Group’s financial development

Incap Group’s net turnover in 2001 grew by 15 %, being EUR 99.7 million (EUR 86.8 million in 2000). The Group’s comparable operating profit was EUR 2.0 (1.8) million, or about 2 % (2 %) of net turnover.

Non-recurrent costs were due to the adoption of the new enterprise resource planning system, the streamlining programme applied in the electronics sector and the expertise services needed for the restructuring of the business sectors. The increased liability for materials in the electronics sector detracted from relative profitability.

The operating profit of EUR 12.2 million shown in the profit and loss account includes insurance refunds for fixed asset items exceeding the previous balance sheet values worth a total of EUR 10.2 million.

The Group’s comparable profit before extraordinary items was EUR 1.2 (1.3) million, and the profit before extraordinary items shown in the profit and loss account was EUR 11.4 million. Comparable profit for the financial year was EUR 0.3 (0.8) million and profit in the profit and loss account EUR 7.9 million.

Comparable earnings per share were EUR 0.08 (EUR 0.22) and earnings per share in the profit and loss account EUR 2.24. The balance sheet total was EUR 68.9 (42.4) million.


The Group’s total investments in 2001 amounted to EUR 21.3 (10.2) million, accounting for about 21 % (12 %) of net turnover.

In the electronics sector, investments were made to increase the scope and efficiency of production, and they included the extension and layout modification of the Vuokatti production facility and the FMS system for manufacturing sheet metal components at the Vaasa unit. Of the total investments, 71 % were allocated to the construction and machinery of the new Kärsämäki furniture facility. The parent company and the electronics sector adopted a new enterprise resource planning system (ERP).

Of the total investments, EUR 17.8 million were entered as fixed assets in the balance sheet. Altogether EUR 3.4 (6.9) million of the capital invested was acquired by leasing arrangements.

Research and development

EUR 3.0 (2.6) million, or 3 % (3 %) of net turnover, was allocated to research and development. All investments in research and development were entered as annual expenses.


Net financing expenses amounted to EUR 0.79 (0.58) million, and the change in financial assets showed a decrease of EUR 2.2 (2.8) million. Quick ratio was 0.7 (1.0) and current ratio 1.5 (1.7). Net debt amounted to EUR 16.6 (7.9) million, and the Group’s gearing ratio was 61.4 % (37.6 %) and solvency ratio 39.2 % (46.0 %). Cash flow per share was EUR 3.75 (0.98).

Corporate structure

The merger of Incap Electronics Ltd to Incap Corporation was registered on 31 Dec. 2001. The goal of this internal restructuring was to simplify corporate structure and to streamline group-level administration. Contract manufacturing of electronics was continued as previously by Incap Corporation, and the employees of Incap Electronics Ltd were enrolled by Incap Corporation as old employees.


During the financial period, the Group employed an average of 847 (855) persons, of whom an average of 591 (599) were working in contract manufacturing of electronics, 250 (249) in contract manufacturing of furniture and 6 (7) for Incap Corporation. At the end of the financial period, the Group was employing 794 (835) persons.

Shares and shareholders

The Annual General Meeting on 18 April 2001 made two amendments in the Articles of Association of Incap Corporation. The company’s domicile was changed to be Helsinki, and item 10 was amended as “The summons for the Annual General Meetings will be published in two newspapers indicated by the Board of Directors, of which one is published in Helsinki and the other in Oulu, not earlier than two (2) months and not later than seventeen (17) days prior to the date of the meeting. Shareholders intending to attend the Annual General Meeting should register in the manner and time specified in the summons, yet not earlier than ten (10) days before the date of the meeting.”

The ordinary Annual General Meeting authorized the Board of Directors to raise the share capital by issuing new shares, by issuing warrants and/or by taking a convertible bond. The authorization will be valid for a year and it includes a right to deviate from the shareholders’ pre-emptive right to subscribe shares. Based on this authorization, the share capital can be raised by a maximum of EUR 1,179,396.96. The authorization was entered in the register on 23 May 2001.

The Annual General Meeting lowered the subscription prices of the A and B warrants in the 2000 warrant scheme: the new subscription price for shares subscribable with A warrants is EUR 8 and that for B warrants EUR 10. The subscription price for the C and D warrants remains at EUR 12.

The market price of Incap Corporation’s shares varied between EUR 3.70 and 6.00 during the reporting period. The market value of the company on 31 Dec. 2001 was EUR 17.5 million (EUR 15.8 million on 31 Dec. 2000).

The company has a total of 3,510,110 shares, of which 5.3 % (9.0 %) changed hands during the year 2001. At the end of the financial period, the company had 500 (517) shareholders. Altogether 0.5 % (0.75 %) of the shares were in administrative registers.

Annual General Meeting of 2002

Incap Corporation’s Annual General Meeting will be held on Thursday, 18 April 2002, starting at 10.00 a.m. in the Iceland Hall of Radisson SAS Royal, address Runeberginkatu 2, Helsinki.


The company’s long-term goal has been to annually pay as dividend 30 % of the consolidated profit before extraordinary items and after the taxes for the financial period. The Board of Directors will propose to the Annual General Meeting summoned for 18 April 2002 that EUR 0.03 per share, i.e. 39 %, be paid as dividend of the profit for 2001.

Shareholders whose names have been entered on the list of shareholders maintained by the Finnish Central Securities Depository by the dividend record date, 23 April 2002, shall be entitled to the kind of dividend proposed by the Board. The dividend will be paid on 30 April 2002.

Business sectors

Incap Electronics

The net turnover of Incap Electronics in 2001 grew by 24 % compared to the previous year, being EUR 60.7 (49.0) million. The rapid growth in the early part of the year slowed down during the last two quarters. The growth was mostly due to the shift of material liabilities from the customers to Incap Electronics, and the share or organic growth was 3.4 %. Most of the net turnover accrued from the manufacturing of equipment and components for telecommunications, electric industry, measurement and process industry and health care and diagnostics.

The operating profit of Incap Electronics was EUR 0.2 (1.3 million), or about 0.4 % (3 %) of net turnover. The slower than expected growth of profitability was due to the overall slowing down of the market and the rapid drop in the demand for contract manufacturing services in electronics during the latter half of the year, when both the production volume and the capacity utilization rate declined markedly. The effects of the measures taken to counteract the negative development by adjusting production volumes and cutting costs were already detectable in the profit trends towards the year-end, but the full benefit of these measures will only be felt in 2002.

The transfer of material liabilities to Incap increased the net turnover on the one hand, but detracted from relative profitability on the other. Profit also diminished due to non-marketability entries worth more than EUR 0.3 million. The restructuring carried out in the Finnish units in 2001 caused non-recurrent costs of about EUR 0.1 million.

At the Estonian unit, production was ramped up after the renovation of the facility, and the unit’s profit development turned positive in March. The unit recruited 16 new workers.

During 2001, the quality and environmental management systems of Incap Electronics were renewed and certified to comply with the ISO 9001:2000/ISO 14001:1996 standards. The systems and the certificates cover all units of Incap Electronics.

Incap Electronics and its Estonian subsidiary were employing 550 (591) persons at the end of the year 2001.

Incap Furniture

The net turnover of Incap Furniture was EUR 39.0 (37.8) million, or more by 3.2 % than in 2000. The growth of net turnover slowed down somewhat during the early part of the year due to problems in delivery by some subcontractors. The fire at the Kärsämäki facility resulted in a temporary suspension of production and the growth of net turnover in May. Compensatory production, mostly by the Finnish network of subcontractors, was organized promptly, and nearly all orders to key customers were duly delivered.

The company had full insurance coverage for both the production facility and the equipment destroyed at Kärsämäki as well as for the suspension of operation, and the EUR 12.2 million operating profit in the profit and loss account includes insurance refunds for the destroyed fixed assets worth altogether EUR 10.2 million.

The comparable operating profit of Incap Furniture was EUR 3.0 (1.3) million, which is over 7.7 % (4 %) of net turnover. Profit development was positive during the early months of the year, and the insurance for consequential losses ensured that the targets were reached even during the period following the fire. The operating profit of the non-Finnish subsidiaries included in the consolidated figures showed an overall loss of EUR 0.1 million.

The construction of a new production facility at Kärsämäki was started in June and completed within a short time. The machinery was installed in January, and production is being ramped up to full volume during the spring 2002.

At the end of 2001, Incap Furniture Ltd was employing 237 (236) persons.

Future prospects

Incap Electronics

Although demand slightly increased during the last quarter of 2001 compared to the preceding quarter, no definite upward turn is to be expected very soon. According to a number of forecasts, the demand for contract manufacturing services in electronics is expected to remain low, at least during the early part of the year.

As soon as demand begins to increase, however, Incap will be able to respond quickly even to massive growth, thanks to the extension of the Vuokatti unit and the measures already taken to improve operational efficiency. Net turnover in 2002 is expected to reach a growth rate higher than the market average. Profitability is also expected to improve significantly compared to the 2001 level. The measures taken in 2001 to streamline production and to improve its efficiency will have a full impact on profit development in 2002.

Incap will focus increasingly on improving the added value of its products in close co-operation with the customers. Incap will play an increasingly significant role in lifecycle-based projects and, along with its traditional manufacturing, product integration and testing services, also actively participate in technological co-operation, product design, rapid ramp-up of new products and product generations, planning of testing procedures and improvement of logistic efficiency.

More focused and more extensive efforts at personnel development will be made in 2002.

The low level, marked fluctuations and poor predictability of demand will set special requirements on the management of inventories, and it will be a challenging task to try to reach the target turnover of inventories. Tied-up capital will be minimized by utilizing the Kanban system already in use, developing the purchasing activities and using carrier storage more effectively than currently.

Incap Furniture

The company’s order backlog is good, and many new products have been developed for key customers. The modern technology and advanced automation of the new production facility at Kärsämäki will further enhance cost efficiency and competitiveness.

Events after the end of the reporting period

Incap Corporation’s strategy is to focus exclusively on the electronics sector. The company is aiming at a strong growth rate with the help of both organic growth and acquisitions.

Negotiations concerning the differentiation of the furniture sector from Incap Corporation proceeded, and at the beginning of January 2002, a Letter of Intent was signed concerning the sale of Incap Furniture Ltd to the operative management and an investor group consisting of Teollisuussijoitus Oy, JMC Finance Oy, Teknoventure Oy and Jokilaaksojen Rahasto I Ky. The final agreement will be signed by 1 March 2002.

To consolidate the electronics sector, a Letter of Intent was signed on 4 Jan. 2002 concerning the acquisition of the capital stock of JMC Tools Oy, a manufacturer of high-frequency components for telecommunications industry. If successfully accomplished, this transaction will strengthen Incap’s position in the telecommunications sector and provide resources for the expansion of services in the other customer sectors. The aim is to sign the actual merger agreement in February and to implement the merger by the end of April.

Notes to financial statements:

The key figures in the table have been calculated based on the official profit and loss account. According to the calculations, 29 % of the profit for the reporting period will be payable as taxes. Due to the insurance refunds entered as income, taxes include a change of deferred tax liabilities worth EUR 2.6 million and income tax for the reporting period worth EUR 1.0 million.

The insurance refunds for the destroyed property and the suspension of business operations have been entered as income on an accrual basis.

Interim report for January – March 2002 will be published on Friday, 3 May 2002.

Espoo, 14 February 2002


Board of Directors

Kari Saarinen

President and CEO

The full Report including tables is available to download from the enclosed link.