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Elektrobit Group Oyj - EB, ELEKTROBIT CORPORATION LOWERS ITS OPERATING RESULT GUIDANCE FOR THE FIRST HALF OF 2012 AND GIVES MORE PRECISE OPERATING RESULT GUIDANCE FOR THE WHOLE YEAR OF 2012

June 21, 2012

EB, ELEKTROBIT CORPORATION LOWERS ITS OPERATING RESULT GUIDANCE FOR THE FIRST HALF OF 2012 AND GIVES MORE PRECISE OPERATING RESULT GUIDANCE FOR THE WHOLE YEAR OF 2012


STOCK EXCHANGE RELEASE

Free for publication on June 21, 2012 at 5.00 p.m. (CEST+1)

EB, ELEKTROBIT CORPORATION LOWERS ITS OPERATING RESULT GUIDANCE FOR THE FIRST HALF OF 2012 AND GIVES MORE PRECISE OPERATING RESULT GUIDANCE FOR THE WHOLE YEAR OF 2012

EB, Elektrobit Corporation lowers its operating result guidance for the first half of 2012 and gives more precise guidance for the whole year 2012 based on the more specific outlook available. The reason for the changed operating result outlook is, that the company will book a provision of EUR 0.8 million due to the estimated costs related to collecting the receivables from TerreStar Companies, and in addition, it has become obvious, that the operating profit in both Automotive and Wireless Business Segments during the second quarter of 2012 will remain somewhat lower than planned mainly due to the higher than estimated project costs. Regarding the company's net sales, the outlook has not changed.

Considering the above mentioned provision and more precise outlooks for both Business Segments, based on the information currently available, EB expects the operating result of the second quarter of 2012 to stay below the level of the first quarter 2012 (EUR 0.9 million, 1Q 2012). EB expects for the first half of 2012 that net sales will grow clearly from the previous year (EUR 76.1 million in 1H 2011), and the operating result will be close to zero level (EUR -4.4 million, 1H 2011). Due to the lowered operating result outlook for the first half of 2012 also the outlook for the whole year 2012 has lowered. However, EB expects for the year 2012 further, that the net sales and operating result will grow clearly from the previous year (net sales of EUR 162.2 million, and operating loss of EUR -4.0 million in 2011).

Previously, EB expected for the year 2012, that the net sales and operating result will clearly grow from the previous year (net sales of EUR 162.2 million, and operating loss of EUR -4.0 million in 2011), and for the first half of 2012, EB expected that the net sales will clearly grow (EUR 76.1 million in 1H 2011) and the operating result will be positive (EUR -4.4 million in 1H 2011).  

EB has decided to make the above mentioned booking of the provision of EUR 0.8 million primarily due to the restructuring process of TerreStar Corporation continuing longer than expected. EB's operating result in the first half of 2012 will include approximately EUR 1.2 million costs related to collecting the receivables from TerreStar companies. During 2011 EB's operating result included EUR 0.9 million costs related to collecting the receivables from TerreStar companies. EB has currently significant receivables amounting to approximately USD 25.8 million from TerreStar Networks Inc. and its parent company TerreStar Corporation. EB has claimed its receivables as well as additional costs resulting mainly from the ramp down of the business operations between the parties totaling to USD 27.9 million in the Chapter 11 cases of both TerreStar Networks and TerreStar Corporation.

The profit outlook for the year 2012 is based on the assumption that there will be no further bookings of impairments of EB's accounts receivable from TerreStar Networks Inc. and TerreStar Corporation. There is no certainty that the booked provision of EUR 0.8 million is enough to cover all costs related to collecting the receivables during the whole collection period, especially if the process will continue during 2013.  It is possible that, based on later information related to reorganizations of TerreStar Networks Inc. and TerreStar Corporation, this view may need to be reconsidered. Due to the uncertainties related to the outcome of reorganization processes of TerreStar Networks Inc. and TerreStar Corporation, the credit risk may still grow during 2012. Uncertainties regarding reorganization of TerreStar Networks Inc. and TerreStar Corporation, the amount of the receivables and collecting the receivables as well as other uncertainties regarding the outlook are presented in the Company's interim report, published on April 26, 2012, under "Risks and Uncertainties" section.

Information on TerreStar Networks' and TerreStar Corporation's reorganizations are presented in the October 20 and 25, November 20 and December 30, 2010, February 17, 2011, and November 18, 2011 stock exchange releases as well as in EB's interim reports and financial statement at www.elektrobit.com .

Oulu, June 21, 2012

EB, Elektrobit Corporation
Jukka Harju
CEO

Further information:

Jukka Harju
CEO
Tel. + 358 40 344 5466

Distribution:

NASDAQ OMX Helsinki
Principal media

EB, Elektrobit Corporation

EB creates advanced technology and turns it into enriching end-user experiences. EB is specialized in demanding embedded software and hardware solutions for wireless and automotive industries. The net sales for the year 2011 totaled MEUR 162.2. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com