2007-08-09 07:35:28 CEST
2007-08-09 07:35:28 CEST
REGLERAD INFORMATION
Aspocomp Group - Quarterly report
CORRECTION: ASPOCOMP S INTERIM REPORT JANUARY 1 - JUNE 30, 2007
ASPOCOMP GROUP OYJ Quarterly report August 9, 2007 at 8:35 am
DUE TO TECHNICAL PROBLEMS, THE INTERIM REPORT THAT WAS PUBLISHED AT
8:00 AM APPEARED INCOMPLETE. THE COMPANY WILL PUBLISH THE COMPLETE
INTERIM REPORT BELOW:
- Net sales: EUR 51.6 million (EUR 72.9 million in 1-6/2006). The
reference quarter figure includes the Chinese lower technology plant
that was divested in April. Eliminating the effect of the
divestiture, comparable net sales declined by 17.6 percent (EUR 62.6
million in 1-6/2006). Net sales of the Salo plant waned due to a
limited number of products and production ramp-down. Global
overstocking of the handset market in the first quarter of the year
still affected demand at the Chinese plant. Its sales picked up
towards the end of the period. Lower technology products of the Thai
plant were under heavy price pressure, which affected its sales
volumes. Net sales at the Oulu plant continued to strengthen.
- Operating profit: EUR -40.9 million (-8.9). The decline was mostly
attributable to write-offs amounting to EUR 20.4 million at the Salo
plant and compensation of EUR 10.1 million to the former employees of
Aspocomp S.A.S. The plants in Oulu and China continued to turn a
profit.
- Earnings per share from continuing operations: EUR -0.96 (-0.23).
- Cash flow from operations: EUR -2.1 million (-2.3).
- Investments: EUR 48.7 million (10.4). Investments consisted mostly
of the purchase of a minority share in the Chinese subsidiary.
- Per-share cash flow after investments: EUR -0.93 (-0.25).
- A decision to close down the Salo plant was made in June. The plant
was closed in July.
The report and reference period figures do not include the Modules
division divested in August 2006. Unless otherwise stated, the
reference period figures include the Chinese lower technology plant.
THE APRIL-JUNE PERIOD IN BRIEF
(Reference figures are for 4-6/2006)
Net sales and operating profit, EUR million
4-6/2007 change, % 4-6/2006
Net sales 24.1 -33.0 35.9
Operating profit -34.4 -5.3
The Aspocomp Group's net sales for the April-June period were EUR
24.1 million (35.9). The Group's comparable net sales for the period
were EUR 30.9 million, excluding net sales of the Chinese lower
technology plant sold in April. It fell by 22.2 percent and in China,
by 9.8 percent on the reference quarter. Net sales of the Salo plant
waned due to a limited number of products and production ramp-down.
Global overstocking during the first quarter of the year still
affected demand at the Chinese plant. Lower technology products of
the Thai plant were under heavy price pressure, which affected its
sales volumes.
Net sales of the Oulu plant improved slightly on the reference
period. However, the total net sales of the Finnish Salo and Oulu
plants declined by 15.3 percent due to the Salo plant.
Comparable net sales of the Asian plants in China and Thailand,
eliminating the effect of the lower technology plant sold in China,
declined by 24.9 percent. Sales of the Thai plant waned markedly on
the reference quarter. Despite weaker overall demand, sales in China
picked up 20.2 percent on the first quarter of the year.
The Group's net sales per plant were as follows:
- the Finnish plants, 44 percent (36%)
- the Asian plants, 56 percent (64%)
The Group's net sales by market area were as follows:
- Europe, 59 percent (54%)
- Asia, 21 percent (31%)
- the Americas, 20 percent (15%)
The Group's net sales per product area were as follows:
- handheld devices and telecom networks, 83 percent (67%)
- automotive, industrial and consumer electronics, 17 percent (33%)
Operating profit was EUR -34.4 million (-5.3), or -143 percent (-17%)
of net sales. The severe decline in operating profit was mostly
attributable to write-offs amounting to EUR 20.4 million at the Salo
plant, of which the plant building accounted for EUR 11 million, and
compensation of EUR 10.1 million to the former employees of Aspocomp
S.A.S. Salo write-offs, both building and machinery, include
uncertainties and the final outcome may differ from current amounts.
Profit of the Thai plant waned noticeably on the reference quarter.
The plant's lower technology products were under heavy price
pressure, which shrank its sales volumes and pressed profits.
Although the profit posted by the Chinese plant fell visibly on the
reference quarter due to lower sales volumes, resulting from global
overstocking in the handset market, and unfavorable product mix, its
profitability remained good. Profit of both Asian plants improved in
the second quarter compared to the previous quarter. Profit of the
Oulu plant improved on both the reference quarter and the
January-March period.
The Group's net financial expenses were EUR -3.6 million (-0.3) and
the profit for the period was EUR -40.2 million (-5.7). Financial
expenses included EUR 2.1 million in Aspocomp S.A.S litigation
interest. Earnings per share were EUR -0.79 (-0.14).
Taxes include an avoir fiscal tax asset write-off of EUR 2.2 million.
After the closing of the Salo plant, it is unlikely that the tax
asset can be utilized in the near future.
Cash flow from operations was EUR 1.3 million (-4.0).
OUTLOOK FOR THE FUTURE
Aspocomp's main priority in 2007 is to focus the company's resources
on developing its market position and competitiveness, serving the
main global customers, increasing cost-effectiveness as well as
securing the liquidity and financing of the Aspocomp Group. These are
subject to successful partnership negotiations or financial
arrangements.
The full-year net sales of the Aspocomp Group from continuing
operations and excluding the sold plant in China are forecast to
decrease compared to the previous year. Profitability, excluding
one-off items, is anticipated to improve on 2006; however, the
full-year 2007 result is expected to be markedly unprofitable.
Aspocomp Group Oyj's liquidity will remain weak.
The Aspocomp Group's consolidated cash flow from continuing
operations is estimated to improve and to reach break-even during the
fourth quarter of 2007. However, liquidity of Aspocomp Group Oyj will
still remain weak.
MAIJA-LIISA FRIMAN, PRESIDENT AND CEO:"The first half of the year was a challenging period in the PCB
market due to the overstocked global sales channels. In addition,
certain products at the Salo plant were terminated and subsequent to
the minority share acquisition in China, the Suzhou plant underwent a
significant transition period. The Salo plant was closed down in
July. The major overhauls have now been completed and there are signs
of an improvement. The Group's cash flow from operations is starting
to turn and we expect it to improve in the third quarter of the year.
Closing down the Salo plant is expected to yield annual savings in
excess of EUR 10 million and reduce loss before non-recurring items
by about EUR 3 million.
After a weaker start of the year, the transition period following the
minority share purchase in the Chinese subsidiary was completed.
Experienced Chinese management has replaced the Taiwanese and the
unit has been integrated into the Group. The benefits of the
operational takeover will be visible starting the third quarter and
come into full effect in the fourth quarter of the year. We are now
well-poised for taking full advantage of the growing market.
Lower technology products from Thailand have been under heavy price
pressure this year, which has affected the sales volumes. Actions
taken to improve the plant's operative performance, including labor
cost cuts and better control of raw material usage, have started to
bear fruit. The Oulu plant, in contrast, continues to excel.
The decision of the French Supreme Court on June 19, 2007, was the
least expected outcome. According to the decision, Aspocomp has to
pay EUR 10.1 million plus interest to the former employees of
Aspocomp S.A.S. The related counter obligation of Aspocomp to Nordea
has been converted into a bank loan; therefore, the decision will not
essentially weaken Aspocomp's immediate liquidity.
In order to better serve our globally growing customers, we are
actively continuing partnership and financing negotiations. A
partnership enables our growth in Asia and helps finance our planned
investment program. The possible choice for strategic partnership
will also affect the timing of investments and plant start-up in
India.
Aspocomp's volume production is now located entirely in Asia. The
closing down of the Salo plant went well. Consequently, we expect to
see a better performance starting from the third quarter of the
year."
PRINTED CIRCUIT BOARD MARKET
The overbuilt global inventory that was carried over from the last
quarter of 2006 began to clear during the second quarter of 2007,
particularly in the largest and fastest growing market, Asia Pacific.
Consequently, HDI PCB manufacturing started to pick up. Material
costs remained unfavorable.
According to market estimates, global HDI PCB production in the
April-June period grew by over 5 percent compared to the previous
quarter. In Asia HDI PCB production grew at the same rate.
In 2007, the production value of technologically complex HDI PCBs is
forecast to amount to almost USD 6 billion (over EUR 4 billion)
globally. Market researchers expect the value of global HDI PCB
production to grow by nearly 6 percent annually between 2007 and
2011. Annual growth of almost 7 percent is forecast for Asia, with
growth in China exceeding this figure somewhat. It is expected that
by 2010, about 90 percent of the world's HDI PCB revenue will be
generated in Asia.
Aspocomp's customers in the handheld devices segment reported strong
performance in the April-June period. In the telecom infrastructure
market, the Group's customers experienced mostly flat or falling
sales. The automotive electronics market appeared to be stable during
the review period.
CONSOLIDATED NET SALES AND OPERATING PROFIT, JANUARY-JUNE
(Reference figures are for 1-6/2006)
Net sales and operating profit, EUR million
1-6/2007 change, % 1-6/2006
Net sales 51.6 -29.2 72.9
Operating profit -40.9 -8.9
The Aspocomp Group's net sales for the review period were EUR 51.6
million (72.9). Comparable net sales that takes into account the
Chinese lower technology plant sold in April was EUR 62.6 million,
declining by 17.6 percent. This was mainly due to weak sales at the
Salo and China plants. Weak sales were mostly attributable to
overbuilt global inventory that began in the last quarter of 2006 and
slowed down PCB demand.
Net sales of the Suzhou, China plant was down 13 percent from the
reference period to EUR 17.5 million due to overstocking of global
handsets and the effects of the transition period. Despite weaker
overall demand, sales in China picked up towards the end of the
review period. Net sales of the Thai plant fell by 29 percent to EUR
10.2 million due to weak demand for lower technology products.
Net sales of the Salo plant declined by 26 percent to EUR 14.3
million as a consequence of a limited number of products and
production ramp-down. Net sales posted by the Oulu plant were up 11
percent from the corresponding period last year, amounting to EUR
10.5 million.
The Group's comparable net sales per plant were as follows:
- the Finnish plants, 46 percent (38%)
- the Asian plants, 54 percent (62%)
The Group's comparable net sales by market area were as follows:
- Europe, 63 percent (54%)
- Asia, 21 percent (31%)
- the Americas, 16 percent (15%)
The Group's comparable net sales per product area were as follows:
- handheld devices and telecom networks, 83 percent (67%)
- automotive, industrial and consumer electronics, 17 percent (33%)
During the review period, the share of Aspocomp's overall PCB
production accounted for by HDI PCBs totaled 68 percent.
Aspocomp's five largest customers during the period were Continental
Automotive Systems, Elcoteq, Nokia, Philips and Wabco. The five
largest customers accounted for 72 percent of net sales (49%).
Operating profit was EUR -40.9 million (-8.9), or -79.3 percent
(14.2%) of net sales.
The heavy losses of the Salo plant in particular cut into the Group's
profitability during the review period. The plant was closed down in
July.
Losses of the Thai plant mounted on the reference period due to
weaker sales; however, its result improved somewhat in the second
quarter compared to the first quarter. Although the profit posted by
the Chinese plant declined due to global overstocking in the handset
market and unfavorable product mix, its profitability remained good
and picked up in the second quarter. Profit at the Oulu plant
remained on a par with the reference period and was clearly in the
black.
The Group's net financial expenses were EUR -4.7 million (-0.5). The
profit for the period was EUR -48.0 million (-9.6) and earnings per
share from continuing operations were EUR -0.96 (-0.23).
FINANCING, INVESTMENTS AND EQUITY RATIO
The Aspocomp Group's consolidated cash flow from operations during
the review period was negative, totaling EUR -2.1 million. The
Group's consolidated net liquid assets at the end of the period
amounted to EUR 17.3 million (17.3). Aspocomp Group Oyj's liquid
funds, including unused limits, were EUR 4.3 million (4.1).
Interest-bearing net debt rose to EUR 74.9 million (38.8). The figure
contains EUR 20.0 million (21.6) in financial lease liabilities.
Gearing was 341 percent (41.4%), rising due to poor performance,
write-offs, the Aspocomp S.A.S litigation settlement and the higher
debt level. Non-interest-bearing liabilities amounted to EUR 54.4
million (37.9).
Cash flow from operations amounted to EUR -2.1 million (-2.3) and
investments to EUR 48.7 million (10.4). Per-share cash flow after
investments was EUR -0.93 (-0.25).
Investments primarily consisted of the minority share purchase in the
Chinese subsidiary. Capital expenditures were EUR 46.6 million (4.5)
in Asia and EUR 2.1 million (5.9) in Europe. Net financial expenses
were 9.1 percent (0.1%) of net sales.
The Group's equity ratio at the end of June stood at 13.0 percent
(49.9%).
The major part of the net proceeds obtained from the rights offering
issued in March was used to fund the company's working capital
requirements.
RESEARCH AND DEVELOPMENT
The Group's research and development expenditure amounted to EUR 1.2
million (2.2), or 2.4 percent (3.0%) of net sales.
After the statutory codetermination negotiations in Finland, the
Group announced that part of its research and development will remain
in Finland to serve the company's global customers. The Group will
also start product development in the premises of its Chinese plant
this year.
During the review period, the main focus of technology development
was on HDI semi-flex PCBs. The industrialization of two flex layer
HDI semi-flex PCBs was finalized and ready for production with one
material build-up. Technology was developed further with a view to
finding a greater number of cost-effective and reliable materials for
both semi-flex applications. Design guidelines were updated
accordingly.
During the review period, a market study for Any Layer Microvia type
PCBs was continued, including the customers' build-up and design
requirements.
Research related to optoelectronics was carried out throughout the
review period and evaluations seeking to identify flexible optical
material options continued.
Research progressed on the HDI rigid-flex concept for the dynamic
application of hinge solutions for handheld devices. It included the
technical evaluation of the processing requirements of this type of
product.
SHARES AND SHARE CAPITAL
The total number of Aspocomp's shares at June 30, 2007, was
49,905,130 and the share capital stood at EUR 49,905,130. Of the
total shares outstanding, the company held 200,000 treasury shares,
representing 0.4 percent 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 34,726,893 Aspocomp Group Oyj shares were traded on the
Helsinki Stock Exchange during the period from January 1 to June 30,
2007. The aggregate value of the shares exchanged was EUR 26,176,055.
The shares traded at a low of EUR 0.36 (June 26 and 27, 2007) and a
high of EUR 2.20 (January 29, 2007). The average share price was EUR
0.99. The closing price at June 29, 2007, was EUR 0.40. At the end of
the period, nominee-registered shares accounted for 7.3 percent of
the total shares and 2.4 percent were directly held by non-Finnish
owners.
Following the rights issue described below, Aspocomp was notified on
April 19, 2007 that the stake of Erkki Etola and companies managed by
him in Aspocomp Group Oyj's shares and votes had decreased below the
5 percent threshold. The total amount of the shares is 2,398,000 and
they represent 4.80 percent of Aspocomp's shares and votes.
Standard Chartered Bank (Hong Kong) Limited notified Aspocomp on
April 20, 2007 that, following the completion of the share offering,
if it uses its right to subscribe for the 4,000,000 shares in full,
its proportion of shares and votes of the new number of Aspocomp
shares would amount to 7.42 percent and the proportion of shares and
votes of the currently registered 49,905,130 shares would amount to
8.02 percent.
On May 25, 2007, the stake of Varma Mutual Pension Insurance Company
in Aspocomp Group Oyj's shares and votes decreased below the 5
percent threshold to 3.79 percent. The amount of shares and votes
held by Varma was 1,890,607.
On June 20, 2007, the stake of Sampo Life Insurance Company Limited
in the company's shares and votes decreased below the 10 percent
threshold to 9.24 percent, or 4,611,372 shares and votes.
The Extraordinary General Meeting of January 19, 2007, authorized the
Board of Directors to decide on issuing 50,000,000 new shares and
conveying the 200,000 Aspocomp shares held by the company. The
authorization is valid for two years from the date of the decision of
the meeting. Based on the authorization, a total of 29,823,078 new
shares were subscribed for in a rights issue that ended in April
2007, increasing the total amount of company shares to 49,905,130.
Trading with the new shares commenced on the Helsinki Stock Exchange
on April 20, 2007.
The Annual General Meeting of May 10, 2007 authorized the Board to
decide on issuing and/or granting a maximum of 40,000,000 new shares
and conveying and/or receiving a maximum of 200,000 Aspocomp shares
held by the company. The new shares can be issued and the company's
own shares conveyed either against payment (rights issue) or for free
(bonus issue) to the company's shareholders in proportion to their
holding, or by means of a directed issue, waiving the pre-emptive
subscription right of shareholders, if there is a weighty financial
reason for the company to do so. The authorization also includes the
right to grant special rights, as specified in Article 1 of Chapter
10 of the Companies Act, to receive new shares in the company or
Aspocomp shares held by the company against payment such that either
the share subscription price will be paid in cash or the subscriber's
receivables will be offset against the subscription price. In
addition, the authorization includes the right to decide on a bonus
issue to the company itself such that the number of shares issued to
the company can amount to no more than one-tenth (1/10) of all the
company's shares. The Board of Directors has the right to decide on
other particulars of the share issues and the granting of special
rights. The authorizations are valid for two years from the date of
the decision of the Annual General Meeting. They do not cancel
previous unexercised share issue authorizations.
Kaupthing Bank Oyj, which has been a market maker in Aspocomp shares,
discontinued market making in Aspocomp shares until further notice on
May 11, 2007. Kaupthing has provided bids and offers for Aspocomp
shares such that the maximum difference between a bid and offer price
is 2 percent of the bid. Bids or offers include at least 1,000
shares. Since Aspocomp shares trade below 0.50 euros and the minimum
tick size is 1 cent, it is not possible to provide bids and offers at
less than 2 percent of the share price.
RIGHTS OFFERING
On March 16, 2007, the Board of Aspocomp Group Oyj decided on a
rights issue whereby the shareholders of Aspocomp were entitled to
subscribe for three new shares for every two old shares. A total of
29,823,078 new shares were offered for subscription at a subscription
price of EUR 0.84 per share. The offer shares represented
approximately 150 percent of the total shares and voting rights of
the company prior to the offering and 60 percent after the offering.
The share issue was based on the authorization granted by the
Extraordinary General Meeting of January 19, 2007.
In the secondary subscription any investor could subscribe for any
offer shares that had been left unsubscribed for on the basis of the
subscription rights. The company received an underwriting commitment
for the full amount of the offering from a group of investors
comprising 2M Ventures Oy, Ajanta Oy, Avenir Rahastoyhtiö Oy, E.
Öhman J:or Fondkommission AB, Oy Hammaren & Co Ab, Varma Mutual
Pension Insurance Company Ltd, Oy Finvestock Ab, Ramsay & Tuutti Oy
Ab and Sampo Life Insurance Company.
The subscription period commenced on March 26, 2007. It expired on
April 12, 2007 with respect to the subscription rights, and on April
13, 2007 with respect to the secondary subscription. A total of
27,221,343 shares were subscribed for in the primary subscription and
a total of 2,601,735 shares in the secondary subscription. New equity
raised by the offering was approximately EUR 25 million prior to the
deduction of fees and expenses. The total number of Aspocomp's shares
increased to 49,905,130 shares and trading with all shares commenced
on the Helsinki Stock Exchange on April 20, 2007.
Evli Bank Plc, Corporate Finance acted as the Manager of the share
issue.
STOCK OPTIONS AND CONVERTIBLE DEBENTURE LOAN
As part of the financing arrangement for the minority share
acquisition in China, and on the basis of the authorization from the
Extraordinary General Meeting of January 19, 2007, the Board of
Directors of Aspocomp resolved on March 21, 2007 to issue 4,000,000
warrants to Standard Chartered Bank (Hong Kong) Limited in deviation
from shareholders' pre-emptive subscription rights. Each warrant
entitles its holder to subscribe for one share in the company. As a
result, the total number of the company's shares can increase by a
maximum of 4,000,000 shares. The warrants may be exercised from
October 3, 2008 (or earlier if a person or entity will acquire over
30 percent of the company's shares) until March 31, 2010. Following
the share offering described above, the Board of Directors noted on
April 18, 2007, that the share subscription price on the basis of the
warrants granted to Standard Chartered Bank (Hong Kong) Limited will
be approximately EUR 1.13 per share.
Aspocomp also made a commitment to Standard Chartered Bank not to
issue, without its consent, more than 40,000,000 shares on the basis
of the authorization from the Extraordinary General Meeting of
January 19, 2007. In addition, Aspocomp undertook to reserve
10,000,000 shares of the authorization for a possible share issue on
commercially acceptable terms. The issue would take place in the
event Standard Chartered Bank requests it within 120 days prior to
the repayment of the loan granted for the minority acquisition in
China, scheduled for September 2008. The schedule for the possible
issue may change if the term of the loan is extended.
Following the share offering described above, the Board of Directors
resolved on April 18, 2007 to amend the subscription prices of the
convertible debenture loan I/2006 and the stock options issued by
Aspocomp. The subscription price of convertible debenture loan I/2006
was reduced by EUR 0.43 to EUR 2.1407 per share. In order to reduce
the subscription price, the Board resolved to entitle the holders of
the loan to subscribe for a total of 804,810 new shares of the
company. As a result of the amendment, each book-entry issued for the
loan entitles the holder to convert the book-entry into 467 shares of
the company instead of the current 389 shares of the company.
As part of the incentive scheme for Aspocomp's management, the Board
of Directors decided on May 10, 2007 to distribute stock options -
which were issued by the Annual General Meeting held on April 10,
2006 - to the Group's key personnel. The shareholding scheme and the
financial performance-linked subscription rights aim to align the
objectives of executives and other shareholders.
The Board of Directors distributed a total of 310,000 stock options
2006B and 25,000 stock options 2006A to key personnel of the Group.
The beginning of the share subscription period for stock options
2006B is subject to attainment of the targets set for the Group's
cash flow. The Board of Directors decided on the financial targets
for stock options 2006A in the spring of 2006. The share subscription
period with stock options 2006A is from May 1, 2008 to May 31, 2010
and with stock options 2006B from May 1, 2009 to May 31, 2011.
The share subscription price with stock options 2006B is EUR 0.84
(average share turnover-weighted price on the Helsinki Stock Exchange
in April 2007). The subscription price with stock options 2006A
changed due to the share issue carried out in March-April 2007 such
that with stock options 2006A the subscription price of shares is EUR
2.47 and a total of 1.387 shares in the company can be subscribed for
with one stock option. When shares are subscribed for, the total
number of shares will be rounded down to a full number. The total
subscription price will be calculated using the rounded number of
shares. After this change, a maximum of 429,970 shares in the company
can be subscribed for with stock options 2006A, instead of 310,000
shares, and the company's share capital can rise by a maximum of EUR
429,970, instead of EUR 310,000. Annual dividends paid are deducted
from the subscription price.
The Board of Directors also decided on a separate share-based
incentive scheme covering about 10 senior executives. Benefits, if
any, will be paid in January 2008 at the latest.
PERSONNEL
During the review period, the Aspocomp Group had an average of 2,472
employees (3,328). The personnel count on June 30, 2007 was 2,406
(3,397). Of them, 1,609 (2,372) were non-salaried and 797 (956)
salaried employees. 2,381 (2,348) personnel worked in PCB production
and 25 (24) in Group administration.
Personnel by region, average
1-6/2007 change, % 1-6/2006
Europe 575 -18.0 701
Asia 1,897 -27.8 2,627
Total 2,472 -25.7 3,328
The personnel reduction in Asia was mainly attributable to the sale
of the older technology plant in China. The Group continued to
implement the HR development process, adopted last year, to achieve
consistency in operating methods and documentation in different
countries.
Management was restructured in Thailand and new management was
appointed for the Chinese plant due to the new focus on HDI PCB
production. In addition, the Group-wide recruiting process was honed.
On May 4, 2007, Aspocomp issued a notice on statutory labor
co-determination negotiations in Finland. The negotiations concerned
about 350 employees at Aspocomp Group Oyj and Aspocomp Oy, excluding
personnel at the Oulu production unit. The negotiations were
concluded on June 15, 2007. As a result, a total of 237 personnel,
consisting of 183 non-salaried and 54 salaried employees, were made
redundant. Production at the Group's Salo plant was closed down on
July 14, 2007, and employment of its 215 personnel will be terminated
during 2007.
BOARD OF DIRECTORS AND AUDITORS
The Annual General Meeting of May 10, 2007 decided that the number of
Board members is seven and re-elected the current members of the
Board: Aimo Eloholma, Johan Hammarén, Tapio Hintikka, Tuomo
Lähdesmäki, Yoshiki Sasaki, Anssi Soila and Kari Vuorialho. The
meeting re-elected PricewaterhouseCoopers Oy as the company's auditor
for the 2007 financial year.
In addition, the meeting decided that the remunerations of the
members of the Board will remain the same as in 2006. An annual
remuneration of EUR 35,000 will be paid to the chairman of the Board,
EUR 25,000 to the deputy chairman and EUR 15,000 to the members. The
annual remuneration will be paid such that 60 percent is paid in cash
and the remaining 40 percent is, according to the authorization of
the annual general meeting, used to buy shares in the company for
conveyance to Board members after the release of the Group's second
quarter results. EUR 1,500 per meeting will be paid to the chairman
and EUR 1,000 per meeting to the other members. EUR 1,500 per meeting
will be paid to the members of the Board of Directors residing
abroad. EUR 500 will be paid for each committee meeting. The members
of the Board residing outside of the Greater Helsinki Area are
reimbursed for reasonable travel and lodging costs. The auditor will
be paid according to invoice.
At its organization meeting held on May 10, 2007, the Board of
Directors of Aspocomp Group Oyj re-elected Tuomo Lähdesmäki as
Chairman of the Board and Yoshiki Sasaki as Vice Chairman. The Board
of Directors appointed Aimo Eloholma, Tapio Hintikka, Tuomo
Lähdesmäki and Kari Vuorialho as members to the Compensation and
Nomination Committees. Johan Hammarén, Yoshiki Sasaki and Anssi Soila
were elected as members of the Audit Committee.
GROUP RESTRUCTURINGS
On April 17, 2007, Aspocomp announced that the technology development
of Imbera Electronics Oy, the R&D joint venture of Aspocomp Group Oyj
and Elcoteq SE, has reached the industrialization and
commercialization stage. The companies signed and closed a
transaction to broaden Imbera's ownership base, extend its exposure
to the market and secure its financing. Imbera's new financiers and
major owners are funds managed by Index Ventures, Northzone Ventures
and Conor Venture Partners. The funds made investments in Imbera
Electronics Inc, a new US-based parent company of Imbera Electronics
Oy that was incorporated for this investment.
Aspocomp and Elcoteq remain Imbera's minority shareholders through a
share exchange with Imbera Electronics Inc. After the arrangement,
Aspocomp and Elcoteq each own approximately 15 percent of Imbera's
share capital. Imbera's operative management remained unaffected and
gained a minority holding in the company.
Aspocomp signed a 10-year worldwide manufacturing license agreement
for the current Imbera technology. The ownership arrangement will
have no impact on Aspocomp's financial result. Imbera Electronics Oy
was set up jointly by Aspocomp and Elcoteq in 2002 to develop
Integrated Module Board assembly technology.
The Board of Directors of Aspocomp Group Oyj decided on May 10, 2007
to merge the subsidiary Aspocomp Oy with its parent company. The
merger plan was entered into the Finnish Trade Register on June 5,
2007 and the planned registration date for the implementation of the
merger is September 30, 2007. The merger will have no effect on the
Aspocomp Group's financial statement figures.
EXPANSION IN ASIA
On February 15, 2007, Aspocomp announced that the total investment in
the minority acquisition and product capacity expansion related to
the Chinese subsidiary as well as in the India plant project is
currently estimated to amount to about EUR 170 million. According to
the estimates released on March 15, 2007, the investment in India
will amount to about EUR 100 million, of which about EUR 80 million
is earmarked for building and machinery and EUR 20 million for
working capital, interest and start-up costs.
On March 16, 2007, Aspocomp entered into an agreement to acquire the
49 percent minority interest in ACP Electronics Ltd, Aspocomp's
Suzhou, China based joint venture, from the Group's Taiwanese partner
Chin-Poon Holdings. The net purchase price was EUR 37.8 million. The
gross transaction price of EUR 44.6 million was reduced by
Chin-Poon's equipment purchase from ACP Electronics, valued at EUR
6.8 million. Since the equipment was not suitable for HDI technology
production, Aspocomp was unable to use it. As the Group aims to
increase HDI printed circuit board production capacity in China, the
plant facility is scheduled to be upgraded into an HDI PCB plant
during 2008.
On March 21, 2007, Aspocomp agreed on a EUR 40 million credit
facility with Standard Chartered Bank (Hong Kong) Limited to purchase
the 49 percent minority share in ACP Electronics Ltd. The loan was
drawn down in full in connection with the minority share purchase,
finalized on April 4, 2007, and it has an 18-month term with an
option for the lender to extend it by another 18 months. The maximum
effective annual interest of the loan, calculated at the reference
interest rate of April 4, is 12.9 percent including interest, related
structuring fee and a possible additional fee of up to EUR 2 million,
described below. As part of the arrangement, Aspocomp granted
Standard Chartered Bank 4 million warrants that entitle the bank to
subscribe for 4 million shares in Aspocomp. Depending on the Aspocomp
share price, the company may have an obligation at the end of the
loan period to pay Standard Chartered Bank a fee of up to EUR 2
million.
Aspocomp has previously announced that it will be active in the
industry's consolidation trend. On June 15, 2007 the company declared
that it is negotiating on potential cooperation with strategic
partners in order to enable its growth in Asia and to finance its
planned investment program. A possible choice for strategic
partnership will also affect the timing of plant start-up in India.
The Group will also continue negotiations with alternative plant
project financiers. The duration of the partnership and financing
negotiations cannot be estimated and the company cannot guarantee
their outcome.
ASPOCOMP S.A.S.
With its decisions of June 19, 2007, the French Supreme Court upheld
the former decisions of the Rouen appellate court, announced in March
2005, in the legal case initiated by Aspocomp S.A.S's former
employees against Aspocomp Group Oyj. The case relates to the closing
of the heavily unprofitable Aspocomp S.A.S. in 2002 and the
dismissals that ensued.
According to the decisions of the Rouen appellate court, Aspocomp
Group Oyj was ordered to pay EUR 10.1 million, plus by annual
interest of about 7 per cent, to 388 former employees of Aspocomp
S.A.S. To date, the interest amounts to approximately EUR 2.1
million.
A French bank, Credit Industriel et Commercial, had earlier given a
performance bond guarantee to the former employees for payment
according to the decision of the Supreme Court. Nordea Bank Finland
Plc had given the French bank an on-demand bank guarantee for the
same sum, which sum Aspocomp had undertaken to indemnify.
The counter obligation of Aspocomp to Nordea has been converted into
a bank loan. The interest rate of the loan is based on the monthly
Euribor interest rate and will initially be 6.2 percent annually. The
decision of the French Supreme Court will thus not essentially weaken
Aspocomp's immediate liquidity.
NEGATIVE SHARE CAPITAL OF ASPOCOMP GROUP OYJ'S SUBSIDIARY ASPOCOMP OY
On August 9, 2007, the Board of Directors of Aspocomp Group Oyj
confirmed the write-offs that resulted from the closing down of the
Salo plant in the bookkeeping of Aspocomp Group Oyj's subsidiary
Aspocomp Oy. As a result, the equity of Aspocomp Oy is estimated at
EUR -18.1 million. A notice regarding the loss of equity has been
entered into the Finnish Trade Register.
The merger of Aspocomp Oy into Aspocomp Group Oyj is expected to come
into force on September 30, 2007. Due to the merger, the
shareholders' equity of Aspocomp Group Oyj is estimated to amount to
EUR 35.3 million.
AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Due to the new Companies Act, the Extraordinary General Meeting of
January 19, 2007, decided to amend the Articles of Association such
that Article 3, which concerns the minimum and maximum share capital,
Article 4, which concerns the number of shares, and Article 16, which
concerns the redemption obligation, were deleted. In addition, the
numbering of Articles 5, 9, 13 and 15 of the Articles of Association
was changed. The Articles were amended as specified in the invitation
to the company's Extraordinary General Meeting, published as a stock
exchange release on December 22, 2006.
DIVIDEND POLICY
The Board of Directors of Aspocomp Group Oyj defined a new long-term
dividend policy for the company on March 15, 2007. According to the
policy, Aspocomp aims to pay dividends amounting to no less than 30
percent of the profit for each financial year once the company's
profitability has been restored and it has reached its gearing and
equity ratio goals. It is likely that the Board will not propose
dividend payments in the near future. The Annual General meeting of
May 10, 2007, decided not to pay dividends for 2006.
OUTLOOK FOR THE FUTURE
Aspocomp's main priority in 2007 is to focus the company's resources
on developing its market position and competitiveness, serving the
main global customers, increasing cost-effectiveness as well as
securing the liquidity and financing of the Aspocomp Group. These are
subject to successful partnership negotiations or financial
arrangements.
The Group is currently negotiating on potential cooperation with
strategic and financial partners in order to enable its growth in
Asia and to finance its planned investment program. Successful
completion of these negotiations is vital to the future operation of
the company. The duration of the on-going partnership and financing
negotiations cannot be estimated and the company cannot guarantee
their outcome.
The Chinese plant facility to be vacated in 2007 by the former
minority shareholder is currently planned to be upgraded into an HDI
PCB plant during 2008. The possible outcome of the strategic
partnership or financing negotiations will affect the timing of plant
start-up in India and the upgrade of the Chinese plant.
The planned expansion of HDI PCB production capacity in India and
China is forecast to have a visible positive effect on the company's
net sales starting 2008, provided Aspocomp obtains financing and
provided the investments are completed on schedule. The investments
required for the expansion are estimated to result in a significant
increase in the company's indebtedness and markedly higher financing
costs.
The full-year net sales of the Aspocomp Group from continuing
operations and excluding the sold plant in China are forecast to
decrease compared to the previous year. Profitability, excluding
one-off items, is anticipated to improve on 2006; however, the
full-year 2007 result is expected to be markedly unprofitable.
Aspocomp Group Oyj's liquidity will remain weak.
The Aspocomp Group's consolidated cash flow from continuing
operations is estimated to improve and to reach break-even during the
fourth quarter of 2007. However, liquidity of Aspocomp Group Oyj will
still remain weak.
RISKS AND UNCERTAINTIES RELATED TO THE BUSINESS OF ASPOCOMP
In addition to the normal business risks as well as the risks
announced in the annual report 2006 and the offering memorandum of
the rights issue of March 2007, the company's short-term risks are
mainly related to Aspocomp Group Oyj's financing and liquidity.
Securing the liquidity and financing of the Aspocomp Group depends on
the success of partnership negotiations or financial arrangements.
Successful completion of these negotiations is vital to the future
operation of the company. The duration of the on-going partnership
and financing negotiations cannot be estimated and the company cannot
guarantee their outcome.
ACCOUNTING POLICIES
This interim report has been prepared in accordance with IAS 34.
INCOME STATEMENT,
APRIL-JUNE 4-6/07 4-6/06
MEUR % MEUR %
NET SALES 24.1 100.0 35.9 100.0
Other operating income 0.6 2.5 0.6 1.7
Materials and services -10.8 -44.8 -19.4 -54.0
Personnel expenses -8.8 -36.5 -9.3 -25.9
Other operating expenses -19.3 -80.1 -8.9 -24.9
Depreciation and amortization -20.1 -83.4 -4.1 -11.5
OPERATING PROFIT -34.3 -142.3 -5.3 -14.6
Financial income and expenses -3.6 -13.3 -0.3 -0.8
PROFIT ON CONTINUING
OPERATIONS BEFORE TAX -37.9 -155.6 -5.6 -15.5
Taxes -2.3 -9.5 0.0 0.0
PROFIT ON CONTINUING
OPERATIONS -40.2 -165.1 -5.6 -15.5
Profit on discontinuing
operations 0.0 0.0 0.0 0.0
PROFIT FOR THE PERIOD -40.2 -165.1 -5.6 -15.5
Profit attributable to
minority interests -0.1 0.0 1.1 3.1
equity shareholders -40.1 -88.7 -6.4 -17.8
INCOME STATEMENT,
JANUARY-JUNE 1-6/07 1-6/06 1-12/06
MEUR % MEUR % MEUR %
NET SALES 51.6 100.0 72.9 100.0 148.9 100.0
Other operating income 1.3 2.6 1.1 1.5 3.3 2.2
Materials and services -26.2 -50.8 -38.0 -51.2 -80.0 -53.8
Personnel expenses -16.1 -31.1 -18.1 -24.8 -36.5 -24.5
Other operating expenses -27.1 -52.0 -18.0 -24.7 -41.0 -27.6
Depreciation and amortization -24.3 -47.1 -8.5 -11.7 -18.1 -12.1
OPERATING PROFIT -40.9 -79.3 -8.6 -11.8 -23.3 -15.7
Financial income and expenses -4.7 -8.3 -0.5 -0.7 -1.9 -1.3
PROFIT ON CONTINUING
OPERATIONS BEFORE TAX -45.6 -87.6 -9.2 -12.6 -25.2 -16.9
Taxes -2.4 -0.3 0.0 0.0 -2.2 -1.5
PROFIT ON CONTINUING
OPERATIONS -48.0 -28.2 -9.2 -12.6 -27.4 -18.4
Profit on discontinuing
operations 0.0 0.0 -0.2 0.2 0.2 0.1
PROFIT FOR THE PERIOD -48.0 -88.0 -9.4 -12.9 -27.2 -18.3
Profit attributable to
minority interests -0.3 0.8 1.9 2.7 4.1 2.8
equity shareholders -47.7 -88.7 -11.4 -15.6 -31.3 -21.0
CONSOLIDATED BALANCE SHEET
6/07 6/06 Change 12/06
ASSETS MEUR MEUR % MEUR
NON-CURRENT ASSETS
Intangible assets 24.9 4.9 408.2 4.5
Tangible assets 73.4 94.2 -22.1 95.0
Investments in
associated companies 0.1 0.0 0.2
Investment property 2.8 2.6 7.7 3.4
Available for sale
investments 0.5 0.3 66.7 0.3
Deferred income tax assets 1.1 0.3 266.7 1.3
Other long-term receivables 4.2 7.9 -46.8 6.5
TOTAL NON-CURRENT ASSETS 107.0 110.7 -3.3 114.9
CURRENT ASSETS
Inventories 17.0 21.9 -22.4 20.9
Short-term receivables 15.0 37.8 -60.3 30.0
Available for sale
investments 0.0 0.0 0.0 0.0
Restricted cash 12.3
Cash and bank deposits 17.3 17.3 0.0 22.7
TOTAL CURRENT ASSETS 61.6 77.0 -20.0 73.6
TOTAL ASSETS 168.6 187.7 -10.2 184.8
SHAREHOLDERS' EQUITY
AND LIABILITIES
Share capital 20.1 20.1 0.0 20.1
Share premium fund 27.9 27.9 0.0 27.9
Treasury shares -0.8 -0.8 0.0 -0.8
Special reserve fund 46.0 46.0 0.0 46.0
Revaluation and other funds 0.1 0.1 0.0
Funds for investments for
non-restricted equity 27.3 1.9
Retained earnings -98.6 -30.3 225.1 -48.6
Equity attributable
to shareholders 22.0 63.0 -70.5 44.6
Minority interest 0.0 30.7 -100.0 23.7
TOTAL EQUITY 22.0 93.7 -80.1 68.3
Long-term borrowings 59.5 19.1 229.3 29.7
Provisions 0.6 1.5 -60.0 1.1
Short-term borrowings 32.7 37.0 -11.6 43.9
Trade and other payables 53.8 36.4 47.8 41.8
TOTAL LIABILITIES 146.6 94.0 59.6 116.5
TOTAL SHAREHOLDERS'
EQUITY AND LIABILITIES 168.6 187.7 -10.2 184.8
CONSOLIDATED CHANGES IN EQUITY,
JANUARY-JUNE
Funds
for
in-
Re- vest-
valu- men-
Sha- ati- ts of Mi-
re Spe- on non- Trans- nor-
Sha- pre- cial and rest- Trea- lation Ret- ity To-
re mi- re- ot- ricted sury differ- ained in- tal
capi- um serve her eq- sha- en- earn- ter- equi-
tal fund fund funds uity res ces ings ests ty
Ba-
lance
at
31.12.06 20.1 27.9 46.0 0.0 1.9 -0.8 -4.8 -45.7 23.7 68.3
Share
issue 22.0 22.0
Trans-
lation
differ-
ences 0.5 0.5
Net
profit -48.0 -48.0
Other
items 0.1 3.4 -0.6 2.9
Pur-
chase
of
minor-
ity
interest -23.7 -23.7
Ba-
lance
at
30.6.07 20.1 27.9 46.0 0.1 27.3 -0.8 -4.3 -94.3 0.0 22.0
CONSOLIDATED CHANGES IN EQUITY,
JANUARY-JUNE 2006
Re-
valu-
Sha- ati- Mi-
re Spe- on Trans- nor-
Sha- pre- cial and Trea- lation Ret- ity To-
re mi- re- ot- sury differ- ained in- tal
capi- um serve her sha- en- earn- ter- equi-
tal fund fund funds res ces ings ests tyBa-
lance
at
31.12.05 20.1 27.9 46.0 0.1 -0.8 -2.2 -14.8 30.9 107.2
Trans-
lation
differ-
ences -2.4 0.0 -2.1 -4.5
Net
profit -11.4 1.9 -9.4
Other
items 0.4 0.0 0.4
Ba-
lance
at
30.6.06 20.1 27.9 46.0 0.1 -0.8 -4.6 -25.8 30.8 93.7
CONSOLIDATED CASH FLOW STATEMENT, 1-6/07 1-6/06 1-12/06
JANUARY-JUNE MEUR MEUR MEUR
Cash flow from operations -2.1 -2.3 1.9
Cash flow from investments -44.1 -10.4 -20.1
Cash flow before financial items -46.2 -12.7 -18.3
Change in long-term and short-term financing 31.1 14.8 34.3
Share issue 22.0 0.0
Return of subsidiary equity to minority 0.0 -8.7
Cash flow from financing 53.1 14.8 25.7
Change in cash and cash equivalents 6.9 1.2 7.4
Cash and cash equivalents
at the end of period 29.6 17.3 22.7
CONSOLIDATED CASH FLOW STATEMENT, 4-6/07 4-6/06
APRIL-JUNE MEUR MEUR
Cash flow from operations 1.3 -4.0
Cash flow from investments -1.1 -4.7
Cash flow before financial items 0.2 -8.7
Change in long-term and short-term financing -7.5 9.5
Share issue 22.0 0.0
Cash flow from financing 14.5 9.5
Change in cash and cash equivalents 14.7 0.1
Cash and cash equivalents
at the end of period 29.6 17.3
KEY FINANCIAL INDICATORS 3/07 3/06
Return on investment (ROI), % -43.8 -11.9
Return on equity (ROE), % -196.5 -18.7
Equity per share, EUR 0.44 3.17
Equity ratio, % 13.0 49.9
Gearing, % 340.8 41.4
Gross investments, MEUR 48.7 10.4
Average number of personnel 2 720 3 328
CONTINGENT LIABILITIES 3/07 12/06
MEUR MEUR
Mortgages given for
security for liabilities 10.0 11.8
Operating lease liabilities 0.1 0.1
Other liabilities 1.0 12.0
Total 11.1 23.9
All figures are unaudited.
Helsinki, August 9, 2007
ASPOCOMP GROUP OYJ
Board of Directors
Maija-Liisa Friman
President and CEO
For further information, please contact CEO Maija-Liisa Friman, tel.
+358 9 7597 0711.
Distribution:
The Nordic Exchange
Major media
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 and to continue to expand its business outside
the European market.
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