© Aspocomp PCB | April 25, 2011

Aspocomp reports net sales of EUR 4.9 million

First-quarter net sales amounted to EUR 4.9 million, up 13% on 1-3/2010. The 5 largest customers accounted for 80% of net sales (79%). In geographical terms, 93% of net sales were generated in Europe (90%) and 7% in Asia (10%).
The operating result was EUR 0.4 million (0.4). Profitability remained on a par with the comparison period, with the operating margin amounting to 8.9%. Quick-turn deliveries and the more favorable product mix supported profitability.

The Groups net financial expenses likewise remained at the same level as in the comparison period, EUR -0.3 million. Consequently, the result for the review period, EUR 0.1 million, and earnings per share, EUR 0.00, were also on a par with the comparison period.

President and CEO's review

The final months of 2010 were tough and 2011 got off to a slow start, but net sales eventually rose to a good level thanks to the pickup in quick-turn deliveries. The operating result EUR 0.4 million, or about nine percent of net sales was also satisfactory.

Cash flow in turn slumped into the red as a result of the decline in sales in the previous quarter and payments that are mainly due in the first months of the year but which are recognized over the entire financial year.

The short-term market outlook appears to be upbeat, but the rise in material prices still overshadows profitability. As usual, we have only been partly able to transfer the higher material costs to the prices of the final products. Fortunately, it seems that demand for quick-turn deliveries will compensate for the higher costs and, all in all, the financial year ahead will most likely be good.

The consequences of the natural catastrophe in Japan are not expected to have a significant impact on Aspocomps business.

Investments and R&D

Investments amounted to EUR 0.1 million (EUR 0.7 million 1-3/2010).

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

Receivable from TTM Technologies Inc.

Aspocomp has booked a receivable from TTM Technologies Inc. (TTM) in its balance sheet. The receivable is related to Aspocomps ownership arrangements in 2007, where Aspocomps production facilities in China and India were transferred to Meadville Aspocomp (BVI) Holdings Ltd. (MAH), a company established together with Meadville Holdings Limited. Meadville originally bought an 80 percent stake in MAH, and a put and call option deed was signed for the remaining 20 percent. According to IFRS this arrangement is considered a hundred-percent sale and therefore Aspocomps 20 percent holding under the option agreement is presented in other receivables.

In 2010, the PCB operations of Meadville Holdings Ltd. were acquired by TTM. The rights and responsibilities of MAH were transferred by agreements to TTM and Aspocomp.

The receivable is booked under non-current receivables at the minimum value specified in the put and call option deed. The minimum value was EUR 16.7 million at the end of the period. The other two valuation scenarios presented in the option deed are considered non-substantive due to the challenging current and expected future operations of MAH.


During the period, Aspocomp had an average of 101 employees (98). The personnel count on March 31, 2011 was 101 (97). Of them, 70 (67) were non-salaried and 31 (30) salaried employees.


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 2007 financial statements.

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.

Increased material cost and lack of capacity

Strong global PCB demand and higher raw material prices have raised the prices of laminates and chemicals used in PCB production. If Aspocomp fails to transfer the increased raw material cost to its products, profitability will weaken.

Increasingly complicated PCB designs add load to certain parts of the PCB production process. If the company fails to add capacity to these sub-processes, the total production volume will suffer, and the potential demand will not materialize as net sales growth.

Outlook for the future

The outlook for operations in Oulu and Groups lean cost structure enable the continuity of Aspocomps operations. Groups financial position is satisfactory.

As operations focus on prototypes and quick-turn deliveries, it is very difficult to forecast full-year net sales. The company expects to see net sales growth in 2011. The operating result is anticipated to be in the black, but to fall short of 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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