Sami Mykkänen, President and CEO of Incap Group:

"The company's strategic restructuring that has lasted for several years has been completed in the summer, when the Helsinki factory's production was transferred to the company's other factories. Incap now has one factory in each country where it operates - Finland, Estonia and India - which provides a good foundation for improving profitability and competitiveness."

"The demand for energy efficiency sector's products has stayed on a pleasing level during the reporting period in both Europe and Asia. Revenue of the Indian operations has increased more than expected and production volumes have reached a profitable level. Deliveries of well-being technology products have decreased due to, among other reasons, some of the products being omitted from the production programme as expected."

"Improving profitability has been our main target, and recent profit development shows that we have succeeded in laying a sustainable foundation for growth in accordance with our strategy. We expect the favourable development to continue and estimate that the operating profit (EBIT) for the second half of the year will be positive."

"The comprehensive financing solution negotiated in the spring stabilised our financing structure. We are currently preparing for the redemption of the convertible bond agreed upon in the spring, which is supposed to take place during 2012. Our original intention was to finance the redemption through a share issue in the autumn, but we are currently also investigating other possible financing tools."

Revenue and profitability July-September 2012

Revenue for the third quarter amounted to EUR 15.7 million, down 14% year-on-year. The decrease in revenue was mainly due to certain products manufactured at the Helsinki factory being omitted from the production programme. Revenue from customer accounts served from the Indian plant has increased more than expected, by 37%, especially with international but also with locally operating customers.

The operating profit (EBIT) for July-September was approximately EUR 0.3 million, i.e. clearly better than in the corresponding period last year. The operating profit was positive, as it also was in the previous quarter in April-June. Measures to lower costs were continued, and the decrease in personnel costs and other fixed costs had a positive effect on profitability.

The expanded premises of the Kuressaare property entered production use, which will improve the factory productivity. Production activity at the Helsinki factory ended, and manufacturing of sheet-metal mechanics was transferred partially to the company's Vaasa plant and partially to subcontractors. The closure of the factory and centralisation of production in Vaasa and Kuressaare are expected to result in savings of approximately EUR 1.6 million in 2013, comprised mainly of personnel costs.

Some of the production equipment of the Helsinki factory was transferred to Vaasa, some was sold. The net gains from the sale of equipment are recognised under other operating income.

Revenue and profitability January-September 2012

Revenue for January-September amounted to EUR 49.6 million, down approximately 5% year-on-year. Deliveries to customers in the energy efficiency industry remained at a good level, and the demand for rotor components, inverters and UPS products has increased clearly. Revenue in Indian operations increased by about 35% year-on-year.

The operating result for January-September was EUR -0.05 million, which is almost a million euros better than the corresponding period for the previous year. Particularly the profitability in the Indian operations has developed strongly. Material expenses and other variable production costs decreased year-on-year, and also fixed costs went down. In order to improve the cost structure, Group Services, among other functions, were reorganised and tasks were centralised in the company's Tallinn office. Financial performance was burdened by expenses related to the closure of the Helsinki plant during the period under review.

Net financial expenses decreased compared to the previous year and amounted to EUR 0.2 million (EUR 1.7 million). The decrease was due to EUR 1.1 million of financing income recognised in June as the result of the dilution of the convertible bond. Depreciation stood at EUR 1.2 million (EUR 1.6 million). The loss for the period totalled EUR -0.3 million (EUR -2.7 million).

Personnel and management

At the close of the period, Incap Group had a payroll of 667 employees (772). Of the personnel, 56% worked in India (51%), 30% in Estonia (27%) and 14% in Finland (22%).

HR Director and member of the Group Management Team Kirsi Hellsten gave notice to accept a position with another company at the beginning of November.

Outlook for 2012

Demand in the energy efficiency industry remained at a good level in Europe and India. Revenue from well-being technology products will fall short of the previous year due to the discontinuation of certain products formerly manufactured in Helsinki and Kuressaare.

The closure of the Helsinki factory is the final stage in the company's strategic restructuring of production, which has formed a basis for profitable growth. Transferring the factory's production to other units and making operations more efficient will improve the company's profitability starting in the third quarter.

Incap reiterates its previous guidance published on 14 September. The company estimates that the Group's revenue in 2012 will be lower than the EUR 68.9 million achieved in 2011. Incap further estimates that the operating profit (EBIT) for the latter half of the year will be positive and full-year operating profit will be clearly better than in 2011, at which time it amounted to EUR -1.6 million.