ELCOTEQ

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INTERIM REPORT JANUARY-JUNE 2000 (Unaudited)

Growth continued strong. Half-year net sales more than tripled on the
same period last year to MEUR 932.3.
Half-year operating profit MEUR 27.9 (one year earlier: MEUR 0.0),
pre-tax profit MEUR 25.5 MEUR (-1.3), EPS EUR 0.72 (-0.10).
Return on capital employed improved and 12-month rolling ROCE was
17.4 %.
Full-year net sales are expected to almost triple on 1999 and profits
to improve even more rapidly.

Demand for electronics manufacturing services continued to grow
during the first and second quarters of 2000. This enabled Elcoteq to
deploy the plant network created during the 1998-1999 globalization
program. The Group has succeeded in growing rapidly by offering its
customers modern and competitive manufacturing capacity with
consistent business processes, working procedures and systems on
three continents.

Net sales during the first six months of the year exceeded net sales
for the whole of 1999 by almost one quarter and the profit before
extraordinary items and taxes was more than 2.5 times higher than the
corresponding figure. Elcoteq's key figures indicate stable and
positive financial performance; the Company achieved or exceeded the
financial targets which it presented in conjunction with its share
issue in May.

Capacity created to safeguard growth

Elcoteq has laid the groundwork for rapid growth by continuously
increasing its production capacity. During the second quarter the
Company built further plant capacity in Mexico, Estonia and Finland.
The new manufacturing facility in Mexico will come on stream in
September. The plant expansion in Finland was taken into use at the
beginning of August and the expansion in Estonia will be brought into
operation during the final quarter of the year.

After the first six-month period, Elcoteq also took two important
steps to add further capacity. In July Elcoteq was the first
international EMS company to start production in the capital of
China. Elcoteq leased altogether 12,000 square meters of factory
space in Beijing for manufacturing of subassemblies for mobile phones
and GSM network equipment for customers including Ericsson and Nokia.
This expansion more than doubles the Group's production space in
China, one of the world's largest and fastest growing mobile phone
markets, and will raise the number of Elcoteq employees there to over
1,000 by the end of 2000.

In response to the rapid growth in demand for wireless network
infrastructure equipment, Elcoteq decided in August to establish a
separate plant in Estonia specializing in these products. The new
6,300-square-meter plant to be built in Tallinn will be leased and
brought into operation during the first quarter of 2001. Elcoteq
possesses considerable expertise in telecommunications in Tallinn, in
addition to which the Company has agreed on co-operation with the two
leading Estonian universities to safeguard the availability of the
special skills and personnel needed in the manufacture of advanced
electronics products.

The Company now has 126 % more plant manufacturing space either in
use or under construction than after the second quarter in 1999.
Equally important, part of the additional capacity results from the
continuous implementation of more advanced production technology at
both the new and existing plants.

Net sales and performance

Elcoteq's rapid growth in net sales increased and the Company's net
sales between January and June more than tripled (+242 %) compared to
the first six months of 1999. Net sales for the period totaled MEUR
932 (272). Intermittent component shortages slowed growth in net
sales, particularly during the second quarter; nonetheless, this
quarter's net sales were still 13 % up sequentially and more than
three times higher (+220 %) than in the second quarter of 1999.

The Group also reported a clear improvement in profits and in
profitability, measured in terms of return on capital employed. The
operating profit was MEUR 27.9 (January-June 1999: MEUR 0.0). The
rolling 12-month return on capital employed (ROCE), a central measure
of the Company's profitability, reached 17.4 %, well above the target
of 15 %. Earnings per share were EUR 0.72.

Depreciation between January and June increased substantially on the
same period in 1999 in pace with the rapid increase in manufacturing
capacity, totaling MEUR 14.3 (8.2). Gross capital expenditure on
fixed assets amounted to MEUR 45.8 (14.5) during the reporting
period, comprising plant acquisitions in Germany, Poland and Hungary,
plant expansions in Mexico, Estonia and Finland, and machinery and
equipment for various plants. Most of the latter expenditure took
place in Hungary.

The balance sheet totaled MEUR 720.4 on June 30, 2000 having been
MEUR 281.8 one year earlier. During the second quarter the balance
sheet increased 22 % mainly as a result of growth in inventories and
current receivables.

The share issue in May improved the Company's solvency ratio (equity
to total assets) compared to the first quarter. The solvency ratio at
the end of June was 33.6 % (25.1 % at the end of March and 46.4 % at
the end of June 1999).

In February 2000 the Company decided to exercise its right to redeem
the FIM 110 million convertible capital notes ahead of schedule. All
note holders decided to convert the notes into Series A shares.

The Group had MEUR 160.7 in unused credit lines at its disposal at
the end of June 2000.

Elcoteq had 8,643 (4,142) employees on average during the first six
months of 2000. Personnel increased by 657 employees during the
second quarter, totaling 9,678 at the close of the period. Most new
jobs were created in Mexico, Finland and China. Elcoteq had 1,419
employees in Finland and 8,259 outside Finland at the end of June.

The component markets

The availability of electronics components remained difficult during
the second quarter although the situation did not deteriorate
significantly on the first quarter. In fact the availability of
standard semi-conductors improved slightly whereas delivery times of
passive components lengthened further.

The Company's continued vigorous growth at a time when components are
in short supply demonstrates the efficiency of Elcoteq's material and
logistics operations. The Company has resolutely developed its
competence in this field together with customers and component
suppliers including the introduction of e-commerce tools. The key
principle is the fastest possible transfer of information on demand
and availability within the material and logistics chain to ensure
that the physical flow of materials represents the exact quantities
required and is correctly timed.

Several component suppliers are expected to gain additional capacity
during the third quarter and therefore the availability of many
components is expected to gradually improve towards the end of the
year.

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