INCAP 3Q 2023: QUESTIONS AND ANSWERS

In connection with our Q3 report on 25 October we organised a webcast on our results. This is a summary of the questions and answers in the webcast.

Q: What is the share of the revenue from the largest customer in Q3 and 9 months of 2023. What is the trend looking like, are other customers growing faster than that biggest customer?

A: We haven't published exact customer data, but historically our biggest customer has been over 60% of our revenue. Now their share is clearly lower, and other customers are growing faster.

Q: Is Pennatronics included for the whole quarter, or from 5 July?

A: Pennatronics has been included in Incap Group's reporting as of 1st of July 2023, i.e. for the whole quarter.

Q: Do you plan for a ramp-up again in Q1/2024 for the largest customer's orders, or will the Q4 level be the new normal for some time?

A: Naturally it depends on how the sales of our largest customer develops, but we believe that we will reach the bottom level in Q4 and return to growth.

Q: What is the forecast of demand for EMS in 2024? Do you see more activity from customers for the coming months despite the current macro situation?

A: The EMS market growth forecast for Europe in 2024 is 5-7%. We have been able to grow other customers above that percentage this year and will continue to push sales and try to outgrow the market average when it comes to other customers than our largest one. We will also continue to pursue M&A opportunities.

Q: How do you see the profitability going forward as the share of other factories and customers rises compared to the Indian factory?

A: In Q4, it will be challenging to maintain the profitability with the lowest volumes. But in general, it is a question of utilisation and how we use the resources, and in this respect, we have fared better than many companies in our industry. In Q4 with the low volumes, it will be tougher to defend the profitability that we've had at the high volumes that we are used to.

Q: What industry, markets and countries does your largest customer operate in?

A: They are quite diverse. They operate globally in many different industries, in solar power sector, off-grid, recreational vehicles, EV charging, etc.

Q: Do you plan for more M&A?

A: We will continue to look for acquisition targets and have an active pipeline.

Q: How should we think of Incap's inventory going forward? Why is the inventory rising now even though you know Q4 will materially slow down?

A: Inventory at end of September 2023 totalled EUR 83.6 million (at the end of December 2022 it was EUR 91.8 million), so it did not increase, in fact it decreased clearly. The value of the inventory was impacted by the acquisition of Pennatronics, where the value of the inventory at the end of September 2023 was EUR 8.8 million.

Q: How is high interest environment impacting Incap directly? Are Incap's loans with fixed or variable rates?

A: Our loans have a 3-month Euribor element and on top of that there is the bank's margin.

Q: Do you have any plans for share repurchasing after the drop in stock price?

A: Share repurchasing is a good idea in general, but we are still growing organically and planning acquisitions, and our good cash position is useful there.