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Incap Enjoys 65% Revenue Growth in 2015
February 19, 2016 | IncapEstimated reading time: 20 minutes
Revenue for the financial period amounted to EUR 30.6 million, by approx. 65% more than in 2014 (1-12/2014: EUR 18.5 million). The increase in revenue was a result of growing demand of present customers and the production for new customers. Out of the growth, approximately EUR 3.1 million or 17 percentage points was caused by the strengthening of Indian Rupee in relation to Euro.
The profitability of Incap Group showed a remarkable improvement thanks to the growing production volumes, increased efficiency and strategic focusing. The full-year operating profit (EBIT) amounted to EUR 3.7 million (EUR 1.1 million), being 12.1% out of revenue which in the company’s business, Electronics Manufacturing Services, is in general terms considered to be a good level. The operating profit in the comparison period 2014 included non-recurring items connected with the dissolution of provision for rents amounting to approx. EUR 0.5 million. Approximately EUR 0.5 million of the net result for the period was a result of the favourable exchange rate between Euro and Indian rupee.
The company continued with the strict cost management in 2015, based on which the overhead costs remained low enabling profitable operations and increased competitive edge.
Personnel expenses in the reporting period amounted to EUR 3.2 million (EUR 2.8 million). The growth was caused by the increased manufacturing volumes but was more moderate than the growth rate of revenue. Other business costs increased year-on-year mainly due to the renewal of ERP system, the oursourcing of finance and administration, the development of reporting and the increase of rental costs. In line with the increasing production volumes the value of inventories increased from EUR 3.4 million to EUR 5.2 at the end of the reporting period.
Net financial expenses amounted to EUR 0.5 million (EUR 0.7 million). Depreciation amounted to a total of EUR 0.3 million (EUR 0.3 million).
Net profit for the period was EUR 2.0 million (EUR 0.2 million). Earnings per share were EUR 0.01 (EUR 0.00).
Investments
Investments in 2015 totalled EUR 0.9 million (EUR 0.2 million) for the development of production capacity in India and Estonia.
Quality assurance and environmental issues
Incap Group’s both factories 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 factory has ISO 13485:2003 quality certification for the manufacture of medical devices.
Inission AB’s public tender offer on Incap shares
After the increase of its holding in December 2014 Inission AB made a mandatory public tender offer for all other Incap shares and securities entitling to shares in line with the Securities Market Act, Chapter 11, Section 19. Based on the trades in the mandatory public tender offer and direct buy of shares Inission AB’s holding increased to a total of 44,573,010 shares, i.e. to 40.85% of all shares and votes. Later on, after the subscriptions made in Incap Corporation’s rights issue in May 2015, the holding of Inission AB increased to 90,490,452 shares.
Rights issue
The Board of Directors of Incap Corporation resolved on 25 may 2015, based on the authorization granted by the Extraordinary General Meeting on 7 May 2015 on the share issue against payment in which the company offered to its shareholders 109,114,035 new shares for subscription. The subscription period was from 1 to 22 June 2015, when 106,585,585 new shares were subscribed by the preferred subscription rights and 52,850,453 new shares by the secondary subscription rights, i.e. altogether approximately 146% of all the new shares offered. The Board of Directors accepted in accordance with the conditions of the rights issue a total of 106,585,585 new shares subscribed by the preferred subscription rights and 2,528,450 new shares by the secondary subscription rights i.e. altogether 100% of all the new shares offered.
Altogether 1,033 subscribers participated in the rights issue by the preferred subscription rights and altogether 471 subscribers by the secondary subscription rights. The three largest shareholders of the company – Inission AB, Oy Etra Invest Ab and Ilmarinen Mutual Pension Insurance Company – subscribed in accordance with their conditional subscription undertakings new shares at a minimum the quantity that corresponded to their pro rata proportions of the company’s outstanding shares.
Incap collected a total of EUR 2,181,280.70 new equity through the rights issue i.e. the full amount targeted under the rights issue. The total subscription price of EUR 2,181,280.70 as well as the related costs of approximately EUR 0.2 million have been recorded in the invested unrestricted equity reserve of the company. The rights issue did not amend the registered share capital of the company.
As a result of the rights issue, the amount of the company’s shares doubled to 218,228,070 shares. The new shares were admitted to trading on Nasdaq Helsinki on 1 July 2015.
Balance sheet, financing and cash flow
The balance sheet total on 31 December 2015 stood at EUR 18.1 million (EUR 14.4 million). The Group’s equity at the close of the financial period was EUR 5.6 million (EUR 1.4 million). The parent company’s equity totalled EUR 9.4 million, representing 46% of the share capital (EUR 8.0 million, 39%). The Group’s equity ratio was 31.2 % (9.9%).
Liabilities decreased to EUR 12.5 million compared with previous year (EUR 13.0 million), of which EUR 7.6 million (EUR 9.3 million) were interest-bearing liabilities. Interest-bearing net liabilities decreased from the comparison period and were EUR 5.6 million (EUR 5.7 million), and the gearing ratio was 98% (524%).
The Group’s non-current interest-bearing liabilities amounted to EUR 4.3 million (EUR 0.3 million) while the current interest-bearing liabilities were EUR 3.3 million (EUR 9.1 million). In the corresponding period the majority of liabilities were included in current liabilities because of the breach of covenants. Approximately EUR 2.7 million of liabilities concern the Indian subsidiary (EUR 3.4 million). Other current liabilities include EUR 4.1 million of bank loans and limits granted by the company’s Finnish bank and EUR 0.7 million of factoring financing used in Estonia.
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