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© Aspocomp PCB | February 18, 2011

Net sales increased 43% for Aspocomp Y-o-Y

Aspocomp Group reported net sales of EUR 18.8 million (EUR 13.2 million 1-12/2009) for year 2010.
Net sales for the financial year amounted to EUR 18.8 million, up 43% on 1-12/2009. During the second and the third quarters of the year especially the second - demand for quick-turn and emergency deliveries was very strong. This was caused by the fast recovery of global PCB demand at the beginning of 2010, which took the volume manufacturers and their raw material suppliers by surprise.

The operating result was EUR 1.8 million (-1.7 Me 1-12/2009). Earnings saw strong improvement thanks to better demand and the cost structure adjustments implemented in 2009. The Groups net financial expenses amounted to EUR -1.2 million (-1.0). The result for the financial year was EUR 0.7 million (-2.5) and earnings per share were EUR 0.01 (-0.05).

CEO's Review

A good year finished with a weak fourth quarter. Demand stayed at a reasonable level, but a lower share of high margin quick-turn deliveries and a rise in material costs weakened profitability. Capacity overload caused by strong demand during the first half of the year resulted in higher than expected maintenance and service expenses in the last quarter. In addition, one-time ramp-up costs related to a new client weakened profit.

However, 2010 was satisfactory overall. Net sales improved by over 40% to nearly EUR 19 million and operating profit was clearly in the black. Impressively, cash flow stayed over EUR 2 million positive even though investments were greater than in an average year.

After a minor dip, demand seems to be recovering again. Our short-term challenges include passing the increased raw material costs to the end product prices and the optimization of the production capacity for increasingly complicated products. We are going forward into 2011 with confidence.

Personnel

During the period, Aspocomp had an average of 98 employees (101). The personnel count on December 31, 2010 was 98 (96). Of them, 67 (67) were non-salaried and 31 (29) salaried employees.

Liquidity and financial risks

Because of the agreement on debt restructuring, management of the Groups 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 other ways of financing, the company may ultimately become insolvent.

Litigations

In 2007, the French Supreme Court ordered the company to pay approximately EUR 11 million to 388 former employees of Aspocomp S.A.S. The company made the payment in 2007.

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 appealed, but the Court of Appeal of Rouen confirmed the decision in May 2010. The payment has not been made, but Aspocomp made a related provision in its 2007 financial statements.

In October 2010, Aspocomp was informed that six former employees reasserted their suspended claims in a French Court. In addition, one new claim has been made. These hearings will be held in May 2011. The total amount of the claims is EUR 0.3 million.

The aforementioned compensations and claims do not have a profit impact during the financial year, because Aspocomp has made a reservation in its financial statements 2007. 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 90 employees may also institute proceedings. Under legislation that came into effect in June 2008, the statute of limitations for filing a suit is five years after the law came into effect.

Outlook for the future

As Aspocomp's operations focus on prototypes and quick-turn deliveries, it is difficult to forecast full-year net sales. In 2011 net sales is expected to grow, and operating results will be positive but lower than in 2010. 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.

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