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PKC GROUP'S INTERIM REPORT 1-6/2012
[August 09, 2012]

PKC GROUP'S INTERIM REPORT 1-6/2012

(OMX (English) Via Acquire Media NewsEdge) PKC Group Plc INTERIM REPORT 9 August 2012 8.15 a.m.

-- Net sales grew 136.1% on the comparison period (1-6/2011), totalling EUR 486.8 million (EUR 206.2 million).

-- Operating profit before PPA depreciation and amortization and non-recurring items was EUR 35.3 million (EUR 20.1 million). During the report period PPA depreciation and amortization totalled EUR 7.1 million (EUR 1.2 million).

-- Operating profit was EUR 26.9 million (EUR 16.7 million) and 5.5% (8.1%) of net sales.

-- Net profit for the report period amounted to EUR 16.6 million (EUR 13.9 million).

-- Diluted earnings per share were EUR 0.78 (EUR 0.69).

-- Gross capital expenditure was EUR 10.1 million (EUR 19.5 million).

-- Net cash from operating activities was EUR 35.3 million (EUR 8.8 million).

-- Cash flows after investments were EUR 28.3 million (EUR 9.1 million negative).

-- Gearing was 57.9% (14.8%).

-- Equity ratio was 31.2% (54.3%).

-- Net liabilities were EUR 93.4 million (EUR 18.7 million).

KEY FIGURES 1-6/12 1-6/11 1-12/11 Net sales, EUR 1,000 486,771 206,193 550,208 Operating profit, EUR 1,000 26,912 16,745 34,505 % of net sales 5.5 8.1 6.3 Net profit for the report period, EUR 1,000 16,626 13,854 23,445 Earnings per share (EPS), EUR 0.78 0.69 1.16 ROI,% 23.0 27.7 18.9 Net liabilities, EUR 1,000 93,426 18,727 110,739 Gearing, % 57.9 14.8 72.6 Average number of personnel 21,478 6,745 10,793 MATTI HYYTIÄINEN, PRESIDENT AND CEO: “PKC’s performance remained stable during the second quarter of 2012. The second quarter’s net sales reached EUR 244.8 million, EBITDA EUR 21.9 million and operating profit EUR 14.2 million. Cash flow after investments were EUR 5.2 million positive. Cash flow during the second quarter was impacted by investments that were larger than in the first quarter and growth of net working capital in North America. In our other units the net working capital decreased from the levels of the first quarter.

First six month’s cash flow after investments were significantly better than during the same period of time last year. This has further strengthened PKC’s financial position.

Production volumes of heavy and medium duty trucks in North America and Europe remained roughly at the first quarter’s level. In Brazil the production volumes were on the same modest level as during the first quarter mainly due to the transition to new emission standards (Euro 5) as well as the economic downturn in Brazil.


I am especially pleased with the way PKC’s North American Wiring Systems business has developed. The management and personnel continued their determined work developing operations and customer relationships. The acquisition of AEES which was executed last year has proven to be a good acquisition and the integration phase has been finalized during the second quarter ahead of schedule.

The management of Wiring Systems business in Europe and Asia was renewed by reorganizing operative management under common leadership and by centralizing sales management. During the second quarter we opened a customer service and design office in Munich, Germany. Our strengthened presence and improved customer service has been appreciated by our customers.

Brazilian operating profit remained negative during the second quarter.

Measures to improve the situation have been started. During the report period we reinforced the management of the Wiring Systems business in Brazil.

Simultaneously we centralized our operations. In co-operation with our customers we decided to reschedule our production transfers and the projects are due to continue until summer of 2013, which is longer than previously estimated.

PKC’s Wiring Systems business developed positively and first six months’ operating profit was EUR 29.4 million. The positive growth in North America and Europe compensated for the operating loss of the Brazilian Wiring Systems business. The ODM deliveries of PKC’s Electronics business remained on a very low level and the Electronics business recorded an operating profit of EUR 0.3 million negative.

PKC’s commercial vehicle customers’ demand estimates for the second half of the year vary market to market. In North America the market outlook is more uncertain whereas in Europe the market is estimated to remain stable. In Brazil it is estimated that the market recovers slightly due to the actions taken by Brazilian government to support purchases of new vehicles.” OPERATING ENVIRONMENT Wiring Systems business - Vehicles, Europe The economic uncertainty due to the continuing financial crisis in Europe continued to affect market confidence and freight companies’ investment plans.

Second quarter 2012 production of heavy duty trucks in Europe was 75,000 units which was roughly the same as during the first quarter and down 11% from 85,000 units the same period of time year earlier. The estimate for full year production has however been lifted from the first quarter’s 300,000 units stated during the first quarter to 306,000 units, showing still a 10% drop from 2011 production.

Second quarter 2012 production of medium duty trucks was 18,000 units which was 12% less than the same period of time year earlier (21,000 units) and about 5% less than the production during the first quarter of 2012 (19,000 units). Full year estimates have been lifted from the first quarter’s 68,000 to 74,000 which would mean a 9% decline from 2011 production.

- Vehicles, North America The demand for freight remained at a good level and freight companies were profitable, but the market witnessed a change to a more cautious approach to new truck investments.

NAFTA second quarter 2012 production of heavy duty (class 8) was 75,000 units, down 4% from the first quarter’s 78,000 units. Compared to last year’s comparison period the production is up over 20% from 60,000. Full year estimates of heavy duty truck production in North America have been adjusted downwards to less than 290,000 units from the previously estimated 300,000 units. It is estimated that the production grows by 12% from 2011.

Medium duty truck production has remained on the same level with the first quarter at 48,000 units, which represented 6% growth compared to same period year earlier (45,000 units). Full year production estimates have been increased from 175,000 units to 180,000 units, up by 8% from 2011 production.

Light vehicle production in the second quarter remained on the same level with the first quarter at 1,800,000 units, up 15% from the same period year earlier.

It is estimated that full year production will grow by over 7% from last year’s 6,500,000 to 7,000,000 units mainly due to replacement of aging trucks.

- Vehicles, Brazil In Brazil, the second quarter heavy truck production was 27,000 units, which is the same as during the first quarter of 2012 but down 19% from the same period of time last year.

Latest estimates believe the governmental incentives announced by the Brazilian government will improve production volumes and thus the full year production estimates have been lifted from 101,000 to 115,000 units, showing a 19% drop from year 2011 levels.

The medium duty truck production has remained on a stable level, a bit over 13,000 units, growing 7% from the first quarter but declining 14% from 15,000 units the same period of time last year. Full year estimates have been adjusted upwards by 5% from 52,000 units to 55,000 units, showing a 20% decline from 2011 production levels.

- Agricultural Equipment North American tractor sales were up 6% and combines down by 23 % from comparison period year earlier. The draught conditions across much of the U.S.

added some uncertainty for agricultural equipment demand. South American sales of both tractors and combines were down 7% and 12% from comparison period year earlier. In Europe, tractor sales were stable, and combine sales up 15% from same period last year. Full year agricultural equipment unit volume worldwide is expected to be flat to down 5% in comparison to previous year.

- Construction Equipment Global demand for construction equipment (units) dropped over 10% during the second quarter compared to the same period last year. Differences between markets were great: Europe grew about 5%, North America about 30%, South America about 10% and Asia (excl. China) about 25%. On the other hand, the Chinese markets declined almost 40%. Full year construction equipment unit volume worldwide is expected to be flat to down by 5% in comparison to previous year.

Electronics business The economic uncertainty and worldwide drop in industrial investments affected the demand for electronic appliances. Investments in renewable energy and telecommunication testing equipment remained on the same modest level as during the first quarter of 2012. However, the volumes of developing and constructing smart grids were at a good level. Also the demand for energy efficient technologies and products grew during the second quarter.

NET SALES AND FINANCIAL PERFORMANCE April-June 2012 Net sales from April-June amounted to EUR 244.8 million (EUR 109.3 million), up 124.0% on the same period a year earlier. During the report period EUR 1.0 million (EUR 2.2 million) in non-recurring items were recognised. Operating profit before non-recurring items, PPA depreciation and amortization totalled EUR 19.2 million, accounting for 7.8% of net sales. Consolidated operating profit totalled EUR 14.2 million (EUR 7.1 million), accounting for 5.8% of net sales (6.5%). Operating profit continued to be burdened by the losses of the Brazilian unit. Depreciation amounted to EUR 7.7 million (EUR 3.2 million).

Depreciation caused by acquisitions amounted to EUR 4.0 million. Financial items were EUR 0.2 million negative (EUR 0.6 million). Financial items include foreign exchange differences totalling EUR 1.3 million positive net. Profit before taxes was EUR 14.0 million (EUR 7.7 million). Income tax of the report period amounted to EUR 4.3 million accounting for 30.4% of profit before taxes.

Net profit for the report period totalled EUR 9.7 million (EUR 6.3 million).

Diluted earnings per share were EUR 0.46 (EUR 0.31).

Net sales generated by the Wiring Systems business in the report period amounted to EUR 226.8 million (EUR 90.2 million), or 151.6% more than in the comparison period. The segment’s share of the consolidated net sales was 92.7% (82.5%). Net sales increased along with the acquisition of AEES companies.

During the report period EUR 1.0 million (EUR 0.1 million) in non-recurring items were recognised. Wiring Systems business generated an operating profit before non-recurring items, PPA depreciation and amortization of EUR 19.3 million (EUR 10.4 million), equivalent to 8.5% of the segment’s net sales (11.5%). Wiring Systems business generated an operating profit of EUR 14.4 million (EUR 9.6 million), equivalent to 6.3% of the segment’s net sales (10.6%). The comparable profitability was still weakened due to the losses of the Brazilian unit resulting from low production volumes and costs related to the reorganisation of operations.

Net sales generated by the Electronics business decreased by 6.1% to EUR 18.0 million (EUR 19.1 million). The segment’s share of the consolidated net sales was 7.3% (17.5%). During the report period no non-recurring expenses were recognised. During the comparison period EUR 0.2 million in non-recurring items were recognised. Electronics business generated an operating profit of EUR 0.7 million (EUR 0.4 million), equivalent to 3.7% of the segment’s net sales (2.1%).

January-June 2012 Net sales from January-June amounted to EUR 486.8 million (EUR 206.2 million), up 136.1% on the same period a year earlier. During the report period EUR 1.3 million (EUR 2.2 million) in non-recurring items were recognised. Operating profit before non-recurring items, PPA depreciation and amortization totalled EUR 35.3 million, accounting for 7.3% of net sales. Consolidated operating profit totalled EUR 26.9 million (EUR 16.7 million), accounting for 5.5% of net sales (8.1%). Operating profit was burdened by the losses of the Brazilian unit. Depreciation amounted to EUR 15.0 million (EUR 6.1 million). Depreciation caused by acquisitions amounted to EUR 7.1 million. Financial items were EUR 2.4 million negative (EUR 0.3 million). Financial items include foreign exchange differences totalling EUR 0.6 million positive net. Profit before taxes was EUR 24.5 million (EUR 17.1 million). Income tax of the report period amounted to EUR 7.8 million accounting for 32.0% of profit before taxes. Net profit for the report period totalled EUR 16.6 million (EUR 13.9 million).

Diluted earnings per share were EUR 0.78 (EUR 0.69).

Net sales generated by the Wiring Systems business in the report period amounted to EUR 453.4 million (EUR 168.3 million), or 169.4% more than in the comparison period. The segment’s share of the consolidated net sales was 93.2% (81.6%). Net sales increased along with the acquisition of AEES companies.

During the report period EUR 1.1 million (EUR 0.1 million) in non-recurring items were recognised. Wiring Systems business generated an operating profit before non-recurring items, PPA depreciation and amortization of EUR 37.7 million (EUR 21.0 million), equivalent to 8.3% of the segment’s net sales (12.5%). Wiring Systems business generated an operating profit of EUR 29.4 million (EUR 19.7 million), equivalent to 6.5% of the segment’s net sales (11.7%). The comparable profitability weakened due to the losses of the Brazilian unit resulting from low production volumes and costs related to the reorganisation of operations.

Net sales generated by the Electronics business decreased by 12.0% to EUR 33.3 million (EUR 37.9 million). The segment’s share of the consolidated net sales was 6.8% (18.4%). During the report period EUR 0.1 million (EUR 0.2 million) in non-recurring items were recognised. Electronics business generated an operating profit before non-recurring items of EUR 0.2 million negative, equivalent to 0.6% negative of the segment’s net sales. Electronics business generated an operating profit of EUR 0.3 million negative (EUR 0.8 million), equivalent to 1.0% negative of the segment’s net sales (2.2%). The decline of net sales and operating profit is due to decreased demand of design and manufacturing services (ODM) of production and service devices for telecommunication industry. Decrease in demand was especially due to change of individual customer’s product strategy. Electronics segment’s result was further burdened by costs related to production transfers from Finland to more competitive production facilities.

FINANCIAL POSITION AND CASH FLOW Consolidated total assets at 30 June 2012 amounted to EUR 516.6 million (EUR 233.7 million). Increase in total assets compared to comparison period is mainly due to the business acquisitions. Interest-bearing liabilities totalled EUR 155.1 million at the close of the report period (EUR 33.8 million). The Group’s equity ratio was 31.2% (54.3%). Net liabilities totalled EUR 93.4 million (EUR 18.7 million) and the gearing was 57.9% (14.8%).

Inventories amounted to EUR 97.6 million (EUR 71.1 million). Current receivables totalled EUR 139.8 million (EUR 68.1 million). Net cash from operating activities was EUR 35.3 million (EUR 8.8 million) and cash flows after investments during the report period were EUR 28.3 million (EUR 9.1 million negative). Cash and cash equivalents amounted to EUR 61.6 million (EUR 15.1 million).

CAPITAL EXPENDITURE During the report period, the Group’s gross capital expenditure totalled EUR 10.1 million (EUR 19.5 million), representing 2.1% of net sales (9.5%). The capital expenditure consisted mainly of production machinery and equipment.

RESEARCH & DEVELOPMENT Research and development costs totalled EUR 4.1 million (EUR 3.2 million), representing 0.8% (1.6%) of the consolidated net sales. At the end of the report period, 163 (130) people worked in product development, excluding production development and process development personnel.

PERSONNEL During the report period, the Group had an average payroll of 21,478 employees (6,745). At the end of the report period, the Group’s personnel numbered 20,602 employees (7,685), of whom 20,240 (7,293) worked abroad and 362 (392) in Finland. In addition the Group had at the end of the report period 368 rented employees.

QUALITY AND THE ENVIRONMENT All of the Group’s factories are certified in accordance with requirements of the ISO/TS16949 quality standard for the automotive industry excluding factory in Traverse City (USA), which is certified in accordance with requirements of ISO9001 standard. In addition all of the Group’s factories, except factories in Campo Alegre (Brazil) and Sao Bento do Sul (Brazil), are certified in accordance with the ISO14001 environmental standard and all factories operate in accordance with the ISO9001 quality standard. Production units in Curitiba (Brazil), Itajuba (Brazil), Raahe (Finland) and Suzhou (China) have also certification in accordance with the OHSAS18001 occupational health and safety management system standard.

The certification in accordance with ISO14001 environmental standard in Campo Alegre (Brazil) is planned to be completed during 2012.

MANAGEMENT The Annual General Meeting held on 4 April 2012, re-elected Outi Lampela, Matti Ruotsala and Jyrki Tähtinen as Board members and elected Andres Allikmäe, Shemaya Levy, Robert Remenar and Harri Suutari as new Board members. In the Board’s organisation meeting, Matti Ruotsala was elected as Chairman of the Board with Harri Suutari as Vice-Chairman.

Outi Lampela was elected as the chairman of the Audit Committee and Andres Allikmäe, Shemaya Levy and Jyrki Tähtinen as members. The Board decided to expand the duties of the Nomination Committee and form it into Nomination and Remuneration Committee. The Board elected Matti Ruotsala as chairman of the Nomination and Remuneration Committee and Robert Remenar and Harri Suutari as members.

Authorised public accounting firm KPMG Oy Ab, which has announced Virpi Halonen, APA, to be the Auditor with principal responsibility, was selected as auditor.

Matti Hyytiäinen has started as President & CEO as of 4 April 2012.

The Group’s Executive Board consists of the following persons Matti Hyytiäinen, Chairman (President & CEO), Jyrki Keronen (Senior Vice President, Business Development), Pekka Korkala (President, Wiring Systems, South America) Harri Ojala (President, Wiring Systems, Europe & APAC), Sanna Raatikainen (General Counsel), Jarmo Rajala (President, Electronics), Frank Sovis (President, Wiring Systems, North America) and Juha Torniainen (CFO). Juha Torniainen has replaced Marja Sarajärvi on 1 July 2012.

DIVIDEND FOR 2011 The Annual General Meeting held on 4 April 2012 resolved to pay a dividend of EUR 0.60 per share: i.e. a total of about EUR 12.8 million. The dividend was paid out on 18 April 2012.

SHARE TURNOVER AND SHAREHOLDERS PKC Group Plc’s share turnover on NASDAQ OMX Helsinki Ltd from 1 January to 30 June 2012 was 6,080,112 shares (5,402,828 shares), representing 28.8% of the average number of shares (27.4%). Shares were traded to a total value of EUR 91.0 million (EUR 84.2 million). The lowest share value during the report period was EUR 10.65 (EUR 13.90) and the highest EUR 18.30 (EUR 18.36). The closing price on the last trading day of the report period was EUR 12.13 (EUR 15.78) and the average price during the report period was EUR 14.97 (EUR 15.59). The company’s market capitalisation at 30 June 2012 was EUR 260.6 million (EUR 314.1 million).

The shares held by Board members, their closely associated persons and corporations in which they have a controlling interest accounted for 1.5% (0.7%) of the total number of shares at the end of the report period. PKC Group Plc had a total of 8,976 shareholders (8,123) at the end of the report period.

The shares held by foreigners and through nominee registrations at the close of the report period totalled 26.0% of the share capital (22.9%).

SHARES AND SHARE CAPITAL PKC Group Plc’s shares and share capital has changed during the report period as follows: -- A total of 110 PKC Group Plc’s shares have been subscribed for with 2006B options. The new shares and the corresponding increase in the share capital, EUR 37.4, have been entered into the Trade Register on 12 January 2012. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 13 January 2012. After the increase the Company’s registered share capital was EUR 6,103,098.92, divided into 21,155,966 shares.

-- A total of 201,439 PKC Group Plc’s shares have been subscribed for with 2006 options (101,040 with 2006B options and 100,399 with 2006C options).

The new shares and the corresponding increase in the share capital, EUR 68,489.26, have been entered into the Trade Register on 29 March 2012. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 30 March 2012. After the increase the Company’s registered share capital was EUR 6,171,588.18, divided into 21,357,405 shares.

-- A total of 57,157 PKC Group Plc’s shares have been subscribed for with 2006 options (28,780 with 2006B options and 28,377 with 2006C options), and the corresponding increase in the share capital is EUR 19,433.38. A total of 67,750 PKC Group Plc’s shares have been subscribed for with 2009A options.

New shares and increase in share capital corresponding to subscriptions have been entered into the Trade Register on 10 May 2012. The new shares were traded on the main list of the NASDAQ OMX Helsinki Ltd together with the old shares as of 11 May 2012. After the increase the Company’s registered share capital was EUR 6,191,021.56, divided into 21,482,312 shares.

THE BOARD'S AUTHORISATIONS The Board of Directors was granted authorisation by the Annual General Meeting on 30 March 2011 to decide on share issue and granting of special rights defined in Chapter 10, Section 1 of the Companies Act and all the terms and conditions thereof. A maximum total of 6,000,000 shares may be issued or subscribed for on the basis of authorisation. The authorisation includes the right to decide on directed share issue. The authorisation is in force for five years from the date of the General Meeting's decision. At Board of Directors' discretion the authorisation may be used e.g. in financing possible corporate acquisitions, inter-company co-operation or similar arrangement, or strengthening company's financial or capital structure etc. PKC Group Plc’s Board of Directors has, on the basis of the authorisation granted by the shareholders’ meeting on 30 March 2011, resolved on a directed share issue without payment of 1,250,000 new shares to company’s wholly owned subsidiary PKC Group USA Inc for the payment of the purchase price for the shares in the AEES-companies. After this share issue, a maximum total of 4,750,000 shares may be issued or subscribed for on the basis of authorisation.

The Board of Directors does not possess a valid authorisation to acquire company’s own shares, and the company does not have any own shares (treasury shares) in its possession.

AMENDMENT OF ARTICLES OF ASSOCIATION The Annual General Meeting resolved on 4 April 2012, in accordance with the Board of Directors proposal, to amend the 1§ of the Articles of Association so that PKC Group Plc shall be defined to be the company’s name in English and that Helsinki be changed to be the company’s domicile; 9§ so that the invitation to the General Meeting be published on the Company’s Internet pages no more than three (3) months and no less than three (3) weeks prior to the meeting; 10§ so that the meeting shall be held at Company's domicile.

STOCK OPTION SCHEMES 2006 options The stock option scheme initiated in 2006, comprises a total of 697,500 options divided into A, B and C warrants. At the close of report period, the outstanding options and options held by key personnel totals 80,610 2006C warrants.

The share subscription price for the 2006 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki, with dividend adjustments, as defined in the stock option terms (at present, EUR 8.94 for the 2006C warrants). Through the exercise of the 2006 stock options, the share capital of PKC Group Plc may be increased by a maximum total of 697,500 new shares and EUR 237,150. After the registration of subscription made on 10 May 2012, the Company’s share capital can increase by a maximum of 82,260 shares i.e. EUR 27,968.40 as a result of the exercise of the remaining outstanding option rights. The share subscription period is for 2006C warrants 1 April 2011 – 30 April 2013. The 2006 stock options are subject to a share ownership plan.

Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.

The share subscription period for 2006A warrants has ended 30 April 2011.

During the share subscription period a total 200,300 shares were subscribed and 2,200 warrants remained unused. The share subscription period for 2006B warrants has ended 30 April 2012 and no warrants remained unused.

2009 options The Annual General Meeting held on 27 March 2009 decided to issue stock options to key personnel in the company and its subsidiaries. The maximum total number of stock options issued is 600,000 and they are divided into A, B and C warrants. At the close of the report period, the outstanding options and options held by key personnel totals 127,750 2009A, 200,000 2009B and 200,000 2009C warrants.

The subscription price for shares through the exercise of the 2009 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki for April 2009, 2010 and 2011 + 20% with dividend adjustments, (at present, EUR 2.30 for the 2009A warrants, EUR 12.11 for the 2009B warrants and EUR 17.98 for the 2009C warrants). The subscription price for shares will be recorded in the invested non-restricted equity fund. The stock options entitle their owners to subscribe for a maximum total of 600,000 new shares in the company or existing shares held by the company. After the registration of subscription made on 10 May 2012, the Company’s share capital can increase by a maximum of 532,250 shares as a result of the exercise of the remaining outstanding option rights. The share subscription period for 2009A warrants is 1 April 2012 30 April 2014, for 2009B warrants 1 April 2013 30 April 2015 and for 2009C warrants 1 April 2014 30 April 2016. The 2009 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.

2012 options The Annual General Meeting held on 4 April 2012 decided to issue stock options to key personnel in the company and its subsidiaries. The maximum total number of stock options issued is 1,020,000. The stock options are marked with the symbol 2012A(i) and 2012A(ii); 2012B(i) and 2012B(ii); as well as 2012C(i) and 2012C(ii). A total of 170,000 stock options are included in each stock option class. At the close of the report period, a total of 170,000 2012A(i) warrants have been allocated to key personnel, in addition to which 170,000 2012A(ii) warrants have been initially allocated to key personnel.

The subscription price for shares through the exercise of the 2012 stock options is the volume-weighted average price of the PKC Group Plc share on NASDAQ OMX Helsinki Ltd during first quarter in 2012, 2013 and 2014. The share subscription price is EUR 15.31 with the 2012A options. The subscription price for shares will be recorded in the invested non-restricted equity fund. The stock options entitle their owners to subscribe for a maximum total of 1,020,000 new shares in the company or existing shares held by the company. The share subscription period for stock options 2012A, will be 1 April 2015 30 April 2017, for stock options 2012B, 1 April 2016 30 April 2018, and for stock options 2012C, 1 April 2017 30 April 2019. The share subscription period for stock options 2012A(ii), 2012B(ii) and 2012C(ii) shall, however, not commence, unless certain operational or financial targets of the Group established for the exercise of stock options and determined by the Board of Directors have been attained. The Board of Directors shall annually decide on targets separately for each stock option class in connection with the distribution of stock options. Those stock options, for which the targets determined by the Board of Directors have not been attained, shall expire in the manner decided by the Board of Directors. The 2012 stock options are subject to a share ownership plan. Key personnel are obliged to subscribe for or purchase the company’s shares with 20% of the gross income earned from stock options and to own these shares for two years. The company’s President and CEO is obliged to own these shares for the duration of his managerial contract.

CORPORATE RESPONSIBILITY Corporate responsibility is a key element in PKC’s operations. PKC operates with ethical business practice, takes responsibility for the operating environment and strives to minimize any harm caused to the environment, and respects and promotes human rights and fair workplace practices, equal opportunities, and zero-tolerance policy on bribery and corruption. PKC Group’s Board of Directors has ratified the Code of Conduct covering the whole group.

The Code of Conduct sets principles for ethical business practice and is based on the highest ethical standards. Compliance with legislation, regulations and international norms is a fundamental requirement, from which it is not possible to deviate in any circumstances. PKC is in the process of developing its corporate responsibility reporting in the direction of GRI’s guidelines (Global Reporting Initiative).

With regard to the labour union issue in Acuna, Mexico, PKC Group is complying fully with the Mexican laws and norms and respects the rights of its employees, including their freedom of association and the right to collective bargaining.

Furthermore, a labour union vote shall be arranged in the Mexican subsidiary in question. The Mexico Federal Labour Court oversees the vote process and will schedule the vote. The working environment in the Acuna plant is stable, the employee turnover is very low and the employee satisfaction is high.

SHORT-TERM RISKS AND UNCERTAINTIES The public deficit and high indebtedness of many European countries and the United States may weaken economic growth and availability of financing for investment goods and increase uncertainty in the markets.

A potential weakening of the euro against the Polish zloty and the Russian rouble as well as the potential weakening of the USD against the Mexican peso may increase PKC’s processing costs.

A significant increase in copper price may weaken PKC Group’s profit in short term. The customer prices are updated on average with 5 month delay on the basis of copper price changes.

OUTLOOK FOR THE FUTURE PKC expects that its net sales and comparable operating profit will increase in 2012 from the previous year’s level. Net sales in 2011 amounted to EUR 550.2 million and operating profit without non-recurring items was EUR 42.6 million.

Major part of net sales and profit is generated by the Wiring Systems business.

FINANCIAL REPORTS IN 2012 In 2012, the Interim Reports will be published as follows: Interim Report 1-9/2012 Thursday, November 1, 2012 at about 8.15 a.m.

The text section of this release focuses on the interim report. Comparisons have been made to the figures of the corresponding period in 2011, unless otherwise mentioned. The figures presented in the tables are independently rounded figures.

TABLES This interim report has been prepared in accordance with IAS 34 (Interim Financial Reporting) standard. The interim report has been prepared in accordance with the same principles as the annual financial statements for 2011. The year 2012 IFRS standard changes have not had any effect. Interim financial statements are unaudited.

CONSOLIDATED STATEMENT OF 4-6/12 4-6/11 1-6/12 1-6/11 1-12/11 COMPREHENSIVE INCOME 3 mon. 3 mon. 6 mon. 6 mon. 12 mon.

(EUR 1,000) NET SALES 244,804 109,307 486,771 206,193 550,208 Other operating income 331 1,755 661 2,413 4,042 Increase (+) / decrease (-) in -1,772 -558 -2,505 1,107 -1,679 stocks of finished goods and work in progress Production for own use 39 74 60 74 208 Materials and services 149,583 67,459 297,273 127,679 332,646 Employee benefit expenses 50,888 21,649 101,283 40,374 109,800 Depreciation 7,688 3,243 15,048 6,056 17,531 Other operating expenses 21,065 11,153 44,471 18,933 58,296 OPERATING PROFIT 14,177 7,074 26,912 16,745 34,505 Interest expenses -1,492 -591 -3,139 -1,129 -4,253 Other financial income 1,337 1,213 723 1,460 599 Other financial expenses -32 0 -32 0 -1,437 PROFIT BEFORE TAXES 13,991 7,696 24,464 17,076 29,414 Income tax -4,260 -1,434 -7,839 -3,222 -5,969 PROFIT FOR THE REPORT PERIOD 9,731 6,262 16,626 13,854 23,445 Other comprehensive income: Interest derivatives -193 0 -401 0 -464 Foreign currency translation 1,186 -590 4,800 -3,329 -1,112 differences - foreign operations Total comprehensive income for the 10,724 5,672 21,025 10,525 21,869 period Attributable to equity holders of the parent company: Basic earnings per share (EPS), 0.46 0.32 0.79 0.70 1.18 EUR Diluted earnings per share (EPS), 0.46 0.31 0.78 0.69 1.16 EUR CONSOLIDATED STATEMENT OF FINANCIAL POSITION 6/12 6/11 12/11 (EUR 1,000) ASSETS NON-CURRENT ASSETS Goodwill 30,527 15,384 29,813 Other intangible assets 49,070 10,650 50,099 Property, plant and equipment 101,729 48,478 113,556 Deferred tax assets 12,957 4,895 7,697 Other receivables 23,302 31 20,207 Total non-current assets 217,584 79,438 221,371 CURRENT ASSETS Inventories 97,586 71,083 110,526 Receivables Trade receivables 112,721 55,766 103,965 Other receivables 22,440 12,007 20,490 Current tax assets 4,606 328 165 Total receivables 139,766 68,100 124,621 Cash and cash equivalents 61,636 15,056 52,280 Total current assets 298,988 154,240 287,426 TOTAL ASSETS 516,573 233,677 508,798 EQUITY AND LIABILITIES EQUITY Share capital 6,191 6,103 6,103 Share premium account 10,605 8,246 8,259 Invested non-restricted equity fund 34,013 21,852 35,639 Translation reserve 10,700 733 6,257 Fair value reserve -865 0 -464 Share-based payments 2,676 1,993 2,340 Retained earnings 81,407 74,179 70,902 Profit for the report period 16,626 13,854 23,445 Total equity 161,353 126,960 152,482 LIABILITIES Non-current liabilities Interest-bearing liabilities 140,942 25,228 146,789 Non-interest-bearing liabilities 26,809 0 24,321 Provisions 885 1,037 1,541 Deferred tax liabilities 32,007 6,762 32,957 Total non-current liabilities 200,643 33,026 205,608 Current liabilities Interest-bearing liabilities 14,120 8,556 16,230 Trade payables 91,342 37,306 90,779 Other non-interest-bearing liabilities 44,659 27,451 43,176 Current tax liabilities 4,456 379 524 Total current liabilities 154,577 73,692 150,708 Total liabilities 355,220 106,718 356,316 TOTAL EQUITY AND LIABILITIES 516,573 233,677 508,798 CONSOLIDATED STATEMENT OF CASH FLOWS (EUR 1,000) 1-6/12 1-6/11 1-12/11 12 6 mon. 6 mon. mon.

Cash flows from operating activities Cash receipts from customers 478,124 220,549 564,533 Cash receipts from other operating activities 351 2,224 5,357 Cash paid to suppliers and employees -433,713 -212,053 -520,867 Cash flows from operations before financial 44,762 10,719 49,022 income and expenses and taxes Interest paid and other financial expenses -3,004 -1,164 -3,695 Translation difference 1,448 994 2,489 Interest received 91 713 1,995 Income taxes paid -8,027 -2,469 -9,822 Net cash from operating activities (A) 35,271 8,794 39,990 Cash flows from investing activities Acquisition of property, plant and equipment and -9,454 -5,674 -11,845 intangible assets Proceeds from sale of property, plant and 2,077 293 1,393 equipment and intangible assets Acquisitions of subsidiaries 0 -12,552 -79,565 Loans granted 0 0 -514 Proceeds from repayments of loans 411 16 16 Dividends received 0 0 301 Net cash used in investment activities (B) -6,965 -17,917 -90,213 Cash flows after investments 28,305 -9,123 -50,223 Cash flows from financing activities Drawing of long-term borrowings 0 0 153,703 Drawing of short-term borrowings 5,041 0 12,175 Share issue 2,590 3,500 4,000 Repayment of short-term/long-term borrowings -14,549 -5,355 -93,596 Dividends paid -12,814 -10,891 -10,890 Net cash used in financing activities (C) -19,733 -12,746 65,391 Net increase (+) or decrease (-) in cash and 8,572 -21,868 15,168 equivalents (A+B+C) Cash and cash equivalents in the beginning of 52,280 37,104 37,104 the period Effect of exchange rate fluctuations 784 -179 8 Cash and cash equivalents in the end of the 61,636 15,056 52,280 period KEY FINANCIAL INDICATORS 1-6/12 1-6/11 1-12/11 12 6 mon. 6 mon. mon.

Net sales, EUR 1,000 486,771 206,193 550,208 Operating profit, EUR 1,000 26,912 16,745 34,505 % of net sales 5.5 8.1 6.3 Profit before taxes, EUR 1,000 24,464 17,076 29,414 % of net sales 5.0 8.3 5.3 Net profit for the period, EUR 1,000 16,626 13,854 23,445 % of net sales 3.4 6.7 4.3 Return on equity (ROE), % 21.2 22.1 17.0 Return on investments (ROI), % 23.0 27.7 18.9 Net liabilities, EUR 1,000 93,426 18,727 110,739 Gearing, % 57.9 14.8 72.6 Equity ratio, % 31.2 54.3 30.0 Current ratio 1.9 2.1 1.9 Gross capital expenditure, EUR 1,000 10,132 19,493 101,532 % of net sales 2.1 9.5 18.5 R&D expenditures, EUR 1,000 4,079 3,196 6,922 % of net sales 0.8 1.6 1.3 Personnel average 21,478 6,745 10,793 PER-SHARE KEY INDICATORS 1-6/12 1-6/11 1-12/11 12 6 mon. 6 mon. mon.

Earnings per share (EPS), EUR 0.79 0.70 1.18 Earnings per share (EPS),diluted, EUR 0.78 0.69 1.16 Equity per share, EUR 7.51 6.38 7.66 Share price at close of period, EUR 12.13 15.78 11.48 Lowest share price, EUR 10.65 13.90 8.60 Highest share price, EUR 18.30 18.36 18.36 Average share price, EUR 14.97 15.59 13.44 Turnover in shares, 1,000 shares 6,080 5,403 11,804 Turnover in shares per (share issue adjusted) 28.8 27.4 59.6 share capital, % Average number of shares, 1,000 shares 21,082 19,725 19,816 Average number of shares, diluted, 1,000 shares 21,310 20,104 20,127 Shares at end of period, 1,000 shares 21,482 19,904 19,906 Unlisted shares at the end of period, 1,000 0 0 1,250 shares Market capitalisation, EUR 1,000 260,580 314,092 228,519 1. SEGMENT INFORMATION 1.4.-30.6.2012 (EUR 1,000) Wiring Electro Unallocated amounts and Group Systems nics eliminations Total Sales to external 226,827 17,977 0 244,804 customers Sales to other segments 122 31 -153 0 Net sales 226,948 18,008 -153 244,804 Operating profit before 15,382 664 -851 15,195 non-recurring items % of net sales 6.8 3.7 6.2 Non-recurring employee 1,018 0 0 1,018 benefit expenses Total non-recurring other 1,018 0 0 1,018 operating items Operating profit 14,364 664 -851 14,177 % of net sales 6.3 3.7 5.8 Segment's assets 501,675 46,942 -45,064 503,553 Unallocated assets *) 13,020 13,020 Total assets 501,675 46,942 -32,044 516,573 *) Segment's assets do not include deferred taxes 1.4.-30.6.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group Systems nics and eliminations Total Sales to external customers 90,159 19,148 0 109,307 Sales to other segments 266 43 -309 0 Net sales 90,425 19,192 -309 109,307 Operating profit before 9,653 543 -934 9,262 non-recurring items % of net sales 10.7 2.8 8.5 Donations to the 0 150 0 150 universities Advisor fees 410 0 1,944 2,354 Cancellation of the -317 0 0 -317 write-down of inventories Total non-recurring other 93 150 1,944 2,187 operating items Operating profit 9,560 393 -2,878 7,075 % of net sales 10.6 2.1 6.5 Segment's assets 193,376 50,026 4,858 248,260 Unallocated assets *) -14,583 -14,583 Total assets 193,376 50,026 -9,725 233,677 *) Segment's assets do not include deferred taxes 1.1.-30.6.2012 (EUR 1,000) Wiring Electro Unallocated amounts and Group Systems nics eliminations Total Sales to external 453,447 33,325 0 486,771 customers Sales to other segments 278 54 -332 0 Net sales 453,724 33,379 -332 486,771 Operating profit before 30,553 -203 -2,158 28,191 non-recurring items % of net sales 6.7 -0.6 5.8 Non-recurring employee 1,143 136 0 1,279 benefit expenses Total non-recurring other 1,143 136 0 1,279 operating items Operating profit 29,410 -339 -2,158 26,912 % of net sales 6.5 -1.0 5.5 Segment's assets 501,675 46,942 -45,064 503,553 Unallocated assets *) 13,020 13,020 Total assets 501,675 46,942 -32,044 516,573 *) Segment's assets do not include deferred taxes 1.1.-30.6.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group Systems nics and eliminations Total Sales to external customers 168,333 37,860 0 206,193 Sales to other segments 419 59 -478 0 Net sales 168,752 37,920 -478 206,193 Operating profit before 19,756 986 -1,810 18,932 non-recurring items % of net sales 11.7 2.6 9.2 Donations to the 0 150 0 150 universities Advisor fees 410 0 1,944 2,354 Cancellation of the -317 0 0 -317 write-down of inventories Total non-recurring other 93 150 1,944 2,187 operating items Operating profit 19,663 836 -3,754 16,745 % of net sales 11.7 2.2 8.1 Segment's assets 193,376 50,026 4,858 248,260 Unallocated assets *) -14,583 -14,583 Total assets 193,376 50,026 -9,725 233,677 *) Segment's assets do not include deferred taxes 1.1.-31.12.2011 (EUR 1,000) Wiring Electro Unallocated amounts Group Systems nics and eliminations Total Sales to external customers 477,212 72,995 0 550,208 Sales to other segments 755 132 -887 0 Net sales 477,967 73,127 -887 550,208 Operating profit before 42,467 2,825 -3,326 41,967 non-recurring items % of net sales 8.9 3.9 7.6 Donations to the 0 150 0 150 universities Advisor fees 7,100 0 0 7,100 Cancellation of the -317 0 0 -317 write-down of inventories Non-recurring employee 218 310 0 528 benefit expenses Total non-recurring other 7,001 460 0 7,461 operating items Operating profit 35,466 2,365 -3,326 34,505 % of net sales 7.4 3.2 6.3 Segment's assets 483,593 48,910 -31,402 501,101 Unallocated assets *) 7,697 7,697 Total assets 483,593 48,910 -23,706 508,798 *) Segment's assets do not include deferred taxes NET SALES BY GEOGRAPHICAL 4-6/12 4-6/11 1-6/12 1-6/11 1-12/11 12 LOCATIONS (EUR 1,000) 3 mon. 3 mon. 6 mon. 6 mon. mon.

Finland 16,038 16,521 29,029 32,107 62,521 Other Europe 59,019 62,790 117,066 117,615 236,006 North America 146,552 6,913 294,594 13,283 157,458 South America 17,877 17,329 36,236 33,111 73,514 Other countries 5,318 5,755 9,846 10,078 20,708 Total 244,804 109,307 486,771 206,193 550,208 2. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR MILLION) A = Share Capital B = Share premium account C = Invested non-restricted equity fund D = Fair value reserve E = Translation difference F = Retained earnings G = Total equity A B C D E F G Equity at 1.1.2011 6.0 4.9 21.8 0.0 7.6 83.5 123.7 Dividends 0.0 0.0 0.0 0.0 0.0 -10.7 -10.7 Share-based payments 0.0 0.0 0.0 0.0 0.0 0.3 0.3 Subscription of shares 0.1 3.4 0.0 0.0 0.0 0.0 3.5 Comprehensive income for the period 0.0 0.0 0.0 0.0 -3.3 13.8 10.5 Other changes 0.0 0.0 0.0 0.0 -0.5 0.0 -0.5 Equity at 30.6.2011 6.1 8.3 21.8 0.0 3.8 86.9 126.9 Equity at 1.1.2012 6.1 8.3 35.6 -0.5 6.3 96.7 152.5 Dividends 0.0 0.0 0.0 0.0 0.0 -12.8 -12.8 Share-based payments 0.0 0.0 0.0 0.0 0.0 0.3 0.3 Share issue, exercise of options 0.1 2.3 0.0 0.0 0.0 0.0 2.4 Comprehensive income for the period 0.0 0.0 0.4 -0.4 4.4 16.6 21.0 Other changes 0.0 0.0 -2.0 0.0 0.0 0.0 -2.0 Equity 30.6.2012 6.2 10.6 34.0 -0.9 10.7 100.8 161.4 3. PROPERTY, PLANT AND EQUIPMENT (EUR 1,000) 6/12 6/11 Acquisition cost 1.1. 148,456 76,511 + Additions 6,966 5,091 + Acquisitions 0 15,738 - Disposals -1,152 -689 Acquisition cost 30.6. 154,271 96,651 Accumulated depreciation 1.1. 41,366 40,505 - Accumulated depreciation on disposals 0 3,409 + Depreciation 10,878 4,034 +/- Exchange difference 298 223 Depreciation 30.6. 52,542 48,171 Carrying amount 30.6. 101,729 48,478 4. OTHER INTANGIBLE ASSETS (EUR 1,000) 6/12 6/11 Acquisition cost 1.1. 104,828 39,246 + Additions 3,165 551 + Acquisitions 0 2,918 Acquisition cost 30.6. 107,993 42,715 Accumulated depreciation 1.1. 24,525 14,882 + Depreciation 3,680 1,705 +/- Exchange difference 192 95 Depreciation 30.6. 28,397 16,681 Carrying amount 30.6. 79,596 26,034 5. CONTINGENT LIABILITIES AT END OF PERIOD (EUR 1,000) 6/12 6/11 12/11 Leasing liabilities 14,519 2,712 1,898 Liabilities for derivative instruments Nominal values Interest rate swaps 40,991 0 45,974 Currency derivatives Forward contracts 16,063 347 5,944 Copper derivatives Forward contracts 8,257 2,524 2,450 Total 65,311 2,872 54,367 Fair values Interest rate swaps -885 0 -480 Currency derivatives Forward contracts 7 0 -64 Copper derivatives Forward contracts -160 11 188 Total -1,037 12 -356 Currency and copper derivatives are used only in hedging currency and copper risks. PKC Group does not apply hedge accounting to currency and copper derivative instruments in accordance with IAS 39. Fair values of currency and copper derivatives are recognised through profit and loss. PKC Group applies hedge accounting to interest rate swaps.

6. QUARTERLY KEY 1-3/11 4-6/11 7-9/11 10-12/1 1-3/12 4-6/12 INDICATORS, 3 mon. 3 mon. 3 mon. 1 3 3 mon. 3 mon.

CONSOLIDATED mon.

Net sales, EUR million 96.9 109.3 102.0 242.0 242.0 244.8 Operating profit, EUR 9.7 7.1 9.0 8.8 12.7 14.2 million % of net sales 10.0 6.5 8.8 3.6 5.3 5.8 Profit before taxes, EUR 9.4 7.7 4.6 7.7 10.5 14.0 million % of net sales 9.7 7.0 4.5 3.2 4.3 5.7 Equity ratio, % 52.4 54.3 36.1 30.0 30.9 31.2 Earnings per share (EPS), 0.38 0.31 0.19 0.29 0.33 0.46 diluted (EUR) Equity per share, EUR 6.09 6.38 6.44 7.66 7.65 7.51 QUARTERLY KEY INDICATORS, WIRING SYSTEMS Net sales, EUR million 78.2 90.2 84.3 224.5 226.6 226.8 Operating profit, EUR 10.1 9.6 7.1 8.7 15.0 14.4 million % of net sales 12.9 10.6 8.4 3.9 6.6 6.3 QUARTERLY KEY INDICATORS, ELECTRONICS Net sales, EUR million 18.7 19.1 17.7 17.5 15.3 18.0 Operating profit, EUR 0.4 0.4 1.7 -0.2 -1.0 0.7 million % of net sales 2.4 2.1 9.8 -1.2 -6.5 3.7 CALCULATION OF INDICATORS Return on equity (ROE), % = 100 x Profit for the report period / Total equity (average) Return on investments (ROI), % = 100 x (Profit before taxes + financial expenses) / (Total equity + interest-bearing liabilities (average)) Gearing, % = 100 x (Interest-bearing liabilities – cash and cash equivalents) / Total equity Equity ratio, % = 100 x Total equity / (Total of the statement of financial position – advance payments received) Current ratio = Total current assets / Total current liabilities Earnings per share (EPS), EUR = Profit for the report period attributable to equity holders of the parent company / Average share issue-adjusted number of shares Shareholders’ equity per share, EUR = Equity attributable to equity holders of the parent company / Share issue-adjusted number of shares at the date of the statement of financial position Market capitalisation = Number of shares at the end of the report period x the last trading price of the report period All the future estimates and forecasts presented in this stock exchange release are based on the best current knowledge of the company’s management and information published by market research companies and customers. The estimates and forecasts contain certain elements of risk and uncertainty which, if they materialise, may lead to results that differ from present estimates. The main factors of uncertainty are related, among other things, to the general economic situation, the trend in the operating environment and the sector as well as the success of the Group’s strategy.

PKC GROUP PLC Board of Directors Matti Hyytiäinen President and CEO For additional information, contact: Matti Hyytiäinen, President & CEO, PKC Group Plc, +358 400 710 968 PRESS CONFERENCE A press conference on the interim report will be arranged for analysts and investors today, 9 August 2012, at 10.00 a.m., at the address Event Arena Bank, Unioninkatu 20, Helsinki.

DISTRIBUTION NASDAQ OMX Main media www.pkcgroup.com The PKC Group offers design and contract manufacturing services for wiring systems and electronics. The Group has production facilities in Brazil, China, Estonia, Finland, Germany, Ireland, Mexico, Poland, Russia, Ukraine and the USA. The Group's net sales in 2011 totalled EUR 550.2 million. PKC Group Plc is listed on NASDAQ OMX Helsinki Ltd.

Copyright © 2012 OMX AB (publ).

Copyright © 2012 OMX AB (publ)

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