ASPOCOMP’S INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2009

Aspocomp Group Plc., Interim report   November 12, 2009 at 9:00 am

 

ASPOCOMP’S INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2009

 

In this financial statements bulletin, the Group’s business has been presented in line with IFRS standards, divided into continuing operations as well as divested and discontinued operations. Continuing operations comprise Aspocomp Oulu Oy and the parent company Aspocomp Group Plc. These operations form one business segment.

 

– Net sales: EUR 8.9 million (EUR 16.3 million 1-9/2008).

 

– Operating profit before depreciation (EBITDA): EUR -1.2 million (1.7).

 

– Operating profit (EBIT): EUR -2.1 million (0.5).

 

– Earnings per share (EPS) from continuing operations: EUR -0.05 (-0.02).

 

– Earnings per share (EPS) from divested and discontinued operations: EUR 0.00 (-0.02).

 

– Cash flow from operations: EUR 0.6 million (-3.5).

 

SAMI HOLOPAINEN, PRESIDENT AND CEO:

 

“The market still remained challenging. Oulu plant’s result stayed on red, but improved from the second quarter of the year. Group’s result was weakened by one-time, unexpected pension costs and provisions amounting to EUR 0.3 million.

 

Cash flow after investments barely remained positive.

 

The market is estimated to slightly improve and the operating result of the forth quarter is expected to be positive. However, the full year 2009 EBITDA will be negative.

 

The Suzhou, China plant (MAS) of the joint venture Meadville Aspocomp (BVI) Holdings Ltd. still runs at a low capacity utilization level. It is expected that there will be gradual improvement of both export and local sales in the later part of year 2009. The India plant project remains on hold until further notice.”

 

 

THE GROUP’S BUSINESS ACTIVITIES

 

Aspocomp Oulu Oy manufactures and sells PCBs for telecom, industrial, and automotive electronics applications. Its service portfolio includes prototype and quick-turn deliveries, fulfillment of urgent PCB needs in high-volume operations as well as development and commercialization of new technologies. Aspocomp Oulu’s primary technologies are HDI (High Density Interconnection), multilayer and special material PCBs.

 

The figures of Aspocomp Oulu Oy and the parent company Aspocomp Group Plc. are consolidated in the Group’s profit and loss statement.

 

Aspocomp has a 20% stake in the joint venture Meadville Aspocomp (BVI) Holdings Limited. The joint venture’s production facility in Suzhou, China is a volume manufacturer of HDI and multilayer PCBs.

 

Aspocomp’s 20% stake in the joint venture is booked into the balance sheet at its minimum value, which is based on the option agreement made in connection with the ownership arrangements in 2007. The minimum value is 16.1 million euro in the end of the period, and it increases by 2.5 percent annually until the option is exercised. Details of the option agreement can be found in the press release of Meadville Holdings Ltd. published on November 16, 2007: “Major transaction – acquisitions and resumption of trading, pages 8-9” (www.meadvillegroup.com/announcements.html). Due to the aforementioned the financial performance of the joint venture does not impact on the value of Aspocomp’s holding.

 

In addition, Aspocomp holds a 14.1% share in the Thai company PCB Center Co., Ltd. (former subsidiary Aspocomp (Thailand) Co., Ltd.) and a 5.3% share in Imbera Electronics Inc.

 

 

CONSOLIDATED NET SALES AND OPERATING PROFIT 7-9/2009

(Reference figures are for 7-9/2008, include only continuing operations)

 

Net sales and operating profit, EUR million

 

Aspocomp’s five largest customers accounted for 80% of net sales (78%).

 

Net financial expenses were EUR -0.3 million (-0.4). Profit was EUR -1.2 million (-0.1) and earnings per share were EUR -0.02 (0.00).

 

 

CONSOLIDATED NET SALES AND OPERATING PROFIT 1-9/2009

(Reference figures are for 1-9/2008, include only continuing operations)

 

Net sales and operating profit, EUR million

 

Aspocomp’s five largest customers accounted for 76% of net sales (75%).

 

Net financial expenses were EUR -0.7 million (-1.2). Profit was EUR -2.6 million (-0.9) and earnings per share were EUR -0.05 (-0.02).

 

 

FINANCING, INVESTMENTS AND EQUITY RATIO

(Reference figures are for 9/2008, include continuing as well as divested and discontinued operations)

 

Aspocomp’s cash flow from operations during the period was EUR 0.6 million (-3.5). Net liquid assets at the end of the period amounted to EUR 3.0 million (3.7).

 

Interest-bearing net debt was EUR 19.0 million (35.7). Gearing increased to 620.7% (563.4%). Non-interest bearing liabilities amounted to EUR 5.5 million (11.4).

 

Investments were EUR 0.6 million (1.3).

 

The equity ratio stood at 10.0% (6.8%) at the end of the period.

 

 

SHAREHOLDERS’ EQUITY OF THE PARENT COMPANY

 

In accordance with the requirements of the Companies Act, the Trade Register has been notified of the loss of share capital on May 14, 2008. The shareholders’ equity of Aspocomp Group’s parent company, Aspocomp Group Plc., was EUR 3.2 million negative at the end of the second quarter. However, the shareholders’ equity of Aspocomp Group was EUR 3.1 million positive.

 

 

RESEARCH AND DEVELOPMENT

 

Aspocomp engages in R&D primarily through cooperation with its customers and suppliers. In connection with customer projects and other customer contacts, information on future interconnection technology applications is exchanged. This information is used to steer development work and execute investments to improve technical capability. Correct timing of investments is vital for maintaining competitiveness, cost efficiency and technological viability.

 

Research and product development costs are recognized in plant overhead.

 

 

SHARES AND SHARE CAPITAL

 

The total number of Aspocomp’s shares at September 30, 2009 was 49 905 130 and the share capital stood at EUR 20 082 052. Of the total shares outstanding, the company held 200 000 treasury shares, representing 0.4% of the aggregate votes conferred by all the shares. The number of shares adjusted for the treasury shares was 49 705 130.

 

A total of 32 333 328 Aspocomp Group Plc. shares were traded on NASDAQ OMX Helsinki during the period from January 1 to September 30, 2009. The aggregate value of the shares exchanged was EUR 4 686 546. The shares traded at a low of EUR 0.05 and a high of EUR 0.24. The average share price was EUR 0.14. The closing price at September 30, 2009 was EUR 0.13, which translates into market capitalization of EUR 6 487 667. At the end of the period, nominee-registered shares accounted for 4.9% of the total shares and 0.2% were directly held by non-domestic owners.

 

 

PERSONNEL

 

During the period, Aspocomp had an average of 108 employees (147). The personnel count on September 30, 2009 was 101 (126). Of them, 69 (83) were non-salaried and 32 (43) salaried employees. The reference numbers are for continuing operations.

 

 

DECISIONS OF THE ANNUAL GENERAL MEETING

 

The Annual General Meeting of Aspocomp Group Plc. held on April 21, 2009 re-elected the current Board and decided that the remunerations of the members of the Board will remain the same as in 2008. The General Meeting also decided to amend the company’s Articles of Association. Furthermore, the Meeting decided not to pay dividend for the period.

 

The Annual General Meeting decided to set the number of Board members at three (3) and re-elected the current members of the Board: Johan Hammarén, Tuomo Lähdesmäki, and Kari Vuorialho. The Meeting re-elected PricewaterhouseCoopers Oy as the company’s auditor for the 2009 financial year.

 

Annual remuneration of EUR 24 000 will be paid to the chairman of the Board and EUR 12 000 to the other Board members. 60% of the annual remuneration will be paid in cash and 40% in company shares, which will be acquired and distributed to Board members. EUR 1 000 per meeting will be paid to the chairman and EUR 500 per meeting to the other members. The members of the Board residing outside of the Greater Helsinki area are reimbursed for reasonable travel and lodging expenses. The auditor will be paid according to invoice.

 

The Annual General Meeting decided to amend the Articles of Association such that Articles 6 and 12 were deleted as unnecessary and the new Article 10 was amended to read as follows: “Article 10 The notice of meeting shall be delivered to the shareholders at the earliest three (3) months and at the latest twenty-one (21) days prior to the General Meeting by publishing the notice on the company’s website and, should the Board of Directors so decide, in one widely circulated newspaper specified by the Board.”

THE BOARD OF ASPOCOMP GROUP PLC., AUTHORIZATIONS GIVEN TO THE BOARD

 

In its organization meeting, the Board of Directors of Aspocomp Group Plc. re-elected Tuomo Lähdesmäki as Chairman of the Board. As the Board only comprises three (3) members, Board committees were not established.

 

The Annual General Meeting 2008 of Aspocomp Group Plc. authorized the Board to decide on issuing new shares and conveying the Aspocomp shares held by the company. A maximum of 55 000 000 new shares can be issued and/or granted on the basis of special rights. Authorization is valid 5 years from the respective Annual General Meeting.

 

The Annual General Meeting 2008 also decided about issuing stock options to the CEO. The Board of Directors has not granted the said stock options.

 

Details of the authorizations can be found on pages 10-11 of the Annual Report 2008 (www.aspocomp.com/linked/investor/ar_2008.pdf).

 

 

ASSESSMENT OF BUSINESS RISKS

 

Significant indebtedness

 

The Aspocomp Group’s interest-bearing liabilities at September 30, 2009 amounted to about EUR 22.0 million under IFRS and had a nominal value of about EUR 24.4 million.

 

Liquidity and financial risks

 

Because of the agreement on debt restructuring, management of Aspocomp’s liquidity risk is based on the cash assets of the parent company and the cash flow generated by the Oulu plant. If Aspocomp Group Plc. does not obtain financing from Aspocomp Oulu Oy, or its associated company Meadville Aspocomp (BVI) Holdings Ltd. in the form of dividends or other income, or other ways of financing, to cover its expenses by 2013, the company may ultimately become insolvent.

 

Litigations

 

In 2007, the French Supreme Court ordered the company to pay approximately EUR 11 million, including annual interest of about 7%, to 388 former employees of Aspocomp S.A.S. In January 2009, the Labor Court of Evreux, France ruled that the company has to pay approximately EUR 0.5 million in compensation, with interest, to a further 13 former employees. Aspocomp has appealed the decision to the next instance in France. The aforementioned compensations do not have a profit impact during 2009.

 

The claims are related to the notice time salaries of the closed, heavily loss-making Evreux plant. The closure took place in 2002.

 

There is a risk that the remaining approximately 100 employees may also institute proceedings. In France, the statute of limitations for filing a suit is 30 years.

 

OUTLOOK FOR THE FUTURE

 

Aspocomp’s financial position is satisfactory. The lean cost structure and the outlook for operations in Oulu enable the continuity of operations.

 

Net sales in 2009 will decline due to the difficult market situation and solutions implemented to reduce risks. The market is estimated to slightly improve during the last quarter compared to the previous quarters.

 

Group’s forth quarter operating result is expected to be positive, but the full year operating profit before depreciation (EBITDA) will remain negative.

 

In addition to developing the continuing operations of the company, the Board of Directors is looking into various structural development solutions, including carrying out company reorganization in the future.

ACCOUNTING POLICIES

 

All figures are unaudited. Aspocomp’s financial statements bulletin has been prepared in accordance with IAS 34, Interim Financial Reporting. The accounting principles that were applied in the preparation of the financial statements of December 31, 2008 have been applied in the preparation of this report. However, as of January 1, 2009 the company has applied the following new or modified standards:

 

– IAS 1 Presentation of Financial Statements – amended

– IFRS 8 Operating Segments

 

The amendments to IAS 1 change the structure of the Profit & Loss and Changes in Equity statements. IFRS 8 does not impact on any of the financial information presented.

 

 

 

 

 

 

 

 

 

 

 

Mortgages as collateral for debt have declined due to the divestment of the Thai subsidiary. With regards to other commitments, the customs bonds of the parent company have been discontinued, as they are no longer necessary.

 

 

FORMULAS FOR CALCULATION OF KEY FIGURES

 

Equity/share, EUR =       Equity attributable to shareholders

                          ____________________________________

                          Number of shares at the end of period

 

 

Equity ratio, % =         Total equity

                          _______________________________________  x 100

                          Balance sheet total – advances received

 

 

Gearing, % =              Net interest-bearing liabilities

                          ________________________________  x 100

                          Total equity

 

 

Earnings per share

(EPS), EUR =              Profit attributable to equity shareholders

                          __________________________________________

                          Adjusted weighted average number of shares

                          outstanding

 

 

All figures are unaudited.

 

Espoo, November 12, 2009

 

Aspocomp Group Plc.

Board of Directors

 

 

For further information, please contact Sami Holopainen, CEO, tel. +358 400 487 180.

 

www.aspocomp.com

 

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.