Aspocomp’s Financial Statements 1.1.-31.12.2019

Aspocomp Group Plc, Financial Statements, March 10, 2020 at 9:00 a.m.

Aspocomp’s Financial Statements 1.1.-31.12.2019

Key figures 10-12/2019 in brief

Key figures 1-12/2019 in brief

OUTLOOK FOR THE FUTURE

The outbreak of the coronavirus epidemic will affect the availability and delivery times of the circuit boards purchased by Aspocomp from China. The coronavirus epidemic is also having a profound impact on the supply chains of the electronics industry and on customer orders. Due to this situation, the outlook for 2020 involves a significantly higher risk than normal.

Aspocomp estimates that its net sales and operating result for 2020 will be at the same level as in 2019. In 2019, net sales amounted to EUR 31.2 million and the operating result to EUR 3.4 million

CEO’S REVIEW

“Our growth remained strong for the fourth year in a row. Net sales for 2019 were 7 percent higher compared to the last year’s reference period. Our growth clearly exceeded the total PCB market growth, which is estimated to have been below 1 percent (Custer Consulting, February 2020). However, fourth-quarter sales were approximately 4 percent lower compared to the last year’s strong reference period. Net sales for 2019 amounted to EUR 31.2 million.

Telecommunications remained the largest customer segment with growth of almost 20 percent from the previous year. Growth was strongest in the first half of the year. Sales in the fourth quarter did not reach the level of the previous year due to a very strong comparison period and the timing of customer development needs.

In the Automotive segment, net sales were 6 percent lower than in the comparison period, mainly due to the introduction of ship transport, which delayed the accumulation of net sales although demand remained stable. Aspocomp’s automotive products have in the past been largely used in heavy transport vehicles, but during the autumn we achieved a breakthrough with several products for passenger cars, too. Volume deliveries for new low-emission car models began at the end of the year.

In the Security, Defense and Aerospace segment, sales remained at the previous year’s level. The R&D investments of the segment were increased significantly during the year. New products and customers will bring business opportunities as early as 2020. During the year, the development process of the defense and aviation quality certificate AS9100 was also launched at the Oulu plant.

In the Semiconductor segment, sales grew by almost 60 percent. Multi-year development investments are now generating new growing business. The segment’s growth outlook is positive. The newly acquired technology capabilities support the needs of the Semiconductor Industry segment in particular. The first phase of the investment program was mainly completed in 2019.

The general economic situation and the decline in investments in Europe slowed down our Industrial Electronics segment. Sales decreased by almost 10 percent from the previous year. The decline was particularly visible in the Nordic countries.

The order book developed positively throughout the year and amounted to EUR 4.4 million at the end of the year, a year-on-year increase of almost 60 percent.

The operating result for the year rose to EUR 3.4 million. Operating result was 11 percent of net sales. In the fourth quarter, the operating result was clearly down from the strong comparison period at EUR 0.7 million. The decline in operating profit was mainly due to the slowdown in demand for product development during the last quarter. The result was also burdened by increasing R&D investments in new products.

The coronavirus epidemic that began in China is strongly affecting the supply chain of the entire electronics industry. This undermines our ability to assess net sales development, especially during the first half of 2020.”

NET SALES AND EARNINGS

October-December 2019
Fourth-quarter net sales amounted to EUR 8.2 (8.5) million, a year-on-year decrease of 4 percent.  Net sales decreased due to the strong comparison period and the timing of customer development needs.

The five largest customers accounted for 59 (55) percent of net sales. In geographical terms, 98 (98) percent of net sales were generated in Europe, 2 (1) percent in Asia and 0 (1) percent in North America.

The operating result for the fourth quarter amounted to EUR 0.7 (1.2) million. Fourth-quarter operating result was 8.1 (14.5) percent of net sales. The major factor behind the decline in profitability was the slackening in demand for product development series in the last quarter of the year.

Net financial expenses amounted to EUR 0.1 (0.0) million. Earnings per share were EUR 0.19 (0.25).

The order book grew by 59 percent compared to the last year’s reference period. The order book at the end of the review period was EUR 4.4 (2.8) million, representing a year-on-year increase of EUR 1.6 million.

Financial year 2019
Net sales amounted to EUR 31.2 (29.1) million, a year-on-year increase of 7 percent. The largest customer segment remained the Telecommunications segment, which grew by almost 20 percent compared to the previous year. Sales in the fourth quarter did not reach the level of the previous year due to a very strong comparison period and the timing of customer development needs. In the Automotive segment, net sales were 6 percent lower than in the comparison period, mainly due to the introduction of ship transport, which delayed the accumulation of net sales although demand remained stable. In the Security, Defense and Aerospace segment, sales remained at the previous year’s level. In the Semiconductor segment, sales grew by almost 60 percent. Multi-year development investments and newly acquired technology capabilities supported the segment’s positive development. The Industrial Electronics segment’s sales declined by nearly 10 percent due to the general economic climate and dwindling investments in Europe.

The five largest customers accounted for 58 (54) percent of net sales. In geographical terms, 98 (97) percent of net sales were generated in Europe, 1 (1) percent in Asia and 1 (2) percent in North America.

The full-year operating result amounted to EUR 3.4 (2.9) million and to 11 percent of net sales. Operating result saw a year-on-year increase of 18 percent. Earnings were driven by improvements in EBITDA, growth in net sales and the greater share accounted for by more technologically demanding products.

Net financial expenses amounted to EUR 0.1 (0.1) million. Earnings per share were EUR 0.59 (0.49).

INVESTMENTS

Investments during 2019 amounted to EUR 3.5 (3.4) million. The investments were mainly focused on improving the capabilities of the Oulu plant. The EUR 10 million investment program to enhance the capabilities of the Oulu plant and increase its capacity, announced in December 2017, is proceeding on schedule. The investment program focuses in the first stage on enhancing the capabilities of the plant and in the second stage on increasing capacity. Most of the first stage equipment has already been ordered and installation was completed during 2019. Newly acquired technology capabilities supported the needs of the semiconductor industry segment in particular. With the investment program, the company will be able to respond even better to the rise in demand generated by global digitalization and thereby bolster its position as a partner to the world’s leading technology and semiconductor companies.

CASH FLOW AND FINANCING

Cash flow from operations amounted to EUR 4.3 (2.0) million in 2019. Cash flow increased due to improved operating result.

Cash assets amounted to EUR 2.4 (2.6) million at the end of the period. Interest-bearing liabilities amounted to EUR 5.8 (5.4) million. Gearing was 19 (19) percent. Non-interest-bearing liabilities amounted to EUR 5.6 (5.5) million.

At the end of the period, the Group’s equity ratio amounted to 61.3 (57.6) percent.

The company has a EUR 1.0 (1.0) million credit facility, which was not in use at the end of the review period. In addition, the company has a recourse factoring agreement, of which EUR 0.0 (0.0) million was in use.

DEFERRED TAX ASSETS

At the end of 2019 financial year, the company had EUR 4.7 million in deferred tax assets in its balance sheet. The deferred tax assets are primarily due to decelerated tax depreciation.

PERSONNEL

During the review period, the company had an average of 124 (116) employees. The personnel count on December 31, 2019 was 132 (117). Of them, 80 (74) were blue-collar and 52 (43) white-collar employees.

ANNUAL GENERAL MEETING, THE BOARD OF DIRECTORS AND AUTHORIZATIONS GIVEN TO THE BOARD

The decisions of the Annual General Meeting 2019, the authorizations given to the Board of Directors by the AGM and the decisions relating to the organization of the Board of Directors have been published in separate stock exchange releases on April 3, 2019.

Aspocomp’s Annual General Meeting 2020 is scheduled for Thursday, April 2, 2020 at 10:00 a.m. EET. The meeting will be convened by the company’s Board of Directors later.

SHARES

The total number of Aspocomp’s shares at December 31, 2019 was 6,704,505 and the share capital stood at EUR 1,000,000. The company did not hold any treasury shares. Each share is of the same share series and entitles its holder to one vote at a General Meeting and to have an identical dividend right.

The Board of Directors of Aspocomp Group Plc decided on April 3, 2019 on a directed share issue without payment based on Aspocomp’s Share Reward Plan 2016-2019 for the performance period 2018. According to the terms and conditions of the Share Reward Plan 2016-2019 and after deduction of the cash payment portions of the remunerations meant for taxes and tax-like contributions, the persons included in the 2018 share-based incentive scheme received altogether 38,000 new shares in the company through a directed share issue without payment. The new shares were registered in the Trade Register on May 3, 2019. After the registration of the new shares, the total number of Aspocomp Group Plc’s shares has increased to 6,704,505.

A total of 1,925,930 Aspocomp Group Plc. shares were traded on Nasdaq Helsinki during the period from January 1 to December 31, 2019. The aggregate value of the shares exchanged was EUR 9,855,873. The shares traded at a low of EUR 3.71 and a high of EUR 6.90. The average share price was EUR 5.12. The closing price at December 31, 2019 was EUR 5.26, which translates into market capitalization of EUR 35.3 million.

The company had 3,457 shareholders at the end of the review period. Nominee-registered shares accounted for 3.0 percent of the total shares.

OUTLOOK FOR THE FUTURE

The outbreak of the coronavirus epidemic will affect the availability and delivery times of the circuit boards purchased by Aspocomp from China. The coronavirus epidemic is also having a profound impact on the supply chains of the electronics industry and on customer orders. Due to this situation, the outlook for 2020 involves a significantly higher risk than normal.

Aspocomp estimates that its net sales and operating result for 2020 will be at the same level as in 2019. In 2019, net sales amounted to EUR 31.2 million and the operating result to EUR 3.4 million.

A major share of Aspocomp’s net sales is generated by quick-turn deliveries and R&D series, and thus the company’s order book is short. The company’s aim is to systematically expand its services to cover the PCB needs of customers over the entire life cycle and thereby balance out variations in demand and the order book.

ASSESSMENT OF SHORT-TERM BUSINESS RISKS

Impact of coronavirus on the electronics supply chain
The coronavirus epidemic that began in China have a major impact on the supply chain of the entire electronics industry. This will affect particularly the availability and delivery times of the PCBs subcontracted by the company in China. At the same time, the coronavirus epidemic may affect the availability of parts and components required by electronic assemblers, which is estimated to limit business.

Dependence on key customers
Aspocomp’s customer base is concentrated; over half of sales are generated by five key customers. This exposes the company to significant fluctuations in demand.

Market trends
Although Aspocomp is a marginal player in the global electronics market, changes in global PCB demand also have an impact on the company’s business. Competition for quick-turn deliveries and short production series will accelerate as the market for PCBs weakens and continues to have a negative impact on both total demand and market prices.

Aspocomp’s main market area comprises Northern and Central Europe. In case Aspocomp’s clients would transfer their R&D and manufacturing out of Europe, demand for Aspocomp’s offerings might weaken significantly.

BOARD OF DIRECTORS’ DIVIDEND PROPOSAL AND ANNUAL GENERAL MEETING

According to the financial statements dated December 31, 2019 the parent company’s distributable earnings amounted to EUR 9,306,756.97, of which the retained earnings were EUR 6,494,052.87.

The Board of Directors will propose to the Annual General Meeting to be held on April 2, 2020, that a dividend of EUR 0.15 per share be paid. The dividend would be paid to shareholders registered in the Register of Shareholders maintained by Euroclear Finland Ltd on the record date of the dividend distribution, April 6, 2020. The Board of Directors proposes that the dividend will be paid on April 15, 2020.

There have been no significant changes in the company’s financial position since the close of the financial period. According to the Board of Directors, the proposed dividend distribution does not endanger the company’s financial standing.

PUBLICATION OF THE FINANCIAL STATEMENTS AND REPORT OF THE BOARD OF DIRECTORS

Aspocomp’s Annual Report will be published on Thursday, March 12, 2020. The Annual Report will include the report of the Board of Directors, the consolidated and the parent company’s financial statements and the Auditors’ Report for the financial year January 1-December 31, 2019. At the same time, the company will release its Corporate Governance Statement and Remuneration Statement for 2019 and Remuneration Policy for governing bodies. The Annual Report, the Remuneration Policy for Governing Bodies and the Remuneration Statement as well as the Corporate Governance Statement are also available on the company’s website at www.aspocomp.com/governance.

PUBLICATION OF FINANCIAL RELEASES FOR 2020
Aspocomp Group Plc.’s financial information publication schedule for 2020 is:

Interim report January-March 2020:  Tuesday, May 5, 2020
Half-year report for January-June 2020:  Wednesday, August 12, 2020
Interim report January-September 2020:  Wednesday, November 4, 2020

The interim and half-year reports will be published at around 9:00 a.m. (EET) on the given date.

Aspocomp’s silent period commences 30 days prior to the publication of its financial information.

Espoo, March 10, 2020

ASPOCOMP GROUP PLC
Board of Directors

Some statements in this stock exchange release are forecasts and actual results may differ materially from those stated. Statements in this stock exchange release relating to matters that are not historical facts are forecasts. All forecasts involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performances or achievements of the Aspocomp Group to be materially different from any future results, performances or achievements expressed or implied by such forecasts. Such factors include general economic and business conditions, fluctuations in currency exchange rates, increases and changes in PCB industry capacity and competition, and the ability of the company to implement its investment program.

ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING POLICES

The reported operations include the Group’s parent company, Aspocomp Group Plc. The figures presented for the review period have not been audited. This interim report has been prepared in accordance with IAS 34 (Interim Financial Reporting), following the same accounting principles as in the annual financial statements for 2018; however, the company complies with the standards and amendments that came into effect as from January 1, 2019.

R&D
R&D costs comprise general production development costs. These costs do not fulfill the IAS 38 definition of either development or research and are therefore booked into plant overheads.

IFRS 16 Leases (application from January 1, 2019)
The new standard replaces IAS 17 and its interpretations. Above all, IFRS 16 provides guidance for the lessee and defines principles for the accounting treatment of a rental agreement as an asset and a liability (lease obligation). In the income statement, the cost of rental agreements will be presented as depreciations and financial expenses instead of rental expenses.

The application of the standard is carried out with a simplified approach and therefore the company does not adjust its comparative information for the previous financial year. Lease liability is determined based on the present value of the remaining lease payments using the rate of interest of additional credit at the time of application. The Group does not have any right-of-use assets that meet the definition of an investment property and does not have finance leases where it is the lessor.

First-time application of IFRS 16 employs the following practical means permitted by the standard: Low-value or short-term leases of less than or equal to 12 months are treated as short-term leases. Applying a single discount rate to a portfolio of leases with similar characteristics.

Right-of-use assets recognized by the Group as of January 1, 2019 primarily consist of leased cars, rented offices and land lease. The right-of-use assets recognized by the Group amount to approximately EUR 0.2 million and the impacts arising from implementation of the standard are thus not considered to have a material impact on the Group’s key figures. In the balance sheet, the lease liability is presented as long-term and short-term interest-bearing liabilities.

IFRIC 23 Income Tax Treatment Uncertainty (effective for annual periods beginning on or after January 1, 2019). The interpretation applies to the accounting for income taxes when the tax treatment contains uncertainty that affects the application of IAS 12. The main question is whether the tax authority approves the tax treatment chosen by the Group. In making this assessment, it is assumed that the tax authorities have at their disposal all relevant information to assess the tax treatment presented. The interpretation will not have a material impact on the consolidated financial statements.

All figures are audited.

Further information
For further information, please contact Mikko Montonen, President and CEO,
tel. +358 40 5011 262, mikko.montonen(at)aspocomp.com.

Aspocomp – heart of technology

A printed circuit board (PCB) is used for electrical interconnection and as a component assembly platform in electronic devices. Aspocomp provides PCB technology design, testing and logistics services over the entire lifecycle of a product. The company’s own production and extensive international partner network guarantee cost-effectiveness and reliable deliveries.

Aspocomp’s customers are companies that design and manufacture telecommunication systems and equipment, automotive and industrial electronics, and systems for testing semiconductor components for security technology. The company has customers around the world and most of its net sales are generated by exports.

Aspocomp is headquartered in Espoo and its plant is in Oulu, one of Finland’s major technology hubs.

www.aspocomp.com

Attachment

• Aspocomp Financial Statement 2019