Aspocomp Group Plc, Interim Report, October 23, 2024, at 9:00 a.m. (Finnish time)

• Net sales EUR 6.4 (8.1) million, decrease of 21%
• Operating result EUR -1.2 (-0.7) million, -18.8% (-8.9%) of net sales
• Earnings per share EUR -0.20 (-0.11)
• Operative cash flow EUR -1.3 (0.7) million
• Orders received EUR 14.1 (7.1) million, increase of 100%

JANUARY-SEPTEMBER 2024 HIGHLIGHTS

• Net sales EUR 19.7 (26.4) million, decrease of 26%
• Operating result EUR -4.0 (0.0) million, -20.6% (0.1%) of net sales
• Earnings per share EUR -0.63 (-0.02)
• Operative cash flow EUR -4.4 (1.6) million
• Orders received EUR 28.3 (26.2) million, increase of 8%
• Order book at the end of the review period EUR 19.1 (14.0) million, increase of 36%
• Equity ratio 56.5% (66.4%)

OUTLOOK FOR 2024

The recovery in demand for Aspocomp's products began during the third quarter of 2024. In particular, demand in the Semiconductor Industry customer segment grew strongly in the third quarter, and demand is expected to remain strong.

Aspocomp reiterates the guidance that was published on August 29, 2024. Aspocomp estimates that its net sales for 2024 will be below the 2023 level, and its operating result for 2024 will be clearly below the 2023 level. In 2023, net sales amounted to EUR 32.3 million and the operating result was a loss of EUR 1.7 million.

CEO'S REVIEW

"In the third quarter of 2024, net sales decreased by 21 percent year-on-year and amounted to EUR 6.4 million. The positive development in demand that started at the end of the second quarter continued and order intake grew strongly during the quarter, especially in the semiconductor industry segment. However, this was not yet reflected in net sales, because the customer segment's demand was sluggish in the first half of the year.

The recruitments that began in the summer have progressed as planned, which enables full utilization of the capacity. However, the training and orientation of the new personnel are still in progress, so production throughput will be slower as the demand has grown more strongly than expected. This also had a significant impact on the low net sales.

The third-quarter operating result fell into the red and amounted to EUR -1.2 million. The decline in operating result was influenced by low net sales, the emphasis of net sales on customer segments with lower margins and the increased production personnel costs.

The recovery in demand for Aspocomp's products expected during 2024 began during the third quarter, and the company's order book grew strongly. In particular, the demand of the Semiconductor Industry customer segment turned to strong growth compared to the previous quarter, and globally the market has continued to grow compared to the previous year. Demand is expected to remain strong and expand to all customers in the segment.

We reiterate the guidance that was published on August 29, 2024, that Aspocomp's net sales for 2024 will be below the 2023 level, and its operating result for 2024 will be clearly below the 2023 level.

Aspocomp has been in a challenging situation since the fall of last year when demand dropped significantly, and the company's business has been loss-making since the second half of last year. In the second quarter of this year, we focused strongly on improving sales. This, together with the revival of demand in the Semiconductor Industry segment, has raised the company's order book to a significantly better level. The personnel lay-offs that had been ongoing since the beginning of the year ended in June and we started recruitment to increase capacity. These measures and the end of the annual holiday season have brought the number of production personnel back to a level that enables full utilization of capacity. In the third quarter, we have focused on training and orientation for new personnel. The increase in capacity and the improvement in production throughput are expected to be fully reflected in production volumes only in the last quarter of the year. For the rest of the year, the focus will be on increasing and stabilizing production volumes. This makes it possible to improve the company's profitability and cash flow.

Rapidly increasing production volumes increases net working capital along with the increase in net sales. In addition to increasing the credit limit, measures have been agreed with both customers and suppliers to improve the company's cash flow.”

NET SALES AND EARNINGS

July-September 2024

Third-quarter net sales amounted to EUR 6.4 (8.1) million. Net sales decreased year-on-year by 21%. The development of net sales was impacted especially by sluggish demand in the Semiconductor Industry segment in the first half of the year, and the extended production lead times. During the quarter, 14% more personnel were hired for production, but their training and orientation are still in progress, so production throughput weakened as growth in demand outpaced expectations.

The Semiconductor Industry customer segment's third-quarter net sales decreased year-on-year by 49% to EUR 1.5 (2.9) million. The net sales of the customer segment turned to moderate growth compared to the second quarter, and demand swung to strong growth.

The Industrial Electronics customer segment's third-quarter net sales decreased year-on-year by 27% to EUR 0.7 (1.0) million.

The Security, Defense and Aerospace customer segment's third-quarter net sales increased by 9% year-on-year and amounted to EUR 1.6 (1.5) million.

The Automotive customer segment's third-quarter net sales decreased by 7% year-on-year and amounted to EUR 1.8 (2.0) million.

The Telecommunication customer segment's third-quarter net sales remained on par with the comparison period and amounted to EUR 0.7 (0.7) million.

The five largest customers accounted for 61% (43%) of net sales. In geographical terms, 75% (87%) of net sales were generated in Europe and 25% (13%) on other continents.

The operating result for the third quarter amounted to EUR -1.2 (-0.7) million. The decline in the operating result was influenced by low net sales and the emphasis of net sales on customer segments with lower margins, extended production throughput times, and personnel costs due to the increase in production personnel.

Operating result was -18.8% (-8.9%) of net sales.

Net financial expenses amounted to EUR 0.2 (0.1) million. Earnings per share were EUR -0.20 (-0.11).

January - September 2024

January-September net sales amounted to EUR 19.7 (26.4) million, a year-on-year decrease of 26 percent. The development of net sales was impacted especially by sluggish demand in the Semiconductor Industry segment in the first half of the year, and the extended production lead times.

The Semiconductor Industry customer segment's net sales decreased by 61% to EUR 4.0 (10.2) million. The slow recovery of the semiconductor industry and high inventory levels in the value chain led to sluggish demand in the first half of the year. However, demand and received orders turned to strong growth during the third quarter.

The Industrial Electronics customer segment's net sales remained on par with the comparison period and amounted to EUR 2.9 (2.9) million.

The Security, Defense and Aerospace customer segment's net sales increased by 7% to EUR 5.0 (4.6) million. The number of customer contacts in the customer segment increased, but the order cycles are long, and the results are visible with a delay.

The Automotive customer segment's net sales remained on par with the comparison period and amounted to EUR 5.9 (5.9) million.

The Telecommunication customer segment's net sales amounted to EUR 2.0 (2.9) million, a year-on-year decrease of 32%. The decrease in net sales was due to the weak demand situation among end customers.

The five largest customers accounted for 56 (56) percent of net sales. In geographical terms, 78 (85) percent of net sales were generated in Europe and 22 (15) percent on other continents.

The January-September operating result amounted to EUR -4.0 (0.0) million. The operating result fell short of the comparison period due to the decrease in net sales, the emphasis of net sales on lower-margin customer segments, and the extended production throughput times. During the third quarter, 14% more personnel were hired for production, but their training and orientation are still in progress, so production throughput weakened as growth in demand outpaced expectations. During the first months of the year, the deterioration of the operating result was also affected by the additional costs of quality assurance caused by the production process failure that continued until the end of 2023.

January-September operating result was -20.6 (0.0) percent of net sales.

Net financial expenses amounted to EUR 0.3 (0.1) million. Earnings per share were EUR -0.63 (-0.02).

The order book at the end of the review period was EUR 19.1 (14.0) million. The order book grew especially due to strong demand from the Semiconductor Industry customer segment.

INVESTMENTS

Investments during the review period amounted to EUR 0.2 (2.3) million. The investments were aimed at the Oulu plant.

CASH FLOW AND FINANCING

January-September 2024 cash flow from operations amounted to EUR -4.4 (1.6) million. Cash flow weakened mainly due to the increase in working capital and negative result.

Cash assets amounted to EUR 0.8 (1.4) million at the end of the period. Interest-bearing liabilities amounted to EUR 6.0 (5.2) million. Interest-bearing liabilities are subject to covenant terms. The covenant terms were breached in the second-quarter 2024, but waiver consents have been obtained from financiers. Interest-bearing liabilities increased due to the use of the credit facility. Gearing was 36% (18%). Non-interest-bearing liabilities amounted to EUR 5.1 (5.1) million.

At the end of the period, the Group's equity ratio amounted to 56.5% (66.4%).

The company has a EUR 6.0 (4.0) million credit facility, of which EUR 4.9 million was in use at the end of the review period. In addition, the company has a recourse factoring agreement, of which EUR 0.0 (0.0) million was in use.

PERSONNEL

During the review period, the company had an average of 159 (164) employees. The personnel count on September 30, 2024, was 164 (166). Of them, 113 (109) were blue-collar and 51 (57) white-collar employees.

ANNUAL GENERAL MEETING 2024, THE BOARD OF DIRECTORS AND AUTHORIZATIONS GIVEN TO THE BOARD

The decisions of the Annual General Meeting held on April 18, 2024, the authorizations given to the Board of Directors by the AGM and the decisions relating to the organization of the Board of Directors have been published in separate stock exchange releases on April 18, 2024.

SHARES

The total number of Aspocomp's shares at September 30, 2024 was 6,841,440 and the share capital stood at EUR 1,000,000. The company did not hold any treasury shares. Each share is of the same share series and entitles its holder to one vote at a General Meeting and to have an identical dividend right.

A total of 634,187 Aspocomp Group Plc. shares were traded on Nasdaq Helsinki during the period from January 1 to September 30, 2024. The aggregate value of the shares exchanged was EUR 1,985,975. The shares traded at a low of EUR 2.51 and a high of EUR 3.84. The average share price was EUR 3.13. The closing price at September 30, 2024 was EUR 2.85, which translates into market capitalization of EUR 19.5 million.

The company had 4,208 shareholders at the end of the review period. Nominee-registered shares accounted for 0.7% of the total shares.

SHARE-BASED LONG-TERM INCENTIVE SCHEME

The Board of Directors of Aspocomp Group Plc decided on the establishment of a share-based long-term incentive scheme for the company's top management and selected key employees on July 20, 2022. The objectives of the Performance Share Plan (PSP) are to align the interests of Aspocomp's management with those of the company's shareholders and thereby promote shareholder value creation in the long term as well as to commit the management to achieving Aspocomp's strategic targets. The performance period of the first plan, PSP 2022-2024, covers the period from the beginning of July 2022 until the end of the year 2024. Eligible for participation in PSP 2022-2024 are approximately 20 individuals, including the members of Aspocomp's Management Team. The payment of rewards is conditional on the achievement targets set by the Board of Directors for the respective plan. The launch of a long-term Performance Share Plan has been announced in a separate stock exchange release on July 20, 2022.

On February 15, 2023, Aspocomp Group Plc's Board of Directors decided on the commencement of a new performance period in the share-based long-term Performance Share Plan (PSP) for the company's senior management and selected key employees. The next plan within the PSP structure, PSP 2023-2025, commenced as of the beginning of 2023 and the share rewards potentially earned thereunder will be paid during H1 2026. The new performance period of the long-term Performance Share Plan has been announced in a separate stock exchange release on February 15, 2023.

The Board of Directors of Aspocomp Group Plc has approved a new performance period covering the years 2024-2026 within the share-based long-term incentive scheme on July 18, 2024. The Performance Share Plan is part of the existing long-term incentive scheme structure, and it is aimed at the company's top management and selected key employees. PSP 2024-2026 commenced at the beginning of 2024 and the share rewards potentially earned thereunder will be paid during the first half of 2027. The new performance period for the Performance Share Plan has been announced in a separate stock exchange release on July 18, 2024.

SHAREHOLDERS' NOMINATION BOARD

On September 17, 2024, Aspocomp announced the composition of its Shareholders' Nomination Board. The three largest shareholders have appointed the following members to the Shareholders' Nomination Board: Päivi Marttila, appointed by Etola Group and Erkki Etola, Kyösti Kakkonen, appointed by Joensuun Kauppa ja Kone Oy, and Mikko Montonen, the third largest shareholder.

ASSESSMENT OF SHORT-TERM BUSINESS RISKS

In accordance with its goal, the company has systematically expanded its services to cover the PCB needs of its customers over the entire life cycle and thereby has successfully balanced out variations in demand and the order book.

Risks affecting the operating environment

Russia's war against Ukraine and the sanctions imposed on Russia in response are not expected to have a significant direct impact on the company. Aspocomp has no business operations and no direct customers or suppliers in Russia or Belarus. However, the changed operating environment may affect our sourcing and logistics chains.

The geopolitical situation has increased the risks related to customers' global supply chains. Weak economic development, inflation and high interest rates cause uncertainty in the operating environment and may affect customer demand and delay customers' investment decisions.

Cyber risks and disruptions in information systems can affect production. Aspocomp's ability to operate may deteriorate due to production interruptions among suppliers or disruptions in the company's production. Disturbances in the labor market can also affect production and delivery capacity.

Dependence on key customers and variation in the product mix

Aspocomp's customer base is concentrated; approximately half of sales are generated by five key customers. This exposes the company to significant fluctuations in demand. In addition, variations in the product mix can have a major impact on profitability.

Market trends

Although Aspocomp is a marginal player in the global electronics market, changes in global PCB demand also have an impact on the company's business. Competition for quick-turn deliveries and short production series will accelerate as the market for PCBs weakens and continues to have a negative impact on both total demand and market prices.

Aspocomp's main market area comprises Northern and Central Europe. In case Aspocomp's clients would transfer their R&D and manufacturing out of Europe, demand for Aspocomp's offerings might weaken significantly.

PUBLICATION OF FINANCIAL RELEASES FOR 2025

Aspocomp Group Plc's financial information publication schedule for 2025 is:

Financial Statements 2024: Wednesday, February 26, 2025 at around 9:00 a.m. (Finnish time)

Interim report January-March 2025: Tuesday, April 29, 2025 at around 8:00 a.m. (Finnish time)

Half-year report 2025: Thursday, July 17, 2025 at around 9:00 a.m. (Finnish time)

Interim report January-September 2025: Thursday, October 30, 2025 at around 9:00 a.m. (Finnish time).

Aspocomp's silent period commences 30 days prior to the publication of its financial information.

Espoo, October 23, 2024

Aspocomp Group PLC

Board of Directors

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.

ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING POLICES

The reported operations include the Group's parent company, Aspocomp Group Plc. All figures presented for the review period are unaudited. This interim report has been prepared in accordance with IAS 34 (Interim Financial Reporting), following the same accounting principles as in the annual financial statements for 2023; however, the company complies with the standards and amendments that came into effect as from January 1, 2024.

R&D

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