Stock Exchange Release, 20 August 2003, 9 a.m.


  • net turnover in the January-June period was EUR 30 million
  • the operating loss in January-June contracted to half of the figure reported for the same period of last year and was EUR 1.2 million
  • the second-quarter operating result improved on the first quarter but was still in the red
  • delivery volumes increased within base station products, in which all the company’s areas of expertise are utilised
    Comparison figures used in the report
    In the text part of this Interim Report, the comparison figures for 2002 are pro forma figures comprising the divisions according to the Group’s present structure. The accounting policy for the pro forma figures is described in Annex 9. The comparison with the official figures for January-June 2002 is presented in Annexes 1, 2, 3 and 7. The official comparison figures comprise the Incap Group’s Electronics business sector for January-June 2002 as well as the Furniture business sector for January-February 2002 and the JMC Tools Group for May-June 2002.
    Earnings per share, including the comparison figures, have been calculated by report period as a departure from the previous practice of using full-year figures.
    Net turnover and financial performance in April-June
    Net turnover in April-June totalled EUR 14.6 million, down about 4% on the first quarter (EUR 15.3 million). Net turnover in the same period of the previous year was EUR 17.0 million.
    The operating result improved by 10% on the previous quarter but was a loss of EUR 0.6 million. The operating loss includes a total of EUR 0.3 million of non-recurring costs for personnel arrangements.
    Compared with the same period of 2002, the operating loss figure improved by 53%. Earnings per share were EUR 0.07 negative (0.14 negative).

    Net turnover and financial performance in January-June
    Consolidated net turnover in January-June was EUR 29.9 million, down about 12% on the net turnover in the same period of 2002 (EUR 33.8 million). 
    The Group reported an operating loss of EUR 1.2 million, i.e. a 48% improvement on the same period of 2002 (operating loss: 2.4 million). Although net turnover declined from the comparison period, profitability improved further thanks to cost-cutting and efficiency-boosting measures.
    Earnings per share in the report period were EUR 0.13 negative (0.26 negative) and equity per share was EUR 1.39 (1.86). The Group’s equity ratio was 40.9% (42.9%) and total assets were EUR 41.4 million (52.9 million).

    Development of operations
    Demand varied by customer sector. Although demand in the telecommunications sector was still at a low level owing to the low volume of network investments, net turnover was generated evenly throughout the first part of the year, without large monthly variations. Within base station products that exploit the full range of the company’s areas of expertise, Incap was able – following a series of small lots – to start mainline deliveries. Demand for power electronics products remained slack. Sales of health care equipment and safety electronics held up at the previous year’s level.
    Manufacturing orders for new products and product families came in from existing customers, and the delivery scope was expanded from the manufacture of components to design and assembly. New customers were landed and the recent sales inputs also began to show up in the form of increased offer activity.
    Competitiveness was improved through enhanced efficiency and cost- cutting. All the units and functions were the object of a critical review with the aim of improving profitability. Development actions in line with this effort were carried out throughout the period. Painting operations at the Vaasa factory were outsourced in June, at which time most of the painting shop’s staff transferred to the employ of a new partner in co-operation.
    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 negotiations did not lead to the signing of an actual agreement by the deadline, the Letter of Intent lapsed at the end of April.
    The Group’s liquidity was satisfactory: the quick ratio was 0.7 (0.8) and the current ratio 1.7 (1.9). Cash flow from operations was EUR 3.9 million (4.0 million negative), cash flow after investments was EUR 0.3 million negative (1.4 million) and cash flow after financial income and expenses was EUR 2.5 million negative (3.3 million). The change in cash flows was an increase of EUR 1.1 million (increase of 0.7 million). Net financial expenses came to EUR 0.4 million (0.6 million). Net debt totalled EUR 14.5 million (EUR 17.2 million) and the gearing ratio was 73.8% (72.9%). The equity ratio was 40.9% (42.9%).
    Cash flow from operations was positive. The Group’s liquid assets at 31 July 2003 amounted to EUR 4.6 million, of which EUR 2.6 million consisted of unused credit facilities. The company estimates that available funds will suffice at least in accordance with the liquidity plan that has been drawn up for the next 12 months.
    Capital expenditures
    The Group’s gross capital expenditures in the report period totalled EUR 0.3 million (EUR 0.3 million), or about 1.1% of net turnover (0.8%).
    Research and development
    Spending on research and development amounted to EUR 0.9 million, or 3% of net turnover (EUR 1.0 million, 3% of net turnover). Research and development focused, among others, on improving the performance of the plating, tuning and testing processes for high-frequency products as well as on the development of the lead-free soldering process. The respective 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 report period it had 561 employees. At the end of June, 57 employees had been laid off (84 employees at the start of the year).
    Share and share price trend
    The number of shares is 12,180,880. The price of the Incap Corporation share varied in the range of EUR 0.87 to EUR 1.66 during the report period, and the share price at the close of the period was EUR 0.96. Share turnover during the report period was about 2%. At the end of the report period, the company had 605 shareholders and the company’s market capitalisation was EUR 11.7 million.
    Valid authorisations of the Board of Directors
    At the close of the report period, the Board of Directors had an authorisation, granted by the Annual General Meeting, to increase the share capital by a maximum of EUR 4,092,775.68.
    Group structure
    In order to simplify the group structure, JMC Tools Oy will be merged into the parent company by way of voluntary dissolution by the end of the year. Accordingly, the JMC Tools Oy business was transferred to the parent company on 1 June 2003.
    Annual General Meeting
    The Annual General Meeting was held on 25 April 2003. The Board of Directors was granted authorisations to decide on increasing the share capital, granting stock options and/or issuing convertible bonds such that on the basis of the authorisation the share capital can be increased by a maximum of EUR 4,092,775.68. The company’s domicile was changed from Helsinki to Oulu. The Annual General Meeting re-elected Seppo Arponen, Kalevi Laurila, Markku Puskala, Jorma Terentjeff and Juhani Vesterinen as members 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. At its organisation meeting, the Board of Directors elected Jorma Terentjeff as chairman of the Board.
    Events after the close of the report period
    Juhani Hanninen, M.Sc. (Eng.), was appointed the Group’s new President and CEO, effective 1 September after Seppo Ropponen agreed to take over special assignments designated by the Board.
    Tuula Ylimäki, M.Sc. (Econ.) was appointed the company’s Vice President, Finance and Administration, effective 1 October. The present Vice President, Finance and Administration, Rauni Nokela, is leaving to become manager of the municipality of Yli-Ii.
    Outlook for the future
    There are conflicting views in the markets regarding the future trend of the economy, though positive signs of an upswing and a pick-up in demand are beginning to appear more frequently. We expect Incap’s third-quarter net turnover to exceed the figure for the comparison period of last year and we estimate that net turnover in the second half of the year will be in line with the pace in the first half. On the basis of customers’ latest forecasts and the general outlook, we revise our previous estimate and believe that Incap’s full-year net turnover in 2003 will be roughly at last year’s level.
    We expect the positive trend in profitability to continue in the second half of the year and reiterate our estimate that the full-year result will improve substantially on the pro forma level for 2002.
    The Interim Report for January-September 2003 will be published on Wednesday, 19 November 2003.
    Board of Directors
    Rauni Nokela
    Acting President & CEO
    The full report including tables can be downloaded from the enclosed link. 

    For additional information, contact:
    Rauni Nokela, Vice President, Finance and Administration, tel. +358 400 383 409