Incap Group Interim Report January-June 2013
(Thomson Reuters ONE) -
Incap Corporation Stock Exchange Release 31 July 2013 at 8:30 a.m.
INCAP GROUP INTERIM REPORT JANUARY-JUNE 2013
Decrease in revenue impaired profitability year-on-year. Operating result for
the second quarter clearly improved compared with the first quarter of the year.
January-June 2013 in brief:
* the Group's revenue was EUR 20.5 million, down approximately 39% year-on-
year (Jan-June 2012: EUR 33.9 million) due to temporary transfer of the
purchase of materials to customers and due to the discontinuation of
manufacturing of certain well-being technology products
* as a result of the decrease in revenue, the operating result (EBIT) declined
year-on-year and was EUR -1.8 million (EUR -0.3 million)
* after the end of the review period, Incap Corporation negotiated a
comprehensive financing arrangement that significantly enhances the
company's financial position improving notably equity ratio and liquidity,
among others
* the company adjusts its financial guidance and estimates that the Group's
revenue in 2013 will be clearly lower than in 2012 and its full-year
operating result (EBIT) will be positive.
April-June 2013 in brief:
* revenue for the second quarter amounted to EUR 9.9 million, down
approximately 7% from the first quarter and approximately 46% year-on-year
(April-June 2012: EUR 18.4 million)
* the operating result (EBIT) for the second quarter improved from the first
quarter by approximately EUR 1.0 million and was EUR -0.4 million (April-
June 2012: EUR 0.01 million).
The accounting principles for the interim report
This interim report has been prepared in accordance with international financial
reporting standards (IFRS) - IAS 34 Interim Financial Reporting standard. When
preparing the release, the same preparation principles have been used as in the
2012 financial statements. Unless otherwise stated, the comparison figures refer
to the same period in the previous year. The information in this interim report
is unaudited.
Sami Mykkänen, President and CEO of Incap Group:
"Revenue for the first half of the year was clearly lower than in the comparison
period, although demand for energy efficiency products still remained good. Our
delivery reliability suffered from the company's challenging cash position,
which hampered the accrual of revenue. In order to ensure deliveries to
customers, we temporarily transferred the responsibility for the purchase of
materials to customers.
Negotiations aiming at the improvement of the company's financial situation were
continued, and after the end of the review period, a comprehensive financing
arrangement was achieved that will improve the company's cash position and
decrease liabilities significantly. We can now resume normal operations,
especially in materials management and production control. Inission AB as new
Incap shareholder - and a potential merger with it - create entirely new
opportunities for developing our operations.
My heartfelt thanks to all our customers who have supported us by purchasing
materials needed in production. In addition, I would like to thank our suppliers
and other partners for their flexibility, which they showed by cutting their
receivables, thereby contributing remarkably to the achievement of the financing
arrangement.
Now that the challenging financing situation that has hampered our operations
for a long time has been fixed, we can focus our strength and energy to customer
service and development of operations. Return to normal mode enables fluent and
prompt deliveries, giving us means to expand the cooperation with customers
further."
Incap Group's revenue and earnings in April-June 2013
Revenue for the second quarter amounted to EUR 9.9 million, down approximately
46% year-on-year. The decrease in revenue was due to the partial transfer of the
responsibility for the purchase of materials to customers. Revenue for the
comparison period includes products the manufacturing of which was discontinued
in the second half of 2012. Demand for summer season products delivered to the
energy efficiency sector remained good, although difficulties in deliveries
arising from the poor availability of materials hampered the accrual of revenue.
The operating result of the second quarter improved in comparison with the first
quarter thanks to the production capacity in the manufacture of mechanics being
utilised more efficiently than in the first months of the year when there were
more breaks in the availability of materials. In addition, electronics
production costs could be adjusted to decreased revenue. Measures aimed at
improving administration efficiency reduced costs, too. The operating result for
the first quarter of the year included an impairment provision of EUR 0.4
million made for the Vuokatti property.
Quarterly comparison 4-6/ 1-3/ 10-12/ 7-9/ 4-6/ 1-3/
(EUR thousands) 2013 2013 2012 2012 2012 2012
-----------------------------------------------------------------------
Revenue 9,883 10,654 14,498 15,701 18,378 15,564
Operating profit/loss (EBIT) -415 -1,432 -628 280 13 -345
Net profit/loss -1,172 -1,885 -4,616 44 352 -711
Earnings per share, EUR -0.05 -0.09 -0.23 0.00 0.02 -0.04
Incap Group's revenue and earnings in January-June 2013
Revenue for the first half of 2013 amounted to EUR 20.5 million, down
approximately 39% year-on-year. Revenue declined as materials purchased by
customers were no longer included in revenue. Revenue for the comparison period
includes well-being technology products manufactured at the Helsinki factory
that were omitted from the production programme in autumn 2012. Demand for
energy efficiency products remained good, but difficulties in deliveries and the
prolonged recession in Europe hampered the accrual of revenue.
The operating result (EBIT) for January-June was approximately EUR -1.8 million
(EUR -0.3 million). The result was impaired first and foremost by the decline in
revenue.
Variable personnel expenses decreased by approximately 23% year-on-year. Fixed
costs were reduced by approximately 11% from the comparison period. The value of
inventories decreased year-on-year by EUR 4.6 million and from the end of 2012
by approximately EUR 2.7 million.
Net financial expenses amounted to EUR 1.0 million (EUR 0.03 million) and
depreciation to EUR 0.9 million (EUR 0.9 million). In the comparison period in
2012, net financial expenses included a non-recurring financing income item of
approximately EUR 1.1 million. EUR 0.4 million of depreciation in the review
period arose from to the impairment loss for the Vuokatti property.
Net profit/loss for the period was EUR -3.1 million (EUR -0.4 million). Earnings
per share amounted to EUR -0.14 (EUR -0.02).
Comparison by review period 1-6/ 1-6/ Change, % 1-12/
(EUR thousands) 2013 2012 2012
------------------------------------------------------------
Revenue 20,537 33,942 -39 64,141
Operating profit/loss (EBIT) -1,847 -332 456 -681
Net profit/loss -3,056 -358 753 -4,930
Earnings per share, EUR -0.14 -0.02 600 -0.25
Sales of the Vuokatti plant property
In June, Incap sold its plant property located in Vuokatti to Vuokatti Superpark
Oy, a former tenant of the premises. The sales contract covered real estate of
approximately 18,570 square metres and a parcel of land of 10,400 square metres
as well as the industrial premises of approximately 8,700 square metres, built
during 1987-2001. The sales price equalled the book value of the property in
Incap's consolidated balance sheet on 31 March 2013. The sales had no
substantial effect on the result. As a part of the financing negotiations, which
were finalised after the review period the bank will release the collateral
arrangement connected with the sales price of the property.
Action plan for improved profitability
One of the most important objectives of the company in 2013 is the improvement
of profitability. Previously the company estimated that by enhanced material
sourcing, closing down the Helsinki factory and centralising Group Services to
Estonia the company could achieve savings of approximately EUR 2.3 million in
2013. The savings were realised during the first 6 months of the year as
expected.
The action plan for improving the efficiency of production, launched at the
beginning of the year, was continued in Finland and Estonia. The action plan
will improve the operating result (EBIT) of 2013 by a total of approximately EUR
1.8 million, of which approximately EUR 0.8 million has already been achieved
during the first half of the year. The number of employees at the Kuressaare
plant has decreased by nearly 30 since the beginning of the year, in addition to
which all factory personnel only worked a four-day week in April and May. At the
Vaasa plant, the temporary lay-offs that had been agreed in the co-operation
negotiations were cancelled as the situation improved, and more leased employees
for the summer season were hired to the plant. The number of employees in group
functions I Finland has been cut to approx. half.
Capital expenditure
Capital expenditure for the period totalled EUR 0.1 million (EUR 0.1 million).
Quality assurance and environmental issues
All of Incap Group's plants have environmental management and quality assurance
systems certified by Det Norske Veritas. The systems are used as tools for
continuous improvement. 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.
Balance sheet, financing and cash flow
The balance sheet total stood at EUR 22.8 million (EUR 38.9 million). The
Group's equity at the close of the review period was negative, EUR -5.9 million
(EUR 1.7 million). The parent company's equity totalled EUR 6.7 million,
representing 33% of the share capital (EUR 12.5 million, 61%). The Group's
equity ratio was negative, -25.8% (4.3%).
Liabilities totalled EUR 28.7 million (EUR 37.2 million), of which EUR 18.2
million (EUR 23.2 million) were interest-bearing liabilities.
Interest-bearing net liabilities decreased from the comparison period and were
EUR 15.7 million (EUR 22.7 million), and the gearing ratio was -266% (1,373%).
Interest-bearing liabilities on 30 June 2013:
Non-current financial liabilities measured at amortised cost (EUR
thousands)
------------------------------------------------------------------------
Capital loans 1,050
Convertible loan 1,890
Finance lease liabilities 0
------------------------------------------------------------------------
2,940
Current financial liabilities measured at amortised cost
------------------------------------------------------------------------
Bank loans 11,377
Other liabilities 1,899
Convertible loans 1,959
Finance lease liabilities 61
------------------------------------------------------------------------
15,295
Interest-bearing liabilities, total 18,234
Approximately EUR 3.5 million of current financial liabilities concerns the
Indian subsidiary. Factoring financing used by the parent company in Finland and
Estonia is part of current liabilities. Part of the 2012 convertible loan (EUR
1.9 million) and the capital loans 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.
From the loans from credit institutions, EUR 9.8 million was granted by the
Finnish bank as bank loans and lines of credit in use. Of the Finnish bank's
credit line and factoring credit line, EUR 4.2 million was in use and EUR 5.3
million was unused on 30 June 2013. For operations in India and Estonia, the
balances of bank loans and credit line totalled EUR 3.5 million, which includes
Finnfund's EUR 1.9 million investment in Incap's operations in India. In the
comprehensive financing arrangement implemented after the end of the review
period, the company's debt was restructured and consequently, the company's
interest-bearing liabilities was reduced by approximately EUR 6.0 million. The
financing arrangement and its impact on the company's financial situation are
described in more detail in the section "Events after the end of the review
period" of this interim report.
At the end of the review period, the company had EUR 1.05 million in capital
loan granted by the company's largest shareholders. The capital loan was
converted to shares as part of the comprehensive financing arrangement
implemented after the end of the review period.
The amount of the convertible loan of 2007 at the end of the period was EUR 1.0
million. After the end of the review period, half of the loan was redeemed. The
remaining loan - totalling EUR 0.5 million - will mature on 30 June 2014. The
convertible loan issued in 2012 (EUR 2.9 million in total) was converted in its
entirety to the company's shares after the end of the review period.
On 30 June 2013, EUR 11.4 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 pledge, and a EUR 0.6 million
mortgage on the production facilities in India. According to the financing
arrangement made after the end of the review period, one bank will release a
collateral arrangement connected with the sales price of the Vuokatti plant
property.
In January, Incap drew down one half of the loan of EUR 1.5 million granted to
the company. The remaining loan instalment was planned to be drawn down by 29
July 2013 after a separate confirmation given by the bank. The financing
arrangement achieved after the review period will replace this additional loan.
On 30 June 2013, the loans, credit line and factoring credit line granted by
Incap's Finnish bank involved the following covenants: equity ratio of at least
15% and net IBD/EBITDA up to 5. During the financing negotiations in June, the
bank announced that it would test covenants as per 30 June 2013 after the
results of the company's financing negotiations are at hand. The bank has
confirmed after the end of the review period, on 26 July 2013, that it will not
use its right to terminate the loan based on the status per 30 June 2013.
In addition to the covenants mentioned above, the EUR 1 million additional loan
drawn by Incap in July 2012 incorporated the bank's right to terminate the loan
in case the redemption of the 2007 convertible loan did not take place by the
end of June 2013 as agreed.
The company will continue negotiations with the bank to revise loan conditions
and covenants.
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. On 30 June 2013, the total amount of tax
liabilities within the scope of this arrangement is EUR 0.9 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.
During the review period, approximately EUR 176,000 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 30 June 2013, 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 (0.5), and the current ratio was 0.7 (0.8).
Cash flow from operations was positive: EUR 2.3 million (EUR 0.1 million). On
30 June 2013, the Group's cash and cash equivalents totalled EUR 2.6 million
(EUR 0.5 million). The change in cash and cash equivalents showed an increase of
EUR 1.8 million (an increase of EUR 0.04 million).
In the comprehensive financing arrangement, implemented after the end of the
review period, the company's financial situation underwent a significant change,
which is described in more detail in the section "Events after the end of the
review period".
Personnel
At the end of June 2013, the Incap Group had a payroll of 563 employees (714).
Some 56% (50%) of the personnel worked in India, 29% (30%) in Estonia and 15%
(20%) in Finland. The main personnel reductions took place in Finland due to the
closure of the Helsinki plant and the streamlining of Group Services.
Annual General Meeting
Incap Corporation's Annual General Meeting (AGM) was held in Helsinki on
Wednesday, 10 April 2013. A total of 16 shareholders participated in the
meeting, representing a total of 50.0% of all shares and votes.
The Annual General Meeting adopted the annual accounts for the financial period
that ended on 31 December 2012. In accordance with the proposal of the Board of
Directors, the Annual General Meeting decided that no dividend be distributed
for the financial period and that the loss for the financial period, a total of
EUR 5,505,693.92, be recognised in equity.
The Annual General Meeting discharged the members of the Board of Directors and
the President and CEO from liability. Of the previous members of the Board of
Directors, Raimo Helasmäki, Matti Jaakola, Susanna Miekk-oja and Lassi Noponen
were re-elected to the Board of Directors. Janne Laurila was elected as a new
member of the Board of Directors. All the members of the Board of Directors are
independent of the company and four members are independent of its major
shareholders. The firm of independent accountants Ernst & Young Oy was re-
elected as the company's auditor.
Following the write-down on deferred tax assets in the financial statements for
2012, the equity of Incap Group's parent company decreased to less than one half
of the share capital, and because of this the Board of Directors proposed -
according to the Companies Act, Chapter 20, Section 23, Paragraph 3 - that the
Annual General Meeting consider the financial position of the company. An action
plan to ensure the profitability of the company in 2013 was presented to the
Annual General Meeting. The plan included an issuance of shares, withdrawal of
additional financing that has been granted by the bank, a reorganisation of the
company's operations, enhancement of the efficiency of production as well as the
improvement of inventory turn.
The Annual General Meeting authorised the Board of Directors to decide within
one year after the Annual General Meeting to issue a maximum of 300,000,000 new
shares either against payment or without payment. The Board of Directors did not
exercise the authorisation during the review period. In the share issue arranged
after the end of the review period, the Board of Directors exercised a total
64,137,000 shares of this authorisation for a directed share issue and
15,318,574 for the conversion of the convertible loan. Accordingly, at the
publication of this interim report the Board of Directors has an authorisation
covering a total of 220,544,426 shares.
At the first meeting of the Board of Directors held after the Annual General
Meeting, Lassi Noponen was elected as the Chairman of the Board and Matti
Jaakola as the Deputy Chairman of the Board.
Shares and shareholders
Incap Corporation has one series of shares, and the number of shares at the end
of the period is 22,546,266. During the period, the share price varied between
EUR 0.10 and 0.25 (EUR 0.28 and 0.65). The closing price for the period was EUR
0.16 (EUR 0.31). During the review period, the trading volume was 3,983,178
shares, or 17.7% of outstanding shares (1,357,732, or 6.7%).
On 30 January 2013, 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
new shares were taken into trade at the NASDAQ OMX Helsinki Ltd. on 14 February
2013 together with the other shares of the company.
At the end of the review period, Incap had 1,253 shareholders (1,091). Nominee-
registered or foreign owners held 0.6% (0.5%) of all shares. The company's
market capitalisation on 30 June 2013 was EUR 3.6 million (EUR 5.8 million). The
company does not hold any of its own shares.
The largest shareholders on 30 June 2013:
No. of Share of
shares ownership, %
----------------------------------------------------
Oy Etra Invest Ab 4,834,547 21.4
JMC Finance Oy 2,402,286 10.7
Suomen Teollisuussijoitus Oy 2,185,509 9.7
Onvest Oy 1,697,286 7.5
Sundholm Göran 1,481,113 6.6
Laurila Kalevi Henrik 1,460,429 6.5
Mandatum Life 1,116,059 5.0
Aaltonen Pekka Juhani 400,000 1.8
Lehtonen Jussi Tapio 400,000 1.8
Oksanen Markku 244,383 1.1
Following the directed share issue and conversion of the convertible loan
implemented after the end of the review period, the number of the company's
shares rose to 119,114,035.
Announcements in accordance with Section 10 of Chapter 9 of the Securities
Market Act on a change in holdings
Following the directed share issue arranged in January 2013, there were the
following changes in holdings exceeding the announcement limit on 11 February
2013: The number of shares held by Mandatum Life increased to 1,116,059 and
their holding after the registration of the share issue is 4.95% of all shares
of the company. The holding of Onvest Oy increased to 1,697,286 shares, or
7.53% of all shares. The holding of Suomen Teollisuussijoitus Oy decreased to
9.69%.
On 11 March 2013, Oy Ingman Finance Ab's holding in Incap shares decreased to
1,081,485 shares, or 4.80% of total number of shares and votes.
Following the directed share issue and conversion of loans as announced after
the end of the review period on 22 July 2013, the following changes in holdings
exceeding the announcement limit took place:
Shareholder Share of ownership Number of new Share of
and shares Ownership
number of shares subscribed after the share
prior to and converted issue and
the share issue conversion
-------------------------------------------------------------------------------
% shares shares %
-------------------------------------------------------------------------------
Inission AB 0 0 28,500,000 26.12
Oy Etra Invest Ab 21.44 4,834,547 12,100,000 15.52
Ilmarinen 0 0 8,307,692 7.61
Varma 0 0 7,684,615 7.04
Finnvera 0 0 6,238,600 5.72
Oy Ingman Finance Ab 0 0 8,780,769 8.05
Onvest Oy 7.53 1,697,286 3,500,000 4.76
JMC Finance Oy 10.65 2,402,286 0 2.20
Suomen Teollisuussijoitus
Oy 9.69 2,185,509 0 2.00
Göran Sundholm 6.57 1,481,113 0 1.36
Kalevi Laurila 6.48 1,460,429 1,275,000 2.51
Events after the end of the review period
On 21 July 2013, Incap Corporation completed financing negotiations that
resulted in a comprehensive arrangement that substantially enhances the
company's financial position in both the short and the long term. The
arrangement enables the return to normal mode in the company's operations like
in the purchase of materials. At the same time the equity ratio and liquidity of
the company improved significantly. The arrangement involved a directed share
issue for raising additional capital and converted debt to the company's new
shares. In addition, loan units of the company's convertible loan issued in
2012 were converted to the company's new shares.
In the directed share issue and the conversion of debt connected with it, a
total of 64,137,000 new shares were issued, of which 45,212,000 shares were
subscribed against cash payment and 18,925,000 shares were subscribed as
conversion against loans. Furthermore, in the conversion of the convertible loan
2012, a total of 22,430,769 new shares were subscribed. After the registration
of all the new shares, the company has a total of 109,114,035 shares, each
having one vote.
Deviating from shareholders' pre-emptive subscription rights, the share issue
was directed at the company's major shareholders, an industrial investor, the
company's Finnish financiers and the company's other creditors and senior
management. The deviation from shareholders' pre-emptive subscription rights was
justified by a weighty financial reason in accordance with Chapter 9, Section
4, Paragraph 1 of the Finnish Limited Liability Companies Act, as the purpose of
the directed share issue was to carry out a financing arrangement for the
company. The subscription price per share was EUR 0.10, based on the agreement
between the company and the subscriber.
The shares subscribed in the share issue and in loan conversions will grant
dividend rights and other shareholders' rights as of 29 July 2013, when the new
shares were entered in the Trade Register. The company applies to have the
shares traded on the NASDAQ OMX Helsinki Ltd main list at equal value to the
company's other shares, and for this purpose, the company will publish a
prospectus.
Concerning the convertible loan issued in 2012, the contracts were renewed in
the way that all holders of the convertible loan will - after the composition
arrangement - convert the remaining loan to a total of 22,430,769 new shares in
the company. The subscription price of these shares was calculated to be
approximately EUR 0.13 per share. According to the provisions of the agreement,
one subscriber of the 2012 convertible loan had the right to terminate the
financing agreement in case the redemption of the 2007 convertible loan did not
take place by 30 June 2013. The subscriber in question did not exercise this
termination right.
The company has further reached an agreement with holders of the convertible
loan issued in 2007 to have half of the loan paid immediately and the remaining
EUR 0.5 million on 30 June 2014. Some of the loan units were already converted
to the company's shares in the private placement arranged in January 2013.
The holders of the company's capital loan and the company's Finnish financiers
converted their loan receivables to new shares in connection with the above
mentioned directed share issue. At the same time, loan contracts and interest
repayment schedules were renegotiated. In addition, a bank has agreed to release
a collateral arrangement connected with the sales price of the company's
property in Vuokatti. In addition, the company's other creditors - suppliers of
materials and services - supported the financing arrangement by participating in
the composition arrangement, with a total effect of EUR 1.5 million.
The immediate cash effect of the comprehensive arrangement is approximately EUR
6 million. The total subscription price paid in cash, i.e. approximately EUR
4.5 million, will be recorded in full in the reserve for invested unrestricted
equity. Furthermore, the decline of the company's liabilities and the release of
the collateral arrangement connected with the sales price of the Vuokatti
property transaction have an impact of approximately EUR 9 million.
Effect of the financing arrangement on the company's interest-bearing
liabilities:
(EUR 1,000) 30 June After the financing
2013 arrangement
--------------------------------------------------------
Capital loans 1,050 0
Convertible loan 2012 2,889(1)) 0
Convertible loan 2007 960 480
Bank loans 11,377 9,827
Finance lease liabilities 61 80
Other loans 1,899 1,899
Total 18,234 12,286
1) In the consolidated financial statements (IFRS), convertible loan costs of
EUR 27,000 have been deducted from the EUR 2.9 million capital of the
convertible loan and amortised as financial expenses and liabilities.
Following the financing arrangement and the directed share issue related to that
arrangement, the Swedish contract manufacturer Inission AB becomes the company's
largest shareholder. After registration of the new shares subscribed in the
directed share issue, Inission AB will hold 28,500,000 shares in Incap
Corporation, corresponding to approximately 26% of the total share capital.
The comprehensive arrangement agreed between Inission AB and Incap Corporation
on 21 July 2013 includes an option for Inission AB to combine and unite Inission
AB's business operations with Incap Corporation. The use of this option shall be
notified by Inission AB by the end of the year 2013. If the option is used, the
uniting of Incap and Inission will be carried out by Incap Corporation acquiring
Inission AB's subsidiaries' shares and business operations. The purchase price
is based on the actual result of Inission AB for the years 2011 and 2012 and for
January-June 2013.
If the transaction is consummated in accordance with the agreement conditions,
Incap will pay the purchase price by directing a new share issue to Inission in
two phases. In the first phase, the value of the new shares issued will
correspond to 70 per cent of the total purchase price with the new shares being
issued in connection with the consummation of the agreement. The remaining 30
per cent of the purchase price will be paid through a second directed share
issue two weeks after Incap has published its financial statements for 2013.
Incap will convene an extraordinary general meeting to decide on the transaction
regarding the two companies. As Inission AB's share ownership in Incap
Corporation will exceed the limit set for the obligation to make a takeover bid
in case the transaction is consummated, Inission will apply the Financial
Supervisory Authority for an exemption from the obligation to bid.
Short-term risks and factors of uncertainty concerning operations
A substantial change took place in the risks related to Incap's business
operations on 21 July 2013 when the company realised the comprehensive financing
arrangement that had long been negotiated. The arrangement stabilised the
company's financial position and consequently, there are no longer any
significant risks associated with the continuity of operations and sufficiency
of funding.
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. Of these, the most significant risks at the moment are the
execution of the actions to improve profitability and inventories as well as
global economic development and its impact on the company's customers' market
situation and demand.
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 cover the requirement for the
next 12 months at the time of the publication of this interim report.
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. In the challenging market situation the
management of customer relationships is of special importance. 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.
Strategic development of the company
During the past few years, Incap has implemented its strategy by becoming more
international and by streamlining its operations. Production has been
centralised in low-cost regions, and the number of business locations has been
reduced. In Europe, electronics production has been centralised in Kuressaare
and mechanical production in Vaasa. In India, production capacity has been
developed and operations have been returned to profitability. Materials
management is coordinated from Hong Kong, near the sources of components in
Asia.
At the same time, the company's financial situation was weakened by earlier
investments and structural changes that have burdened operations as well as by
market situation. In order to remedy the situation, the company has negotiated
financing and carried out directed share issues and other arrangements, but they
have been able to improve the situation in the short term only.
In spring 2013, the company carried out extensive negotiations in order to build
a solid foundation of financing in the long term, too. A large group of the
company's financiers, creditors and other stakeholders took part in the
negotiations. At the same time, the Board of Directors charted besides financing
also opportunities for mergers and acquisitions that would ensure the company's
future growth and development of competitiveness after the remedy in the
financial position.
After the end of the review period, on 22 July 2013, the company published the
outcome of the negotiations: a very important and comprehensive financing
arrangement that significantly improves the company's financial position and
enables the return to normal mode of operations. Thanks to the arrangement, the
company's cash position improved and the liabilities decreased remarkably. After
a long unstable period the company can again focus on the actual business,
customer service and the realisation of future growth.
An essential part of the arrangement is the agreement signed with Inission AB.
Following the directed share issue, Inission AB becomes Incap's largest single
shareholder. The agreement includes an option for combining Inission's and
Incap's business operations by Incap Corporation acquiring Inission AB's
subsidiaries' shares and business operations.
The financing restructuring will ensure the continuity of Incap's industrial
structure and the alliance with Inission AB will enable future growth. The
eventual combination of Incap and Inission would create a strong Nordic company
with excellent capabilities for serving their customers globally. Incap's
strengths in this alliance would include long-term strategic customer
relationships, competitive and efficient production in India, its own sourcing
unit in Asia, and mechanical production founded on special expertise. Inission's
contributions to the co-operation would feature its comprehensive sales network
and effective operating model that ensures profitability of operations. The
post-merger Incap-Inission would have a strong competitive position in the
global market and could be a significant and active player in the consolidation
of the northern European EMS industry.
Outlook for 2013
Incap's estimates for future business development are based both on its
customers' forecasts and on the company's own assessments.
The company adjusts its financial guidance published on 3 May 2013. Due to the
partial transfer of the purchase of materials to customers, the Group's revenue
in 2013 is estimated to be clearly lower than in 2012, when it amounted to EUR
64.1 million. The full-year operating result (EBIT) is estimated to be positive.
The operating result in 2012 was negative EUR -0.7 million.
Previously, on 3 May 2013, the company estimated that the Group's revenue in
2013 would be lower than in 2012. At that time, the full-year operating result
(EBIT) was anticipated to be clearly positive.
Publication of the interim report for January-September 2013
Incap Group's interim report for the third quarter will be published on 31
October 2013.
Helsinki, 31 July 2013
INCAP CORPORATION
Board of Directors
For additional information, please contact:
Sami Mykkänen, President and CEO, tel. +358 40 559 9047 or +372 555 37905
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 31 July
2013 at 10:00 a.m. at the World Trade Center, Helsinki, at Aleksanterinkatu 17,
FI-00100 Helsinki.
ANNEXES
1 Consolidated Statement of Comprehensive Income
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 international contract manufacturer whose comprehensive
services cover the entire life cycle of electromechanical products from design
and manufacture to maintenance services. Incap's customers include leading
equipment suppliers in energy-efficiency and well-being technologies, for which
the company produces competitiveness as a strategic partner. Incap has
operations in Finland, Estonia, India and China. The Group's revenue in 2012
amounted to approximately EUR 64.1 million, and the company currently employs
approximately 600 people. Incap's share has been listed on the NASDAQ OMX
Helsinki Ltd since 1997. Additional information: www.incap.fi.
Annex 1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|(EUR thousands, | | | | | | | | | | |
|unaudited) | 4-6/| 1-3/|10-12/| 7-9/| 4-6/| 1-3/| 1-6/| 1-6/|Change|1-12/|
| | 2013| 2013| 2012| 2012| 2012| 2012| 2013| 2012| , %| 2012|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
| | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|REVENUE | 9,| 10,| 14,| 15,| 18,| 15,| 20,| 33,| -39| 64,|
| | 883| 654| 498| 701| 378| 564| 537| 942| | 141|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Work performed | | | | | | | | | | |
|by | 0| 0| 0| 0| 0| 0| 0| 0| 0| 0|
|the enterprise | | | | | | | | | | |
|and capitalised | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Change in | | | | | | | | | | |
|inventories | | | | | | | | | | |
|of finished | -97| -260| -323| -169| -327| 176| -357| -150| 138| -643|
|goods | | | | | | | | | | |
|and work in | | | | | | | | | | |
|progress | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Other operating | -12| 51| 49| 136| 134| 85| 40| 219| -82| 404|
|income | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Raw materials | 5,| 7,| 9,| 10,| 12,| 10,| 12,| 23,| | 44,|
|and consumables | 617| 112| 968| 978| 568| 801| 728| 369| -46| 315|
|used | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Personnel | 2,| 2,| 2,| 2,| 3,| 3,| 4,| 6,| -19| 11,|
|expenses | 428| 527| 538| 419| 119| 011| 955| 130| | 087|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Depreciation, | | | | | | | | | | |
|amortisation and| 227| 628| 231| 378| 435| 415| 855| 850| 1| 1,|
|impairment | | | | | | | | | | 460|
|losses | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Other operating |1,917|1,611| 2,114|1,612|2,051|1,944|3,528|3,994| -12|7,721|
|expenses | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|OPERATING | -415| -1,| -628| 280| 13| -345| -1,| -332| 456| -681|
|PROFIT/LOSS | | 432| | | | | 847| | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Financing income| -595| -439| -569| -156| 339| -366| -1,| -26| 3,829| -751|
|and expenses | | | | | | | 034| | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|PROFIT/LOSS | -1,| -1,| -1,| 124| 352| -711| -2,| -358| 703| -1,|
|BEFORE TAX | 010| 871| 197| | | | 880| | | 432|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Income tax | -162| -14| -3,| -79| 0| 0| -176| 0| | -3,|
|expense | | | 418| | | | | | | 498|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|PROFIT/LOSS | -1,| -1,| -4,| 44| 352| -711| -3,| -358| 753| -4,|
|FOR THE PERIOD | 172| 885| 616| | | | 056| | | 930|
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
| | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Earnings per |-0.05|-0.09| -0.23| 0.00| 0.02|-0.04|-0.14|-0.02| 600|-0.25|
|share | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|Options have no | | | | | | | | | | |
|dilutive effect +-----+-----+------+-----+-----+-----+-----+-----+------+-----+
|in financial | | | | | | | | | | |
|periods | | | | | | | | | | |
|2012 and 2013. | | | | | | | | | | |
+----------------+-----+-----+------+-----+-----+-----+-----+-----+------+-----+
+--------------+------+------+------+----+----+----+------+----+--------+------+
|OTHER | 4-6/| 1-3/|10-12/|7-9/|4-6/|1-3/| 1-6/|1-6/| Change,| 1-12/|
|COMPREHENSIVE | 2013| 2013| 2012|2012|2012|2012| 2013|2012| %| 2012|
|INCOME | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
| | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|PROFIT/LOSS | | | | | | | | | | |
|FOR THE |-1,172|-1,885|-4,616| 44| 352|-711|-3,056|-358| 753|-4,930|
|PERIOD | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
| | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|OTHER | | | | | | | | | | |
|COMPREHENSIVE | | | | | | | | | | |
|INCOME: | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Items that may| | | | | | | | | | |
|be recognised | | | | | | | | | | |
|in | | | | | | | | | | |
|profit or loss| | | | | | | | | | |
|at a later | | | | | | | | | | |
|date: | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Translation | | | | | | | | | | |
|differences | -285| 91| -129| 63| -50| -2| -194| -51| 278| -118|
|from | | | | | | | | | | |
|foreign units | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Other | | | | | | | | | | |
|comprehensive | -285| 91| -129| 63| -50| -2| -194| -51| 278| -118|
|income, | | | | | | | | | | |
|net | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
| | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|TOTAL | | | | | | | | | | |
|COMPREHENSIVE |-1,457|-1,793|-4,745| 107| 302|-712|-3,250|-410| 693|-5,048|
|INCOME | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
| | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Attributable | | | | | | | | | | |
|to: | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Shareholders | | | | | | | | | | |
|of the parent |-1,457|-1,793|-4,745| 107| 302|-712|-3,250|-410| 693|-5,048|
|company | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
|Non- | | | | | | | | | | |
|controlling | 0| 0| 0| 0| 0| 0| 0| 0| | 0|
|interest | | | | | | | | | | |
+--------------+------+------+------+----+----+----+------+----+--------+------+
Annex 2
+------------------------------+------------+------------+---------+-----------+
|CONSOLIDATED BALANCE SHEET | | | | |
|(IFRS) | | | | |
+------------------------------+------------+------------+---------+-----------+
|(EUR thousands, unaudited) |30 June 2013|30 June 2012|Change, %|31 December|
| | | | | 2012|
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|ASSETS | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|NON-CURRENT ASSETS | | | | |
+------------------------------+------------+------------+---------+-----------+
|Property, plant and equipment | 2,093| 3,160| -34| 2,578|
+------------------------------+------------+------------+---------+-----------+
|Goodwill | 905| 949| -5| 940|
+------------------------------+------------+------------+---------+-----------+
|Other intangible assets | 64| 212| -70| 178|
+------------------------------+------------+------------+---------+-----------+
|Other financial assets | 471| 311| 51| 311|
+------------------------------+------------+------------+---------+-----------+
|Deferred tax assets | 356| 4,061| -91| 560|
+------------------------------+------------+------------+---------+-----------+
|TOTAL NON-CURRENT ASSETS | 3,888| 8,693| -55| 4,568|
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|CURRENT ASSETS | | | | |
+------------------------------+------------+------------+---------+-----------+
|Inventories | 6,695| 11,338| -41| 9,352|
+------------------------------+------------+------------+---------+-----------+
|Trade and other receivables | 9,705| 16,444| -41| 12,815|
+------------------------------+------------+------------+---------+-----------+
|Cash and cash equivalents | 2,551| 460| 455| 613|
+------------------------------+------------+------------+---------+-----------+
|TOTAL CURRENT ASSETS | 18,951| 28,242| -33| 22,780|
+------------------------------+------------+------------+---------+-----------+
|Non-current assets held-for- | 0| 1,936| -100| 1,936|
|sale | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
|TOTAL ASSETS | 22,838| 38,871| -41| 29,283|
| | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|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|
+------------------------------+------------+------------+---------+-----------+
|Reserve for invested | 5,182| 4,843| 7| 4,818|
|unrestricted equity | | | | |
+------------------------------+------------+------------+---------+-----------+
|Exchange differences | -1,111| -850| 31| -917|
+------------------------------+------------+------------+---------+-----------+
|Retained earnings | -30,497| -22,869| 33| -27,440|
+------------------------------+------------+------------+---------+-----------+
|TOTAL EQUITY | -5,895| 1,655| -456| -3,008|
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|NON-CURRENT LIABILITIES | | | | |
+------------------------------+------------+------------+---------+-----------+
|Deferred tax liabilities | 0| 0| | 0|
+------------------------------+------------+------------+---------+-----------+
|Interest-bearing loans and | 2,940| 2,978| -1| 2,492|
|borrowings | | | | |
+------------------------------+------------+------------+---------+-----------+
|NON-CURRENT LIABILITIES | 2,940| 2,978| -1| 2,492|
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|CURRENT LIABILITIES | | | | |
+------------------------------+------------+------------+---------+-----------+
|Trade and other payables | 10,499| 14,037| -25| 11,841|
+------------------------------+------------+------------+---------+-----------+
|Current interest-bearing loans| 15,295| 20,030| -24| 17,959|
|and borrowings | | | | |
+------------------------------+------------+------------+---------+-----------+
|CURRENT LIABILITIES | 25,794| 34,067| -24| 29,800|
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
|Liabilities relating to non- | 0| 171| -100| 0|
|current assets held-for-sale | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
|TOTAL EQUITY AND LIABILITIES | 22,838| 38,871| -41| 29,283|
| | | | | |
+------------------------------+------------+------------+---------+-----------+
| | | | | |
+------------------------------+------------+------------+---------+-----------+
Annex 3
CONSOLIDATED CASH FLOW STATEMENT
(EUR thousands, unaudited) 1-6/2013 1-6/2012 1-12/2012
-------------------------------------------------------------------------------
Cash flow from operating activities
Operating profit/loss -1,847 -332 -681
Adjustments to operating profit 931 584 728
Change in working capital 3,719 1,058 4,188
Interest paid and payments made -520 -1,189 -1,814
Interest received 6 18 27
-------------------------------------------------------------------------------
Cash flow from operating activities 2,289 139 2,448
Cash flow from investing activities
Capital expenditure on tangible and intangible
assets -134 -86 -124
Proceeds from sale of tangible and intangible
assets 1,487 100 139
Other investments 0 0 -61
Loans granted -4 -1 0
Sold shares of subsidiary 0 0 0
Repayments of loan assets
Unternehmensinformation / Kurzprofil:
Datum: 31.07.2013 - 07:30 Uhr
Sprache: Deutsch
News-ID 283265
Anzahl Zeichen: 65623
contact information:
Town:
Helsinki
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 151 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Incap Group Interim Report January-June 2013"
steht unter der journalistisch-redaktionellen Verantwortung von
Incap Oyj (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
