Incap`s revenue in Q1 down 19,3%

Incap's revenue in the first quarter totaled EUR 17.0 million, down 19.3% on the same period last year (Jan.-Mar. 2006: EUR 21.0 million). Operating profit in January-March was EUR 1.2 million negative (1.4 million positive), or 7.0% negative of revenue (6.6% positive). The result includes non-recurring business development expenses totalling EUR 0.2 million. Operating profit during the same period in 2006 included EUR 0.3 million in other operating income. In addition to low production volumes, first-quarter profitability was influenced by the fact that the company manufactured mostly material-intensive products. Moreover, inputs into the development of operations, the drive to become international and the start-up of the Indian operations increased costs. The profit for the comparative period (January-March 2006) includes non-recurring changes in deferred tax assets totalling EUR 0.3 million. Demand for electronics manufacturing services was, with the exception of the telecommunications sector, at a good level. Demand for telecommunications products fell sharply within a very short period of time. Tendering was brisk and progress was made in the acquisition of new customers. During the report period, Incap started co-operation with Efore and Bevesys, among others. Incap is currently negotiating agreements for the manufacture of several new products for present and new customers, and believes that they will bring revenue already during the second quarter. Lloyd's Register Quality Assurance Ltd. granted the Kuressaare facility an ISO13485:2003 certificate which is widely applied to the manufacture of medical devices. In February 2007, Incap signed a Letter of Intent with TVS Electronics Limited for the acquisition of an electronics contract manufacturing unit in India. Business deal and financing for it is currently being negotiated and the target is to sign the final agreement during the second quarter of the year. The factory to be acquired is located in Tumkur, near Bangalore and mostly manufactures integrated products. The unit conducts circuit board assembly and manufactures power supplies, among other things.