Incap - Interim report (Q1 and Q3)

Incap Group Business Review for January-March 2016

Incap Corporation
Stock Exchange Release             12 May 2016 at 8.30 a.m.
(EET)

INCAP GROUP BUSINESS REVIEW FOR JANUARY-MARCH 2016

Revenue was increased by 47% and operating profit doubled on the corresponding
period of previous year. Construction work of the factory extension in India has
begun.

The information in this business review concerns the development of Incap Group
in January-March 2016 and in the corresponding period of 2015, unless otherwise
stated. The figures are unaudited.

Key figures in January-March 2016

  * The Group's revenue amounted to EUR 8.7 million, up 47% on the corresponding
    period of previous year (Jan-Mar 2015: EUR 5.9 million).
  * The Group's operating profit (EBIT) amounted to EUR 1.2 million, doubling on
    the corresponding period (EUR 0.5 million) and being approximately at the
    same level than on the previous quarter (Oct-Dec 2015: EUR 1.2 million).
  * Net profit for the period amounted to EUR 0.7 million (EUR 0.6 million). The
    net profit was decreased by taxes, which amounted to EUR 0.4 million during
    the period (EUR 0.1 million).


                                                                 10-12/  1-12/
(EUR thousand)               1-3/2016 1-3/2015 4-6/2015 7-9/2015   2015   2015




Revenue                         8,686    5,908    7,346    7,960  9,352 30,566

Operating profit/loss (EBIT)    1,165      541      937    1,039  1,174  3,692

Profit/loss for the period        651      603      242      402    765  2,012



Key events of the period

Incap Group's revenue developed favourably both in India and in Estonia. The
revenue increased on the corresponding period in 2015 by approximately 47%. The
revenue of the first quarter remained somewhat lower than on the preceding
quarter, which is typical in the company's business sector. The quotation base
is on a good level in both factories of the company, and there are new products
coming to the production.

The profitability of Incap Group improved clearly on previous year. The
operating profit (EBIT) in January-March 2016 amounted to approximately EUR 1.2
million, i.e. double the figure on corresponding period last year (1-3/2015: EUR
0.5 million). The equity ratio improved compared with the corresponding period
and was on 31 March 2016 approximately 34.7% (31 March 2015: 19.0%).

The construction of the expansion of the production facilities in India has
started on schedule, and the extension of approximately 2,000m(2) is planned to
be ready at the turn of the years 2016-2017. The construction costs of
approximately EUR 1 million will be financed using operating income. New
capacity is needed, because the export deliveries of the factory are increasing.
The investment concerns specifically the export operations, which according to
the Indian tax legislation have to take place in separate premises. There still
is unused capacity in the production facilities for inter-Indian deliveries,
allowing future growth.

Reduction of share capital and the quantity of shares

The Annual General Meeting held on 6 April 2016 resolved to reduce the share
capital of the company from EUR 20,486,769.50 by EUR 19,486,769.50 to cover the
losses and to transfer funds to unrestricted equity reserves. The losses
accumulated during previous financial periods will be covered by decreasing the
unrestricted equity reserve by EUR 16,804,218.62, by decreasing the share
premium account by EUR 44,316.59 and by decreasing the share capital by EUR
11,118,952.29. After covering the losses the share capital will further be
decreased by EUR 8,367,817.21 by transferring the funds to the unrestricted
equity reserve. After these measures the new share capital of the company will
be EUR 1,000,000 and the unrestricted equity reserve will be EUR 8,367,817.21.
The parent company's equity will accordingly exceed the level set in the
Companies Act, chapter 20, section 23. Covering the losses will clarify the
parent company's balance sheet structure and improve the ratio between the
company's equity and share capital. The creditor protection procedure, which is
required in the arrangement as regulated in the Companies Act has been
introduced and the reduction of the share capital can be entered into the Trade
Register in approximately three months.

The Annual General Meeting further resolved on the reduction of the quantity of
company's shares by way of issuing new shares and by redemption of company's own
shares, in such a way that each current 50 shares of the company shall
correspond to one share of the company.  The arrangement was implemented soon
after the Annual General Meeting on 8 April 2016. The new quantity of the
company's shares is 4,365,168. The new quantity was entered into the Trade
Register on 11 April 2016 and the trading with the adjusted quantity started at
Nasdaq Helsinki on the same day. The purpose of the reduction of the quantity of
company's shares was to improve the trade conditions and the reliability of the
price formation of the share.

Short-term risks and factors of uncertainty concerning operations

General risks related to the company's business operations and sector include
the development of customer demand, price competition in contract manufacturing,
successful acquisition of new customers, availability and price development of
raw material and components, sufficiency of funding, liquidity and exchange rate
fluctuations. A significant part of the Group's operations are located in India,
and the fluctuations in the exchange rates of Indian rupee and Euro may have a
significant effect on the revenue, result and equity ratio.

As a result of the improved profitability and the rights issue executed in 2015
the financing position of the company has improved and the sufficiency of
financing or working capital is at the moment posing no remarkable risk.

Outlook for 2016

Incap's estimates for future business development are based both on its
customers' forecasts and on the company's own assessments.

The company estimates that the Group's revenue in 2016 will be approximately EUR
35-40 million. The operating profit (EBIT) in 2016 is estimated to be
approximately at the same level or somewhat higher than in 2015, when the
operating profit was EUR 3.7 million, provided that there are no major changes
in exchange rates.

In its previous guidance given on 18 February 2016 the company estimated that
the Group's revenue in 2016 will be somewhat higher than in 2015 and the
operating profit (EBIT) will be approximately at the same level than in 2015,
provided that there are no major changes in exchange rates.

Incap will publish its half-year financial report for January-June 2016 in
accordance with IAS 34 on Tuesday, 23 August 2016.

Ville Vuori, President and CEO of Incap Group:

"The first quarter of the year has met with our expectations in all aspects. The
construction of the expansion in the Indian factory has begun and the new
production facilities are scheduled to be available at the end of the year. In
our Estonian factory, the new ERP has been introduced successfully to efficient
use, and now also there all resources can be focused on the service of our
customers and on the development of production.

In order to ensure the long-term growth we will strengthen our sales operations
both in Europe and in India. We will continue improving the operational
efficiency among others by improving the cooperation between factories and
enhancing the material sourcing."

INCAP CORPORATION
Board of Directors


For additional information, please contact:
Ville Vuori, President and CEO, tel. +358 400 369 438

Distribution:
Nasdaq Helsinki Ltd
Principal media
The company's home page www.incapcorp.com


INCAP IN BRIEF
Incap Corporation is an international contract manufacturer. Incap's customers
are leading suppliers of high-technology equipment in their own business
segments, and Incap increases their competitiveness as a strategic partner.
Incap has operations in Finland, Estonia, India and China, and the company
currently employs approximately 470 people. Incap's share is listed on the
Nasdaq Helsinki Ltd. as from 1997. Additional information: www.incapcorp.com.


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