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Incap Oyj: Incap Group Business Review for January-March 2016

Incap Corporation

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


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
* 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).

| (EUR thousand) 1-3/2016 1-3/2015 4-6/2015 7-9/2015 10-12/ 1-12/ |
| |
| 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 2,000m2is 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."

Board of Directors

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

Nasdaq Helsinki Ltd
Principal media
The company's home page

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:


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Incap Oyj via Globenewswire


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