• Net turnover amounted to EUR 15.3 million
  • The operating result (an operating loss of EUR 0.7 million) improved on both the previous quarter and particularly on the same pro forma period a year ago
  • The synergy benefits sought in the merger of Incap and JMC Tools showed up in the form of the first integrated deliveries of RF products 
    Comparison figures used in the report
    In the text part of the report, the comparison figures used for 2002 are the January-March pro forma figures, which include the businesses according to the Group’s present structure: Incap Corporation’s Electronics business sector and the JMC Tools Group, which became a part of the Incap Group. The accounting policy for the pro forma figures is described in Annex 9.
    The comparison with the official figures for January-March 2002 has been carried out in Annexes 1, 2, 3 and 7. The official comparison figures comprise the Incap Group’s Electronics business sector for January-March 2002 as well as the Furniture business sector for January-February 2002.
    Net turnover and financial performance
    Consolidated net turnover in January-March was EUR 15.3 million, down about 10% on the pro forma net turnover in the same period of 2002 (EUR 16.9 million). Compared with the previous quarter, net turnover declined by about 6%.
    The operating result was a loss of EUR 0.7 million, i.e. a 43% improvement on the same period of 2002 (operating loss: 1.1 million). The operating result improved by 15% on the previous quarter. Earnings began to reflect the savings measures launched during 2002, and the efficiency-boosting led to improved productivity.
    Earnings per share were EUR 0.28 negative (0.48 negative) and equity per share was EUR 1.45 (2.00). The Group’s equity ratio was 40.7% (42.7%) and total assets were EUR 43.5 million (57.1 million).
    Development of operations
    Customers continued to be cautious in placing orders and making forecasts. Demand for telecommunications components held up at the previous quarter’s level and sales of products to the security sector were better than expected. On the other hand, demand in the electrical power industry contracted further.
    New products, notably, from Instrumentarium Imaging Oy and Metorex Security Products Oy were brought into production. The proportion of integrated deliveries drawing on the company’s full range of services grew and the scope of deliveries was increased for a number of customers. A co-operation agreement was signed with Franke Finland Oy concerning the manufacture of electronics for washer-disinfectors used in hospitals and laboratories. The transfer of Solotop Oy’s manufacture of scales to Incap was accomplished in the planned timeframe and the order book for the products is good.
    Incap’s objective is to offer integrated deliveries that make use of all the company’s areas of expertise. The first orders for integrated deliveries of RF products were obtained at the beginning of the year, and the first products were manufactured during the period. Testing and tuning expertise, particularly that required in RF products, was built up both through recruitment and equipment purchases. Product manufacturing methods were also developed.
    The Group’s liquidity was satisfactory: the quick ratio was 0.8 (pro forma Jan.-Mar. 2002: 0.7) and the current ratio 1.7 (1.9). Cash flow from operations was EUR 3.0 million (2.2 million negative), cash flow after investments was EUR 0.1 million negative (1.9 million) and cash flow after financial income and expenses was EUR 1.3 million negative (2.1 million). The change in cash flows was an increase of EUR 1.5 million (increase of 1.8 million). Net financial expenses came to EUR 0.2 million (0.3 million). Net debt totalled EUR 14.7 million (EUR 18.9 million) and the gearing ratio was 75.2% (57.7%). The equity ratio was 40.7% (42.7%).
    The cash flow from operations was positive. The Group’s liquid assets at 13 May 2003 amounted to EUR 6.1 million and it had EUR 1.9 million of unused credit facilities. The company estimates that available funds will suffice at least for the next 12 months in accordance with the liquidity plan that has been drawn up.
    Capital expenditures
    The Group’s gross capital expenditures in the report period totalled EUR 0.2 million (pro forma Jan.-Mar. 2002: EUR 0.2 million), or about 1.1% of net turnover (1.5%).
    Research and development
    Spending on research and development amounted to EUR 0.5 million (pro forma Jan.-Mar. 2002: EUR 0.5 million), or 3% of net turnover (3%). Research and development expenditure has been booked to expenses for the period.
    At the beginning of the report period the Incap Group had a payroll of 589 employees and at the end of the period it had 568 employees. At the end of March, 73 employees had been laid off (84 employees at the start of the year).
    Share and share price trend
    The number of shares at the beginning of the year was 12,180,880. The price of the Incap Corporation share varied in the range of EUR 0.89 to EUR 1.66 during the report period, and the share price at the close of the period was EUR 0.90. Share turnover during the report period was about 1%. At the end of the report period the company had 588 shareholders. The company’s market capitalisation at 31 March 2003 was EUR 11.0 million.
    Events related to shares and shareholdings
    The Board of Directors exercised the authorisation it had received from the 2002 Annual General Meeting on 21 January 2003 through an issue of a total of 702,000 warrants directed at Varma-Sampo Mutual Pension Insurance Company entitling the holders of said warrants to subscribe for an equal number or shares. The subscription price of the shares is determined according to the mathematical average of the closing prices of the company’s share during the period from 3 February to 30 May 2003. The subscription price must nevertheless be at least 2.50 euros per share. The subscription period for the shares commences on 1 June 2003 and ends on 31 December 2005. If Varma-Sampo exercises the warrants in their entirety, the number of Incap Corporation’s shares will rise to 12,882,880 and Varma-Sampo’s shareholding in Incap Corporation will be 5.4%.
    Annual General Meeting 2003
    The Annual General Meeting of Incap Corporation was held on Friday, 25 April 2003 in Helsinki. The Annual General Meeting authorised the Board of Directors to decide on increasing the share capital, granting stock options and/or issuing convertible bonds. On the basis of the authorisation the share capital can be increased by a maximum of EUR 4,092,775.68 (not an exact figure).
    The Articles of Association were amended in accordance with the Board of Directors’ proposal, whereby the company’s domicile will change from Helsinki to Oulu.
    The Annual General Meeting re-elected Seppo Arponen, Kalevi Laurila, Markku Puskala, Jorma Terentjeff and Juhani Vesterinen to seats on Incap Corporation’s Board of Directors. Jorma Terentjeff will continue as chairman of the Board of Directors.
    Ernst & Young Oy were re-elected as the company’s auditor, with Rauno Sipilä, Authorised Public Accountant, acting as chief auditor.
    Events after the close of the financial year
    On 7 April 2003 Incap and Finn-Power signed a Letter of Intent on the transfer of Finn-Power Oy’s sheet metal fabrication and electrical assembly businesses to Incap. Because the companies did not reach a final agreement by the deadline, the Letter of Intent lapsed at the end of April.
    The merger of JMC Tools Oy into the parent company, Incap Corporation, was deferred to 2003 by exception to the original merger plan because the company wanted to ascertain the tax effects of the changes in the Group structure. After obtaining the necessary clarifications, the company’s Board of Directors decided on 13 May 2005 that the simplification of the Group structure would be carried out by way of voluntary dissolution procedure. Accordingly, JMC Tools Oy will be placed in voluntary liquidation as from 31 May 2003 and the company’s business operations will be transferred as an advance allotment to the parent company. The arrangement will be completed by 31 December 2003.
    Painting shop operations at the Vaasa unit will be outsourced during June 2003 in accordance with the decision taken previously. Following co-determination negotiations on the matter, 8 employees have been made redundant. Most of them will find jobs in the employ of a local partner in co-operation.
    Outlook for the future
    Due to the prevailing uncertaintity in the markets it is still difficult to judge the future trend. Because there is continuing strong interest in outsourcing services and the equipment manufacturers favour suppliers who are capable of carrying out extensive integrated deliveries, Incap still believes that its net turnover in 2003 will increase from last year’s level. Profitability is also estimated to improve substantially on the 2002 pro forma level.
    The Interim Report for January-June 2003 will be published on 20 August 2003.
    Board of Directors
    Seppo Ropponen
    President and CEO
    The full “INTERIM REPORT JANUARY-MARCH 2003” including tables can be downloaded from the following link: