currency options, EUR thousands 0 0 0 Annex 6 QUARTERLY KEY FIGURES (IFRS) 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/ 2009 2009 2008 2008 2008 2008 Revenue, EUR millions 16.9 18.5 25.8 21.4 26.4 20.3 Operating profit, EUR millions -0.5 -0.5 -1.2 -0.4 -0.6 -1.3 % of revenue -2.8 -2.8 -4.8 -2.1 -2.3 -6.5 Profit before taxes, EUR millions -1.0 -0.9 -1.9 -0.8 -1.0 -1.7 % of revenue -6.1 -5.1 -7.5 -3.7 -3.8 -8.3 Return on investment (ROI), % -2.1 -4.9 -11.1 -4.1 -4.9 -13.4 Return on equity (ROE), % -33.9 -29.8 -47.4 -18.7 -22.9 -37.0 Equity ratio, % 26.4 27.4 27.0 29.43 31.2 33.3 Gearing, % 164.9 151.1 146.1 132.6 120.4 106.5 Net debt, EUR millions 19.7 19.6 20.7 21.7 18.0 19.9 Net interest-bearing debt, EUR millions 18.6 18.6 19.3 20.1 19.2 18.3 Average number of share issue-adjusted 12,180 12,180 12,180 12,180 12,180 12,180 shares during report period ,880 ,880 ,880 880 ,880 ,880 Earnings per share (EPS), euro -0.08 -0.08 -0.16 -0.07 -0.08 -0.14 Equity per share, euro 0.92 1.01 1.08 1.24 1.31 1.41 Investments, EUR millions 0.5 0.1 0.3 0.3 0.4 0.8 % of revenue 2.9 0.6 1.3 1.2 1.6 4.1 Average number of employees 732 728 743 739 724 733 |
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