2013-02-26 07:30:00 CET
2013-02-26 07:30:55 CET
REGULATED INFORMATION
Incap - Financial Statement Release
INCAP GROUP'S FINANCIAL STATEMENTS RELEASE FOR 2012 (UNAUDITED)
Incap Corporation Stock Exchange Release 26 February 2013 at
8:30 a.m.
INCAP GROUP'S FINANCIAL STATEMENTS RELEASE FOR 2012 (UNAUDITED)
January-December 2012: Profitability improved further, revenue decreased due to
the restructuring process
* the Group's revenue in 2012 amounted to EUR 64.1 million, a decrease of
approximately 7% year-on-year (2011: EUR 68.9 million)
* the revenue generated by the operations in India grew by 37% from the
previous year and the earnings trend also exceeded expectations
* the demand for equipment related to energy production, storage and supply in
particular developed favourably
* full-year operating result (EBIT) improved year-on-year and was EUR -0.7
million (EUR -1.6 million)
* a write-down on deferred tax assets of EUR 3.3 million was made in the
consolidated balance sheet, resulting in the decrease of parent company's
equity to less than 50% of share capital
* the Board of Directors proposes to the Annual General Meeting that no
dividend be paid out
* Incap estimates that the Group's revenue in 2013 will be at the same level
or somewhat lower as in 2012 and the full-year operating result (EBIT) will
be positive.
October-December 2012: Revenue did not meet expectations and impaired earnings
* revenue for the final quarter of 2012 amounted to EUR 14.5 million (10-
12/2011: EUR 16.9 million)
* revenue was decreased by the elimination of certain products from the
manufacturing programme and the partial postponement of deliveries to early
2013
* operating result (EBIT) was EUR -0.6 million (EUR -0.6 million)
* decrease in revenue and increase in costs impaired the result for the period
These financial statements have been prepared in compliance with the
international financial reporting standards (IFRS) IAS 34 Interim Financial
Reporting. When preparing the release, the same preparation principles have been
used as in the 2011 financial statements and in interim reports published in
2012. Unless otherwise mentioned, the comparison figures refer to the same
period in 2011. The information in this financial statements release is
unaudited.
Sami Mykkänen, President and CEO of Incap Group:"In many aspects, the year 2012 was very challenging. Our revenue decreased from
the previous year, mainly because slot machines and certain products made at the
Helsinki plant with lower profitability were eliminated from the manufacturing
programme. As a result of this development, there was a distinct change in the
structure of our customer base and the share of well-being technology products
in the Group's revenue decreased clearly.
Demand for our services at profitable prices was bigger than what we were able
to fulfill. Here, our financial situation was a bottleneck offering us
challenges when obtaining components for production.
Strong growth in our operations in India compensated for losses occurring
elsewhere. Revenue from products delivered from our Indian plant increased by
37% on the previous year, and nearly one third of the entire Group's revenue was
generated by the Indian operations. The earnings trend in India was strong as
well and the unit has lived up to the expectations set for it at the time of the
acquisition.
We successfully completed the strategic structural change. By centralising our
production activities we have been able to reduce the number of plants. In
addition, Group Services have been streamlined and the focus has been shifted to
low-cost regions. Efficiency improvement measures are well under way in all
functions. At the moment we are searching for the best and most effective form
of organising the Group's management and administration.
The company's difficult financial situation required special effort throughout
the year. We managed to rearrange the redemption of the convertible loan issued
in 2007, which matured in May. At the time of the publication of the financial
statements, the vast majority of the original amount (approximately EUR 6.8
million) of the convertible loan has been redeemed or rearranged, and the last,
EUR 1 million instalment of the convertible loan will mature at the end of June
2013.
In these challenging circumstances, the major shareholders of the company have
expressed their support for the company by participating in the private
placement and by granting a capital loan to cover the company's financial needs.
In 2013, one of the important milestones for financing is the share issue to be
arranged in the spring, and I am very confident it will be a success."
Operating environment 2012
Incap Group's operating environment continued to be challenging 2012. Due to
uncertain outlook in global economy, many customers postponed bringing new
products to the market and shortened the forecast scope for current products.
The fact that Incap's business operations are spread over several customer
sectors balances the development of the company's revenue. Part of products
manufactured for the energy efficiency sector are capital goods that have a
delayed reaction to market changes. Although the demand for large motor
components weakened during the second half of the year, this decline was short-
lived and the demand returned to the normal level at the end of the year.
Deliveries of UPS equipment ensuring uninterrupted and undisturbed current input
increased clearly on the previous year.
The general increase in the cost levels affects Incap's earnings trend and the
company aims to balance the situation by distributing production activities into
several countries of operation. For the most part, the company's production
activities are located in low-cost regions such as India and Estonia which have,
thanks to their moderate wage trends, maintained their price competitiveness in
2012.
Incap's growth drivers
Incap builds its growth strategy on the basis of these market trends and its own
strengths. Incap is a technology company that focuses on energy efficiency and
has industrial operations in India, Estonia and Finland. In addition to
manufacturing of products, the company's services cover design and other product
life-cycle services.
Factors that drive the demand for new equipment solutions include varied use of
renewable energy resources and efforts to improve energy efficiency in energy
production, transfer and use. Increasing environmental awareness also increases
interest in equipment that involves advanced automation and control engineering.
These global trends boost the growth of Incap's business operations, because the
design and manufacturing of electrotechnical equipment are among the company's
core competencies.
Equipment manufacturers wish to concentrate on their own core expertise and
outsource an increasing proportion of manufacturing of products to partners. In
order to improve the efficiency of their operations, equipment manufacturers try
to decrease the number of their partners and prefer contract manufacturers whose
service covers an extensive part of the product life cycle and who are also
capable of providing local service near their main markets.
Economic growth continues in Asia and Incap is here in a good position thanks to
its Indian operations. In order to ensure the company's competitive edge,
equipment manufacturing and product design are centralised in low-cost regions.
Incap Group's revenue and earnings in October-December 2012
Revenue for the final quarter of 2012 amounted to EUR 14.5 million,
approximately 14% lower than in the same period in 2011. The decrease in revenue
resulted mainly from the fact that certain products that were previously
manufactured at the Helsinki plant were eliminated from the manufacturing
programme. In addition, some revenue moved to the beginning of the year 2013 due
to difficulties in deliveries. On the other hand, revenue was boosted by the
price increases made by the company on the basis of both the increasing general
cost level and higher material expenses.
The October-December operating result (EBIT) was approximately EUR -0.6 million,
roughly the same level as in the same period in 2011. The result of the
comparison period included a non-recurring provision of approximately EUR 0.6
million for the closure of the Helsinki plant. The result for the report period
was impaired by the decrease in revenue, the increase in material and personnel
expenses, a write-down on tax assets amounting to approximately EUR 3.3 million
as well as high financial expenses.
Quarterly comparison 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousand) 2012 2012 2012 2012 2011 2011 2011 2011
------------------------------------------------------------------------------
Revenue 14,498 15,701 18,378 15,564 16,906 18,286 17,694 16,005
Operating profit/loss -628 280 13 -345 -609 35 -623 -423
(EBIT)
Net profit/loss -4,616 44 352 -711 -1,288 -576 -1,182 -951
Earnings per share, -0.23 0.00 0.02 -0.04 -0.07 -0.03 -0.06 -0.05
EUR
Incap Group's revenue and earnings in 2012
Incap Group's revenue in 2012 was EUR 64.1 million, or about 7% less than in
2011. Deliveries to energy efficiency customers remained at a good level, and
the demand for rotor components as well as for inverter and UPS products grew
clearly. Revenue generated by the manufacturing of equipment for well-being
technology decreased by approximately 33%. Underlying reasons include the
decline in the general market situation and the elimination of slot machines and
certain volume products from the production programme after the closure of the
Helsinki plant. Increasing demand in the energy efficiency sector partly
compensated for the decline in the revenue from well-being technology customers.
Business developed particularly well in India where revenue grew by 37%.
Incap's profitability improved further, but the full-year operating result
(EBIT) remained negative, EUR -0.7 million. Operating result was nearly a EUR 1
million higher than in the previous year.
The earnings trend was good especially in the third quarter when the operating
result (EBIT) was satisfactory, or 1.8% of revenue. The profitability trend in
India was strong during the full year.
Material costs and other production costs decreased compared to the previous
year, and fixed costs went down as well. On the other hand, the result was
weighed down by costs that were related to the closure of the Helsinki plant and
arose from partly overlapping resources and the transfer of production and
machines.
Measures aimed at improving the cost structure included the reorganisation of
Group Services and the centralisation of tasks to Incap's Tallinn office.
Net financial expenses were EUR 0.8 million (EUR 2.4 million). Financial
expenses decreased from the previous year and amounted to EUR 2.2 million (EUR
2.6). Financial income was EUR 1,4 million, of which 1.0 million arose in
connection with the decrease in the redemption value of the convertible loan.
Depreciation stood at EUR 1.5 million (EUR 2.0 million).
Net profit/loss for the period was EUR -4.9 million (EUR -4.0 million). This was
affected by the non-recurring write-down on deferred tax assets. Earnings per
share amounted to EUR -0.25 (EUR -0.21).
Comparison by report period 1-12/2012 1-12/2011 Change, % 1-12/2010
(EUR thousand)
---------------------------------------------------------------------
Revenue 64,141 68,890 -7 59,162
Operating profit/loss (EBIT) -681 -1,619 -58 -3,223
Net profit/loss -4,930 -3,997 23 -4,884
Earnings per share, EUR -0.25 -0.21 19 -0.33
Write-down on deferred tax assets and equity
Incap Corporation has approved tax losses, which can be utilised in the years
2013-2022. Parent company's deferred tax assets of EUR 3.3 million has been
recorded as an expense in the financial statements for 2012, because there are
no longer IFRS-based prerequisites for keeping deferred tax assets in the
balance sheet based on IAS 12.
Despite the write-down the company's management trusts that the deferred tax
assets can be utilised against the parent company's taxable income in the
future. The demand for energy efficiency technology products manufactured at the
Vaasa plant is estimated to develop favourably in the future, too, and ongoing
restructuring will also improve the parent company's profitability.
As the operations of the Indian subsidiary have been profitable, approximately
EUR 0.2 million of its tax assets has been utilised in 2012. After this, the
consolidated balance sheet contains EUR 0.6 million of deferred tax assets
relating to the Indian subsidiary. According to the impairment testing, their
value has not been impaired, and on the basis of calculations, it is probable
that the Indian subsidiary will accumulate sufficient taxable income to utilise
its deferred tax assets.
As a result of the write-down recorded in the parent company's and the Group's
balance sheet, the Group's equity becomes negative and the Group's equity ratio
is -10.3%. The parent company's equity capital is EUR 8.1 million, or 39% of the
share capital. The capital loan according to the Companies Act, Chapter 12 of
EUR 0.6 million strengthens the parent company's shareholders' equity, and
taking this into account, the parent company's equity capital is 1.6 million
less than the minimum capital required by the Companies Act.
Due to the equity of Incap Group's parent company decreasing to less than half
of the share capital, the Board of Directors of Incap Corporation has taken
steps to convene the Annual General Meeting to decide on measures to consolidate
the company's operations. The Board of Directors of Incap together with the
management is preparing an action plan to ensure the company's profitability in
2013. To improve the capital structure the Board of Directors will also propose
to the Annual General Meeting to decide on a rights issue in spring 2013.
Restructuring process
The company has continued the strategic restructuring process launched in 2006.
In 2012 the company's plant network was reduced by one company, after which the
company will have one production plant in each of its countries of operation.
The Kuressaare plant in Estonia was developed, and the extension project nearly
doubled the area of its facilities. The new facilities make it possible to
increase the efficiency of operations and improve profitability. Another
significant structural change carried out during the financial period was the
shift in focus of Group Services to Estonia and personnel reductions in Group
Services.
As the negotiations on the sale of the sheet-metal operations of the Helsinki
plant did not lead to a satisfactory result and no sustainable solutions were
found for improving profitability through other measures, Incap decided in
January 2012 to close down the Helsinki plant and transfer the production to the
company's other plants in Vaasa and Kuressaare.
The production operations at the Helsinki plant ended in August, at which point
the sheet-metal mechanics manufacturing had been transferred partly to Incap's
plant in Vaasa and partly to subcontractors. Manufacturing of some products was
discontinued entirely in connection with the closure of the plant due to a
tendering carried out by a customer among other things.
The centralisation of production increases the capacity utilisation rate and
lowers fixed costs. Incap estimates that the closure of the plant and the
centralisation of production will bring savings of about EUR 1.0 million in
2013, mainly in personnel expenses. Decrease in production costs enhances also
the competitive edge of our customers' products. The aim of centralisation is to
create better prerequisites for developing the company's operations, too.
The result of 2011 included a non-recurring provision of approximately EUR 0.6
million for the closure of the Helsinki plant. By the end of the year 2012, EUR
0.6 million of this provision was used.
Some of the production equipment of the Helsinki plant were transferred to Vaasa
and some were sold. Net income from the sales of equipment - EUR 0.4 million in
total - has been recorded in other operating income
Capital expenditure
Capital expenditure totalled EUR 0.1 million in 2012 (EUR 0.3 million),
consisting mainly of replacement investments that aimed to develop of production
at the Vaasa and Tumkur plants in particular. According to the company's
estimate, it is possible to grow business operations significantly with current
production capacity, without major investments.
Quality assurance and environmental issues
All of Incap Group's plants have environmental management and quality assurance
systems certified by Det Norske Veritas. 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.
The systems are used as tools for continuous improvement. The quality assurance
system of the Tumkur plant was included in Incap Group's "multisite"
certification in 2012.
Balance sheet, financing and cash flow
The balance sheet total was EUR 29.3 million (EUR 39.3 million). The Group's
equity at the close of the report period was negative, EUR -3.0 million (EUR
1.3 million). The parent company's equity capital is EUR 8.1 million, or 39% of
the share capital (EUR 12.8, 63%).
The Group's equity ratio was negative, -10.3% (3.3%).
Liabilities totalled EUR 32.3 million (EUR 38.0 million), of which EUR 20.5
million (EUR 24.9 million) were interest-bearing liabilities.
Interest-bearing net liabilities decreased from the comparison period and were
EUR 19.8 million (EUR 24.5 million), and the gearing ratio was -659% (1,868%).
Interest-bearing liabilities:
Non-current financial liabilities measured at amortised cost (EUR
thousand)
Capital loan 600
Convertible loan 1,886
Finance lease liabilities 5
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2,491
Current financial liabilities measured at amortised cost
Bank loan 12,558
Other liabilities 1,899
Convertible loans 3,405
Finance lease liabilities 97
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17,959
Non-current liabilities total 20 450
The company has long-term debt of EUR 2.5 million, of which EUR 1.9 million of
the 2012 convertible bonds and EUR 0.6 million loan.
On 31 December 2012, Incap Group's current interest-bearing loans and borrowings
stood at EUR 18.0 million. Of this amount, EUR 14.5 million is a loan from
credit institutions, of which EUR 4.1 million is directed towards the Indian
subsidiary. In Finland and Estonia, the parent company uses factoring financing
which is part of current liabilities.
Of the company's loans, a part of finance leases and a part of the 2012
convertible loan and the capital loan are classified as non-current. Other bank
loans are included in current financial liabilities on the basis of the loan
period or due to the breach of covenants.
On 31 December 2012, Incap's loans from credit institutions and other loans
totalled EUR 20.5 million. Of this, EUR 14.5 million was loans from credit
institutions (31 December 2011: EUR 17.0 million) and EUR 6.0 million other
loans (31 December 2011: EUR 7.8 million).
Balance on 31 Dec Review of
Loans from credit institutions 2012 covenants
(EUR thousand)
-----------------------------------------------------------------------------
Bank loan in Finland 5,043 30 Jun 2013
Account with credit facility (< EUR 1 million) 25 30 Jun 2013
Factoring limit (< EUR 8.5 million) 5,265 30 Jun 2013
Account with credit facility in India 668
Bank loan in India 1,555
Finnfund's investment in Indian operations 1,899
Bank loan in Estonia 2
-----------------------------------------------------------------------------
Total 14,456
Other loans
-----------------------------------------------------------------------------
Convertible loan 2007 2,406
Convertible loan 2012 2,885
Capital loan in Finland 600
Finance lease in Finland 86
Finance lease in Estonia 17
-----------------------------------------------------------------------------
Total 5,994
Total 20,450
From the loans from financial institutions, EUR 10.3 million was granted by the
Finnish bank to bank loans and lines of credit in use. Of the Finnish bank's
credit line and factoring credit line, EUR 5.3 million was in use and EUR 4.2million was unused on 31 December 2012. For operations in India and Estonia, the
balances of bank loans and credit line totalled EUR 4.1 million. Finnfund's EUR
1.9 million investment in Incap's operations in India is included in the loans
from credit institutions.
Other loans (EUR 6.0 million) include convertible loans, capital loan as well as
finance lease liabilities in Finland and Estonia. The amount of the convertible
loan of 2007 at the end of the financial year was EUR 2.4 million, of which a
part was reorganised after the end of the financial year and the remainder of
1.0 million is due 30 June 2013. The convertible loan 2012 abount to EUR 2.9
million and will mature on 25 May 2017. Other loans are the Finnish and Estonian
finance leases, totalling EUR 0.1 million, and the EUR 0.6 million instalment of
the Finnish capital loan, drawn in December 2012. The last instalment of the
loan from the municipality of Sotkamo, approximately EUR 43,000, was repaid in
2012.
Instalments and interests of loans:
(EUR Instalments Interests 31 Dec 2012
thousand)
-----------------------------------------------
Less than 6 17,905 525 18,430
months
6-12 months 54 1 54
1-5 years 2,492 772 3,263
More than 5
years
-----------------------------------------------
20,450 1,297 21,747
At the end of financial period, EUR 12.6 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, a EUR 1.5 million mortgage on the
production facilities in Vuokatti, Finland and a EUR 0.7 million mortgage on the
production facilities in India.
Incap's liabilities for debts reduced in May 2012 when the value of the 2007
convertible loan decreased by approximately EUR 1.0 million in connection with
the financing arrangement. The decrease in the value resulted from the fact that
the company committed itself to redeeming some of the loan units of the
convertible loan at a price that is on average 27% lower than the nominal value
of the loan units.
During 2012, approximately EUR 0.2 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 31 December 2012, confirmed tax losses
for which no deferred tax asset was recognised amounted to EUR 11.2 million.
The Group's quick ratio was 0.5 (0.4), and the current ratio was 0.8 (0.7).
The company was able to reduce stock value and free capital from inventories.
During the financial period, the value of inventories decreased from EUR 11.4
million at the beginning of 2012 to EUR 9.4 million. The increase in the demand
in the energy efficiency sector increased inventories especially at the Indian
plant. On the other hand, the closure of the Helsinki plant decreased the entire
Group's inventories by approximately 1.6 million when compared to the end of
2011.
Cash flow from operations was positive: EUR 2.4 million (EUR -3.1 million). On
31 December 2012, the Group's cash and cash equivalents totalled EUR 0.6 million
(EUR 0.4 million). The change in cash and cash equivalents showed an increase of
EUR 0.2 million (a decrease of EUR 0.4 million).
Aspects related to the Group's cash flow, financing and liquidity are also
described in the section "Short-term risks and factors of uncertainty concerning
operations".
Private placement in April 2012
On 11 April 2012, the company's Board of Directors used the authorisation issued
by the Annual General Meeting held in 2011 and offered a total of 2,168,100 new
shares to the major shareholders of the company. The private placement was a
part of the financing arrangement prepared by the company, aiming to improve the
company's equity ratio and solvency and to ensure the continued development of
the company.
The share issue was subscribed in full at the price of EUR 0.35 per share. In
addition to four major shareholders, shares were subscribed by all members of
the Board of Directors and the President and CEO of the Group.
The received subscription amount, approximately EUR 759,000 in total, has been
recognised in the reserve for invested unrestricted equity. The new shares were
registered in the Trade Register on 18 July 2012, increasing the total number of
the company's shares to 20,848,980. In order to enter the new shares for public
trading, Incap drew up a prospectus, and the new shares were admitted to public
trading at the Helsinki Stock Exchange on 18 September 2012 after the prospectus
was approved.
Convertible loan 2007
The convertible loan of EUR 6.75 million, issued by Incap in 2007, matured on
25 May 2012. In May 2012, the company agreed upon re-financing for the
convertible loan so that the company redeems the loan units of some of the
convertible loan's holders while a portion of the holders convert their loan
units to a new convertible loan. Some of the redemptions were carried out in
May-June 2012, and the amount to be redeemed by 31 December 2012 was EUR
2,405,950.27.
In January 2013, after the end of the financial period, Incap negotiated the
final redemption of the convertible loan. In January 2013, the company redeemed
out of the remaining loan units a total of EUR 1.0 million. Furthermore, a part
of the loan with respective interest, i.e. a total of EUR 0.4 million, was
converted to Incap's shares by means of a private placement to one holder of the
convertible loan. The final redemption of the 2007 convertible loan, EUR 1.0
million including interest, will be settled by the end of June 2013.
Convertible loan 2012
In the redemption arrangements of the convertible loan issued in 2007, a portion
of the holders converted their loan units to a new convertible loan. The Board
of Directors approved subscriptions for this new loan on 25 May 2012. The issue
rate of the convertible loan is 100% and an annual fixed interest of 7% will be
paid on the loan after each 12-month period. The subscription price of the new
loan was formed in the following way: one loan unit in the 2007 convertible loan
can be converted into one loan unit in the 2012 convertible loan. The loan
amount is EUR 2,916,000 and a total of 540 loan units with the nominal value of
EUR 5,400 were granted out of the loan. The convertible loan will expire on 25
May 2017.
Personnel
At the end of 2012, the Incap Group had a payroll of 614 employees (735). Some
55% (51%) of the personnel worked in India, 28% (27%) in Estonia and 17% (22%)
in Finland. The main personnel reductions took place in Finland due to the
closure of the Helsinki plant and the streamlining of Group Services.
At the end of the year, 170 of Incap's employees were women and 444 were men.
Permanently employed staff totalled 414, and the number of fixed-term employees
was 200. The company had two part-time employment contracts at the end of the
year. The average age of the personnel was 33.5 years.
Company management and organisation
The company's President and CEO during the financial period was Sami Mykkänen.
In addition to the CEO, the Group's Management Team included Kimmo Akiander
(Business Unit Well-being, until 29 February 2012), Kirsi Hellsten (Human
resources, until 31 October 2012), Mikko Hirvinen (Special Projects), Jari
Koppelo (Business Unit Energy efficiency and, from 1 March 2012, Business Unit
Well-being), Sami Kyllönen (Production, Europe), Kirsti Parvi (Finance and
administration) and Hannele Pöllä (Communications).
In addition to the members of the actual Management Team, the Extended
Management Team included Siret Kegel (Quality), Murthy Munipalli (Energy
efficiency Asia), Pekka Laitila (Materials management), Päivi Luotola (IT) and
Marko Tapaninaho (Engineering).
Annual General Meeting 2012
Incap Corporation's Annual General Meeting (AGM) was held in Helsinki on 11
April 2012. The AGM adopted the financial statements for the financial period
that ended on 31 December 2011. In accordance with the proposal of the Board of
Directors, the AGM decided that no dividend be distributed for the financialperiod and that the loss for the financial period (EUR 2,372,981.70) be
recognised in equity.
Authorisation of the Board of Directors
On 11 April 2012, the Annual General Meeting authorised the Board of Directors
to decide during one year after the Annual General Meeting to issue a maximum of
9,300,000 new shares either against payment or without payment. Of the new
shares, a maximum of 300,000 shares can be used for the option rights of the
company's remuneration and compensation system.
The Board of Directors exercised the authorisation in connection with the
company's financing arrangement on 25 May 2012 when a portion of the holders of
the convertible loan issued in 2007 converted their loan units to a new
convertible loan. The new convertible loan includes a right to convert loan
units to a maximum total of 7,112,195 new shares in the company.
At the end of the financial period 2012, the Board of Directors had a total of
2,187,805 unused shares from the authorisation granted by the Annual General
Meeting. The Board of Directors exercised the authorisation on 30 January 2013
and directed one holder of the convertible loan 2007 the company's new shares
against the redemption of the convertible loan. After this the Board of
Directors have an unused authorisation for a total of 490,519 shares.
Board of Directors and auditor
The Annual General Meeting held on 11 April 2012 re-elected Raimo Helasmäki,
Kalevi Laurila, Susanna Miekk-oja and Lassi Noponen as members of the Board of
Directors and elected Matti Jaakola as a new member. From among its members, the
Board elected Kalevi Laurila as Chair and Lassi Noponen as Deputy Chair. The
secretary of the Board was Anu Kaskinen, LL.M. The Board convened 49 times in
2012, and the average attendance rate was 88%.
The auditor was auditing firm Ernst & Young Oy with Jari Karppinen, Authorised
Public Accountant, as the principal auditor.
Report on corporate governance
Incap will release a report on the company's corporate governance in compliance
with the Securities Market Act as a separate document, in connection with the
publication of the report of the Board of Directors and the annual report in
Week 12.
Shares and shareholders
Incap Corporation has one series of shares, and the number of shares at the end
of the period is 20,848,980. During the financial period, the share price varied
between EUR 0.15 and 0.65 (EUR 0.37 and 0.64). The closing price for the year
was EUR 0.19 (EUR 0.42). During the report period, the trading volume was
2,952,411 shares, or 14.2% of outstanding shares (746,382, or 4.0%).
At the end of the financial period, Incap had 1,159 shareholders (1,053).
Nominee-registered or foreign owners held 0.5% (0.5%) of all shares. The
company's market capitalisation on 31 December 2012 was EUR 4.0 million (7.8
million). The company does not hold any of its own shares.
The largest shareholders on 31 December 2012:
No. of Share of
shares ownership, %
------------------------
Oy Etra Invest Ab 4,834,547 23.2
JMC Finance Oy 2,402,286 11.5
Suomen Teollisuussijoitus Oy 2,185,509 10.5
Sundholm Göran 1,481,113 7.1
Laurila Kalevi Henrik 1,460,429 7.0
Oy Ingman Finance Ab 1,250,000 6.0
Mandatum Life 1,116,059 5.4
Lehtonen Jussi Tapio 300,000 1.4
Oksanen Markku 242,033 1.2
Noponen Lassi Tapani 237,909 1.1
At the end of the financial period, the members of Incap Corporation's Board of
Directors and the President and CEO and their related persons owned a total of
4,512,174 shares, or approximately 21.6% of the company's shares outstanding.
Share-based incentive system 2009
The option scheme implemented in 2009 includes a total of 600,000 stock options
entitling their holders to subscribe for an equal number of Incap shares. The
stock options are broken into three categories: 2009A, 2009B and 2009C. The
subscription price for all stock options is EUR 1. The subscription period is
from 1 April 2010 to 31 January 2014 for 2009A stock options and from 1 April
2011 to 31 January 2014 for 2009B and 2009C stock options. The President and CEO
has received 100,000 A stock options and 100,000 B stock options. The members of
the Management Team have received a total of 129,000 C stock options.
The proportion of shares to be subscribed on the basis of stock options is up to
1.6% of the company's shares and votes after a possible increase in share
capital. Undistributed and returned stock options will be given to Euro-ketju
Oy, a subsidiary fully owned by Incap, and the Board of Directors will make a
separate decision on distributing these.
Announcements in accordance with Section 10 of Chapter 9 of the Securities
Market Act on a change in holdings
On 16 April 2012, Incap announced that after the registration of the new shares
issued in the private placement of Incap Corporation, the holdings of Kalevi
Laurila of Incap Corporation's shares and votes will exceed 5%. Furthermore, on
21 September 2012, the company announced that the holdings of Oy Ingman Finance
Ab of Incap Corporation's shares and votes decreased below 10% after several
consecutive trades.
Information related to the liquidity risk and continuity of operations in the
interim report for January-June
On 22 May 2012, Incap published a stock exchange release with regard to
financing arrangements that were related to the extension of the financing
agreements, the granting of a new bank loan and a rearrangement of the company's
convertible loan. In its interim report for January-June published on 31 July
2012, the company provided information on the final result of the negotiations
and financial risks and referred to information in the financial statements for
2011. However, the information about financing agreements provided in the
financial statements was no longer up-to-date, as the financing agreements had
been partially renegotiated. The interim report did not contain liquidity risk
details as required by the IFRS 7 standard and did not comment, in a manner
required by recommendations, on the continuity of operations in the company's
prevailing financial position. Due to these inadequacies information the interim
report did not meet the requirements of the IAS 34 standard.
Information missing from the interim report was presented in the stock exchange
release published on 14 September 2012 and in the prospectus. The release
provided more information about the company's loans and related covenants, risks
related to liquidity, the sufficiency of the working capital for the next 12
months and aspects related to continuity of operations. The most significant
risks in respect of continuity of the company's operations were related to the
success of the share issue to be arranged, the fulfilment of the conditions set
by the bank in order to draw the second instalment of additional financing, the
fulfilment of the covenant levels set for the continuation of loans from credit
institutions, sufficiency of the actions to improve profitability and
inventories, as well as development of the company's customers' market situation
and demand.
Risk management
The Risk Management Policy approved by the Incap Board classifies risks as risks
connected to the operating environment, operational risks and damage and funding
risks. Risk management at Incap is mainly focused on risks that threaten the
company's business objectives and continuity of operations. In order to improve
its business opportunities, Incap is willing to take on managed risks within the
scope of the Group's risk management capabilities. Incap regularly reviews its
insurance policies as part of its risk management system.
Short-term risks and factors of uncertainty concerning operations
General risks related to Incap'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.
The most significant short-term risks are associated with the continuity of
operations and sufficiency of funding.
Continuity of operations
The most significant risks related to the continuity of operations are:
* the arrangement of financing for the redemption of the convertible loan
maturing on 30 June 2013, either through a share issue or another
arrangement
* the fulfilment of the conditions set by the bank for additional financing
* the fulfilment of the covenant levels set for the continuation of loans from
credit institutions
* the sufficiency of the working capital
* the execution of the actions to improve profitability and inventories
* global economic development and its impact on the company's customers'
market situation and demand.
Financing needed for the redemption of the 2007 convertible loan
The convertible loan of EUR 6.75 million, issued by Incap in 2007, matured on
25 May 2012. In May 2012, the company agreed upon re-financing for the
convertible loan so that the company redeems the loan units of some of the
convertible loan's holders while a portion of the holders convert their loan
units to a new convertible loan. Some of the redemptions were carried out in
May-June 2012, and the amount to be redeemed by 31 December 2012 was EUR
2,405,950.27.
In January 2013, after the end of the financial period, Incap concluded its
negotiations concerning the final redemption of the convertible loan. In January
2013, the company redeemed out of the remaining loan units a total of EUR 1.0
million. Furthermore, a part of the loan with respective interest, i.e. a total
of EUR 0.4 million, was converted to Incap's shares by means of a private
placement to one holder of the convertible loan. The final redemption of the
2007 convertible loan, EUR 1.0 million including interest, will be settled by
the end of June 2013.
According to the provisions of the agreement, one subscriber of the 2012
convertible loan, whose loan unit in the convertible loan is EUR 999,000, has
the right to terminate the financing agreement in case the redemption of the
2007 convertible loan has not taken place by the end of June 2013. This loan
unit of the 2012 convertible loan has been recognised in short-term loans.
Withdrawal of the second instalment of additional financing granted
In the spring 2012, Incap negotiated a financing arrangement in which the
company's Finnish financing banks renewed the maturing loans and granted
altogether EUR 2.5 million in a new loan. Of this new loan, EUR 1 million was
drawn down in July 2012 and EUR 0.75 million after the end of the financial
period in January 2013. The remaining part of the loan can be drawn by 29 July
2013 after a separate confirmation of the bank.
Loan financing and covenants
At the end of the financial period, Incap's loans amounted to EUR 20.5 million.
Loans, credit line and factoring credit line granted by a Finnish bank totalled
EUR 10.3 million on 31 December 2012. These loans involve the following
covenants:
Equity ratio Net IBD/EBITDA
31 December 2012 at least 10% up to 7
30 June 2013 onwards at least 15% up to 5
The covenants were not met on 31 December 2012. On this date, the company's
equity ratio was -10.3% and net IBD/EBITDA was 18.7. The bank has the right to
terminate the agreements to expire after 60 days if any covenant is not met on
the testing date. On 28 January 2013, the company received a written
confirmation from the bank that the bank will not exercise its right to
terminate the loans, even though the covenants were not met on 31 December
2013. The covenants will be tested next on 30 June 2013 and after that every six
months.
In addition to the covenants mentioned above, the EUR 1 million additional loan
withdrawn by Incap in July 2012 incorporates the bank's right to terminate the
loan in case the redemption of the 2007 convertible loan has not taken place by
the end of June 2013 as agreed. The bank has approved the financing arrangement
made after the end of the financial period and announced that it will not
exercise its right to terminate the additional loan agreement.
On the basis of the forecast prepared by Incap on 25 February 2013, the
covenants mentioned above will not be met on the next testing date, 30 June
2013. The company is continuing the negotiations with the bank in order to
mitigate the covenants and to rearrange the financing.
Payment arrangement for tax liabilities
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. The total amount of the tax liabilities within
the scope of this arrangement is approximately EUR 1.2 million, and according to
the agreement, the last payment will take place in August 2014. According to the
provisions of the agreement, if an instalment is late, the Finnish Tax
Administration has the right to terminate the agreement with immediate effect.
The sufficiency of the working capital
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 remarkable uncertainty associated with them. On the basis of this
cash flow projection, Incap's working capital will not cover the requirement for
the next 12 months at the time of the publication of this financial statements
release. According to the company's estimate, approximately EUR 4-6 million of
additional working capital is needed.
However, the company's working capital will be sufficient for the next 12 months
if the following criteria are met:
* the company's potential share issue and financing arrangements succeed as
planned, so that the company obtains funds for working capital funding and
the final redemption of the 2007 convertible loan in June 2013; and
* the bank accepts the terms and conditions for the drawing down of the
additional loan; and
* the goals for the company's result and inventory turnover rate are achieved;
and
* the covenants for the company's loans from credit institutions are met, or,
should the covenants not be met, the bank decides not to exercise its right
to terminate the loan agreements.
Incap's management is confident that the share issue planned by the company will
succeed and the company will be able to redeem the convertible loan as agreed.
The strategic restructuring has been carried out as planned; the company closed
down the Helsinki plant in the summer 2012 and transferred its production to
other units. In addition, in January 2013 the company started co-operative
negotiations with the Group Services personnel, with the aim of reorganising the
company's administration and improving the efficiency of operations
significantly. These measures and other development projects are expected to
improve profitability. In addition, the company will continue to take measures
to ensure that the goals for the company's result and inventory turnover are
achieved.
Thus, the company estimates that it will be able to cover any possible working
capital deficit and ensure that the covenants related to the financing
agreements are met. Should the covenants not be met and the financiers inform
the company that they will make use of the covenants to terminate the
agreements, the company would need to initiate negotiations on the rearrangement
of funding and on gaining new equity or debt financing.
Assets held for sale
The company owns a plant property in Vuokatti, Finland, built in 1978-2001 and
with an approximate area of 8,700 m². The property and the related loans have
been recognised as available for sale since the financial statements for 2010.
In August 2012, Incap signed a 5-year lease contract for the property and
continues measures aimed at selling the property.
Development of customers' market situation and demand
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. 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.
Events after the end of the financial period
Adjustment of operations and co-operative negotiations
In January 2013, Incap started co-operative negotiations, in accordance with the
Act on Co-operation within Undertakings, with both the personnel of its Vaasa
plant and the personnel working in its Group Services in Finland. The outcome of
the negotiations in Vaasa is that, if necessary, the personnel of the Vaasa
plant will be laid off temporarily for a maximum of 90 days. This will take
place by the end of June. Instead of immediate temporary lay-offs, the plant's
operations were adjusted to demand by continuing training and increasing multi-
skills of the personnel. Need for temporary lay-offs will be evaluated weekly
based on the order book. The negotiations with the Group Services are still
ongoing, and their outcome is estimated to affect the employment of a maximum of
14 employees.
Rearrangement of the convertible bond 2007
On 17 January 2013, Incap published a release about a financing arrangement that
was related to the redemption of the convertible loan issued in 2007. Incap
redeemed out of the remaining loan units a total of EUR 1.0 million in cash
payment in January 2013. Furthermore, a part of the loan with respective
interest, i.e. a total of EUR 0.4 million, was converted to Incap's shares by
means of a private placement to one holder of the convertible loan. The final
redemption of the 2007 convertible loan, EUR 1.0 million, will be settled by the
end of June 2013.
Capital loan
In connection with the negotiations concerning the redemption of the convertible
loan, three of Incap Corporation's major shareholders granted the company a
capital loan of EUR 1.05 million, with a loan period of three years and at an
interest rate of 10%. Of this capital loan, EUR 0.6 million was recorded in the
financial statements for 2012. The loan conditions include the right to set off
eventual subscription price of shares in a share issue arranged by the company.
Kalevi Laurila, who is closely related to the company, is one of the
shareholders who granted the capital loan.
Of the capital loan, EUR 0.6 million was drawn on 28 December 2012 and recorded
in the financial statements for 2012. According to the loan conditions, upon the
liquidation or the bankruptcy of the parent company, the capital and the
interest may only be paid at a lower privilege in comparison to all other debts.
Otherwise the capital or the interest may be returned only for the part that the
unrestricted equity and capital loans of the parent company at the time of the
payment exceed balance sheet losses confirmed for the parent company's latest
financial period or included in more recent financial statements. No security
has been provided for interest on the capital or for the loan. The loan interest
is recognised as an expense on a time apportionment basis. Unless the
prerequisites set in the Finnish Limited Liability Companies Act for payment of
interest are fulfilled, the interest may not encumber the result for the
financial period. The interest is presented as interest liability in the notes
for the parent company. In the consolidated IFRS financial statements, the
accumulated interest of the capital loan is recognised as an expense for the
financial period. The loan is due for repayment at the latest on 31 December
2015.
Private placement
On 30 January, the Board of Directors of Incap Corporation arranged a private
placement with which the company redeemed a part of the convertible loan issued
in 2007. One holder of the convertible loan was given, as compensation for the
holder's loan units, altogether 1,697,286 new shares in the company. The imputed
subscription price of the shares was EUR 0.22 per share. The new shares equal
approximately 8.1% of the total number of shares of the company before the share
issue. After the registration of the new shares, the total number of Incap
Corporation's shares was 22,546,266.
Additional bank loan
On 30 January 2013, Incap finalised the financing negotiations with a Finnish
bank and drew down one half of the loan of EUR 1.5 million granted to the
company. The remaining loan instalment can be drawn down by 29 July 2013 after a
separate confirmation given by the bank. In addition, the company has further
agreed on other financing arrangements that strengthen the working capital. As a
result of these measures, Incap's cash in hand was increased by EUR 1.2 million.
Strategy and objectives of the company
In 2013, Incap's principal objectives are to improve profitability of business
operations by enhancing operational efficiency and to improve the company's
financial situation through a share issue.
Demand in the company's strategic customer segments is expected to develop
evenly, although the market outlook is typically very short-term. Incap's goal
is to expand deliveries to existing customers to cover more comprehensive
solutions and a broader range of end products. Customer acquisition will focus
especially on design and manufacture of equipment that improve energy
efficiency, the demand of which is expected to increase strongly.
Long-term growth prospects are good especially in the field of energy efficiency
but also in well-being technology where new, innovative and promising products
are constantly being introduced to the market. Many new growing companies have
adopted the strategy of focusing on core functions and outsourcing all
production activities. For these companies, Incap is able to offer the entire
production process or comprehensive product integration.
The company will strengthen the role of product design and the cooperation
networks launched with design companies will be continued. The company develops
preparedness for comprehensive design cooperation with selected customers. In
its own product design, the company will focus on equipment related to energy
production, storage and supply - an area in which the company already has a
great deal of expertise. A long-term aim is to introduce our own products on the
market and into volume production and to sell them under the customer's own
brand.
The company will continue to enhance the efficiency of its operations and aims
to make use of global opportunities. Materials management is a particular
development area in the future, too, as procurement function and management of
material flows are very significant for the company's profitability. By
reorganising Group Services, the efficiency of group functions will be improved
while the role of the Tallinn office in corporate control will be strengthened.
With the previously initiated actions for improved efficiency, Incap intends to
cut costs by a total of approximately EUR 3.3 million in 2012- 2013, compared to
2011, by enhancing the efficiency of material sourcing, closing down the
Helsinki plant, and centralising Group Services in Estonia.
There is no need for major investments as the company estimates that, with its
present production structure, it will be able to achieve an annual revenue of up
to EUR 100 million by 2015. With the company's target customer base and product
range, it is realistic to expect an operating margin of approximately 5 to 8
percent (EBIT).
In order to ensure future growth of its business operations, the company will
also look into opportunities for business restructuring.
Outlook for 2013
According to the new Securities Market Act, a company is obliged to present its
future outlook in its annual report of operations. Incap Corporation's Board of
Directors will continue the company's existing practice and present its estimate
on future outlook both in the report of the Board of Directors and in interim
reports.
Incap's estimates for future business development are based both on its
customers' forecasts and on the company's own assessments. In the energy
efficiency sector, demand is expected to grow from the 2012 level both in Europe
and in India. Revenue from well-being technology products is estimated to
decrease from last year due to the discontinuation of manufacturing of certain
volume products.
The closure of the Helsinki plant in 2012 was the last phase of the company's
strategic change to production structure, creating the prerequisites for
profitable growth. Reduction of the number of plants and other efficiency
improvements in production, together with the streamlining of the Group
services, will improve the company's profitability in 2013.
Incap estimates that the Group's revenue in 2013 will be the same or somewhat
lower than the EUR 64.1 million achieved in 2012. The company estimates that its
full-year operating result (EBIT) will be clearly positive. In 2012 the
operating result was negative EUR -0.7 million.
Board of Directors' proposal on measures related to the operating result
The parent company's loss for the financial period totalled EUR 5,505,693.92.
The Board will propose to the Annual General Meeting on 10 April 2013 that no
dividend be paid and the loss for the financial period be recognised in equity.
Annual General Meeting 2013
Incap Corporation's Annual General Meeting will take place on Wednesday, 10
April 2013 at 3:00 p.m. at Hotel Kämp, Pohjoisesplanadi 29, 00100 Helsinki.
Notice to the Annual General Meeting will be given on 18 March 2013 at the
latest.
Publication of the financial statements for 2012
Incap will publish the Group's annual report and financial statements including
the Report of the Board of Directors and the auditor's report for 2012, during
Week 12/2013 on the company's home page (www.incap.fi).
Helsinki, 25 February 2013
INCAP CORPORATION
Board of Directors
For additional information, please contact:
Sami Mykkänen, President and CEO, tel. +358 40 559 9047 or
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
PRESS CONFERENCE
Incap will arrange a conference for the press and financial analysts on 26
February 2013 at 10:00 a.m. at the World Trade Center, Helsinki, in Meeting Room
4 on the 2nd floor at Aleksanterinkatu 17, FI-00100 Helsinki.
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
7 Calculation of 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 repair and 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 610 people. Incap's share is listed on
the NASDAQ OMX Helsinki Ltd. Additional information: www.incap.fi.
Annex 1
CONSOLIDATED INCOME STATEMENT (IFRS)
(EUR thousand, 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 1-12/ Change 1-12/
unaudited) 2012 2012 2012 2012 2011 2012 % 2011
-------------------------------------------------------------------------------
REVENUE 14,498 15,701 18,378 15,564 16,906 64,141 -7 68,890
Work performed by
the enterprise and 0 0 0 0 0 0 0
capitalised
Change in
inventories of -323 -169 -327 176 -358 -643 77 -363
finished goods
and work in progress
Other operating 49 136 134 85 49 404 178 145
income
Raw materials and 9,968 10,978 12,568 10,801 11,515 44,315 -9 48,631
consumables used
Personnel expenses 2,538 2,419 3,119 3,011 3,164 11,087 -8 12,016
Depreciation,
amortisation and 231 378 435 415 460 1,460 -29 2,047
impairment losses
Other operating 2,114 1,612 2,051 1,944 2,068 7,721 2 7,597
expenses
-------------------------------------------------------------------------------
OPERATING -628 280 13 -345 -609 -681 -58 -1,619
PROFIT/LOSS
Financing income and -569 -156 339 -366 -679 -751 -68 -2,378
expenses
-------------------------------------------------------------------------------
PROFIT/LOSS BEFORE -1,197 124 352 -711 -1,288 -1,432 -64 -3,997
TAX
Income tax expense -3,418 -79 0 0 0 -3,498 0
-------------------------------------------------------------------------------
PROFIT/LOSS FOR THE -4,616 44 352 -711 -1,288 -4,930 23 -3,997
PERIOD
Earnings per share -0.23 0.00 0.02 -0.04 -0.07 -0.25 19 -0.21
Options have no
dilutive effect
in financial periods
2011 and 2012
OTHER COMPREHENSIVE INCOME 10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 1-12/ Change 1-12/
2012 2012 2012 2012 2011 2012 % 2011
-------------------------------------------------------------------------------
PROFIT/LOSS FOR THE PERIOD -4,616 44 352 -711 -1,288 -4,930 23 -3,997
OTHER COMPREHENSIVE
INCOME:
Translation differences -129 63 -50 -2 -34 -118 -63 -316
from foreign units
-------------------------------------------------------------------------------
Other comprehensive -129 63 -50 -2 -34 -118 -63 -316
income, net
TOTAL COMPREHENSIVE INCOME -4,745 107 302 -712 -1,322 -5,048 17 -4,313
Attributable to:
Shareholders of the parent -4,745 107 302 -712 -1,322 -5,048 17 -4,313
company
Non-controlling interest 0 0 0 0 0 0 0
Annex 2
CONSOLIDATED BALANCE SHEET (IFRS)
(EUR thousand, unaudited) 31 December 31 December Change %
2012 2011
-------------------------------------------------------------------------------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,578 4,007 -36
Goodwill 940 964 -2
Other intangible assets 178 341 -48
Other financial assets 311 314 -1
Deferred tax assets 560 4,085 -86
-------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 4,568 9,710 -53
CURRENT ASSETS
Inventories 9,352 11,423 -18
Trade and other receivables 12,815 15,834 -19
Cash and cash equivalents 613 369 66
-------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 22,780 27,625 -18
1,936 1,936
Non-current assets held-for-sale 0
29,283 39,271
TOTAL ASSETS -25
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF
THE PARENT COMPANY
Share capital 20,487 20,487 0
Share premium account 44 44 0
Reserve for invested unrestricted equity 4,818 4,084 18
Exchange differences -917 -799 15
Retained earnings -27,440 -22,506 22
-------------------------------------------------------------------------------
TOTAL EQUITY -3,008 1,311 -329
NON-CURRENT LIABILITIES
Deferred tax liabilities 0 0 0
Interest-bearing loans and borrowings 2,492 259 862
-------------------------------------------------------------------------------
NON-CURRENT LIABILITIES 2,492 259 862
CURRENT LIABILITIES
Trade and other payables 11,841 13,109 -10
Current interest-bearing loans and borrowings 17,959 24,336 -26
-------------------------------------------------------------------------------
CURRENT LIABILITIES 29,800 37,445 -20
Liabilities relating to non-current assets 0 256 -100
held-for-sale
TOTAL EQUITY AND LIABILITIES 29,283 39,271 -25
Annex 3
CONSOLIDATED CASH FLOW STATEMENT
(EUR thousand, unaudited) 1-12/2012 1-12/2011
--------------------------------------------------------------------------
Cash flow from operating activities
Operating profit/loss -681 -1,619
Adjustments to operating profit 728 2,157
Change in working capital 4,188 -1,920
Interest paid and payments made -1,814 -1,793
Interest received 27 38
--------------------------------------------------------------------------
Cash flow from operating activities 2,448 -3,137
Cash flow from investing activities
Capital expenditure on tangible and intangible assets -124 -280
Proceeds from sale of tangible and intangible assets 139 148
Other investments -61 -80
Loans granted 0 -6
Sold shares of subsidiary 0 0
Repayments of loan assets 3 0
--------------------------------------------------------------------------
Cash flow from investing activities -43 -218
Cash flow from financing activities
Proceeds from share issue 734 0
Drawdown of loans 1,819 4,946
Repayments of borrowings -4,201 -1,118
Repayments of obligations under finance leases -594 -843
--------------------------------------------------------------------------
Cash flow from financing activities -2,242 2,985
Change in cash and cash equivalents 163 -371
Cash and cash equivalents at beginning of period 369 476
Effect of changes in exchange rates 99 288
Changes in fair value (cash and cash equivalents) -18 -24
Cash and cash equivalents at end of period 613 369
Annex 4
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
(EUR thousand,
unaudited)
Share Reserve for
Share premium invested Exchange Retained Total
capital account unrestricted differences earnings
equity
-------------------------------------------------------------------------------
Equity at 1 20,487 44 4,084 -483 -18,510 5,622
January 2011
Issue premium 0 0 0 0 0 0
Transaction costs 0 0 0 0 0 0
for equity
Change in
exchange 0 0 0 -316 0 -316
differences
Options and
share-based 0 0 0 0 2 2
compensation
Other changes 0 0 0 0 0 0
-------------------------------------------------------------------------------
Net income and
losses recognized 0 0 0 -316 2 -314
directly in
equity
Net profit/loss 0 0 0 0 -3,997 -3,997
-------------------------------------------------------------------------------
0 0 0 -316 -3,995 -4,311
Equity at 31 20,487 44 4,084 -799 -22,506 1,311
December 2011
Equity at 1 20,487 44 4,084 -799 -22,506 1,311
January 2012
Share issue 0 0 759 0 0 759
Transaction costs 0 0 -25 0 0 -25
for equity
Change in
exchange 0 0 0 -118 0 -118
differences
Options and
share-based 0 0 0 0 -5 -5
compensation
Other changes 0 0 0 0 0 0
-------------------------------------------------------------------------------
Net income and
losses recognized 0 0 734 -118 -5 611
directly in
equity
Net profit/loss 0 0 0 0 -4,930 -4,930
-------------------------------------------------------------------------------
Total income and 0 0 734 -118 -4,935 -4,319
losses
Equity at 31 20,487 44 4,818 -917 -27,440 -3,008
December 2012
Annex 5
GROUP KEY FIGURES AND CONTINGENT 31 December 31 December
LIABILITIES 2012 2011
-------------------------------------------------------------------------------
Revenue, EUR million 64.1 68.9
Operating profit, EUR million -0.7 -1.6
% of revenue -1.1 -2.4
Profit before taxes, EUR million -1.4 -4.0
% of revenue -2.2 -5.8
Return on investment (ROI), % -12.6 -5.1
Return on equity (ROE), % [2] 580.8 -115.3
Equity ratio, % -10.3 3.3
Gearing, % -659.4 1,867.7
Net debt, EUR million 18.9 21.8
Net interest-bearing debt, EUR million 19.8 24.5
Quick ratio 0.5 0.4
Current ratio 0.8 0.7
Average number of shares during the report
period, adjusted for share issues 20,067,042 18,680,880
Earnings per share (EPS), EUR -0.25 -0.21
Equity per share, EUR -0.14 0.07
Dividend per share, EUR 0 0
Dividend out of profit, % 0 0
Effective dividend yield, % 0 0
P/E ratio -0.8 -2.0
Trend in share price
Minimum price during the period, EUR 0.15 0.37
Maximum price during the period, EUR 0.65 0.64
Mean price during the period, EUR 0.30 0.52
Closing price at the end of the period, EUR 0.19 0.42
Total market capitalisation, EUR million 4.0 7.8
Trade volume, no. of shares 2,952,411 746,382
Trade volume, % 14.2 4.0
Investments, EUR million 0.1 0.3
% of revenue 0.2 0.4
Average number of employees 683 749
CONTINGENT LIABILITIES, EUR million
FOR OWN LIABILITIES
Mortgages 14.3 12.3[1]
Off-balance sheet liabilities 7.1 9.3
Nominal value of currency options, EUR thousand 0 0.0
Fair values of currency options, EUR thousand 0 0.0
[1] In September 2012, the bank confirmed that EUR 1
million of the company's mortgages was released on 6
May 2011. The incorrect mortgage amount stated in the
financial statements for 2011 has been corrected in
this table.
[2] In the calculation of return on equity, the
numerator and the denominator are negative.
Annex 6
QUARTERLY KEY FIGURES (IFRS)
10-12/ 7-9/ 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
2012 2012 2012 2012 2011 2011 2011 2011
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Revenue, EUR 14.5 15.7 18.4 15.6 16.9 18.3 17.7 16.0
million
Operating
profit, EUR -0.6 0.3 0.0 -0.3 -0.6 0.0 -0.6 -0.4
million
% of -4.3 1.8 0.1 -2.2 -3.6 0.2 -3.5 -2.6
revenue
Profit before
taxes, EUR -1.2 0.1 0.4 -0.7 -1.3 -0.6 -1.2 -1.0
million
% of -8.3 0.8 1.9 -4.6 -7.6 -3.2 -6.7 -5.9
revenue
Return on
investment -73.2 3.3 17.8 -1.5 -7.6 1.1 -9.4 -4.3
(ROI), %
Return on
equity (ROE), 2,175.3 11.7 95 -297.7 -148.7 -55.8 -106.5 -75.2
%
Equity ratio, -10.3 4.9 4.3 1.6 3.3 6.3 7.6 11.0
%
Gearing, % -659.4 1,205.2 1,372.9 4,103.2 1,867.7 946.5 739.3 486.6
Net debt, EUR 18.9 18.9 20.3 23.2 21.8 22.0 22.9 21.7
million
Net interest-
bearing debt, 19.8 20.8 22.7 24.6 24.5 24.9 24.1 21.9
EUR million
Average number
of shares
during the 20,067, 19,804, 19,276, 18,680, 18,680, 18,680, 18,680, 18,680,
financial 042 494 512 880 880 880 880 880
period,
adjusted for
share issues
Earnings per
share (EPS), -0.23 0.00 0.02 -0.04 -0.07 -0.03 -0.06 -0.05
EUR
Equity per -0.14 0.08 0.08 0.03 0.07 0.14 0.17 0.2
share, EUR
Investments, 0.1 0.0 0.1 0.0 0.0 0.1 0.1 0.1
EUR million
% of 0.3 -0.1 0.3 0.2 0.0 0.7 0.7 0.3
revenue
Average number 639 684 696 713 753 770 745 727
of employees
Annex 7
CALCULATION OF KEY FIGURES
Return on investment, % 100 x (profit/loss for the period + 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
Capital expenditure VAT-exclusive working capital acquisitions,
without deduction of investment subsidies
Average number of employees average of personnel numbers calculated at the end
of each month
Total market capitalisation closing price for the period x number of shares
available for public trading
[HUG#1680971]
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