Elcoteq SE's Interim Report January - March 2010 (Unaudited)

5/19/2010, 8:02 AM (Source: GlobeNewswire)
Elcoteq SE
Interim Report
May 19, 2010, at 9.00 am (EET)



Net sales 220.5 MEUR, operating result improving and balance sheet strengthens

- Net sales in January-March 2010 were 220.5 million euros (470.0 in January -
March 2009)
- Operating loss -12.9 million euros (-38.3), excluding restructuring costs
-10.6 million euros (-24.7)
- Income before taxes 63.0 million euros (-49.9)
- Earnings per share (EPS) 1.22 euros (-1.40)
- Cash flow after investing activities -23.3 million euros (-50.7)
- Rolling 12-month return on capital employed (ROCE) 11.4% (-11.3%)
- Interest-bearing net debt decreased by 83.8 million euros from December
31, 2009
- Gearing 1.0 (3.2)
- Solvency 19.4% (12.1%)
- An agreement was signed for a committed Revolving Credit facility of 100
million euros maturing on June 30, 2011

This interim report has been prepared in accordance with IFRS. Tables have been
prepared in compliance with the IAS 34 requirements approved by the EU. The
comparative figures given in the body text of this report are figures for the
corresponding period in the previous year, unless stated otherwise.

Elcoteq's President and CEO Jouni Hartikainen:

"After a very challenging year 2009, the first quarter of 2010 showed clear
improvement and progress in many ways. As expected, revenues decreased from the
last quarter of 2009 and the operating result was still negative, but continued
to improve. We started cooperation with several new, prominent customers, like
Inmarsat (satellite phones), Philips Lighting (LED-based lamps and luminaires)
and Sharp (mobile phones). We also signed an agreement with Nokia providing
after market services globally.

The execution of our redefined strategy advanced as planned. Like we have
stated, it is our target to provide a full scope of Life Cycle Services to
customers, with special emphasis on growing After Market Services (AMS), and to
balance our customer portfolio by decreasing the dependency on few large
customers.

The balance sheet strengthening proceeded according to plan. Elcoteq reduced its
gross interest-bearing debt by 105 million euros and increased equity by 85
million euros. We also launched the exchange offer to our remaining debenture
holders in April. The exchange offer has now been completed, resulting in a
further 21.5 million euros reduction in gross debt and a respective increase in
equity in May 2010. Had this transaction taken place in March 2010, the
company's gearing would have been 0.7 and solvency 23.5%."

Net Sales and Earnings

Elcoteq recorded net sales of 220.5 million euros between January and March
(470.0 million euros in January-March 2009). Operating loss totaled -12.9
million euros (-38.3) and excluding restructuring costs it was -10.6 million
euros (-24.7). Despite the lower sales, the operating result improved due to the
cost savings gained from the restructuring actions put in place in the first
half of 2009.

The Group's net financial income was 75.9 million euros (net financial expenses
11.5 million euros in January-March 2009). Income before taxes was 63.0 million
euros (-49.9) and net income totaled 40.3 million euros (-45.6). Earnings per
share (EPS) were 1.22 euros (-1.40). Financial income was mainly attributable to
one-time gains of approximately 75 million euros related to the hybrid
securities transaction executed in January 2010. At the same time the company
has incurred significant financial expenses associated with the exchange offer
to the debenture holders and the fees related to the revolving credit facility
of 100 million euros agreed in November 2009.

The Group's gross capital expenditures on fixed assets between January and March
were 3.0 million euros (2.0), or 1.4% of net sales (0.4%). Depreciation amounted
to 8.1 million euros (18.9). Investments have been reduced to a minimum to
increase existing asset capacity utilization ratios. During the review period,
investments were earmarked mainly for the test equipment of new customer
programs.

Financing and Cash Flow

Cash flow after investing activities was -23.3 million euros (-50.7). The Group
had no sold accounts receivable at the end of March 2010 (52.3 million euros at
the end of March 2009). Negative cash flow mainly resulted from the increase in
working capital for new product ramp-ups.

At the end of March 2010, Elcoteq had cash totaling 69.8 million euros (87.9
million euros at the end of 2009 and 98.0 million euros at the end of March
2009). The company's syndicated committed credit facility of 100 million euros
agreed in November 2009 was fully utilized. On April 30, 2010, the company
signed an agreement with the same bank syndicate for a new credit facility of
100 million euros that will mature at the end of June 2011.

At the end of March, the Group's interest-bearing net debt amounted to 103.7
million euros (286.4). The solvency ratio was 19.4% (12.1%) and gearing was 1.0
(3.2). Rolling 12-month return on capital employed (ROCE) was 11.4% (-11.3%).
The net debt was significantly reduced due to the redemption of debentures with
a nominal amount of 105 million euros in January 2010.

Strategic Business Units

Since the third quarter of 2009, Elcoteq has had two Strategic Business Units
(SBUs) as its segments: Consumer Electronics and System Solutions. In the first
quarter of 2010, Consumer Electronics contributed 77% (73%) and System Solutions
23% (27%) of the Group's net sales.

Net sales of the Consumer Electronics SBU were 170.0 million euros (344.6). The
decline was mainly due to lower handset deliveries and operational changes in
Juarez, Mexico where the business model was transformed at the end of the first
quarter of 2009 from a turnkey (materials owned by Elcoteq) to a consigned
(materials owned by the customer) business model. The segment's operating loss
was -3.8 million euros (-20.1) and -2.6 million euros excluding restructuring
costs (-12.9). The Consumer Electronics SBU made strong progress in reducing
operating costs and expanding service content, especially in increasing the
after sales services business. The SBU also won significant new customers such
as Cinterion, Philips Lighting and Sharp. An agreement was signed with Nokia
about providing after market services.

Net sales of the System Solutions SBU were 50.6 million euros (125.3). The
decline was mainly due to the divestment of Ericsson-related operations in
Tallinn, Estonia to Ericsson in July 2009. The segment's operating income was
2.1 million euros (-10.3) and 3.0 million euros excluding restructuring costs
(-4.5). The System Solutions SBU was successful in attracting new customers,
such as Inmarsat, and showed solid progress in eliminating excess capacity.

Personnel

At the end of March 2010, the Group employed 10,545 (14,569) people. The
geographical distribution of the workforce was as follows: Europe 3,867 (6,597),
Asia-Pacific 3,043 (3,231) and Americas 3,635 (4,741). The average number of
employees on Elcoteq's direct payroll between January and March was 10,024
(14,446).

Balance Sheet Strengthening

In January 2010, the company announced its decision to issue hybrid securities
with a nominal value of 29 million euros in a private placement. The proceeds
from the hybrid securities issue were used directly to redeem the company's
existing outstanding debenture bonds with a nominal amount of 105 million euros
at a price of 25% of the nominal value. As a result of the debentures
transaction, reversing the related deferred tax assets and recognizing the
hybrid securities as equity in the company's balance sheet, the company's equity
increased by approximately 85 million euros. The announced restructuring has
improved the company's indebtedness and solidity significantly.

In September 2009, Elcoteq announced that it had signed a non-binding Letter of
Intent with Videocon Industries Limited (Videocon) regarding a major equity
investment which would have made Videocon the largest single shareholder in
Elcoteq. By mutual decision of both Elcoteq and Videocon the negotiations were
terminated in March 2010.

In March 2010, the three founder shareholders of the company, Mr. Antti Piippo,
Mr. Henry Sjöman and Mr. Jorma Vanhanen, informed the Board of Directors that
they will exercise their right to convert all of their series K founders' shares
to series A shares in accordance with the provisions set out in the Articles of
Association of Elcoteq. The conversion will take place at a ratio of ten series
K founders´ shares to one series A share. It will not affect the ownership
structure of the company, and Mr. Piippo, Mr. Sjöman and Mr. Vanhanen will
continue to have a 41.38% holding in the company. However, the conversion will
affect the voting structure of the company, reducing the total voting share of
Mr. Piippo, Mr. Sjöman and Mr. Vanhanen from the current 84.81% to 41.38%. The
conversion is expected to be completed during the second quarter of 2010.

Elcoteq announced that it continues to work on further strengthening its balance
sheet through equity-related transactions and long-term financing arrangements
in 2010. Related to this, the company announced on April 16, 2010 an exchange
offer containing both a hybrid loan and warrants for the holders of its
remaining outstanding debentures in an aggregate nominal amount of approximately
35 million euros. The exchange offer was completed on May 7, 2010, and as a
result the holders of debentures valued at 21.5 million euros have tendered
their debentures for a hybrid bond and warrants. Had this transaction taken
place in March 2010, the company's gearing would have been 0.7 and solvency
23.5%.

The interest expense related to the hybrid bonds issued in 2010 amounts
approximately to 4.0million euros annually and is recognized when the company
has decided to pay the interest.

In March 2010, Elcoteq SE and the lenders of its revolving credit facility of
100 million euros signed a term sheet on extending the facility from April
30, 2010 until June 30, 2011. The parties concluded the final loan documentation
relating to the committed credit facility on April 30, 2010. The agreed facility
shall be amortized by 33 million euros by March 31, 2011.

Furthermore, the company has stated in March 2010 that it will arrange a rights
issue during 2010 to increase liquidity and to strengthen the balance sheet
further.

Shares and Shareholders

At the end of March 2010, the company had 128,132,185 shares divided into
22,362,185 series A shares and 105,770,000 series K Founders' shares. All the
series K Founders' shares are held by the company's three principal owners.

Elcoteq had 10,306 shareholders on March 31, 2010. There were a total of
3,722,756 foreign and nominee registered A-shares.

Decisions of the Extraordinary General Meeting on February 23, 2010

The Extraordinary General Meeting (EGM) held on February 23, 2010, rejected the
Board's proposals to decrease the current par value of series A shares (0.40
euros) and series K shares (0.04 euros). The Board of Directors made its
proposal to the EGM prior to the recent positive development in the company's
equity. In light of the stronger balance sheet, the EGM deemed that the size of
the proposed authorization to increase the share capital up to 200,000,000 euros
was too high and it is not necessary to decrease the par value of shares.

The EGM decided to increase the authorized share capital of the company from its
current amount of twenty million euros (20,000,000) up to forty million euros
(40,000,000). The EGM authorized the Board of Directors to issue new shares and
convertible debt instruments within the authorized share capital of the company
without reserving preferential subscription rights for the existing
shareholders, up to an amount of twelve million euros (12,000,000) of the
authorized share capital, corresponding to a maximum of 30,000,000 new series A
shares. The EGM also authorized the Board of Directors to issue new shares and
convertible debt instruments within the remainder of the authorized share
capital of nineteen million fifty-five thousand one hundred and twenty-six euros
(19,055,126), respecting the existing shareholders' preferential subscription
rights. A maximum of approximately 47,000,000 new series A shares can be issued
under this authorization.

The EGM deleted from the company's Articles of Association the right of a
shareholder to request a redemption of shares in case a change or changes in the
ownership of the company result in a shareholder holding more than thirty-three
and one third (33 1/3) percent or, as the case may be, fifty (50) percent of the
shares in the company. Finally, the EGM changed the date of the Annual General
Meeting of the shareholders from March 23 to April 28 each year. The company's
Articles of Association were reworded in order to reflect these changes voted
upon at the EGM of the shareholders of the company.

Decisions of the Annual General Meeting on April 28, 2010 and Constitutive Board
Meeting on May 3, 2010

Elcoteq SE's Annual General Meeting (AGM) took place on April 28, 2010, in
Luxembourg. The Meeting confirmed the consolidated and parent company's income
statements and balance sheets for the financial year 2009 and discharged the
members of the Board of Directors and the statutory auditor from liability for
the financial year. The Meeting approved the Board's proposal that no dividend
will be distributed for the financial year January 1 - December 31, 2009.

The Meeting re-elected the following persons to the Board of Directors:
President Martti Ahtisaari; Mr. Heikki Horstia, BSc (Econ.); Mr. Eero Kasanen,
Executive Dean, Aalto University School of Economics; Mr. François Pauly,
General Manager of Sal. Oppenheim jr. & Cie S.C.A; and Mr. Jorma Vanhanen,
founder-shareholder of Elcoteq SE. Mr. Pauli Aalto-Setälä, Managing Director of
Aller Media Oy, and Dr. Sándor Csányi, Chairman and CEO of OTP Bank, were
elected as new members to the Board of Directors. President Ahtisaari, Mr.
Horstia, Mr. Kasanen, Mr. Pauly, Mr. Aalto-Setälä and Dr. Csányi are independent
Board members, and they represent more than half of the Board's members.

The AGM approved the proposal of the Audit Committee of the Board of Directors
to appoint the firm of authorized public accountants KPMG Audit S.à.r.l under
the supervision of Mr. Philippe Meyer as the company's auditors for the
financial year ending on December 31, 2010.

Elcoteq SE's Board of Directors held its constitutive meeting on Monday, May
3, 2010. The Board of Directors elected Mr. Jorma Vanhanen as its Chairman and
Mr. Heikki Horstia as the Deputy Chairman.

Mr. Heikki Horstia was elected as the Chairman of the Audit Committee and Mr.
Martti Ahtisaari, Mr. Eero Kasanen and Mr. François Pauly were elected as
members of this committee. Mr. Heikki Horstia was also elected as the Chairman
of the Compensation Committee and Mr. Martti Ahtisaari, Mr. Eero Kasanen, Mr.
François Pauly and Mr. Pauli Aalto-Setälä were elected as members of this
committee.
When appointing the Nomination Committee, the Board of Directors took into
consideration the recommendation made by the company's largest shareholders at
the Annual General Meeting. The Nomination Committee consists of the largest
shareholders and an independent advisor. The members from outside the Board are
Mr. Antti Piippo, Mr. Henry Sjöman and Mr. Juha Toivola. In addition, the
Chairman of the Board, Mr. Jorma Vanhanen, was elected from among the Board
members.

No working committee was re-established.

Changes in Elcoteq´s Management

On March 4, 2010, Mr. Markus Kivimäki, member of the Elcoteq Management Team and
Senior Vice President of Group Legal Affairs, announced that he will pursue his
career outside Elcoteq. Mr. Jari Hakkarainen, Legal Counsel at Elcoteq will be
heading the legal function as of April 1, 2010.

As of April 2010, the Elcoteq Management Team consists of the following persons:
Mr. Jouni Hartikainen, President and CEO
Mr. Sándor Hajnal, Senior Vice President, Human Resources
Mr. Vesa Keränen, Senior Vice President, Consumer Electronics
Mr. Tommi Pettersson, Senior Vice President, System Solutions
Mr. Mikko Puolakka, CFO
Mr. Tomi Saario, Senior Vice President, New Sales and Business Development
Mr. Roger Taylor, Senior Vice President, Group Operations and Sourcing

Short-Term Risks and Uncertainty Factors

The company operates in a working capital intensive business environment where
the access to and availability of sufficient financing represents a risk factor.
The Board of Directors has assessed the company's financing requirements against
the business plan. The company's ability to implement its business plan is
highly dependent on the availability of debt financing, better control of
working capital and cash pooling as well as ability to stabilize the financing
structure, including the strengthening of shareholders' equity under volatile
market conditions.

The company's key short-term operative challenges are to increase sales,
proactively manage fixed costs according to sales fluctuations, significantly
improve profitability as well as avoid generating excess working capital to
preserve cash reserves. The company makes a significant part of its purchases
and sales in currencies other than the euro and the currency fluctuations may
result in deviations from business plans. The ability to provide the right
service offering to customers is a key element in keeping existing customers and
winning new customers. Under the changing market conditions, a failure to
identify and respond to the customer requirements may prevent the company from
achieving its strategic objectives and the above operative targets.

Prospects

Second-quarter net sales are expected to increase compared with the first
quarter of 2010 due to the new customer programs started in the first quarter.
Operating income is expected to improve from the first quarter but to remain
somewhat negative.

As communicated earlier, the company expects the operating profit to turn
positive for the second half of 2010 based on the impact of implemented cost
reduction actions, the stabilization of underlying business and the contribution
of recently won new customer contracts. Due to the restructuring of subordinated
debt in January 2010, the net income for 2010 will be clearly positive.

The company continues putting special focus on generating positive cash flow
from operations through further cost cuts and serving new customer contracts
with an optimized cost structure. The Board's and Management's key targets also
include further strengthening the balance sheet through equity-related
transactions and long-term financing arrangements. The company also seeks to
reduce tied-up capital through fixed asset divestments and working capital
optimization.

Elcoteq plans its material purchases and capacity based on the forecasts
received from customers and market analysis. Such forecasts may fluctuate during
the forecast period, causing uncertainty in the company's own forecasts.

May 18, 2010
Board of Directors

Further information:
Jouni Hartikainen, President and CEO, +358 10 413 11
Mikko Puolakka, CFO, tel. +358 10 413 1287

Press Conference and Webcast

Elcoteq will hold a combined press conference, conference call and webcast in
English at 2.30 pm (EET) on Wednesday, May 19, in the Ambassador II room (9th
floor of Scandic Hotel Continental, address: Mannerheimintie 46, Helsinki,
Finland).

To participate via a conference call, please dial in 5-10 minutes before the
beginning of the event: +44 (0)20 7162 0025 (Europe) or +1 334 323 6201 (USA).
When dialing in, the participants should quote 866002 as the conference ID. The
password is Elcoteq.

The press conference can also be followed as a live webcast or later as a
recording via Elcoteq's website www.elcoteq.com.

The presentation material used at the press conference (pdf file) will be
available on the company's website www.elcoteq.com on May 19, 2010.

Elcoteq will publish its Interim Report for January-June 2010 at 9.00 am (EET)
on Wednesday, July 21, 2010.

Enclosures:
1 Consolidated statement of comprehensive income
2 Consolidated Balance Sheet
3 Consolidated Cash Flow statement
4 Consolidated statement of changes in equity
5 Formulas for the calculation of key figures
6 Key figures
7 Segment reporting
8 Restructuring expenses
9 Assets and liabilities classified as held for sale
10 Assets pledged and contingent liabilities
11 Quarterly figures

The Group adopted the following standards on January 1, 2010:
- Revised IFRS 3 Business combinations
This adopted standard has not had impact on the reported results.

Other new interpretations or amendments to standards effective as of January
1, 2010 have not been relevant to the Group.


APPENDIX 1


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, Q1/ Q1/ 1-12/
MEUR 2010 2009 Change, % 2009
--------------------------------------------------------------------------------


NET SALES   220.5 470.0 -53.1 1,503.2

Change in work in progress

and finished goods   4.8 -21.9   -44.4

Other operating income 0.9 2.3 -58.2 13.3



Operating expenses -228.8 -456.1 -51.3 -1,451.5

Restructuring expenses -2.3 -13.6   -37.0



Depreciation and impairment -8.1 -18.9 -57.4 -60.1
--------------------------------------------------------------------------------


OPERATING PROFIT/LOSS -12.9 -38.3 -66.3 -76.5

% of net sales   -5.9 -8.2   -5.1



Financial income and expenses 75.9 -11.5   -40.5

Share of profits and losses of associates 0.0 0.0   -0.1
--------------------------------------------------------------------------------


PROFIT/LOSS BEFORE TAXES 63.0 -49.9   -117.1



Income taxes   -23.0 3.7   8.1
--------------------------------------------------------------------------------
NET PROFIT/LOSS     40.0 -46.1   -109.0



Other comprehensive income



Cash flow hedges   0.3 -1.1   3.4

Net gain/loss on hedges of net investments in
foreign operations -0.6 1.5   3.0

Foreign currency translation differences for
foreign operations 0.0 0.1   1.2

Income tax relating to components of other
comprehensive income 0.0 0.3   -0.4
--------------------------------------------------------------------------------
Other comprehensive income for the period, net
of tax -0.3 0.8   7.2



TOTAL COMPREHENSIVE PROFIT/LOSS FOR THE PERIOD 39.7 -45.3   -101.8



PROFIT/LOSS FOR THE PERIOD ATTRIBUTABLE TO:

Equity holders of the parent company * 40.3 -45.6   -105.0

Non-controlling interests   -0.4 -0.5   -3.9
--------------------------------------------------------------------------------
      40.0 -46.1   -109.0



TOTAL COMPREHENSIVE PROFIT/LOSS ATTRIBUTABLE TO:

Equity holders of the parent company 39.5 -45.3   -98.4

Non-controlling interests   0.2 0.0   -3.3
--------------------------------------------------------------------------------
      39.7 -45.3   -101.8





Earnings per share (EPS), A shares EUR 1.22 -1.40   -3.22

Earnings per share (EPS), K founders' shares
EUR 0.12 -0.14   -0.32



Income tax is the amount corresponding to the actual effective rate based on
year-to-date actual tax calculation.
* The Group's reported net income for the period.



APPENDIX 2

March 31, Dec. 31,
BALANCE SHEET, MEUR 2010 2009 Change, %
--------------------------------------------------------------------------------


ASSETS



Non-current assets

  Intangible assets 26.0 25.4 2.4

  Tangible assets 79.1 81.0 -2.3

  Investments 0.7 0.7

  Long-term receivables 22.3 41.9 -46.8
--------------------------------------------------------------------------------
Non-current assets, total 128.1 148.9 -14.0



Current assets

  Inventories 102.9 69.4 48.3

  Current receivables 202.2 189.9 6.5

  Cash and equivalents 69.8 87.9 -20.6
--------------------------------------------------------------------------------
Current assets, total 374.9 347.3 8.0



Assets classified as held for sale 17.2 19.0 -9.5
--------------------------------------------------------------------------------


ASSETS, TOTAL   520.3 515.3 1.0





SHAREHOLDERS' EQUITY AND LIABILITIES



Equity attributable to equity holders of the parent company

    Share capital* 13.2 13.2 0.0

    Other shareholders' equity 51.1 11.6 340.5
--------------------------------------------------------------------------------
Equity attributable to equity holders of the parent
company, total 64.3 24.8 159.4

Non-controlling interests   8.0 7.8 2.0
--------------------------------------------------------------------------------


Hybrid capital loans 28.7 - -
--------------------------------------------------------------------------------


Total equity   100.9 32.6 209.5



Long-term liabilities

  Long-term loans 44.4 109.8 -59.6

  Other long-term debt 3.5 2.8 24.5
--------------------------------------------------------------------------------
Long-term liabilities, total 47.8 112.5 -57.5



Current liabilities

  Current loans 128.9 165.4 -22.1

  Other current liabilities 238.0 200.0 19.0

  Provisions 4.6 4.7 -2.7
--------------------------------------------------------------------------------
Current liabilities, total 371.5 370.1 0.4



Liabilities classified as held for sale - - -
--------------------------------------------------------------------------------


SHAREHOLDERS' EQUITY AND LIABILITIES, TOTAL 520.3 515.3 1.0


* Share capital includes both A-shares listed in Nasdaq OMX Helsinki Exchange
and K founders' shares.




APPENDIX 3


CONSOLIDATED CASH FLOW STATEMENT, MEUR 1-3/2010 1-3/2009 Change,% 1-12/2009
--------------------------------------------------------------------------------


Cash flow before change in working capital 12.3 -7.1   14.0

Change in working capital * -25.3 -38.8 -34.7 50.5

Financial items and taxes -7.7 -5.8 33.2 -24.2
--------------------------------------------------------------------------------
Cash flow from operating activities -20.8 -51.7   40.4



Purchases of non-current assets -2.6 -2.1 24.9 -4.4

Acquisitions   0.0 0.0 0.0 0.3

Disposals of non-current assets 0.1 3.1 -96.7 16.6
--------------------------------------------------------------------------------




Cash flow before financing activities -23.3 -50.7 -54.1  52.9
--------------------------------------------------------------------------------


Hybrid capital loans 27.8 -   -

Change in current debt -6.5 51.4   -56.1

Repayment of long-term debt -20.6 0.0   0.0

Dividends paid   0.0 0.0   -2.4
--------------------------------------------------------------------------------
Cash flow from financing activities 0.7 51.4 -98.6 -58.6



Change in cash and equivalents -22.6 0.7   -5.7



Cash and equivalents on January 1 87.9 95.1 -7.5 95.1

Cash and equivalents classified as held for
sale - -   -

Effect of exchange rate changes on cash
held 4.5 2.2   -1.5



Cash and equivalents at the end of the
period 69.8 98.0 -28.8 87.9




APPENDIX 4

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



Attributable to equity holders
        of the parent



Addi- Trans-  Non-
tio- Ot- Hed- la- Re- cont- Hybrid
Sha- nal her ging tion serve Retai- rol- ca  To-
re paid-in  re re- re- for ned ling pi tal
EUR capi- capi- ser ser- ser- own sha earn- To inte- tal equi
1,000   tal tal ves ve ve res ings  tal rest lo-ans ty
--------------------------------------------------------------------------------


BALAN
CE AT
JAN 1,
 2010 13.2 225.0 8.4 -0.1 6.8 -0.1 -228.4 24.8 7.8 - 32.6



Total
comp
re
hen
sive
In
come       0.3 -1.1   40.3 39.5 0.2   39.6

Hybrid
capi
tal
 loans                     28.7 28.7


--------------------------------------------------------------------------------


BALAN
CE AT
MARCH
31,
2010 13.2 225.0 8.4 0.2 5.7 -0.1 -188.1 64.3 8.0 28.7 100.9
--------------------------------------------------------------------------------






BALAN
CE AT
JAN 1,
2009 13.0 225.0 8.4 -3.1 3.2 -0.1 -124.0 122.5 12.7 - 135.2



Total
Comp
re
hen
sive
in
come       -0.8 1.0   -45.6 -45.4 0.0   -45.3

Share-
based
pay
ments             0.4 0.4     0.4


--------------------------------------------------------------------------------


BALAN
CE AT
MARCH
31,
2009 13.0 225.0 8.4 -3.9 4.3 -0.1 -169.1 77.5 12.8 - 90.3
--------------------------------------------------------------------------------




APPENDIX 5

FORMULAS FOR THE CALCULATION OF KEY FIGURES

Return on equity (ROE) =
Net income x 100
---------------------------------------------
Total equity, average of opening and closing balances


Return on investments (ROI/ROCE) =
(Income before taxes + interest and other financial expenses +
income from discontinued operations before taxes and
financial expenses) x 100
-------------------------------------------------------------
Total assets - non-interest bearing liabilities, average of opening
and closing balances


Return on investment (ROI/ROCE) for trailing 12 months =
(Income before taxes + interest and other financial expenses +
 income from discontinued operations before taxes and
 financial expenses) x 100
----------------------------------------------------------
Total assets - non interest-bearing liabilities, average of opening
and closing balances


Current ratio =
Current assets + assets classified as held for sale
----------------------------------------------------------
Current liabilities + liabilities classified as held for sale


Solvency =
Total equity x 100
--------------------------------------------
Total assets - advance payments received


Gearing =
Interest-bearing liabilities - cash and equivalents
---------------------------------------------------------
Total equity


Equity per share =
Equity attributable to equity holders of the parent company
----------------------------------------------------------------------
Adjusted average number of A shares outstanding end of the
period + (adjusted average number of K founders´ shares
outstanding end of the period/10)


Earnings per share, A shares (EPS) =
Net income attributable to equity holders of the parent, A shares
-------------------------------------------------------------------
Adjusted average number of A shares outstanding during
the period


Earnings per shares, K founders´ shares (EPS) =
Net income attributable to equity holders of the parent,
K founders´ shares
------------------------------------------------------------
Adjusted average number of K founders' shares outstanding
during the period



APPENDIX 6

KEY FIGURES   1-3/2010 1-3/2009 Change-% 1-12/2009
--------------------------------------------------------------------------------


Personnel on average during the period 10,024 14,446 -30.6 11,271



Gross capital expenditures, MEUR 3.0 2.0 50.0 6.4



Return on equity (ROE), % 59.9 -40.9   -129.9

Return on investment (ROI/ROCE), % 24.5 -9.4   -18.9



From 12 preceding months:

Return on equity (ROE), % -23.9 -71.3   -129.9

Return on investment (ROI/ROCE), % 11.4 -11.3   -18.9



Earnings per share (EPS), A-shares, EUR 1.22 -1.40   -3.22



Earnings per share (EPS), K-founders'
shares, EUR 0.12 -0.14   -0.32



Current ratio   1.1 1.0   1.0

Solvency, %   19.4 12.1   6.3

Gearing     1.0 3.2   5.8



Shareholders' equity  per share, A-shares,
EUR 2.82 2.38   0.75

Shareholders' equity  per share,
K-founders' shares, EUR 0.28 0.24   0.08



Interest-bearing liabilities, MEUR 173.5 384.5 -54.9 275.4

Interest-bearing net debt, MEUR 103.7 286.4 -63.8 187.5

Non-interest-bearing liabilities, MEUR 245.8 272.4 -9.8 207.3




APPENDIX 7

SEGMENT REPORTING

Elcoteq applies IFRS 8 Operating Segments in its segment reporting. The
presented segment information is based on the information provided to the
Group's management.

 Elcoteq has two Strategic Business Units (SBUs): Consumer Electronics and
System Solutions. Elcoteq reports these strategic business units as its
segments. Both SBUs are responsible for managing and developing their existing
customer relationships and applicable service offerings, while Group Operations
and Sourcing is responsible for supply chain and production.

Strategic Business Unit Consumer Electronics covers products such as mobile and
wireless phones, their parts and accessories, set-top boxes, flat panel TVs and
other consumer products as well as related after market services.

Strategic Business Unit System Solutions covers wireless and wireline
infrastructure systems and modules, enterprise network products and various
other industrial segment products as well as related after market services.

STRATEGIC BUSINESS UNITS, MEUR   1-3/2010 1-3/2009 1-12/2009
------------------------------------------------------------------------
Net sales

  Consumer Electronics   170.0 344.6 1,127.3

  System Solutions   50.6 125.3 375.9
------------------------------------------------------------------------
Net sales, total     220.5 470.0 1,503.2



Segment's operating income/loss

  Consumer Electronics   -3.8 -20.1 -38.2

  System Solutions   2.1 -10.3 -2.0

  Group's non-allocated expenses/income

    General & Administrative expenses -10.7 -7.2 -35.2

    Other expenses   -0.5 -0,7 -1.2
------------------------------------------------------------------------
Operating income/loss, total   -12.9 -38.3 -76.5



Group's financial income and expenses   75.9 -11.5 -40.5

Share of profits and losses of associates   0.0 - -0.1
------------------------------------------------------------------------
Income before taxes   63.0 -49.9 -117.1




Segments' operating income for January-March 2010 include following
restructuring expenses: Consumer Electronics 1.3 million euros and System
Solutions 0.9 million euros. Group's non-allocated expenses/income include
restructuring costs of 0.2 million euros.

APPENDIX 8

RESTRUCTURING EXPENSES

During the first quarter of 2009, Elcoteq launched a restructuring plan that
applies to the whole Group. These activities will continue in 2010 to further
improve profitability through eliminating excess capacity and strengthening
operational excellence. The restructuring actions cover further capacity
adjustments in whole factory network, especially in the area of indirect
personnel resources as well as increasing capacity utilization through internal
asset transfers. The actions also involve certain asset impairment charges.

The Groups restructuring expenses arising from the actions, in total 2,305
thousand euros, comprise of the following items:

EUR 1,000 2010
-----------------------------------
Personnel expenses 230

Impairments 2,075
-----------------------------------
Restructuring expenses, total 2,305




Impairments of buildings as well as machinery and equipment are primarily due to
plant closures.

APPENDIX 9

ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE

Assets classified as held for sale amounting to 17.3 million euros relate to
real estates on sale.
The company did not have liabilities classified as held for sale at the end of
the reporting period.



APPENDIX 10

ASSETS PLEDGED AND CONTINGENT LIABILITIES, MEUR

March 31, March 31, Change, Dec. 31,
  2010 2009  % 2009
--------------------------------------------------------------------------------


BUSINESS MORTGAGES 100.0 -   100.0



PLEDGED OTHER RECEIVABLES -  -   3.0



PLEDGED CASH AND CASH EQUIVALENTS 62.0 -   56.2



PLEDGED LOAN RECEIVABLES 0.1 0.8 -92.5 0.1



ON BEHALF OF OTHERS



Guarantees 1.0 1.0   1.0



LEASE COMMITMENTS



Operating leases, production machinery
(excl. VAT) 0.8 6.8 -88.8 1.2

Operating leases, real estate (excl. VAT) 12.6 13.2 -4.6 12.3

Operating leases, others (excl. VAT) 0.7 1.4 -50.1 0.9



DERIVATIVE CONTRACTS



Currency forward contracts, transaction
risk,

hedge accounting not applied

    - Nominal value, open deals 2.7 98.7 -97.2 43.2

    - Nominal value, closed deals 117.7 -   130.1

    - Fair value -1.0 -1.5 -35.2 0.0

Currency forward contracts, transaction
risk,

hedge accounting applied

    - Nominal value, open deals 3.0 57.0 -94.8 70.6

    - Nominal value, closed deals - -   11.4

    - Fair value 0.2 -4.6   -0.1

Currency option contracts, transaction
risk,

hedge accounting not applied, bought
options

    - Nominal value - 11.8   -

    - Fair value - 0.1   -

Currency forward contracts, translation
risk

    - Nominal value - 21.5   -

    - Fair value - -0.5   -

Currency forward contracts, financial risk

    - Nominal value 20.0 177.0 -88.7 110.7

    - Fair value -0.3 1.6   -0.2

Interest rate and foreign exchange swap
contracts

    - Nominal value - 1.5   -

    - Fair value - 0.2   -



APPENDIX 11

INCOME STATEMENT, MEUR Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------


NET SALES 220.5 265.5 331.7 436.0 470.0

Change in work in progress

and finished goods 4.8 -9.9 -8.2 -4.4 -21.9

Other operating income 0.9 4.2 5.5 1.4 2.3



Operating expenses -228.8 -250.2 -317.2 -428.0 -456.1

Restructuring expenses -2.3 -21.3 -1.7 -0.4 -13.6



Depreciation and impairments -8.1 -11.7 -13.5 -16.0 -18.9
--------------------------------------------------------------------------------


OPERATING INCOME -12.9 -23.4 -3.3 -11.5 -38.3

% of net sales -5.9 -8.8 -1.0 -2.6 -8.2



Financial income and expenses 75.9 -12.9 -4.1 -11.9 -11.5

Share of profits and losses of
associates 0.0 0.0 -0.1 0.0 0.0
--------------------------------------------------------------------------------


INCOME BEFORE TAXES 63.0 -36.4 -7.5 -23.4 -49.9



Income taxes -23.0 2.2 0.7 1.5 3.7
--------------------------------------------------------------------------------
NET INCOME FOR
THE PERIOD     40.0 -34.2 -6.8 -21.8 -46.1





ATTRIBUTABLE TO:

Equity holders of the parent company 40.3 -31.3 -6.3 -21.8 -45.6

Minority interests -0.4 -2.9 -0.5 0.0 -0.5
--------------------------------------------------------------------------------
      40.0 -34.2 -6.8 -21.8 -46.1







BALANCE SHEET, MEUR Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------


ASSETS



Non-current assets

  Intangible assets 26.0 25.4 25.9 26.6 27.4

  Tangible assets 79.1 81.0 110.3 129.8 149.7

  Investments 0.7 0.7 2.1 2.2 2.3

  Long-term receivables 22.3 41.9 46.8 45.8 53.0
--------------------------------------------------------------------------------
Non-current assets, total 128.1 148.9 185.1 204.3 232.4



Current assets

  Inventories 102.9 69.4 101.1 113.7 174.2

  Current receivables 202.2 189.9 193.4 221.4 221.9

  Cash and equivalents 69.8 87.9 201.0 154.8 98.0
--------------------------------------------------------------------------------
Current assets, total 374.9 347.3 495.5 489.8 494.1



Assets classified as held for sale 17.2 19.0 21.0 41.0 20.7
--------------------------------------------------------------------------------


ASSETS, TOTAL 520.3 515.3 701.6 735.1 747.1





SHAREHOLDERS' EQUITY AND LIABILITIES



Equity attributable to equity holders of the parent company

  Share capital 13.2 13.2 13.0 13.0 13.0

Other shareholders'
  equity 51.1 11.6 43.5 48.7 64.5
--------------------------------------------------------------------------------
Equity attributable to equity holders 64.3 24.8 56.6 61.8 77.5

of the parent company, total

Minority interests 8.0 7.8 11.1 12.0 12.8
--------------------------------------------------------------------------------


Hybrid capital loans 28.7 - - - -
--------------------------------------------------------------------------------
Total equity   100.9 32.6 67.7 73.7 90.3



Long-term liabilities

  Long-term loans 44.4 109.8 110.1 159.6 158.9

  Other long-term debt 3.5 2.8 2.8 5.7 6.7
--------------------------------------------------------------------------------
Long-term liabilities, total 47.8 112.5 113.0 165.2 165.6



Current liabilities

  Current loans 128.9 165.4 263.8 210.7 225.4

Other current
  liabilities 238.0 200.0 250.2 279.0 257.4

  Provisions 4.6 4.7 6.9 5.7 8.4
--------------------------------------------------------------------------------
Current liabilities, total 371.5 370.1 520.9 495.4 491.2



Liabilities classified as held for sale - - - 0.8 -
--------------------------------------------------------------------------------


SHAREHOLDERS' EQUITY

AND LIABILITIES, TOTAL 520.3 515.3 701.6 735.1 747.1





Personnel on average during the period 10,024 8,882 9,877 11,693 14,446

Gross capital expenditures, MEUR 3.0 1.8 1.1 1.5 2.0



ROI/ROCE from 12 preceding months, % 11.4 -18.9 -14.4 -14.4 -11.3

Earnings per share (EPS), A-shares, EUR 1.22 -0.96 -0.19 -0.67 -1.40

Solvency, % 19.4 6.3 9.7 10.0 12.1







      Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009

CONSOLIDATED CASH FLOW STATEMENT, MEUR
--------------------------------------------------------------------------------


Cash flow before change in working
capital 12.3 20.5 7.0 -6.4 -7.1

Change in working capital -25.3 -25.8 34.1 81.1 -38.8

Financial items and taxes -7.7 -9.5 -5.0 -3.9 -5.8
--------------------------------------------------------------------------------
Cash flow from operating activities -20.8 -14.8 36.1 70.7 -51.7



Purchases of non-current assets -2.6 -0.8 -1.1 -0.4 -2.1

Acquisitions 0.0 0.3 - - -

Disposals of non-current assets 0.1 3.9 7.8 1.8 3.1
--------------------------------------------------------------------------------




Cash flow before financing activities -23.3 -11.3 42.7 72.2 -50.7
--------------------------------------------------------------------------------


Hybrid capital loans 27.8 - - - -

Change in current debt -6.5 -100.5 5.2 -12.2 51.4

Repayment of long-term debt -20.6 - - - -

Dividends paid 0.0 -2.4 - - -
--------------------------------------------------------------------------------
Cash flow from financing activities 0.7 -103.0 5.2 -12.2 51.4



Change in cash and equivalents -22.6 -114.3 48.0 59.9 0.7



Cash and equivalents at the beginning of
the period 87.9 201.0 154.8 98.0 95.1

Cash and cash equivalents classified as
held for sale - - - - -

Effect of exchange rate changes on cash
held 4.5 1.1 -1.7 -3.1 2.2



Cash and equivalents at the end of
period 69.8 87.9 201.0 154.8 98.0





STRATEGIC BUSINESS UNITS, MEUR Q1/2010 Q4/2009 Q3/2009 Q2/2009 Q1/2009
--------------------------------------------------------------------------------
Net sales

  Consumer Electronics 170.0 211.1 243.5 328.1 344.6

  System Solutions 50.6 54.5 88.2 107.9 125.3
--------------------------------------------------------------------------------
Net sales, total 220.5 265.5 331.7 436.0 470.0



Operating income

  Consumer Electronics -3.8 -11.2 -2.3 -4.6 -20.1

  System Solutions 2.1 -0.1 6.9 1.5 -10.3

  Group's non-allocated expenses/income

General &
Administrative
    expenses -10.7 -12.1 -7.6 -8.2 -7.2

    Other expenses -0.5 0.0 -0.3 -0.1 -0.7
--------------------------------------------------------------------------------
Operating income, total -12.9 -23.4 -3.3 -11.5 -38.3



Restructuring expenses recognized in segment's operating income

  Consumer Electronics -1.3 -15.6 -1.5 0.0 -7.2

  System Solutions -0.9 -5.7 0.0 -0.4 -5.8

Group's non-allocated
  expenses/income -0.2 0.0 -0.2 0.0 -0.6
--------------------------------------------------------------------------------
Restructuring expenses, total -2.3 -21.3 -1.7 -0.4 -13.6



Financial income and expenses 75.9 -12.9 -4.1 -11.9 -11.5

Share of profits and losses of
associates 0.0 0.0 -0.1 0.0 0.0
--------------------------------------------------------------------------------
Income before taxes 63.0 -36.4 -7.5 -23.4 -49.9




[HUG#1417071]





Elcoteq SE's Interim Report January - March 2010 (Unaudited): http://hugin.info/3033/R/1417071/367604.pdf
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