Incap Enjoys 65% Revenue Growth in 2015

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Incap Corporation is complying with the Corporate Governance Code of Securities Market Association, which is valid as from 1 January 2016. The company will release a report on the company’s corporate governance in compliance with the Securities Market Act as a separate document in connection with the publication of the Report of the Board of Directors and the Annual Report in week 11/2016.

Shares and shareholders

Incap Corporation has one series of shares, and the number of shares at the end of the period was 218,228,070 (31 December 2014: 109,114,035).

During the financial period, the share price varied between EUR 0.03 and 0.20 (EUR 0.04 and 0.11). The closing price for the period was EUR 0.16 (EUR 0.06). The trading volume during the financial period was 123,997,394 shares, or 56.8% of outstanding shares (40,584,525 shares, or 37.2% of outstanding shares). The market capitalisation on 31 December 2015 was EUR 34.3 million (EUR 6.5 million). At the end of financial period, the company had 2,806 shareholders (1,634). Nominee-registered or foreign owners held 41.85% (26.3%) of all shares. The company does not hold any of its own shares.

At the end of the financial period 2015, the members of Incap Corporation’s Board of Directors and the President and CEO and their interest parties owned a total of 93,016,656 shares or approximately 42.6% of the company’s shares outstanding.

Announcements in accordance with Section 10 of Chapter 9 of the Securities Market Act on a change in holdings

Based on the trades in the mandatory public tender offer Inission AB’s holding increased to 40.85% of all shares and votes or to 44,573,010 shares. The previous holding of Inission AB was 37.31% or 40,707,564 shares. At the date of the financial statement release Inission AB holds 90,490,452 shares.

The holding of Oy Etra Invest Ab decreased on 13 November 2015 so that the new holding is 32,400,000 shares and 14.85% of all shares and votes. The previous holding of Oy Etra Invest Ab was 33,000,000 shares and 15.12% of all shares and votes.

Risk management

The Risk Management Policy approved by the Incap Board classifies risks as risks connected to the operating environment, operational risks and damage and funding risks. The company’s risk management is mainly focused on risks that threaten the company’s business objectives and continuity of operations. In order to improve its business opportunities, the company is willing to take on managed risks within the scope of the Group’s risk management capabilities. The company regularly reviews its insurance policies as part of its risk management system.

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.

As a result of the improved profitability and the rights issue executed in June 2015 the company’s financing position has improved and the sufficiency of financing and working capital are at the moment posing no remarkable risk.

Based on the cash flow estimate prepared in connection with the financial statement, the company estimates that the company’s working capital will cover the requirement for the next 12 months.

The company agreed in February 2015 with the bank on new conditions and instalment of the loans. The loan covenants are EBITDA and equity ratio, which are reviewed every six months until 30 June 2018. The new instalment schedule was conditional to the arrangement of a share issue to strengthen the equity.

As a result of the rights issue arranged in June the parent company’s equity was improved by EUR 1.9 million. The company met the covenants both in June and in December 2015. During 2015 the company has paid back the loans at a minimum to the quantity agreed in the instalment plan.

During 2015 the Group functions have been arranged to align with the new organisation structure and in the definition of the volumes of internal transactions the actual value added and the so-called “arm’s length” principle are considered. After the cumulative losses in India were covered during the latter half of 2015, it is possible to repatriate profits also through dividends.

The parent company’s equity at the end of the financial period 2015 totalled EUR 9.4 million, i.e. 46% of the share capital.

The value of the shares in subsidiaries in the parent group has a significant impact on the parent company’s equity and therefore on, for example, equity ratio. In connection with the financial statements for 2014 the value of the shares in the Estonian subsidiary was decreased by EUR 1.0 million.  Based on the value calculations in connection with the financial statements for 2015 there is no need for further decrease of the value of the shares in subsidiaries. However, there is a risk connected with the valuation of the shares of the Estonian subsidiary because of the previous unprofitable operations of the subsidiary. The business of the subsidiary in India has shown a favourable development and there is no risk connected with its valuation.

Demand for Incap’s services and the company’s financial position are affected by global economic trends and the fluctuation among Incap’s customer industries. In 2016, the business environment is estimated to continue challenging, but the general financial development is estimated to have no remarkable negative effect on the demand or the solvency of the company’s customers. The customer relationship management is of utmost importance in a challenging market situation and the management is paying special attention to this.

The company’s sales are spread over several customer sectors balancing out the impact of the economic fluctuation in different industrial sectors. In 2015, there were two customers in the Group with a revenue exceeding 10% of the total revenue of the Group. The combined revenue of these two customers was 65% of the Group’s revenue.

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