Cencorp to discontinue US operations

The Board of Directors has decided to begin statutory employer-employee negotiations at the Cencorp Group, with the aim of improving operations and profitability through the centralisation of production and management. In accordance with the plan, production operations and administration will be centralised in Virkkala. The manufacturing operations of testing equipment will be transferred from Salo to Virkkala, and the Salo plant will concentrate on the product development of testing equipment and manufacturing of customized test fixtures. The premises in Espoo will be closed and the operations of Singulase Oy will be transferred to Virkkala. Production operations in the United States will be discontinued and the manufacturing of Cencorp 1000 SR and Cencorp Datum products will be transferred to Virkkala. The company is analysing the potential transfer of sales and maintenance operations from Colorado to McAllen, Texas. McAllen is located on the border between the United States and Mexico, near important customers in the market area. Target is to start McAllen sales and service office before end of year 2006 and simultaneously close down Longmont operations. The centralisation of production and administration and related efficiency improvement measures are aimed at savings amounting to about EUR 1.5 million on an annual basis. These measures will begin to have a positive impact on results in the first half of 2007. In relation to the centralisation of production and administration, a proposal for statutory employer-employee negotiations has been presented today at the Cencorp Group. The negotiations are related to transfers of operations, shifts to part-time work, layoffs and redundancies, to be carried out for production-related and economic reasons. The negotiations will begin on 25 August 2006 and concern the entire personnel. The required personnel reduction in Finland is at most 22. Terminations will not be directed to production workers in Virkkala and personnel of Singulase Oy. The required personnel reduction in USA is at most 18. Cencorp Corporation has released its Interim Report for 1 January-30 June 2006. Net sales amounted to EUR 6.8 (10.5) million. Operating profit (EBIT) totalled EUR 0.1 (1.4) million. Profit before taxes was EUR -0.2 (1.4) million. Equity ratio stood at 20.7% (31.12.2005 27.7 %).