Componenta Oyj — Annual Report 2010

Feb 7, 2011

2010 ANNUAL REPORT

Contents

• Componenta in brief
• President's review
• Strategy
• Business environment
• Business review
• Corporate Governance
• Board of Directors
• Corporate Executive Team
• Releases 2010
• Financial Statements 1 January 31 December 2010

Componenta is one of the largest cast component suppliers in Europe. We serve our customers by engineering services and providing them with iron and aluminium cast components and innovative solutions made up from them.

Our customers are leading global manufacturers of heavy trucks, construction and mining machinery, passenger cars, agricultural machinery, wind power plants and other machines and equipment. We have indepth knowledge of the business of our customers and contribute to their success by working in close partnership with them. The customer benefits from our engineering and manufacturing expertise throughout the cast component supply chain.

Componenta has customer service centres and sales offices in the Netherlands, Great Britain, Italy, France, Sweden, Germany, Finland, the USA and Turkey. The casting and machining of components takes place in Finland, Turkey, the Netherlands and Sweden. At the end of 2010 Componenta Group employed altogether 4,414 professionals.

Key figures
	2010	2009
Net sales, MEUR	451.6	299. 6
Operating profit, MEUR	13.5	-15.4
- % of net sales	3.0	neg.
Result after financial items, MEUR	-10.0	- 37.2
Return on investment, %	5.0	-4.1
Return on equity, %	-10.3	-45.1
Equity ratio, %
(including preferred capital note in equity)	26.4	26.5
Net debt as proportion of shareholders' equity, %
(including preferred capital note in equity)	170.5	200.8
Interest-bearing net debt, %
(including preferred capital note in equity)	189.4	206.5
Earnings per share, EUR	-0.45	-2.30
Equity per share, EUR	3.63	3.51
Dividend per share, EUR	0.00 *)	0.00
Order book, MEUR	94.6**)	58.8 ***)
Investments in production facilities, MEUR	8.5	15.5
Number of personnel at end of year,
including leased personnel	4,414	3,698
*) Board proposal
**) Order book on 10 January 2011

***) Order book on 15 January 2010

Net sales

Operating profit

Result after financial items

Net sales by customer segment

Our components are in use in CONSTRUCTION AND MINING

A year of growth and strategy renewal

For Componenta, 2010 was a year of growth after the recession, of developing our operations and of setting new strategic goals. Demand for cast components started to rise distinctly and our sales improved in almost all our customer sectors. The Group's net sales increased 51% from the previous year to EUR 452 million and the operating profit improved EUR 29 million. As economic growth gained speed in different market areas, this also had the effect of increasing demand for raw materials and raised their prices, which slowed down the otherwise rapid improvement in Componenta's 2010 result.

The order intake in total grew 61% in 2010, although the overall uncertainty in the economy and the reduction of stocks by customers in the autumn had a temporary impact on the volume of orders coming in. Many orders for new products will generate work until the end of this decade. We expect the clear growth in sales to continue in 2011.

Even though the encouraging developments in sales affected production volumes at our foundries and machine shops, average capacity utilisation remained at the extremely low level of 57%. Despite this, many of the lay-offs during the recession have ended and personnel have been able to return to full working days.

During the year we continued to introduce key strategic standard functions and processes and to develop customer service and product engineering. We significantly reinforced our sales and product development organization and appointed sales management, engineering and product development resources for each customer sector.

New, long-term strategy

A major group-wide process during 2010 was the setting of new, long-term goals and creating a strategy to achieve them. The main issues considered when drawing up the strategy were the possible permanent effects of the global financial crisis and the trends in economic and environmental changes that have an impact on the structure of different industrial sectors and on the need and demand for components. During this process we also examined trends in our customer business sectors.

In future many different factors, such as the new generation vehicles, will reshape the casting market. The increase in electric and hybrid vehicles will have an impact on the need for components and on the raw materials used in these. Demand for iron components is likely to remain unchanged due to the many necessary properties of that metal, but demand for aluminium components will increase, for example because of environmental regulations and the need for lighter-weight vehicles and machinery. Wind power will become a major source of energy and demand for the machinery needed to generate this energy will increase. Consolidaton of customers and raw material suppliers to form larger entities will continue and competition from the countries of Asia will intensify, which will speed up the pace of the restructuring in the foundry industry needed to ensure sufficient competitiveness.

Componenta's mission is Casting Future Solutions. We are actively reshaping the traditional ways of operating in the foundry industry so as to better serve the manufacturing of the new generation vehicles and machinery. We design and produce solutions made up from cast components to meet the needs of customers. Our goal is to be the preferred provider of casting solutions for our customers. By operating as a common One Componenta group, in which strong values and the principles of sustainability form the foundations for management and business operations, we can offer our customers the best possible service. We possess in depth knowledge of the business of our customers, and through close cooperation we contribute to their success.

The main pillars on which our business depends - delivery certainty, quality and costs - are key elements in our competitiveness, and our goal is to achieve the best standards in these in our business sector. Finding a solution that meets the customer's needs begins with engineering, and thanks to our strong engineering knowhow we can participate in customer product development right from the earliest stages and together develop the necessary changes in components. Engineering cooperation with customers and providing effective solutions form the basis for growth in our business and for its success. Componenta is ready to serve.

I would like to express my warm thanks to our personnel, shareholders and customers for their commitment and excellent cooperation in 2010.

Heikki Lehtonen President and CEO

Preferred casting solutions provider

At the end of 2010 Componenta finalized its long-term strategy for the period 2011 - 2015, with the vision of becoming the preferred casting solutions provider both locally and globally by 2015. Our strategy is to grow with our customers as One Componenta, providing solutions comprising everything from engineering to components, and our performance is based on our strong values and sustainability.

Our performance is based on our values: Openness, Honesty and Respect.

Openness means that we are open to new ideas and to change and that we are willing to develop. Through this, we look to continually improve our ways of working. Honesty is about being honest with ourselves and with each other: we do what we promise. Respect means that our work with colleagues, superiors, subordinates, customers and other partners alike - is based on trust and mutual respect.

Mission

Componenta's mission is Casting Future Solutions. We are actively shaping the traditional ways of operating in the cast component industry as it evolves towards new generation vehicles and machinery. Our approach is based on the customer's business, and in close partnership we are able to contribute to our customers' success. We provide advanced engineering expertise for customers who are world-leading operators in their field. The customer benefits from our ability to balance our footprint and our services for different parts of the value chain.

Long-term strategy for 2011 - 2015

Market dynamics, changes in the market and demand are basics for the new strategy. New next generation vehicles are expected to shape the casting market, starting with environmental legislation and fuel economy and followed by increasing amount of hybrid and electric cars. In iron castings, growth is expected to even out, while we foresee significant growth in aluminium castings, as the demand for decreased weight of end products will grow. In the future there will be a broad variety of alternative energy sources, and wind power as a renewable energy source will break through as a significant energy source adding demand for iron cast components. In the cast component industry, the restructuring will accelerate in the future. Consolidation among both suppliers and customers to bigger entities and increasing competition in the cast component market will challenge also the cast suppliers for changes.

In Componenta's new strategy the key issue is our willingness to contribute our customers' success. Our strategy is to grow together with our customers, and to be their preferred casting solutions provider both locally and globally. We will find solutions for our customers' needs and provide them with comprehensive solutions comprising everything from engineering to components, including needed machining, logistics and other services.

Our components are in use in WIND POWER

Key strategic goals by 2015

We grow together as One Componenta,

and by 2015

• The Componenta business model and way of operating support the creation of customer value and enable focused, fast decision-making.
• Critical management information is available on-time and in consistent format across Componenta.
• We have achieved profitable growth: our capacity utilization is high and we have invested in customer service and cost-efficient production in selected markets.
• Componenta is known for its brand promise, and "we walk the talk".

We offer best customer experience,

and by 2015

• Excellence in account management is our clear competitive advantage.
• Componenta is an industry benchmark in customer service.
• Componenta has a strong customer centric culture and presence in key geographical markets.

We have excellence in delivery certainty, quality and costs,

and by 2015

• Our delivery certainty is more than 95%.
• The quality of our products is excellent thanks to eliminating the causes of defects and minimizing variations in manufacturing.
• We are continuously improving excellence in productivity.

We boost solution selling,

and by 2015

• Solution selling is a key to new sales
• Our capacity in solution selling and advanced engineering for it is strong in all markets.
• We have and are actively using all tools needed for solution selling.

Financial objectives

	Actual 2010	2012	2015
EBIT	3%	10%	12%
Equity ratio*)	26.4%	35%	40%
Net sales	EUR 452 million	EUR 750 million	EUR 1 billion
Return on investment	5%	20%	> 20%

*) Preferred capital notes included in equity

Our components are in use in MACHINE BUILDING

Development of market and demand

Market growth and developments in the foundry sector are strongly dependent on the economic situation, so when the economy started to pick up during 2010 this was reflected in the figures for the sector. Demand for castings in Componenta's core business rose considerably in 2010. In Europe, the foundry industry remains fragmented despite the recent restructuring. Foundries are growing in size and specializing in full service deliveries. Machine shop production and upgrading of castings takes place mainly at small machine shops with local operations.

The following changes in Componenta's business environment and in its customer sectors are having an impact on its business operations:

Value chain management

As a result of the high level of consolidation in various industrial sectors in recent years, customer businesses have now become larger entities, which strengthens their purchasing power. Major customers with international operations require their suppliers to have the capacity and ability to make large deliveries. At the same time, customers are focusing increasingly on their own core business and outsourcing functions that lie outside this. This opens up opportunities for component suppliers to expand their value chain from purely component deliveries to product development and engineering functions and to offer full service applications.

Globalization

Componenta's net sales and profitability are impacted significantly by the prevailing competitive conditions and the state of the market. Customers for cast components are looking to obtain one-stop solutions from strong suppliers and in this way actively pass some of the risk down the value chain. The recession forced many smaller and medium-size cast component suppliers into debt rescheduling and bankruptcy. The changes in the foundry industry, the closure of foundries and acquisitions, are reducing the number of suppliers and are affecting market shares.

Consolidating purchases

During the recession customers also aimed to improve their competitive standing by concentrating purchasing with fewer suppliers and by looking for new, more competitive suppliers. Their goal is to find strong, expert strategic partners who can survive even when market conditions are challenging and are able to continuously develop their operations as a supplier of complex cast components.

Developing partnerships

Customers today wish for more comprehensive solutions and are interested in joint R & D activities at their own business locations. When a customer business grows and expands its operations globally, it also requires suppliers that are its strategic partners to have an international presence and local operations close to the end customer. To obtain cost benefits for products and services it is often necessary to have operations in countries with low production costs, which in Europe means basically eastern Europe and Turkey.

Environmental impact

Restrictions on emissions are increasing and becoming stricter in more and more sectors and regions. Meeting these requirements is pushing up demand for alternative materials such as aluminium. The use of renewable energy is increasing, which is boosting investments in the technology needed to generate this energy and the construction of equipment.

Factors affecting demand for cast components

Demand for heavy trucks is mainly affected by the overall state of the economy and the financial market, by developments in logistics, especially in eastern Europe, Russia and South America, and by environmental legislation and regulations.

Demand for mining machines is affected by developments in the prices of raw materials and minerals and demand for these. Investments in infrastructure investments, in the construction of roads and tunnels for example, have an impact on demand for large construction machinery, while population growth and urbanization increase or decrease demand for smaller construction machinery.

Factors affecting demand for private cars have been the subsidy schemes introduced by many European countries to modernize the cars on the road, environmental legislation, new environmental regulations, and the overall state of the economy and the money market.

Demand for agricultural machinery is mainly affected by the price of food and growth in demand for food, by the size of the harvest, higher living standards and the general rise in GNP, as well as improvements to the infrastructure in India, Russia and eastern Europe.

The main factor in demand from the machine building industry is the overall state of the economy and the money market. Demand for diesel engines is driven by orders for new ships and various power plant projects around the world.

Demand for wind power components is dependent on the overall state of the economy, project financing, environmental legislation and new environmental regulations.

Positive developments in 2010 in almost all customer sectors

The iron and aluminium cast components supplied by Componenta are used in heavy trucks, construction and mining machines, private cars, agricultural machinery, by the wind power industry and other machine building, for example in elevators, cranes, robots and diesel engines.

During 2010 Componenta's sales as a whole grew positively, although none of the business segments reached the level they achieved in 2008.

Heavy trucks

Componenta supplies iron cast components for heavy trucks mainly in the European market. The market in the truck industry picked up considerably during 2010, and in most cases the Group also met its 2010 targets for new sales. The increase in demand from end customers and restocking by truck manufacturers contributed to growth.

The arrival of new generation trucks is also likely to have a positive impact on the market. Another goal is to supply more aluminium components for heavy trucks.

Construction and mining

The construction and mining markets started to recover from the recession during 2010, and Componenta's sales picked up extremely well. Demand rose especially in the developing markets.

In future the market is expected to grow especially in developing countries. In developed countries growth is expected to be steadier, and in these markets future challenges include tighter restrictions on emissions and balancing the economy, especially in Europe, Japan and the USA.

Automotive

During 2010 market trends were favourable for aluminium components, and especially for aluminium wheels. Sales of Componenta's wheels increased more than 60%.

The proportion of aluminium in automotive components will continue to rise. Environmental legislation and emissions restrictions are becoming tighter, and the use of light-weight aluminium in components reduces the weight of vehicles, and therefore their emissions.

Agriculture

During the recession, demand in the agricultural machinery industry only declined moderately, and for that reason growth has also been smaller than in some other sectors. Componenta's sales picked up encouragingly however, in particular in Turkey but also in Finland, Germany and France.

Globally the market for agricultural machinery is expected to pick up encouragingly.

Machine building

The Group's customers in the machine building industry operate in many different sectors and this helps even out the impact of up and down turns in the economy. As a result, as a whole this sector did not experience such a sharp drop as other sectors, and again the recovery in demand during 2010 was less marked.

Machine building customers are manufacturers of machines and equipment in many different business sectors, and demand trends vary from one customer to another. As the economy picks up, expectations for 2011 are higher than for 2010.

Wind power

For the wind power industry, 2010 was a challenging year: the financial crisis resulted in projects being postponed or even cancelled, and the running down of stocks has still not ended. On the other hand, new sales picked up encouragingly.

Emission-free energy generated by wind power is considered to have great growth potential in the long term.

Our components are in use in HEAVY TRUCKS

Complete cast component supply chain from Componenta

Componenta is a supplier of complex, high-quality iron and aluminium cast components and solutions made from these. Through its extensive sales and engineering network the company is present and close to customers in its main market areas.

Componenta serves customers by providing the complete supply chain for components, everything from engineering, casting and machining to surface finishing, assembly and logistics, depending on the customer's requirements.

Net sales and operating profit improved

The growth in market demand was reflected in Componenta's net sales, which grew 51% to EUR 452 million and operating profit improved significantly.

Net sales for the operations in Turkey rose 76% from the previous year. The extremely good growth in volumes, especially in construction and mining machines and in the automotive industry, improved the operating profit of the Turkey operations. The order book stood at EUR 48 million at the end of 2010, an increase of 70% from the previous year.

Net sales of the Finland operations rose 29% from the previous year. Operating profit was boosted by the cuts in costs implemented during 2009 and by higher production volumes, especially in the heavy truck industry. The order book of the Finland operations increased 33% from the previous year to EUR 16 million.

Net sales of the Netherlands operations grew 22% from the previous year. The cuts in costs carried out earlier and higher production volumes contributed to the improvement in the result in the Netherlands. The order book rose 32% from the previous year to EUR 16 million.

Net sales of operations in Sweden increased 104% from the previous year. Operating profit was boosted during the year by the cuts in costs carried out earlier and by the considerably higher production volumes especially in the truck industry. The order book of the Sweden operations stood at EUR 22 million at the end of the year, 111% higher than at the same time in the previous year.

New business model introduced in 2010

At the beginning of 2010 Componenta strengthened its common "One Componenta" way of operating in line with the Group's strategy. In place of the old business divisions the com-

Continuous development and innovation throughout the supply chain increase our competitiveness. " "

Our components are in use in AUTOMOTIVE

pany's operations were split into four operational areas, namely Turkey, Finland, the Netherlands and Sweden. Through this the Group is ensuring that customers obtain the services of the efficient supply chains formed by the Group's specialized production units and logistics centres. The operational areas are supported by group-wide operations development functions and purchasing and internal sourcing functions.

The entire supply chain is being strongly enhanced

The work of optimizing the supply chain continued in 2010 throughout the Group. Under the DISA project that began in the previous year, production of large series on the automated vertical moulding line is all being transferred to the Orhangazi foundry in Turkey, and the large series production that used to be carried out at the Pietarsaari foundry is being moved there. About half of the products to be transferred were brought into production in Turkey during 2010. The competitiveness of the DISA production lines is being further enhanced in Pietarsaari and Orhangazi.

The logistics centres make it possible to deliver products according to precise, agreed schedules, even several times a day. Componenta's logistics centre in Great Britain has served local customers for several years now as a distribution centre for components cast in Turkey. The same business model is in practice at the Främmestad logistics centre, which was set up in Sweden in 2009, and at the centre in Karkkila, Finland which began operations in 2010. As well as these three logistics centres of its own, Componenta also purchases external logistics services. At present Componenta is using warehouses in Germany, France, Belgium, the Netherlands and the USA. Thanks to the logistics centres Componenta is close to the customer precisely where the customer has its operations.

During 2010 one focus for Componenta in all customer sectors was on improving customer service. Increased resources were allocated to sales and engineering centres and to the sales companies. To strengthen the early links in the supply chain and customer service, in the second half of 2010 the Group launched a development project to establish customer service centres in various countries, bringing together sales support functions such as customer relations management, order processing, invoicing, and quality and logistics functions. The goal is for a customer to have a single contact person in each country where there is a sales company.

To improve the quality of Componenta's supply chain and business operations, during 2010 the Group introduced the comprehensive, systematic, Six Sigma method throughout the Group. Six Sigma has been in use in individual projects to improve business processes at different Componenta units since 2005. In 2010 the first Six Sigma projects were related to improving customer satisfaction or the supply chain and to reducing production costs.

Added value from engineering

Componenta's supply chain starts with component engineering. The company carries out engineering and product development with customers in all customer sectors. During 2010 the Group conducted a survey of the engineering resources and operating model for cast iron components and began a similar survey for engineering for machining and aluminium castings. The experience and knowhow of the company's engineers, who work in different countries and specialize in different customer industry sectors, and their ability to develop solutions, are available to the Group's customers.

Cooperation in product development becomes even more important in new business sectors such as wind power, where product development continues to evolve. But even in industrial sectors where engineering cooperation has continued for a long time – such as the automotive industry – ever stricter emissions requirements and the need for new structural and material solutions create greater demand for engineering services. Componenta's goal is to increase product development cooperation, which benefits the supplier, equipment manufacturer and end user.

Investments focused on maintenance and the environment

During 2010 the investments made at Componenta's business units were mainly related to maintenance and to completing the investments begun in the previous year.

The biggest investments were the overhaul of the DISA automated production line at the Orhangazi foundry in Turkey and the replacement of the smelting plant filter at the Pori foundry. In Pori the new filter makes it possible to use galvanized steel sheet as the raw material in melting and reduces air emissions.

Minor environmental investments were made at all the Group's units. The filter investment at the Heerlen foundry reduces VOC (volatile organic compound) and dust emissions. During the year various essential oils were also tested in melting in the cupola furnace there to minimize the odour inconvenience from the foundry.

Operations

	Net sales, MEUR	Share of net sales, %	Operation profit, MEUR	Order book, MEUR	Number of personnel at end of year
Turkey operations - iron foundry and machine shop in Orhangazi - aluminium foundry and production unit for aluminium wheels in Manisa	204.8	38	15.2	47.8	2,280
Finland operations - iron foundries in Iisalmi, Karkkila, Pietarsaari and Pori - machine shops in Lempäälä and Pietarsaari - production unit for pistons in Pietarsaari	103.6	19	-0.2	15.7	1,070
Holland operations - iron foundries in Heerlen and Weert - machine shop operations in Weert - pattern shop in Tegelen	85.1	16	-1.5	16.4	691
Sweden operations - machine shop in Främmestad - forge in Wirsbo	84.7	16	0.8	22.0	373
Other business - sales and logistics company Componenta UK Ltd in the UK - service and real estate companies in Finland - the Group's administrative functions - associated company Kumsan A.S. in Turkey	65.3	12	-1.0	-	*)

*) Number of personnel is shown under country operations.

Corporate Governance statement 2010

The parent company of Componenta Group is Componenta Corporation, a public company whose share is listed on the stock exchange of Helsinki, NASDAQ OMX Helsinki. Administration and management of Componenta Corporation (Componenta or the Company) are based on Finnish legislation, the Company's Articles of Association and the guidelines and rules of the Helsinki stock exchange and the Finnish Financial Supervisory Authority. Componenta complies with the Corporate Governance Code for Finnish listed companies of the Finnish Securities Association, which is available on the Securities Market Association's website at the address www.cgfinland.fi.

Deviating from the Code given by the Finnish Securities Association, Componenta has no committees of the Board of Directors. Taking into account the composition of the Board and the nature and size of Componenta's operations, the Board of Directors has considered it unnecessary to establish specific committees to prepare matters that are the responsibility of the Board.

GOVERNING BODIES OF COMPONENTA

Supreme authority at Componenta is exercised by the shareholders at the General Meeting of Shareholders.

The company is managed by the Board of Directors and the President and CEO. Other management assists and supports the President and CEO in carrying out his duties..

Governing bodies

*) Componenta Group's financial administration conducts an internal audit of Group companies in accordance with the annual plan together with the external auditors.

General Meeting

Componenta's supreme decision-making body is the General Meeting. The Annual General Meeting of Componenta must be held within six months of the end of the financial period.

The General Meeting decides on matters that come under its authority as defined in the Companies Act and the company's Articles of Association, including among other approval of the financial statements, decision concerning use of the profit shown in the balance sheet and election of the Board members and the auditor.

Every Componenta shareholder is entitled to attend the General Meeting. One share carries one vote at a General Meeting.

A shareholder is entitled to have a matter that according to the Companies Act falls within the competence of the General Meeting included in the agenda of the meeting, if he/she requests the Board in writing in sufficient time for the matter to be included in the notice convening a General Meeting.

2010

The Annual General Meeting of Componenta was held on 10 March 2010 in Helsinki. At the Annual General Meeting 46.8% of the Company's shares were represented. All members except one of Componenta's Board of Directors and the President and CEO were present.

Board of Directors

The Annual General Meeting elects each year Componenta's Board of Directors, which according to the Company's Articles of Association has 3 – 7 members. The term of office of the Board continues until the close of the following Annual General Meeting. The Board elects from its members Chairman and Vice Chairman.

The majority of the Board members must be independent of the Company. In addition, at least two of the members belonging to this majority must be independent of major shareholders in the Company. Independence is evaluated in accordance with Recommendation 15 of the Corporate Governance Code for Finnish listed companies.

The Annual General Meeting decides on the remuneration of the Board of Directors.

The Board of Directors draws up written Rules of Procedure for itself. The main tasks and duties of the Board of Directors are:

• The Board oversees the management and business operations of Componenta and makes major decisions relating to the strategy, capital expenditure, organization, corporate restructuring and financing.
• The Board appoints the President and CEO and the members of the Group's Corporate Executive Team, and approves the organizational structure and the principles for incentive schemes.
• The Board ensures that the Company's accounting, supervision of financial management and risk management have been arranged appropriately.
• The Board approves the key operating principles and values, and confirms the annual business plans and budgets.
• The Board makes proposals to the General Meetings and convenes the meetings.

The Board meets when it is convened by the Chairman or, in his absence, by the Vice Chairman. The Board forms a quorum when more than half of the members are present, and one of them must be the Chairman or Vice Chairman. Componenta's CFO serves as secretary to the Board meetings.

The Board of Directors evaluates its own performance annually under the leadership of the Chairman. The Board also reviews the corporate governance annually and amends it when required.

2010

The Annual General Meeting held on 10 March 2010 six members to Componenta's Board of Directors: Heikki Bergholm, Pii Kotilainen, Heikki Lehtonen, Juhani Mäkinen, Marjo Miettinen and Matti Tikkakoski. The Board elected Heikki Bergholm as its Chairman and Juhani Mäkinen as Vice Chairman.

Heikki Bergholm, Pii Kotilainen, Juhani Mäkinen, Marjo Miettinen and Matti Tikkakoski are independent of the Company and of the shareholders. Heikki Lehtonen is President and CEO of Componenta Corporation. He is also the Company's significant shareholder through companies which he controls.

Information related to the Board members and their holdings is given on Componenta's Internet site under "Board of Directors Presentation".

The 2010 Annual General Meeting decided that the fees for the Chairman of the Board of Directors would be EUR 50,000 and for the other Board members EUR 25,000 a year. Travel expenses are paid in accordance with the Company's travel instructions.

The Board of Directors met 14 times during the year, and the average attendance rate at Board meetings was 99%. The Board of Directors evaluated its own performance under the leadership of the Chairman in December 2010.

Board members were paid salaries and fees in total of EUR 175,000 in 2010. Board members received other benefits in total of EUR 480 in 2010.

Board members do not participate in Componenta's sharebased incentive scheme or pension schemes.

Board committees

Taking into account the composition of the Board and the nature and size of Componenta's operations, the Board of Directors has not considered it necessary to establish specific committees to prepare matters that are the responsibility of the Board.

President and CEO

The Board of Directors appoints the President and CEO and decides on the President's remuneration and other benefits.

The President and CEO is responsible for managing and developing Componenta's business in accordance with the Finnish Companies Act and the instructions given by the Board of Directors.

The President and CEO prepares and presents matters for consideration at Board meetings and implements the decisions of the Board of Directors. He reports to the Board of Directors on matters including the Company's financial situation, its business environment and other major matters.

The President and CEO is the Chairman of Componenta's Corporate Executive Team and Extended Corporate Executive Team.

2010

Componenta's President and CEO was Heikki Lehtonen.

The President and CEO's contract of employment may be terminated by the company by giving twelve months' notice and by the President and CEO by giving six months' notice. The President and CEO is not entitled to any separate compensation after giving notice or being given notice other than the salary and benefits agreed in the terms of notice and the additional pension in accordance with the principles of the paid up pension policy.

The salary of the President and CEO of Componenta in 2010 totalled EUR 265,327 and other benefits were EUR 7,361.

The President was entitled to the Group's share-based longterm incentive scheme. For the first earning period (2010) in the confirmed scheme for 2010 – 2012, the confirmed maximum number of shares for the President and CEO is 50,000 shares.

The President does not participate in the short-term incentive schemes.

The President and CEO as well as COO, acting as deputy for the President and CEO, have additional pension agreements of EUR 60,000 a year. The agreement includes old age pension after reaching the age of retirement, paid up pension policy rights if the employment of the insured is terminated before reaching the age entitling to old age pension as stated in the insurance policy, disability insurance, and life insurance for the duration of employment, of the paid up pension policy and of pension. The retirement age of the President and CEO is 63 years. If the company terminates the employment of the deputy to the President and CEO, the company is committed to paying the additional annual pension until the end of 2014.

The life insurance during the period of employment and the paid up pension policy defined in the additional pension agreement equals the amount of the insurance savings.

Corporate Executive Team

Componenta's Corporate Executive Team assists the President and CEO in managing and developing Componenta. The Board of Directors decides on the appointment of members of the Corporate Executive Team and on the terms of their employment based on the proposal of the President and CEO. In accordance with the "one over one" principle in use at the Group, the Chairman of the Board of Directors approves these decisions.

The members of Componenta's Corporate Executive Team are those in charge of the Group's business operations or major Group functions who:

• with their work promote the achievement of the Group's long-term business goals, the creation of added value, and the development of business operations
• participate in preparing the Group's strategy
• ensure the efficiency of operations throughout the Group
• develop management standards
• promote common business models and principles

2010

Componenta's Corporate Executive Team had six members and met up monthly. The President and CEO acted as the Chairman and the Communications Director acted as Secretary. During the year the Corporate Executive Team focused on key issues relevant to competitiveness, as balancing production, and execution of actions related to development of sales and engineering operations.

In 2010 the Group's Executive Team comprised the following: President and CEO Heikki Lehtonen; COO Yrjö Julin, Hakan Göral, Senior Vice President, Turkey operations, CFO Mika Hassinen; Anu Mankki, Senior Vice President, Human Resources and Pauliina Rannikko (from 22 June 2010), Senior Vice President, Legal and Risk Management. Communications Director Pirjo Aarnio-

Fees, salaries and other benefits of the Board of Directors, President and CEO and other members of the Corporate Executive Team

	Salaries, fees and
In year 2010 paid	fringe benefits	Bonuses	Share bonuses	Total
Board of Directors	175,480	0	0	175,480
President and CEO	272,688	0	0	272,688
Other members of the Corporate Executive Team *)	861,939	0	0	861,939

*) Including also foreign Corporate Executive Team members

Shares owned by the Corporate Executive Team on 31 December 2010

			Share bonus scheme 2007 – 2009	Share bonus scheme 2010 – 2012
	Shares	Max	Granted	Max *)	Granted
Göral Hakan	-	7,500	510	10,000	3,000
Hassinen Mika	2,850	9,300	600	10,000	3,000
Julin Yrjö **)	50,000	-	-	15,000	4,500
Lehtonen Heikki	5,311,340 ***)	56,000	3,300	50,000	7,500
Mankki Anu	400	5,400	400	6,000	1,800
Rannikko Pauliina ****)	-	-	-	-	-

*) Only includes maximum for 2010 **) Employment at Componenta began in January 2010

***) Shares not owned directly

****) Employment at Componenta began in June 2010

vuori acted as secretary to the CET.

Information about the members of the Corporate Executive Team and their holdings in the Company is given on Componenta's Internet site www.componenta.com under "Corporate Executive Team Presentation".

The Board of Directors decides on the terms of employment of the members of the Corporate Executive Team, based on the proposal of the President and CEO.

The fixed cash salary of the members of the Corporate Executive Team includes compensation for any work on the boards of directors of Componenta Group companies and any associated companies.

The bonus, linked to financial and personal targets that is paid under short-term incentive schemes may be a maximum of 50% of a person's annual earnings.

One element of the short-term bonus scheme for the Corporate Executive Team is that a maximum of 10% of the basic annual salary is paid into a pension fund, depending on the extent to which the company's financial targets have been achieved.

The potential bonus from the long-term share-based incentive scheme for one earning period corresponds to some 40 - 50% of a person's annual earnings when the share price is EUR 4.11.

Members of the Corporate Executive Team and other key Group personnel are entitled to additional health care insurance in addition to the statutory occupational health care.

Members of the Corporate Executive Team are also entitled to a company car as part of their total remu-neration.

Extended Corporate Executive Team

Extended Corporate Executive Team is responsible for development and deployment of corporate strategy.

2010

Extended Corporate Executive Team prepared the Componenta strategy for the years 2011 – 2015.

The Componenta Extended Corporate Executive Team consisted of 19 persons at the end of 2010: in addition to the Corporare Executive Team members and secretary mentioned before the following persons: Olli Karhunen, SVP of Finland Operations, Patrick Steensels, SVP of Holland operations, Michael Sjöberg, SVP of Sweden operations, Tapio Rantala, VP of Foundry technology, Ömer Lütfi Erten, VP of Interna sourcing, Juha Alhonoja, VP of Machining technology, Bert Duit, VP of Quality & Environment, Ville Taipale, VP of Sourcing, VP's of Sales and Product Development Antti Lehto, Lauri Eklin, Jari Leino, and Hein Strijbos, VP of Engineering.

Remuneration

Componenta's Board of Directors decides on the President's remuneration and other benefits. The Board of Directors decides on the terms of employment of the members of the Corporate Executive Team, based on the proposal of the President and CEO. The Annual General Meeting decides on the remuneration of the Board of Directors.

Incentive schemes

Short-term incentive scheme

The Board of Directors confirms each year the short term incentive scheme as part of total remuneration.

Short-term remuneration (one calendar year) is based on meeting measurable personal and business targets set for the year. The earning criteria for the 2010 earning period were Componenta Group´s operating profit. No short-term bonuses were paid from year 2010.

Long-term share-based incentive scheme

The Board of Directors decides on long-term share-based incentive schemes as part of total remuneration and manages the implementation of the schemes.

A long-term share-based bonus and incentive scheme has been approved and implemented for the years 2010 - 2012. The aim of the plan is to unite the objectives of shareholders and key personnel, in order to increase the value of the company, commit key personnel to the company, and offer them a competitive reward scheme based on ownership of company shares.

The Board of Directors decides on the earning criteria and on the targets to be set for them for each earning period. The size of the bonus earned in the earning period is determined at the end of the earning period by the extent to which the targets set for the earning criteria have been achieved.

Any bonuses will be paid in 2011, 2012 and 2013, partly in company shares and partly in cash. The portion paid in cash covers taxes and tax-related costs arising from the bonus. If a bonus of shares is paid under the incentive scheme after the end of an earning period, in proportion to the extent to which the set targets have been achieved, the recipients may not convey, pledge or otherwise use the shares during the two-year restriction period.

2010

At the end of 2010 the target group contained 45 people. The earning criteria for the 2010 earning period were the Group's result after financial items and net cash flow from operations. For the 2010 earnings pe-riod, the Board of Directors resolved to allocate 40,950 shares of which to the President and CEO 7,500 shares and to the rest of the key personnel 33,450 shares altogether.

RISK MANAGEMENT AND MONITORING

In its business operations Componenta complies with all current legislation and regulations and with generally accepted business practices. In addition, business activities are governed by Componenta's values and the Company's own operating principles, the Componenta Way to Operate.

Risk management

Risk management is part of the Company's monitoring system and it ensures that the risks to which the Company's business is exposed are identified, evaluated and monitored. It helps to forecast the threats and opportunities for business operations and ensures the continuity of business.

The Board of Directors confirms the principles for risk management and the President and CEO supervises the implementation of the risk management programme such that the principles and programme focus on matters that are essential for local and operational activities.

The Corporate Executive Team participates in identifying and evaluating risks, in allocating responsibilities and in monitoring the risks.

The CFO is responsible for financial risks and the General Counsel for all other risks related to operative business and the Group.

Management of business operations is responsible for identifying and managing risks in their own business areas as part of their operational activities.

Each employee is responsible for identifying and evaluating the risks that are related to his/her own work or which are otherwise under his/her control and for reporting on them to their supervisors.

The Group's treasury department manages financial risks and ensures on their own part the availability of equity and debt finance to the Group on competitive terms. The Group's treasury department is also responsible for managing and hedging the cash position.

The most significant risks related to Componenta's business environment and business operations and financial risks are presented on the company's website.

Internal audit

Componenta Group's internal audit is conducted in accordance with the operating principles approved by the Board of Directors, which are based on the Group's internal reporting and the annual audit plan approved by the Board.

Componenta Group's financial management conducts the internal audit of Group companies together with the auditors in accordance with the annual plan.

Financial reporting that covers the whole Group regularly monitors how well financial targets are being met. The reports include actual figures, budgets and up-to-date estimates for the current year.

INSIDER MANAGEMENT

Componenta complies with the insider regulations of NASDAQ OMX Helsinki and with its own insider regulations, which can be accessed by all personnel.

Persons who have insider information, irrespective of how or where the information has been obtained, may also be insiders. Componenta requires that all information related to the Company's business operations, being not public information, to be treated as confidential.

Componenta has made the Group's CFO responsible for the Company's insider matters and the Group's Communications Director responsible for maintaining the insider register.

Public insiders

According to the Finnish Securities Market Act, the Company's public insiders are the Board of Directors of the parent company, the President and CEO, and the auditors. The register of public insiders is maintained by Euroclear Finland Ltd and can be seen on the Company's website.

The holdings of Componenta's public insiders are given on the Company's website.

Company-specific insiders

Company-specific insiders include persons who regularly obtain insider information because of their position, responsibilities or duties. Componenta has defined the people working in the following positions as company insiders: the Group's Corporate Executive Team, Extended Corporate Executive team, key personnel in Group's finance, treasury, IT and communications departments, controllers of operative business segments and the secretaries of the Group management.

The holdings in Componenta of company insiders are monitored regularly through the SIRE register of Euroclear Finland Ltd.

Insider registers for individual projects

Componenta maintains a project register within the company insider register for projects that if implemented might have an impact on the price of Componenta's securities or derivatives. A project refers to a reorganization or some other distinct activity that is prepared in confidence and if implemented may have an impact on the value or price of Componenta's securities. The scope or nature of a project clearly distinguishes it from the Company's normal business operations.

Componenta's President and CEO will decide on case by case basis whether reorganization or some other distinct activity is considered a project.

Closed window

Insiders may not trade in Componenta securities for 30 days before the publication of the financial statements bulletin and interim reports. The precise dates are published on the financial calendar on the Company's Internet site.

AUDIT

The Annual General Meeting appoints the auditor and decides on the remuneration of the auditor. The company shall have one auditor which shall be a public accounting firm authorised by the Central Chamber of Commerce of Finland. In addition to the duties prescribed in current accounting regulations, the auditor reports to the Board of Directors of Componenta when necessary.

The responsible auditor may function as an auditor for a maximum of 7 years in succession.

2010

During the accounting period 1 January - 31 December 2010 Componenta's auditor was Oy Audicon Ab, Authorized Public Accountants.

The Annual General Meeting held on 10 March 2010 decided that the remuneration for the auditor would be based on invoicing. Remuneration in 2010 based on invoicing for Componenta Group's auditors totalled EUR 486,000, comprising EUR 427,000 in audit fees and EUR 59,000 for other services.

COMMUNICATIONS

Information about Componenta and its operative business is published on the Groups website. All releases and reports published by Componenta can be found on the Group's website immediately after they have been published.

This Corporate Governance Statement has been presented as a separate report and disclosed together with the Financial statements and the Report by the Board of Directors.

b. 1956, M.Sc. (Eng.) Board Member since 2002, Chairman since 2003

Primary working experience

President and CEO at Suominen Corporation 2002 - 2006 Managerial positions at Lassila & Tikanoja Oyj 1985 - 2001, President 1998 - 2001 Managerial and expert positions at Industrialisation Fund of Finland 1980-1985

Positions of trust

Chairman of the Board of Lakan Betoni Oy Member of the Board of Directors of Forchem Oy, Lassila & Tikanoja Oyj, MB Rahastot Oy and Suominen Corporation

Pii Kotilainen

b. 1960 , M.Sc. (Econ.) Board member since 2010

Primary work experience

Executive Vice President, Human Resources at Outokumpu Oyj 2009 - Senior Vice President, Human Resources at Huhtamäki Oyj 2006 - 2008 Managerial and expert positions at Nokia Group 1984 - 2006

Heikki Lehtonen

b. 1959, M.Sc. (Eng.) Board Member since 1987

Primary work experience

President and CEO at Componenta Corporation 1993 - President and CEO at Santasalo-Gears Ltd 1987 - 1994 Managerial and expert positions at JOT-Companies Ltd 1980 - 1987

Positions of trust

Vice Chairman of the Board of Directors at Pöyry Plc Member of the Board of Directors of Otava Books and Magazines Group Ltd Member of the Supervisory Board of Finnish Business and Policy Forum EVA

Information related to the Board members and their holdings is given on Componenta's Internet site under "Board of Directors Presentation".

Marjo Miettinen

b. 1957, M.Sc. (Ed.) Board Member since 2004

Primary working experience

Chief Executive Officer at EM Group Oy 2006 - Managerial and expert positions 1989 - 2001 and Chairman of the Board of Directors at Ensto Oy 2002 - 2006

Positions of trust

Chairman of the Board of Directors of Efla Oy, Teknari Oy and Teleste Oyj Member of the Board of Directors of EM Group Oy, Ensto Oy, Technology Industries of Finland, Confederation of Finnish Industries and TUT foundation

Juhani Mäkinen

b. 1956, Counsellor of Law Board Member since 2000

Primary working experience

Chairman of the Board of Directors at Aval Ltd 2010 - Chairman of the Board of Directors at Hannes Snellman Attorneys at Law Ltd 2001 - 2009 Partner at Hannes Snellman Attorneys at Law Ltd 1985 - 2010

Positions of trust

Chairman of the Board of Directors at Oy Forcit Ab Vice Chairman of the Board of Directors at Lemminkäinen Oyj and Myllykoski Oyj Member of the Board of Directors at Oy Karl Fazer Ab and Viking Malt Oy

Matti Tikkakoski

b. 1953, B. Sc. (Econ.) Board Member since 2003

Primary working experience

President and CEO at Atria Plc 2006 - Deputy CEO at Å&R Carton AB 2004 - 2005 Managerial positions at Huhtamäki Plc 1980 - 2003

Positions of trust

Member of the Board of Directors at Atria Plc and Finnish Food and Drink Industries' Federation

Corporate Executive Team

Heikki Lehtonen

b. 1959, M.Sc. (Eng) President and CEO 1993 -

Primary working experience

President and CEO at Santasalo-Gears Ltd 1987 - 1994 Managerial and expert positions at JOT-Companies Ltd 1980 - 1987

Hakan Göral

b. 1967, M.Sc. (Eng.) Senior Vice President, Operations, Turkey 2007 -

Primary working experience

Sales and Product Development Director at Döktas A.S. 2006 - 2007 Deputy General Manager at Mako Elektrik A.S. 2002-2006 Managerial and expert positions at Koc Holding Automotive Companies 1990-2002

Mika Hassinen

b. 1969, M.Sc. (Econ.), M.Sc. (For.) CFO 2008 -

Primary working experience

Senior Vice President, Finance & IT, Corporate Market Services at Stora Enso Oyj 2005 - 2007 Managerial and expert positions at Stora Enso Oyj, Deutsche Bank AG Ltd and McKinsey & Co in Finland and abroad 1996 - 2005

Information related to the executive team members and their holdings is given on Componenta's Internet site under "Corporate Executive Team Presentation".

Yrjö Julin

b. 1957, Lic. Sc. (Tech.) COO 2010 -

Primary work experience

Group President and CEO at Aker Yards ASA 2007 - 2008 Managerial positions at Aker Yards and Aker Finnyards 2002 - 2008 Managerial positions at Componenta Corporation 1986 - 2002, latest Chief Operating Officer

Anu Mankki

b. 1963, M.Sc. (Phil.) Senior Vice President, Human Resources 2005 -

Primary working experience

Vice President, Human resources development at Metso Corporation 2003 - 2005 Managerial and expert positions relating HR in Finland and abroad at Metso Corporation, Metso Paper and Valmet Paper Machines 1988 - 2003

Pauliina Rannikko

b. 1970, LL.M., M.Sc. (Econ.) General Counsel and Senior Vice President, Legal and Risk management 2010 -

Primary working experience

General Counsel at Onninen Oy 2007 - 2010 Expert positions at Finnair Oyj and Roschier, Attorneys Ltd 1997 - 2007

THE EXTENDED CORPORATE EXECUTIVE TEAM CONSISTS OF THE CORPORATE EXECUTIVE TEAM AND FOLLOWING PERSONS:

Pirjo Aarniovuori, Communications Director Juha Alhonoja, Vice President, Machining technology development

Bert Duit, Vice President, Quality and environment

Lauri Eklin, Vice President, Sales and product development, Power and Nordic

Ömer Lütfi Erten, Vice President, Internal sourcing

Olli Karhunen, Senior Vice President, Operations, Finland

Antti Lehto, Vice President, Sales and product development,

Off-road and Central Europe

Jari Leino, Vice President, Sales and product development, Heavy trucks Tapio Rantala, Vice President, Foundry technology development Michael Sjöberg, Senior Vice President, Operations, Sweden Patrick Steensels, Senior Vice President, Operations, Holland Hein Strijbos, Vice President, Engineering Ville Taipale, Vice President, Sourcing

January

14 January 2010: Componenta renew its organization and strengthens One Componenta approach

26 January 2010: Componenta Corporation's Financial Statements 1 January - 31 December 2009

26 January 2010: Notice of Annual General Meeting

26 January 2010: Pii Kotilainen proposed for Componenta Board of Directors

February

1 February 2010: Changes in Componenta's financial calendar 2010

17 February 2010: Componenta's Annual Report 2009, financial statements, corporate governance statement and summary of year 2009 releases are published

March

10 March 2010: Resolutions by the Annual General Meeting of Componenta

10 March 2010: The Board of Directors of Componenta resolved on an incentive plan for key personnel

16 March 2010: Oy Etra Invest Ab's holding in Componenta has decreased below 5%

16 March 2010: Etra Capital Oy's holding in Componenta has exceeded 20%

April

7 April 2010: Comparison data for Componenta's business segments for 2009

22 April 2010: Componenta interim report 1 January - 31 March 2010

23 April 2010: Pauliina Rannikko to be General Counsel of Componenta

July

1 July 2010: Componenta's Sustainability Report 2009 has been published

16 July 2010: Componenta interim report 1 January - 30 June 2010

16 July 2010: Adaptation measures at Componenta have mainly ended

September

13 September 2010: The Board of Directors of Componenta Corporation decided to issue a subordinated capital loan

28 September 2010: The Board of Directors of Componenta Corporation decided to issue a bond

October

19 October 2010: Componenta interim report 1 January - 30 September 2010

19 October 2010: Correction: Componenta interim report 1 January - 30 September 2010

November

25 November 2010: Componenta's financial information and Annual General Meeting in 2011

Financial Statements 2010

COMPONEN Sisältö TA CORPORATION FINANCIAL STATEMENTS 1 JANUARY - 31 DECEMBER 2010

CONTENTS

Report by the Board of Directors	31
Consolidated income statement	36
Consolidated statement of financial position	37
Cash flow statement	38
Statement of changes in consolidated shareholders' equity	38
Notes to the consolidated financial statements	39
Parent company income statement and
statement of financial position	61
Group development	62
Shareholders and shares	64
Per share data	65
Calculation of key financial ratios	66
The proposal by the Board of Directors for
the distribution of profits	67
Auditor's report	68
Information for shareholders	69

Strategy 2011 – 2015

During 2010 Componenta continued to strengthen the strategically important One Componenta way of operating and its sales and product development functions and to optimize component production. At the end of 2010 the Group approved Componenta's new long term strategy for 2011 – 2015. Componenta's strategy is to grow with its customers. Componenta produces advanced solutions for the customers, from engineering to components. Group's operations are based on the company's common values and responsibility.

Componenta is actively participating in renewing the established ways of operating in the foundry industry in order to better serve the manufacturing of new generation vehicles and machinery. The new way of operating is based on the knowledge of the business of customers and on close cooperation with them, so that Componenta contributes to the success of its customers. Componenta provides engineering expertise to customers, who are global market leaders in their business sectors. Componenta's customers benefit from the company's ability to keep in balance component manufacturing and service in the different parts of the value chain.

Componenta's vision is to be the first choice manufacturer of casting solutions for our customers locally and globally.

Financial targets in 2015

Componenta has set its long-term target for operating profit at 12%. The long-term target for the equity ratio is 40%, including subordinated capital loans in equity. The 2015 target for net sales has been set at EUR 1 billion and for return on investment at higher than 20%.

Summary of events in 2010

In February Componenta decided to strengthen its common "One Componenta" way of operating with the goal of growing to become the leading cast component supplier in Europe. The business operations were reorganized and the Group's customer businesses were organized in segments, for which sales management personnel were appointed and engineering and R&D resources allocated. Componenta's business operations were divided into four operational areas and corporate functions for developing business operations - supply chain management, development of foundry and machine shop technology, purchasing and internal purchases - support the operational areas and their management.

The Group's Corporate Executive Team was reorganized at the same time and Yrjö Julin was appointed to the Corporate Executive Team with the new position of Chief Operating Officer. An Extended Corporate Executive Team was also established to develop and implement the Group's strategy. In June Pauliina Rannikko was appointed to the Corporate Executive Team as SVP of Legal and Risk Management.

In September Componenta issued a subordinated capital loan and an unsecured bond for a total of EUR 50.3 million. The subordinated capital loan and the unsecured bond were offered to a limited group of selected investors. The funds obtained through the issues were used to strengthen the company's balance sheet and financial position and for general refinancing purposes.

Componenta's Board of Directors approved subscriptions to the subordinated capital loan 2010 with a total nominal value of EUR 23.4 million. Holders of the company's 2006 subordinated capital loans had the right to use the assets pertaining to the principal of the capital loans receivable from the company to pay the subscription price for the loan units of the subordinated capital loan 2010. Altogether EUR 11.1 million of the subordinated capital loan 2006 and convertible capital loan 2006 were used in payment for the subscription to the subordinated capital loan 2010. In addition, Componenta's Board of Directors approved subscriptions to the unsecured bond 2010 with a nominal value of EUR 26.9 million.

Componenta's operational business units in Finland - the foundries and machine shops - were merged in the last quarter of the year to form a single legal company. The new company, Componenta Finland Oy, which is a 100% owned subsidiary of the Group's parent company Componenta Corporation, started operations on 1 January 2011. The change supports the operational management model adopted by the Group in February 2010. The objective is to centralise the sales support, finance, and wages and salaries functions to improve service and achieve cost savings.

Developments in Componenta's business environment and markets in 2010

During 2010 the economy took steps in a positive direction, which was reflected in the considerable increase in demand for cast components. Although demand rose significantly from the previous year, the level before the recession has not yet been reached. The engine behind the growth in demand in 2010 was mainly the developing markets, in particular the BRIC countries (Brazil, Russia, India and China), although demand also picked up especially towards the end of the year in the established markets of Europe and America.

The rise in raw material prices caused by the growth in demand also affected Componenta's result in 2010, mainly in two ways. The prices of raw materials covered by the material surcharge clause rose sharply within a very short period especially early in the year, and the surcharges did not compensate for all the increase in the raw material prices in time. In addition the company also suffered from regional differences in raw material prices, especially in Finland.

In general, the heavy trucks market developed positively in 2010, although the improvement was moderate and varied from one market area to another. Componenta's delivery volumes to the heavy trucks industry rose significantly from the previous year, with the return of customer stocks to normal levels and strong demand in developing markets contributing to this growth. New sales also picked up extremely well. The close partnership in product development continued with heavy truck manufacturers.

Demand for components in the construction and mining machinery also increased significantly in 2010. After running down stocks in the previous year, the need for components increased quickly as the economy recovered and raw material prices rose. Growth was strong in China and India, but remained lower in Europe, Japan and the USA. Demand for agricultural machinery started to pick up in the second half of the year due to good demand in the developing markets.

The number of new passenger cars registered in Europe declined 5.5% in 2010 from the previous year, which was mainly due to the phasing out of the subsidies granted by European countries to renew the passenger car fleet. In June the number of passenger car registrations started to pick up from their level in the previous year and continued to rise right up to the end of the year. Due to growing exports by Turkey's automotive industry and encouraging developments in demand for aluminium alloy wheels, Componenta's deliveries to the automotive industry increased, especially during the second half of the year.

The recession continued to affect the wind power industry and the anticipated growth did not materialize in 2010. Demand picked up towards the end of the year but remained well below the level it reached before the recession, mainly due to the difficulties in arranging financing for new wind park projects.

Demand in the machine building industry began to pick up gradually towards the end of the year, especially in northern Europe. Market demand varied considerably from one sector and market area to another. Although demand in the machine building industry did not decline as much during the recession in 2009 as in other sectors, growth as a whole was low in 2010.

Order book

The order book at the end of December rose 61% from the corresponding time in the previous year to EUR 94.6 (58.8) million. The order book comprises confirmed orders for the following two months. The order book is not exposed to any significant cancellation risk.

The order book for Turkey operations at the end of December was 70% higher than in the previous year and stood at EUR 47.8 (28.1) million. The order book in Turkey was boosted in particular by encouraging developments in construction and mining machinery and in the automotive industry.

The order book for Finland operations at the end of the financial period increased 33% from the previous year to EUR 15.7 (11.8) million. Increased orders from the heavy trucks industry and machine building industry were the main factors in the improvement in the Finnish order book.

The order book for Holland operations at the end of the year showed a 32% increase from the previous year and stood at EUR 16.4 (12.5) million. Increased orders for construction and mining machinery, for agricultural machinery, for heavy trucks and machine building industries contributed to the stronger order book in the Netherlands.

The order book for Sweden operations at the end of the financial period was 111% higher than at the corresponding time in the previous year, standing at EUR 22.0 (10.5) million. A particular factor in the improvement in the order book in Sweden was the increase in orders from the heavy trucks and machine building industries.

Net sales

The Group's net sales increased 51% in 2010 totalling EUR 451.6 (299.6) million. The value of production rose 63% to EUR 454.7 (278.5) million. The Group's capacity utilization rate during the year was 57% (38%).

Net sales of the Turkey operations rose 76% from the previous year to EUR 204.8 (116.2) million. Net sales of the Finland operations rose 29% from the previous year to EUR 103.6 (80.4) million. Net sales of the Netherlands operations increased 22% from the previous year to EUR 85.1 (69.5) million. Net sales for operations in Sweden rose 104% from the previous year to EUR 84.7 (41.5) million.

Componenta's net sales in the financial period by customer section were as follows: heavy trucks 26% (20%), construction and mining 21% (15%), machine building 20% (28%), automotive 20% (20%), agriculture 11% (13%), wind power 2% (2%) and other sales 1% (1%).

Result

The consolidated operating profit for the year was EUR 13.5 (-15.4) million. The Group's net financial costs for the year were EUR -23.5 (-21.8) million. Net financial costs increased by EUR 1.7 million from the previous year due to higher interest costs and exchange rate losses. The Group's result for the period after financial items was EUR -10.0 (-37.2) million. The result includes a one-time item of EUR -0.1 million.

Income taxes calculated from the result for the review period totalled EUR +2.5 (+8.5) million. The net result for the period was EUR -7.5 (-28.7) million and basic earnings per share for the year were EUR -0.45 (-2.30).

The return on investment for the financial year was 5.0% (-4.1%), and return on equity -10.3% (-45.1%).

Balance sheet, financing and cash flow

In September 2010 Componenta Corporation issued a subordinated capital loan and an unsecured bond for a total of EUR 50.3 million. The funds obtained through the issues were used to strengthen the company's balance sheet, financial position, and for general refinancing purposes.

Componenta's Board of Directors approved subscriptions to

the subordinated capital loan 2010 with a total nominal value of EUR 23.4 million. The five-year loan was offered to a limited group of selected investors. Holders of the company's 2006 capital loans had the right to use the assets pertaining to the principal of the capital loans receivable from the company to pay the subscription price for the loan units of the subordinated capital loan 2010. Altogether EUR 11.1 million of the subordinated capital loan 2006 and convertible capital loan 2006 were used in payment for the subscription to the subordinated capital loan 2010. At the end of the financial year the company had outstanding nominal value of EUR 2.3 million of its outstanding convertible capital loan 2006 and EUR 2.9 million of its outstanding subordinated capital loan 2006.

At the end of December the Group had outstanding subordinated capital loans and convertible capital loans with a total value of EUR 40.4 million, as defined in IFRS. In March, the Group repaid the final instalment of EUR 7.4 million of the principal of the convertible capital loan issued in 2005, in accordance with the terms of the loan. At the end of the financial year, the outstanding unconverted capital loan issued in 2006 entitled their holders to subscribe 259,000 shares.

Componenta's Board of Directors approved subscriptions to the unsecured bond 2010 with a nominal value of EUR 26.9 million. The three-year loan was offered to a limited group of selected investors.

During the financial year, long-term bilateral bank loans totalling EUR 33.3 million were drawn, to refinance short-term bank loans that matured during the financial year.

The Group's net interest-bearing debt, excluding the outstanding subordinated capital loans and convertible capital loans of EUR 40.4 million, totalled EUR 189.4 (206.5) million at the end of the year. The company's net interest-bearing debt as a proportion of shareholders' equity, including the capital notes in the shareholders' equity, was 170.5% (200.8%).

At the end of the financial year Componenta's liquidity position was good. Cash in bank at the end of the financial year totalled EUR 11.0 million. Unused committed credit facilities totalled EUR 64.5 million at the end of the financial year. The Group also has a EUR 150 million commercial paper programme, from which the company had a debt payable of EUR 2.0 million at the end of the financial year.

Componenta's net cash flow from operations during the financial year was EUR 25.2 (14.2) million, and of this the change in net working capital was EUR 13.6 (37.5) million. Componenta makes more efficient use of capital with a programme to sell its trade receivables. Under this arrangement, some of the trade receivables are sold without any right of recourse. By the end of the review period the company had sold trade receivables totalling EUR 63.9 (32.7) million.

At the end of 2010, invested capital in the company was EUR 311.5 (316.9) million. The Group's equity ratio was 16.8% (17.5%). The Group's shareholders' equity on 31 December 2010, including the subordinated capital loans and convertible capital loans in shareholders' equity, as a proportion of the balance sheet total was 26.4% (26.5%).

Loans, commitments and contingent liabilities given by the company to Group companies classified as related parties on 31 December 2010 totalled EUR 134.9 (161.7) million. Loans, commitments and contingent liabilities given by the company to private persons classified as related parties on 31 December 2010 totalled EUR 0.3 (0.3) million.

Investments

Componenta restricted the amount of investments in production facilities in 2010 due to the under-utilisation of capacity. Investments in production facilities during the year totalled EUR 8.5 (15.5) million, of which financial lease investments accounted for EUR 0.3 (4.4) million. The net cash flow from investing activities was EUR -10.4 (-12.6) million, which includes the cash flow from the Group's investments in tangible and intangible assets, and the cash flow from shares sold and purchased and from the sale of fixed assets.

Research and development

At the end of 2010, 118 (90) people worked in Componenta's research and development, which corresponds to 3% (2%) of the company's total personnel. Componenta's research and development expenses in 2010 totalled EUR 1.8 (1.9) million, the equivalent of 0.4% (0.6%) of the Group's total net sales.

Environment

Componenta is committed to the continuous improvement and to reducing the environmental impact of its production. The objectives of the Group's environmental policy are to reduce consumption of energy and raw materials, restrict particle and VOC emissions, reduce environmental noise from its operations, increase the sorting of waste, and reduce the amount of waste that cannot be re-used.

One of the most significant environmental aspects for Componenta Group is the use of energy. In 2010 the Group used 629 GWh (422 GWh) of energy. Most of the energy used, 66% (65%), was electricity. The foundries consume more than 90% of all the energy, since especially the melting processes at the foundries utilise much energy. In 2010 energy consumption at Componenta's foundries in proportion to output was 10% lower than in the previous year.

Componenta will publish its 2010 corporate responsibility report during spring 2011.

Personnel

The Group had on average 4,155 (3,798) employees during the financial year, including 303 (114) leased employees. The number of Group personnel at the end of the year was 4,414 (3,698), which includes 398 (84) leased employees. At the end of the year, 52% (47%) of the personnel were in Turkey, 24% (28%) in Finland, 16% (17%) in the Netherlands, and 8% (9%) in Sweden.

Shares and share capital

The shares of Componenta Corporation are quoted on the NASDAQ OMX Exchange in Helsinki. At the end of the financial year the company had a total of 17,457,798 shares. At the end of December Componenta had 2,393 shareholders. At the end of the review period the share capital had a market capitalization of EUR 104.6 (72.0) million and the volume of shares traded during the period was equivalent to 48.6% (20.1%) of the share stock.

Decisions of the Annual General Meeting

Componenta's Annual General Meeting on 10 March 2010 confirmed the financial statements for the 1 January - 31 December 2009 financial year and discharged the members of the Board of Directors and the President and CEO from liability. In accordance with the proposal of the Board of Directors, the General Meeting resolved that no dividend shall be distributed for the financial year 1 January - 31 December 2009.

The General Meeting elected Heikki Bergholm, Pii Kotilainen, Heikki Lehtonen, Marjo Miettinen, Juhani Mäkinen and Matti Tikkakoski as members of the Board of Directors. The General Meeting elected Authorized Public Accountant firm, Oy Audicon Ab, as the company's auditor.

The General Meeting accepted the proposal of the Board of Directors proposal to amend the Articles of Association.

The General Meeting resolved to authorize the Board of Directors, in accordance with its proposal, to resolve on the repurchase of a maximum of 1,700,000 own shares, in one or several instalments, using the unrestricted shareholders' equity of the company. The shares shall be repurchased otherwise than in proportion to the holdings of the shareholders through public trading organised by NASDAQ OMX Helsinki Ltd at the market price prevailing at the moment of repurchase. The authorization is in force for a period of 18 months from the resolution by the General Meeting. The authorization cancels the authorization to resolve on the repurchase of own shares given to the Board of Directors by the Annual General Meeting on 23 February 2009.

Issuing shares and granting option rights and other special rights with an entitlement to shares

The AGM on 26 February 2007 authorised the Board of Directors to decide to issue shares and grant option rights and other special rights with an entitlement to shares under the following terms and conditions:

1. Under the authorisation the Board of Directors may decide to issue shares and grant option rights and other special rights as defined in chapter 10, section 1 of the Finnish Companies Act, such that a maximum of 2,000,000 shares are issued under the authorisation. The authorisation does not exclude the right of the Board of Directors to decide on a direct issue of shares.

2. The authorisation is valid for a period of five years from the date of the decision of the AGM.

Under the above authorisation 12,100 Componenta Corporation shares were issued in 2009 to pay the bonus for the 2007 – 2008 earning periods in Componenta's 2007 – 2009 sharebased incentive scheme.

Share-based incentive scheme 2010 - 2012

The Board of Directors of Componenta Corporation resolved on 10 March 2010 on a long-term bonus and incentive plan for key personnel. The target group for the plan comprises key persons in the Group as decided by the Board of Directors. At the end of the financial year the target group contained 45 people.

The plan includes three earning periods, the calendar years 2010, 2011 and 2012. The Board of Directors decides on the earning criteria for each earning period and on the targets for these. The earning criteria for the 2010 earning period were Componenta Group's result after financial items and net cash flow from operations. The amount of the bonus in the earning period is determined after the end of the period by the extent to which the targets set for the earning criteria have been achieved.

Any bonuses will be paid in 2011, 2012 and 2013 as a combination of company shares and cash. The part to be paid in cash is intended to cover the taxes and tax-related costs arising from the bonus. If shares are paid in the incentive scheme, the shares may not be conveyed, pledged or otherwise used during a twoyear restriction period.

For the 2010 earnings period, the Board of Directors resolved to allocate 40,950 shares of which to the President and CEO 7,500 shares and to the rest of the key personnel 33,450 shares altogether. The scheme's impact on the Group's result before tax at the end of 2010 was EUR -0.1 million.

Board of Directors

After the AGM on 10 March 2010, the Board of Directors held its organization meeting and elected Heikki Bergholm as its Chairman and Juhani Mäkinen as its Vice Chairman. The Board met 14 times in 2010 and the average attendance rate of Board members at its meetings was 99%. The Board assessed its performance, under the leadership of its chairman, in December 2010.

Changes in senior management

The company reorganized its Corporate Executive Team (CET) in February 2010, reducing the number of CET members and also establishing a new Extended Corporate Executive Team.

At the end of the financial year the Corporate Executive Team (CET) of Componenta Corporation comprised the following members: President and CEO Heikki Lehtonen, COO Yrjö Julin, Hakan Göral, SVP of Operations Turkey, CFO Mika Hassinen, Anu Mankki, SVP of HR and Pauliina Rannikko, SVP of Legal and Risk Management (appointed to CET on 22 June 2010). Communications Director Pirjo Aarniovuori acted Secretary to CET.

At the end of the review period the Extended Corporate Executive Team comprised the members of CET and Secretary to CET listed above and the following: Olli Karhunen, SVP of Operations Finland; Patrick Steensels, SVP of Operations Holland; Michael Sjöberg, SVP of Operations Sweden; Tapio Rantala, VP of Foundry Technology Development; Ömer Lütfi Erten, VP of Internal Sourcing; Juha Alhonoja, VP of Machining Technology Development; Bert Duit, VP of Quality and Environment; Ville Taipale, VP of Purchasing; VP's of Sales and Product Development Antti Lehto, Lauri Eklin, and Jari Leino, and Hein Strijbos, VP of Engineering.

Risks and business uncertainties

The most significant risks for Componenta are risks related to the business environment (competition and price risk, commodity and environmental risks), operational risks (customer and supplier risks, productivity, production and process risks, labour market disruptions, contract and product liability risks, personnel risks, and data security risks) as well as financial risks (funding and liquidity risk, currency, interest rate and credit risks).

In order to manage the Group's business operations it is essential to secure the availability of certain raw materials, such as recycled metal and pig iron, and energy, at competitive prices. The cost risk relating to raw materials is mainly managed with price agreements, and under these agreements the prices of products are adjusted in line with the changes in raw material prices. Increases in prices for raw materials may tie up more funds in working capital than estimated.

The financial risks related to Componenta's business operations are managed in accordance with the treasury policy approved by the Board of Directors. The objective is to protect the Group against unfavourable changes in the financial markets and to secure the Group's financial performance and financial position.

More information related to Componenta's risks and risk management is given in the notes of financial statements in the 2010 annual report and on the company's website at www.componenta.com.

Events after end of period

Componenta decided to expand its Corporate Executive Team (CET) in January by appointing Olli Karhunen (SVP of Operations Finland), Patrick Steensels (SVP of Operations Holland) and Michael Sjöberg (SVP of Operations Sweden) to CET.

In January, Componenta decided to begin personnel negotiations, as laid down in the Act on Co-operation within Undertakings, at Pietarsaari on 25 January 2011. Componenta is planning to terminate machining operations in Pietarsaari during the first half of the year and to transfer some of the machining work to Främmestad in Sweden and to Orhangazi in Turkey. If all earlier mentioned acts take place, it will mean a reduction of about 120 employees both in foundry and machining operations in Pietarsaari. One-time costs are expected to be EUR 3.0 million and will be incurred during the first quarter. In addition, investment and product transfer costs are estimated to be at some EUR 1.0 million, and these will be incurred during 2011.

Market outlook

The demand outlook in all the Group's customer sectors is good at the beginning of 2011.

Demand in the heavy trucks sector is expected to continue at good level, in particular because of positive market development in Europe.

Demand for construction and mining machinery is expected to continue to develop favourably during 2011, mainly because of the higher mining material prices and the recovery in the economy.

Demand for agricultural machinery is estimated to rise from the previous year as a result of higher food prices and development in demand in Europe and North America.

Due to growing exports by Turkey's automotive industry and encouraging development in demand for aluminium alloy wheels, the demand in the automotive industry is estimated to grow in 2011.

Demand in the wind power sector is expected to remain at a low level in Europe.

Demand in the machine building industry is expected to continue to pick up gradually.

Prospects for Componenta

Componenta's prospects for 2011 are based on general external economic indicators, delivery forecasts given by customers, and on Componenta's order intake and order book.

Componenta's order book at the end of the financial year was 61% higher than at the end of the previous year. In 2011 the Group's net sales are expected to rise clearly and the result after financial items before one time items to be positive. Net cash flow from operations is expected to remain positive and changes in working capital should be moderate, mainly due to the sale of trade receivables. Investments in production facilities in 2011 are expected to be some EUR 15 million.

The continuing rise in raw material prices at the beginning of 2011 will affect the result in the beginning of the year.

Dividend proposal

The Board of Directors proposes to the Annual General Meeting to be held on 28 February 2011 that, in accordance with the Group's current dividend policy, no dividend shall be paid for the 1 January - 31 December 2010 financial period. On 31 December 2010 the parent company had distributable equity of EUR 84.4 million.

CONSOLIDATED INCOME STATEMENT 1.1. - 31.12.

MEUR	Note	2010	%	2009	%
NET SALES	1	451.6	100.0	299.6	100.0
Other operating income	4	0.6		2.4
Operating expenses	5,6,7	-422.8		-305.2
Depreciation, amortization and write-down of non-current assets	8	-16.0		-12.5
Share of the associated companies' result		0.2		0.2
OPERATING PROFIT	1	13.5	3.0	-15.4	-5.1
Financial income	9	16.5		10.4
Financial expense	9	-40.0		-32.2
Financial income and expenses in total		-23.5		-21.8
PROFIT/LOSS AFTER FINANCIAL ITEMS		-10.0	-2.2	-37.2	-12.4
Income taxes	10	2.5		8.5
PROFIT/LOSS FOR THE FINANCIAL PERIOD		-7.5		-28.7
Allocation of net profit for the period
To equity holders of the parent		-7.9		-28.3
To non-controlling interest		0.4		-0.3
		-7.5		-28.7
Earnings per share calculated on the profit attributable
to the shareholders of the parent company
Earnings per share, EUR	11	-0.45		-2.30
Earnings per share with dilution, EUR *)	11	-0.45		-2.30

*) Restated 2009

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1.1. - 31.12.

MEUR	2010	2009
Net profit	-7.5	-28.7
Other comprehensive income
Translation differences	6.7	-1.0
Cash flow hedges	4.8	2.1
Income tax on other comprehensive income	-1.3	-0.5
Other comprehensive income, net of tax	10.3	0.5
Total comprehensive income	2.8	-28.1
Allocation of total comprehensive income
To equity holders of the parent	2.0	-27.8
To non-controlling interest	0.8	-0.3
	2.8	-28.1

The notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31.12.

MEUR	Note	2010	2009
ASSETS
NON-CURRENT ASSETS
Tangible assets	12	245.3	244.2
Goodwill	13	33.1	31.5
Intangible assets	14	6.7	6.4
Investment properties	15	1.8	1.8
Shares in associated companies	16	1.3	1.1
Financial assets	17	0.5	0.4
Receivables	18	6.0	4.9
Deferred tax assets	19	20.9	16.6
		315.6	307.0
CURRENT ASSETS
Inventories	20	52.2	41.0
Receivables	21	41.7	32.8
Cash and cash equivalents	23	11.0	7.6
		104.8	81.4
TOTAL ASSETS		420.4	388.4
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Share capital		21.9	21.9
Share premium reserve		15.0	15.0
L egal reserve		0.0	0.0
Other reserves		37.0	33.3
Translation difference		-18.1	-24.5
Retained earnings		15.6	44.0
Profit/loss for the financial period		-7.9	-28.3
Equity attributable to equity holders of the parent company Non-controlling interest	24	63.4 7.3	61.3 6.5
Shareholders' equity		70.7	67.8
LIABILITIES
Non-current liabilities
Capital loans	28	35.3	27.7
Interest-bearing	28	185.1	165.3
Provisions	27	8.5	6.7
Deferred taxes	19	9.6	6.1
Current liabilities
Capital loans	28	5.1	7.4
Interest-bearing	28	15.3	48.8
Non-interest bearing	29	89.5	57.5
Tax liability		0.1	0.1
Provisions	27	1.2	1.1
		349.7	320.6
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		420.4	388.4

The notes are an integral part of these financial statements.

CASH FLOW STATEMENT 1.1. - 31.12.

MEUR	2010	2009
Cash flow from operations
Result after financial items	-10.0	-37.2
Depreciation, amortization and write-down	16.0	12.5
Net financial income and expenses	23.5	21.8
Other income and expenses, adjustments to cash flow	1.7	0.5
Change in net working capital	13.6	37.5
Interest received	0.6	0.9
Interest paid	-22.1	-22.6
Other financial income and expenses	0.8	-1.8
Dividends received	0.0	0.0
Taxes paid	0.9	2.8
Net cash flow from operations	25.2	14.2
Cash flow from investing activities
Capital expenditure in tangible and intangible assets	-10.0	-12.5
Proceeds from tangible and intangible assets	0.0	0.4
Other investments and loans granted	-0.4	-0.5
Proceeds from other investments and repayments of loan receivables	0.1	0.0
Net cash flow from investing activities	-10.4	-12.6
Cash flow from financing activities
Dividends paid	-	-3.3
Proceeds from share issue	-	13.3
Repayment of finance lease liabilities	-2.4	-1.6
Draw-down (+)/ repayment (-) of current loans	-36.3	-5.1
Draw-down of non-current loans	54.3	38.3
Repayment of non-current loans and other changes	-27.2	-40.7
Net cash flow from financing activities	-11.7	0.9
Change in liquid assets	3.1	2.5
Cash and bank accounts at the beginning of the period	7.6	5.2
Effects of exchange rate changes on cash	0.3	-0.1
Cash and bank accounts at period end	11.0	7.6
Change during the financial period	3.1	2.5

The notes are an integral part of these financial statements.

Statement of changes in consolidated shareholders' equity

									Share-
		Share						Non-	holders'
	Share	premium	Other		Cash flow Translation	Retained		cotnrolling	equity
MEUR	capital	reserve	reserves		hedges*) differences	earnings	Total	interest	total
Shareholders' equity 1.1.2009	21.9	15.0	6.5	-2.8	-23.5	47.3	64.3	6.8	71.1
Net profit						-28.3	-28.3	-0.3	-28.7
Translation differences					-1.0		-1.0		-1.0
Cash flow hedges				1.5			1.5		1.5
Total comprehensive income				1.5	-1.0	-28.3	-27.8	-0.3	-28.1
Share issue			29.0				29.0		29.0
Dividends paid						-3.3	-3.3		-3.3
Redemption of convertible capital notes			-0.9				-0.9		-0.9
Shareholders' equity 31.12.2009	21.9	15.0	34.6	-1.3	-24.5	15.6	61.3	6.5	67.8

									Share-
		Share						Non-	holders'
	Share	premium	Other		Cash flow Translation	Retained		cotnrolling	equity
MEUR	capital	reserve	reserves		hedges*) differences	earnings	Total	interest	total
Shareholders' equity 1.1.2010	21.9	15.0	34.6	-1.3	-24.5	15.6	61.3	6.5	67.8
Net profit						-7.9	-7.9	0.4	-7.5
Translation differences					6.3		6.3	0.4	6.7
Cash flow hedges				3.6			3.6		3.6
Total comprehensive income				3.6	6.3	-7.9	2.0	0.8	2.8
Other changes			0.1				0.1		0.1
Shareholders' equity 31.12.2010	21.9	15.0	34.7	2.3	-18.1	7.7	63.4	7.3	70.7

*) The fair value changes of hedging instruments in hedging reserve, before taxes, was EUR 3.7 (1.5) million, the amount released to income statement from the hedging reserve, before taxes, was EUR

Notes to the consolidated financial statements

Accounting Principles

General information

Componenta is a metal sector group of companies with international operations. The Group manufactures cast, machined, surface-treated, ready-to-install components and total solutions made up from these. The Group's customers are global manufacturers in the machine building, heavy truck, automotive, construction & mining, agriculture and wind power industries.

The Group's parent company is Componenta Corporation (business identity code 1635451-6), whose shares are quoted on the NASDAQ OMX Helsinki. The parent company is domiciled in Helsinki. The registered street address is Panuntie 4, 00610 Helsinki, Finland.

A copy of the consolidated financial statements can be obtained on the Internet at www.componenta.com or from the head office of the Group's parent company at Panuntie 4, 00610 Helsinki, Finland.

The financial year for all group companies is the calendar year and it ended on 31 December 2010.

The Board of Directors of Componenta Corporation has at its meeting on 24 January 2011 approved these financial statements for publication. According to the Finnish Companies Act, shareholders have the opportunity to approve or reject the financial statements at the General Meeting of Shareholders held after publication. It is also possible to amend the financial statements at the General Meeting of Shareholders.

Basis for preparing consolidated financial statements

Componenta's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), applying the IAS and IFRS standards in force on 31 December 2010 and SIC and IFRIC interpretations. The term 'IFRS standards' refers to standards and interpretations of these in Finnish legislation and provisions based on this approved for applying in the EU in accordance with the procedure established in EU regulation (EY) 1606/2002. The notes to the consolidated financial statements also conform to Finnish accounting and corporate legislation.

The consolidated financial statements have been prepared based on the historical cost, except that the following items have been assessed at fair value: financial assets and liabilities recognized in the income statement, derivative financial instruments, and items hedged at fair value. For mergers of business operations that took place before 2004, goodwill, as stated in IFRS 1, corresponds to the book value as defined under the previous financial statement standards, and this has been used as the deemed cost.

The preparation of the financial statements in accordance with IFRS standards requires management to make estimates and judgments in applying the accounting principles. Information about the judgments made by management in the application of the accounting principles employed by the Group and which have the biggest impact on the figures given in the financial statements is given in the chapter "Accounting principles requiring judgments by management and key sources of estimation uncertainty".

Accounting principles for consolidated financial statements

The consolidated financial statements include Componenta Corporation and those Finnish and foreign subsidiaries in which the Group holds directly or indirectly shares with over 50% of the voting rights or in which the Group has control over financial and operating principles. The financial statements of subsidiaries are included in the consolidated financial statements from the date that Componenta has obtained control in the subsidiary.

The financial statements of foreign subsidiaries have been adjusted to ensure consistency with the Group's accounting policies. The financial statements of subsidiaries are consolidated using the acquisition cost method. Intra-group transactions have been eliminated in the consolidation, as have the internal margin included in the inventories of Group companies and intra-group receivables and liabilities. The share of owners with a non-controlling interest (NCI) in the acquired entity is measured either at fair value or as the NCI's proportionate share of the identifiable net assets of the acquired entity. The principle for measurement is specified separately for each acquisition.

Changes in the parent company's holdings in subsidiaries that do not result in a loss of control are treated as transactions affecting shareholders' equity.

Associated companies are companies in which the Group holds shares with 20% to 50% of the voting rights or in which the Group has significant interest but not control.

The financial statements of associated companies are consolidated according to the equity method. The Group's share of the result of associated companies is entered in the income statement. The value of shares is presented in the balance sheet as the acquisition cost of the shares adjusted by the Group's share of the accumulated results of associated companies and by the dividends paid by the associated companies. Known deviations from IFRS accounting policies in the financial statements of associated companies have been corrected.

Translation of foreign currency items

The result and financial position of each of the Group's business units are measured in the currency of the main operating environment for that unit. The operational and presentation currency for the Group's parent company is the euro. The consolidated financial statements are presented in millions of euros.

The foreign currency receivables and liabilities of the parent company and subsidiaries domiciled in Euro area are translated into euros at the average exchange rate on the balance sheet date. The foreign currency receivables and liabilities of group companies domiciled outside Euro area are translated at the exchange rate for the country concerned on the balance sheet date.

The foreign exchange rate differences arising from trade payables and trade receivables are presented under other operating income together with any related hedging results. Exchange rate differences arising from borrowings, deposits and cash and cash equivalents together with any related hedging results are recognized under financial income and expenses.

The income statements of subsidiaries domiciled outside Euro area are translated into euros using the average exchange rates for the accounting period. Balance sheet items are translated into euros at the average exchange rate on the balance sheet date.

The difference in the result for the period between the average exchange rate for the accounting period and the exchange rate on the balance sheet date is recorded in shareholders' equity in translation differences. The shareholders' equity of subsidiaries is translated into euros in consolidation. Translation differences caused by changes in exchange rates between the date of acquisition and the balance sheet date have been recorded in shareholders' equity. Translation differences from before 1 January 2004 are recorded, in accordance with the exception permitted by IFRS 1, under retained earnings. After the transition date, translation differences arising during the preparation of the consolidated financial statements are presented as a separate item of equity.

Tangible and intangible assets

Property, plant and equipment are recorded in the balance sheet at their historical cost less planned depreciation. For certain buildings the Group has made use of transitional relief, according to which it assessed the buildings at fair value in the 2004 opening balance sheet and after that began planned depreciation on them. No depreciation is made on land and water areas. Intangible assets include computer software, capitalized development costs and capitalized costs for obtaining customers. For intangible assets that have a limited useful economic life, straight-line depreciation is entered as an expense in the income statement over their useful economic lives. The Group has no intangible assets that have an unlimited useful economic life.

Maintenance and repair costs are usually recognized in the income statement as an expense as incurred. Major refurbishment costs are capitalized and depreciated over their estimated useful life if these costs are likely to increase the future economic benefits embodied in the specific asset to which they relate.

Investment grants are deducted from the carrying value of the asset, and grants to be recorded in the income statement are entered under other operating income.

Planned depreciation, except of production machinery and equipment, is calculated on a straight line basis on the historical cost, based on the estimated useful economic life. On 1 January 2009 the Group started to use the units-of-production depreciation method, in which the amount of depreciation is based on the actual output of production machinery and equipment. The units-of-production method gives a more precise picture of the actual economic wear on production machinery and equipement than the straight line method, especially when capasity usage changes quickly. Estimated useful economic lives are as follows:

capitalized development costs	5 years
intangible rights	3–10 years
other capitalized expenditure	3–20 years
buildings and constructions*)	25–40 years
computing equipment	3–5 years
other machinery and equipment	5–25 years
other tangible assets	5–10 years

*) Residual value 25% of acquisition cost

Goodwill equals the part of the acquisition cost that exceeds the Group's share of the net fair value on the date of acquisition of the identifiable assets, liabilities and contingent liabilities of a company acquired after 1 January 2004. For mergers of business operations that took place before 2004, goodwill corresponds to the book value as defined under the previous financial statement standards, and this has been used as the deemed cost in accordance with IFRS.

Goodwill is not amortized but is tested annually for impairment.

Impairment

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized for the amount by which the balance sheet value of the asset exceeds the recoverable amount for the asset. The recoverable amount of an asset is the greater of its net selling price and value in use. As a rule, value in use is based on the estimated discounted future net cash flows obtainable through the asset.

Investment property

Property that is owned by the Group and leased to an external party, and that is not mainly owner-occupied, is classified as investment property and is valued in the balance sheet at acquisition cost. Rental income from investment property is recorded in the Group's net sales. Investment property is depreciated on a straight line basis over its useful economic life, which is 25-40 years. The residual value is 25% of the acquisition cost.

Research and development costs

Research costs are charged to the income statement as incurred. Expenditure on development activities relating to new products which fulfill the capitalization requirements of IAS 38.57 is capitalized and recognized as an expense under depreciation over their useful economic lives. The planned depreciation period for these costs is 5 years. In other respects, the Group's minor research and development costs are recorded as expenses as incurred.

Inventories

Inventories are stated at the lower of acquisition cost and net realizable value. The acquisition cost is based on the FIFO principle. The acquisition cost of manufactured products and work in progress includes the cost of raw materials, direct labour costs, other direct costs as well as a proportion of variable and fixed production overheads.

Leases

The Group classifies its leases at the inception as finance or other leases. Leases for fixed assets that transfer substantially all the risks and rewards incidental to ownership to the Group are classified as finance leases. They are recognized in the balance sheet under fixed assets at the commencement of the lease at an amount equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. Any substantial incremental costs that are directly attributable to negotiating and arranging the lease are added to the amount recognized as an asset. Depreciation is made on the asset over its estimated useful economic life consistently with the Group's depreciation policy, or if there is no reasonable certainty that ownership is obtained at the end of the lease term, the asset is depreciated over the shorter of the lease term and its useful life.

The lower of the fair value of the asset and the present value of the minimum lease payments is recognized as a finance lease liability. Lease payments are divided into financing charges and instalment payment of the liability, using the effective interest rate method so that the liability is repaid over the lease term as an annuity. The financing charge calculated with the effective interest rate is recognized as a financial expense. The difference between the floating interest rate of the agreement and the effective interest rate is recorded as a rental expense.

Other leases comprise of operating leases, where the lessor retains the majority of the risks and benefits of ownership, and insignificant finance lease agreements. Rents paid under other lease agreements are recognized as expenses in the income statement on an accrual basis throughout the lease term.

Employee benefits/Pensions and other employee benefits

Most of the Group's pension schemes are defined contribution schemes, for which payments are entered in the income statement in the period in which they occur. Componenta has a pension schemes classified as a multi-employer defined benefit schemes in Sweden (Alecta ITP and AMF Pension/Avtalspension SAF-LO). Alecta ITP and AMF Pension/Avtalspension SAF-LO have been treated as a defined contribution plans, in accordance with IAS 19.30 (a), as the pension companies have not been able to provide actuarial valuations.

Pension coverage for employees of Group companies in Finland is provided in line with statutory arrangements under the TyEL insurance scheme with an insurance company. Under an agreement made with the pension insurance company, the Group, as a major employer, is responsible in Finland for unemployment payments and work disability payments included in pension insurance payments in their entirety at the moment when the pension starts.

Other non-Finnish subsidiaries operate pension schemes in accordance with local practice and legislation.

Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month's salary.

Employee benefits/Share-based payments

The Group has applied the IFRS 2 standard to the share-based incentive scheme for key personnel which was decided on 10 March 2010.

A share-based incentive scheme has been set up for senior management for the years 2010–2012. Bonuses are paid partly in shares and partly in cash. The benefits given in the scheme are valued at fair value at the time when they are granted and are recognized as an expense in the income statement on a straight-line basis over the earnings period. A liability is recognized for the part to be paid in cash and the change in its fair value is correspondingly recognized as an expense for the period in which it occurs. The fair value of the part to be paid in shares is recognized as an expense and an increase in shareholders' equity. The impact of the scheme on the result is presented in the income statement under personnel expenses.

Operating segments

Componenta has four business segments which are Turkey, Finland, Holland and Sweden. Componenta's reporting structure was changed on 1 February 2010 when the Group organized its divisions into country-based operations. All figures for comparison for 2009 have been adjusted to bring them in line with this reporting structure.

The operations in Turkey comprise the iron foundry and machine shop in Orhangazi and the aluminium foundry and production unit for aluminium wheels in Manisa. The operations in Finland consist of the iron foundries in Iisalmi, Karkkila, Pietarsaari and Pori, the machine shops in Lempäälä and Pietarsaari, and the production unit for pistons in Pietarsaari. The operations in the Netherlands comprise the iron foundries in Heerlen and Weert, the machine shop operations in Weert and the pattern shop in Tegelen. The operations in Sweden comprise the Främmestad machine shop and the Wirsbo forge. Other business comprises the sales and logistics company Componenta UK Ltd in Great Britain, service and real estate companies in Finland, the Group's administrative functions and associated company Kumsan A.S. in Turkey. The operating business segments are based on the Group's internal organizational structure and internal financial reporting.

Revenues and transfers between Componenta's operating business segments are recorded at fair market prices. Segment assets and liabilities are items which the segment can utilize in its business operations and which can be reasonably allocated to the segment. Net financial items, taxes and one-time items are not allocated to the operating business segments.

Information on geographical areas

Componenta monitors non-current assets and capital expenditure in production facilities in its geographical areas which are Turkey, Finland, the Netherlands, Sweden and other countries. In addition the net sales by market area is monitored in more detail.

Provisions

A provision is recognized in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, it is probable that the obligation will have to be settled, and the amount of the obligation can be reliably estimated. If it is possible to obtain compensation for some of the obligation from a third party, the compensation is recognized as a separate asset item, but only when it is in practice certain that the compensation will be obtained.

A provision for restructuring is recognized when the Group has drawn up a detailed and formal restructuring plan and restructuring has either commenced or the plan has been announced publicly.

Income taxes

Consolidated direct taxes include direct taxes based on the taxable profit of Group companies, calculated according to tax legislation in each company's domicile. Deferred tax liabilities are recognized in the balance sheet in full and deferred tax assets to the extent that it is probable that future taxable profit will be available against which the asset can be utilized. Deferred tax liabilities and assets are calculated from all the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes, using the tax rate in force on the balance sheet date.

Deferred tax assets for confirmed losses or for losses for the financial period have only been recognized to the extent to which it is probable that future profits will be generated that can be offset with the temporary differences. Deferred tax liabilities have been calculated for Finnish companies using a tax rate of 26.0%, for Swedish companies using a rate of 26.3%, for the Turkish company using a rate of 20.0% and for Dutch companies using a rate of 25.5%.

Deferred tax liabilities and assets are presented in the balance sheet as a net figure where they apply to the same tax authority and when they can offset each other.

Revenue recognition

Net sales comprises revenue from the sale of products, services, raw materials, goods and energy, adjusted by indirect taxes and sales adjustments. Revenue from the sale of goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer and the Group no longer has a right to dispose of the product or effective control over the product. This normally means when a product has been delivered to the customer in accordance with agreed delivery terms.

Other income from operations

Revenues that are not part of actual net sales, such as revenue from the sale of non-current assets, are recorded under other income from operations. In addition the foreign exchange rate differences arising from trade payables and trade receivables are presented under other operating income together with any related hedging results.

Financial assets and liabilities Financial assets

The Group's financial assets are initially classified in the following categories: 1) financial assets at fair value through profit and loss, 2) loans and other receivables, 3) held-to-maturity investments and 4) available-for-sale financial assets. At the balance sheet date all investments and receivables are included in the categories: financial assets at fair value through profit and loss, loans and receivables, and available-for-sale financial assets.

Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss contain the derivative financial instruments acquired for hedging purposes to which the principles of hedge accounting are not applied. They are recognized at fair value using market prices on the balance sheet date. Realized and unrealized profit and loss resulting from changes in fair value are recognized in the finance income and expenses for the period in which they are incurred.

Financial assets at amortized cost

Loans and other interest-bearing receivables are recognized at fair value and valued thereafter at amortized cost using the effective interest rate method. Only substantial transaction costs are taken into account when calculating the acquisition cost.

Cash and cash equivalents comprise cash balances and cash in bank accounts.

Financial assets at cost

Holdings and investments that do not belong to the other financial asset categories are classified under the available-for-sale category. The investments in this category are long-term unlisted shares and holdings that are closely linked with business operations and which the Group does not intend to sell or otherwise dispose of. Available-for-sale financial assets are valued at acquisition cost if no reliable market value is available, less any impairment loss.

Impairment losses on financial assets

An impairment loss is recognized in the income statement for a financial asset or group of assets if there is objective evidence, such as a customer becoming insolvent, delinquency of payments and financial reorganisation or bankruptcy procedure of the customer, that an event or events have had a significant impact on estimated future cash flows. The amount of the impairment loss is determined as the difference between the carrying amount of the financial asset and the discounted estimated future cash flows. Previously entered impairment losses on trade receivables can later be reversed through the income statement if it is believed that the customer will pay their liabilities. For other financial assets, impairment losses are permanent.

Financial liabilities

Financial liabilities at fair value through profit and loss

Derivative instruments acquired for hedging purposes to which the principles of hedge accounting are not applied are classified under held for trading. Financial liabilities held for trading are recognized at fair value using the market prices on the balance sheet date. Realized and unrealized profit and losses resulting from changes in fair value are recognized under financial income and expenses for the period in which they are incurred.

Financial liabilities at amortized cost

Other financial liabilities are initially recognized at fair value, less any substantial transaction costs that are directly attributable to the acquisition or issue of the financial liability. Other financial liabilities are recognized at amortized cost using the effective interest rate method, so that the costs related to the acquisition or issue of the liability are recognized in the income statement during its contractual term. Interest payable on the financial liability is recognized through profit and loss on an accrual basis.

On initial recognition, the fair value of the liability component of convertible capital notes is estimated as the present value of the contractually determined stream of future cash flows discounted, in the lack of a reliably determined corresponding market interest rate, at a rate reflecting the investor's return taken into account the conversion option value to the investor and the early redemption call option value to the issuer. The liability component is subsequently measured at amortized cost. The equity component of the convertible capital notes is recognized in other equity reserves less the costs attributable to the issue and deferred tax liability.

2 euros per share of the conversion price for shares converted with the loan notes of the convertible capital notes is recognized in the share capital and the remainder in the share premium account or the reserve for invested unrestricted equity. The balance sheet liability is reduced by the same proportion as that of the converted loan notes to the remaining notional value of the loan.

All changes in financial assets and liabilities are recognized using settlement date accounting.

Derivative financial instruments and hedge accounting

The Group's derivative financial instruments are recognized on the settlement date at acquisition cost, after which they are recognized at fair value. The fair value of forward rate agreements is the profit or loss that would occur from closing the agreement, calculated at the market price on the balance sheet date. The fair value of interest rate and currency options is measured using commonly known option pricing models. The fair value of interest rate swaps is calculated by discounting future cash flows at current interest rates at the balance sheet date. Foreign exchange forwards and swaps are valued at forward prices on the balance sheet date. The fair value of electricity price forwards is the estimated profit or loss that would derive from closing the contracts at market prices on the balance sheet date.

Derivative financial instruments are recognized either as financial hedging instruments that are excluded from hedge accounting as defined in IAS 39 or as hedging instruments that qualify as cash flow hedges or as currency hedges of net investments in foreign operations. When hedge accounting is applied, the hedged item and the hedging relationship are identified and documented in accordance with the principles of hedge accounting. Hedge effectiveness is assessed retrospectively when initiating hedge accounting and prospectively on a regular basis, at least quarterly.

For balance sheet date, cash flow hedge accounting is applied when hedging against future changes in interest rates and in electricity spot market prices. When cash flow hedge accounting is applied, the effective portions of changes in the fair value of hedging instruments are recognized in shareholders' equity in the hedging reserve. Accumulated changes in fair value of the interest rate derivatives are recognized in financial income and expenses in the income statement for the period when the hedged business operation takes place. Correspondingly, accumulated changes in fair value of the electricity price forwards are recognized as an adjustment to purchases in operating profit in the income statement for the period when the hedged business operation takes place. When a hedging instrument matures, is sold, the hedging relationship is perceived to be ineffective or it is terminated, the cumulative gain or loss on the hedging instrument from the period when the hedge was effective remains separately recognized in equity until the forecast transaction occurs. The cumulative gain or loss is recognized immediately through profit and loss if the forecast transaction is no longer expected to occur.

The ineffective part of the interest rate hedging relationship is recognized in the income statement under financial income or expenses and the ineffective part of the electricity price hedging relationship is recognized as an adjustment to purchases in operating profit.

The realized and fair values of foreign exchange differences of currency derivatives designated as effective hedges of net investments in foreign operations are recognized in equity as a correction item to translation differences. These items will be recognized through profit and loss on disposal of the foreign operation. The ineffective part of the hedging relationship is recognized in the income statement under financial income or expenses.

Accumulated interest expenses or income from interest rate swaps and currency swaps that have taken place during the financial period are recognized in the income statement under financial items, as are changes in the fair value of interest rate derivatives that are a part of the Group's risk management policy but are excluded from hedge accounting. Exchange differences rising from currency derivatives designated as hedges of accounts receivables and payables are recognized in Other operating income and from currency derivatives used to hedge against exchange differences for borrowings, deposits and other monetary items recognized in Financial income and expenses. Realized gains or losses from electricity price forwards are recognized under purchases as adjustment items. The fair values of derivative financial instruments are recognized under current assets and liabilities in the balance sheet.

Earnings per share

The basic earnings per share are calculated using the weighted average of shares in issue. The weighted average number of shares used to calculate the diluted earnings per share takes into account the diluting effect of outstanding options, conditional share-based payments, earnings-related share-based payments and convertible capital notes.

Dividend payment

Dividends proposed by the Board of Directors to the Annual General Meeting are not recorded in the financial statements until they have been approved by the shareholders at the Annual General Meeting.

Accounting principles requiring judgments by management and key sources of estimation uncertainty

To prepare the consolidated financial statements in accordance with International Financial Reporting Standards, management has to make estimates and assumptions about the future.

The Group's management exercises its discretion when taking decisions about the choice of accounting principles for the financial statements and their application. Estimates have been used when determining in the financial statements for example the realizable value of certain assets, impairments of trade receivables, the useful economic life of tangible and intangible assets, income tax, the value of inventories, provisions and contingent liabilities, and for tests for impairment.

Determining the fair value of assets acquired when merging business operations

In major mergers of business operations the Group has used an external consultant when estimating the fair value of tangible and intangible assets. For tangible assets, comparisons have been made with the market prices of similar assets and estimates made of the reduction in value of the acquired assets due to age, wear and similar factors. The fair value of intangible assets has been determined based on estimates of the cash flows relating to the assets, since no information has been available on the market about purchases of similar assets.

Management believes that the estimates and assumptions used are sufficiently accurate as a basis for determining fair value. In addition the Group examines at least on every balance sheet date any indications of impairment in tangible and intangible assets.

Application of standards

As from 1 January 2010 the Group has applied the following new and revised standards and interpretations. Applying the new standards and interpretations has not had any impact on the result or shareholders' equity.

IFRS 3 Business Combinations. The revision makes several changes to the treatment of acquisitions; for example all transaction costs are expensed, and goodwill may be calculated as the parent's share of net assets or it may include the goodwill of the non-controlling interest. All payments relating to the acquisition of business operations are to be recorded at fair value at the acquisition date and certain contingency payments are subsequently remeasured to fair value through the income statement. Under the transition rules, business combinations where the acquisition date is earlier than the effective date of the revised standard shall not be restated. The revisions did not have any impact on the consolidated income statement or consolidated shareholders' equity because there were no business combinations during the period.

IAS 27 Consolidated and Separate Financial Statements. The revised standard requires the effects of all transactions with a non-controlling interest to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting procedure when control is lost; any remaining interest in the equity is remeasured at fair value, and a gain or loss is recognised in the income statement. A similar accounting procedure will also be applied in future to associated companies (IAS 28) and joint ventures (IAS 31). As a result of the revision to the standard, the losses of a subsidiary can be allocated to a noncontrolling interest even though the cumulative losses would be greater than the investment by the non-controlling interests. The revised IAS 27 standard did not have a significant impact in this fiscal period because no changes of ownership took place in the subsidiaries.

IAS 39 (Amendment) Financial Instruments: Recognition and Measurement. The amendments are related to hedge accounting. The amendments give more detailed guidance regarding the hedging of one-sided risk and the hedging of inflation risk, when the underlying item is a financial asset or liability. The amendments did not have an impact on the Group's financial statements.

IFRIC 17 Distribution of Non-cash Assets to Owners. The interpretation provides guidance on the appropriate accounting treatment when an entity distributes assets other than cash as dividends to its shareholders or when the owners have a choice of receiving either non-cash assets or cash. This interpretation did not have an impact on the Group's financial statements.

New and amended standards and interpretations not yet effective in 2010

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning on or after 1 January 2010 or later periods and which the Group has not yet applied. The Group has identified the following standards as being relevant to its business:

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments (effective from 1 July 2010). The interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor to extinguish all or part of the financial liability. The interpretation is not expected to have a material impact on the Group's financial statements in the future.

IAS 24 Related Party Disclosures (effective from 1 January 2011). The revised standard clarifies the definition of a related party and simplifies the disclosure requirements for government-related entities.

IFRS 9 Financial Instruments (effective from 1 January 2013). IFRS 9 is the first phase in a broader project to replace IAS 39 with a new standard. Different measurement methods have been maintained, but they have been simplified. IFRS 9 divides financial assets into two classifications: those measured at amortized acquisition cost and those measured at fair value. The classification depends on the entity's business model and the characteristics of the contractual cash flows. The IAS 39 instructions on impairment and hedge accounting remain in force. The figures for previous years do not need to be adjusted if the standard is adopted before the financial period beginning on 1 January 2012. The standard has not yet been approved for application in the EU.

NOTES TO THE CONSOLIDATED INCOME STATEMENT

1. OPERATING SEGMENTS

Componenta's business operations are divided into four operational segments, Turkey, Finland, Holland and Sweden. Componenta's reporting structure was changed on 1 February 2010 when the Group organized its divisions into country-based operations. Figures for comparison 2009 have been adjusted to bring them in line with this reporting structure.

The operations in Turkey comprise the iron foundry and machine shop in Orhangazi and the aluminium foundry and production unit for aluminium wheels in Manisa. The operations in Finland consist of the iron foundries in Iisalmi, Karkkila, Pietarsaari and Pori and the machine shops in Lempäälä and Pietarsaari, and the production unit for pistons in Pietarsaari. The operations in the Netherlands comprise the iron foundries in Heerlen and Weert, the machine shop operations in Weert and the pattern shop in Tegelen. The operations in Sweden comprise the Främmestad machine shop and the Wirsbo forge. In addition, the reports contain figures for Other business which includes the sales and logistics company Componenta UK Ltd in the UK, service and real estate companies in Finland, the Group's administrative functions and associated company Kumsan A.S. in Turkey. Transactions between operating business segments as well as between Other business are based on market prices.

Segment assets and liabilities include items which the segment uses in its business operations. Unallocated items include financial and tax items, and items which are common to the whole Group.

Business segments 2010

					Other
MEUR	Turkey	Finland	Holland	Sweden	business	Eliminations *)	Group
External sales	161.5	85.0	81.1	84.2	39.9		451.6
Internal sales	43.3	18.6	4.0	0.5	25.5	-91.9	0.0
Total sales	204.8	103.6	85.1	84.7	65.3	-91.9	451.6
Share of results of associates					0.2		0.2
Segment operating profit	15.2	-0.2	-1.5	0.8	-1.0	0.3	13.5
Unallocated items							-21.0
Net profit							-7.5
Segment assets	210.8	85.7	48.7	51.5	53.9	-70.0	380.6
Shares in associated companies					1.3		1.3
Unallocated assets							38.4
Total assets							420.4
Segment liabilities	33.5	24.2	12.8	25.7	25.7	-22.5	99.3
Unallocated liabilities							250.4
Total liabilites							349.7
Capital expenditure in
production facilities	4.8	2.4	0.4	0.5	0.5		8.5
Depreciation	-4.9	-4.8	-1.5	-2.1	-2.7		-16.0

*) The result in 2010 includes a one-time item of EUR -0.1 million which has been presented in eliminations column.

Business segments 2009

					Other
MEUR	Turkey	Finland	Holland	Sweden	business	Eliminations *)	Group
External sales	97.8	69.0	68.2	40.9	23.7		299.6
Internal sales	18.4	11.4	1.3	0.6	26.1	-57.9	0.0
Total sales	116.2	80.4	69.5	41.5	49.9	-57.9	299.6
Share of results of associates					0.2		0.2
Segment operating profit	2.2	-3.9	-10.2	-8.8	4.6	0.7	-15.4
Unallocated items							-13.3
Net profit							-28.7
Segment assets	183.9	81.2	47.6	42.1	53.4	-50.7	357.5
Shares in associated companies					1.1		1.1
Unallocated assets							29.8
Total assets							388.4
Segment liabilities	20.3	19.4	7.7	13.3	21.9	-17.2	65.4
Unallocated liabilities							255.2
Total liabilites							320.6
Capital expenditure in
production facilities **)	5.4	4.8	0.6	2.9	1.9		15.5
Depreciation	-3.8	-3.7	-1.4	-1.2	-2.5		-12.5

*) The result in 2009 includes one-time items of EUR 0.0 million.

**) Gross capital expenditure in production facilities in 2009 was EUR 17.9 million of which EUR 2.4 million was in non-producition facilities in Other business segment.

Geographical areas 2010

Geographical areas 2009

			The		Other
MEUR	Turkey		Finland Netherlands Sweden countries			Total
Non-current assets *) Capital expenditure in	133.1	89.0	33.0	31.4	1.6	288.1
production facilities	4.8	2.8	0.4	0.5	0.0	8.5

			The		Other
MEUR	Turkey		Finland Netherlands Sweden countries			Total
Non-current assets *) Capital expenditure in	125.2	95.5	34.3	29.1	0.8	285.0
production facilities	5.4	5.7	1.6	2.9	0.0	15.5

*) Excluding non-current deferred tax assets, financial assets and other receivables.

External net sales by market area

MEUR	2010	2009
Sweden	81.7	39.8
Germany	76.0	58.6
Turkey	73.7	49.4
Finland	53.8	51.8
UK	47.5	31.2
Benelux countries	35.2	19.2
France	27.8	20.2
Italy	20.7	12.1
Other European countries	9.1	5.5
Other countries	26.1	11.7
External net sales total	451.6	299.6

2. Business acquisitions

There were no business acquisitions in 2010 and 2009.

3. Business divestments

There were no business divestments in 2010 and in 2009.

4. Other operating income

	2010	2009
Rental income	0.7	0.7
Profit from sale of non-current assets	0.0	0.0
Exchange gains and losses of trade
receivables and payables, incl. hedges	-1.1	0.8
Other operating income	0.9	0.8
Other operating income total	0.6	2.4
Rental income from investment
property included in net sales	0.1	0.1

5. Operating expenses

	2010	2009
Change in inventory of finished goods
and work in progress	3.1	-21.1
Production for own use	0.7	0.7
Materials, supplies and products	-172.9	-92.9
External services	-30.0	-20.6
Personnel expenses	-119.6	-95.9
Rents	-4.6	-4.5
Maintenance costs of investment property	-0.1	-0.1
Waste, property and maintenance	-21.6	-14.0
Energy	-36.9	-24.0
Sales and marketing	-2.2	-4.5
Computer software	-3.6	-3.4
Tools for production	-3.6	-2.9
Freights	-10.1	-5.7
Other operating expenses	-21.3	-16.4
Total operating expenses	-422.8	-305.2
Audit fees	-0.4	-0.4
Other fees	-0.1	-0.1
Total fees paid to auditors	-0.5	-0.5

6. Employee benefit costs

	2010	2009
Personnel expenses
Salaries and fees	-94.8	-75.6
Pension costs	-12.1	-10.5
Other personnel costs	-12.7	-9.8
	-119.6	-95.9

Average number of personnel by segment,

excluding leased personnel
Turkey	1,900	1,582
Finland	956	1,017
Holland	515	573
Sweden	301	345
Other business	181	166
	3,853	3,684

Personnel expenses include costs related to share-based payment EUR -0.1 (-0.0) million.

7. Research and development costs

	2010	2009
The following amounts have been recognized
in the income statement under research
and development costs	-1.8	-1.9

8. Depreciation, amortization and write-down of non-current assets

	2010	2009
Depreciation and amortization
Tangible assets
Buildings and structures	-2.6	-2.5
Investment property	0.0	0.0
Machinery and equipment	-10.8	-7.6
Other tangible assets	-0.7	-0.6
	-14.1	-10.8
Intangible assets
Intangible rights	-0.1	-0.1
Computer software	-0.6	-0.7
Other capitalized expenditure	-1.2	-0.9
	-2.0	-1.7
Write-downs on machinery and equipment	0.0	0.0
Total depreciation, amortization and
write-downs of non-current assets	-16.0	-12.5

9. Financial income and expenses

	2010	2009
Dividend income from available-for-sale
investments	0.0	0.0
Interest income from loans and other receivables	0.6	0.9
Exchange rate gains from financial assets
and liabilities recognized at amortized cost	3.4	2.3
Realized exchange rate gains from currency
derivatives	5.2	3.2
Other financial income	7.7	3.5
Change in fair value of financial assets and
liabilities held for trading	-1.6	-2.0
Ineffective portion of hedge accounting of
net investment in foreign entities	-	-
- fair values transferred from equity
to profit and loss	-	-
Ineffective portion of cash flow
hedge accounting	0.0	0.0
Effective interest expenses for financial
liabilities recognized at amortized cost	-19.4	-18.7
Exchange rate losses for financial assets
and liabilities recognized at amortized cost	-1.8	-2.6
Other charges on financial liabilities valued
at amortized acquisition cost	-0.5	-0.9
Interest expenses and commissions
for sold trade receivables	-3.2	-1.8
Interest expenses for interest rate swaps	-1.8	-2.1
Realized exchange rate losses for
currency derivatives	-7.9	-2.5
Other financial expenses	-4.3	-1.1
Financial income and expenses, total	-23.5	-21.8

Other operating income in note 4 includes a total of EUR 0.2 (1.0) million in exchange rate gains and losses arising from foreign currency denominated sales and purchases and EUR -1.2 (-0.2) million from foreign exchange derivatives designated to these items.

Interest income on interest rate swaps has been moved to compensate interest expenses. During 2010 the Group has not received any significant commissions from financial assets.

10. income taxes

	2010	2009
Income taxes
Income taxes for financial period	-0.2	0.1
Change in deferred taxes (see note 19)	2.8	8.4
	2.5	8.5

Income tax reconciliation between tax expense computed at statutory rates in Finland (26% in 2010 and 2009) and income tax expense provided on earnings.

	2010	2009
Profit before tax	-10.0	-37.2
Income tax using Finnish tax rate Difference between Finnish tax rate and	2.6	9.7
rates in other countries	0.6	-0.2
Tax exempt income	0.0	0.0
Non-deductible expenses	-0.7	-1.0
	2.5	8.5

11. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to shareholders of the parent company by the weighted average number of outstanding shares during the financial year.

		2010	2009
	Basic and diluted earnings per share
Numerator:	Profit for the period attributable to shareholders of the parent company, 1,000 EUR	-7,880	-28,349
Denominator:	Weighted average number of outstanding shares during the
	financial year, 1,000 shares	17,458	12,312
	Basic earnings per share, EUR	-0.45	-2.30
	Earnings per share with dilution, EUR	-0.45	-2.30

The weighted average number of shares used to calculate the diluted earnings per share takes into account the dilutive effect of all potential shares with such an effect. The dilutive effect of convertible capital notes that have not been converted into shares (Note 28) and the share bonus scheme for employees (Note 25) will not be taken into account in 2010 and 2009 since the dilution would increase the earnings per share.

NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

12. tangible assets

	2010	2009
Land and water areas
Acquisition cost at 1 Jan.	23.5	23.6
Translation differences	0.8	-0.1
Additions	0.1	0.0
Disposals	-	-0.1
Book value at 31 Dec.	24.3	23.5
	2010	2009
Buildings and constructions
Acquisition cost at 1 Jan.	108.4	108.6
Additions	0.5	0.2
Disposals	-	-0.8
Reclassifications	0.0	0.2
Translation differences	2.7	0.3
Acquisition cost at 31 Dec.	111.6	108.4
Accumulated depreciation at 1 Jan.	-40.3	-38.7
Accumulated depreciation on decreases
and reclassifications	-0.2	0.9
Translation differences	-1.2	0.0
Depreciation during the period	-2.6	-2.5
Accumulated depreciation at 31 Dec.	-44.3	-40.3
Book value at 31 Dec.	67.3	68.0
	2010	2009
Buildings and constructions, finance leasing
Acquisition cost at 1 Jan.	0.3	0.0
Additions	-	0.2
Acquisition cost at 31 Dec.	0.3	0.3
Accumulated depreciation at 1 Jan.	0.0	0.0
Depreciation during the period	0.0	-0.0
Accumulated depreciation at 31 Dec.	0.0	-0.0
Book value at 31 Dec.	0.3	0.3

	2010	2009
Machinery and equipment
Acquisition cost at 1 Jan.	358.1	378.3
Additions	4.4	5.8
Disposals	-4.9	-32.9
Reclassifications	4.6	7.1
Translation differences	18.5	-0.2
Acquisition cost at 31 Dec.	380.7	358.1
Accumulated depreciation at 1 Jan.	-232.4	-256.7
Accumulated depreciation on increases	0.0	0.0
Accumulated depreciation on decreases
and reclassifications	3.0	32.5
Translation differences	-10.8	-1.5
Depreciation during the period	-10.8	-6.7
Accumulated depreciation at 31 Dec.	-251.1	-232.4
Book value at 31 Dec.	129.6	125.7
	2010	2009
Machinery and equipment, finance leasing
Acquisition cost at 1 Jan.	21.8	17.1
Additions	0.1	4.3
Disposals	-0.2	0.0
Reclassifications	-0.1	0.0
Translation differences	1.2	0.5
Acquisition cost at 31 Dec.	22.8	21.8
Accumulated depreciation at 1 Jan.	-5.8	-4.8
Accumulated depreciation on decreases	0.0	0.0
Translation differences	-0.3	-0.1
Depreciation during the period Accumulated depreciation at 31 Dec.	-1.2 -7.3	-0.9 -5.8
Book value at 31 Dec.	15.5	16.0
	2010	2009
Other tangible assets
Acquisition cost at 1 Jan.	12.2	16.9
Additions	0.3	0.3
Disposals	-0.1	-4.8
Reclassifications	-3.7	0.0
Translation differences	0.6	-0.2
Acquisition cost at 31 Dec.	9.4	12.2
Accumulated depreciation at 1 Jan.	-6.8	-11.0
Accumulated depreciation on decreases
and reclassifications	0.8	4.7
Translation differences	-0.2	0.0
Depreciation during the period	-0.7	-0.6
Accumulated depreciation at 31 Dec.	-6.7	-6.8
Book value at 31 Dec.	2.7	5.5
	2010	2009
Advance payments and fixed
assets under construction
Acquisition cost at 1 Jan.	5.3	8.9
Translation differences	0.3	0.0
Additions	0.9	3.7
Disposals	0.0	0.0
Reclassifications	-0.9	-7.3
Book value at 31 Dec.	5.6	5.3
Total tangible assets	245.3	244.2

Minimum lease payments and present values of the payments by maturity classes relating to finance lease agreements are presented in note 28. Finance lease agreements mainly comprise production equipment leases, with average maturity of 5–7 years. Lease payments are tied to short-term market interest rates. The agreements do not include restrictions on dividend payments, additional borrowing nor on entering into new lease agreements.

13. GOODWILL

	2010	2009
Acquisition cost at 1 Jan.	31.5	31.7
Additions	-	-
Disposals	-	-
Translation difference	1.6	-0.2
Book value at 31 Dec.	33.1	31.5

Allocation of goodwill and impairment testing

Goodwill is allocated to cash generating units and most of the goodwill is recorded under the Turkey segment. The goodwill allocated to Turkey was EUR 31.6 (30.0) million at the end of 2010.

The value in use of the Turkey segment has been defined by using the present value method. The calculations have used 5-year discounted cash flow plans that are based on strategic plans approved by the management. The estimated cash flow of the segment is based on the use of property, plant and machinery in their present condition without any possible acquisitions. Cash flows beyond five years are calculated using the residual value method. Stable 1% annual growth in operating profit has been assumed when defining the residual value.

The discount rate used is the weighted average cost of capital after tax defined by Componenta. The factors in this are risk-free interest rate, market risk premium, the industry beta, borrowing costs and the target ratio for shareholders' equity to liabilities. Componenta has used a weighted average cost of capital of 10.4% in its calculations related to Turkey segment.

There was no need to record impairment losses on the basis of impairment testing in 2010 and in 2009.

Sensitivity analysis:

A sensitivity analysis was carried out on the Turkey segment using a variety of scenarios. These scenarios were achieved by altering the assumed values as follows:

• by reducing profitability (EBITDA) 1-10%
• by raising the weighted average cost of capital 1-20%

It is the opinion of management that the changes in the basic assumptions in the theoretical scenarios mentioned above should not be interpreted as evidence that they are likely to occur. However, none of these scenarios would have resulted in the need to recognize an impairment loss for goodwill.

14. Intangible assets

	2010	2009
Capitalized development costs
Acquisition cost at 1 Jan.	0.0	-
Additions	0.2	0.0
Acquisition cost at 31 Dec.	0.2	0.0
Accumulated amortization at 1 Jan.	0.0	-
Accumulated amortization on decreases	-	-
Amortization during the period	0.0	0.0
Accumulated amortization at 31 Dec.	0.0	0.0
Book value at 31 Dec.	0.2	0.0
	2010	2009
Intangible rights
Acquisition cost at 1 Jan.	1.3	1.1
Additions	0.1	0.3
Disposals	0.0	0.0
Translation differences	0.1	0.0
Acquisition cost at 31 Dec.	1.4	1.3
Accumulated amortization at 1 Jan.	-0.9	-0.8
Accumulated amortization on increases	0.0	0.0
Accumulated amortization on decreases
and reclassifications	0.0	0.0
Translation differences	0.0	0.0
Amortization during the period	-0.1	-0.1
Accumulated amortization at 31 Dec.	-1.0	-0.9
Book value at 31 Dec.	0.4	0.5
	2010	2009
Computer software
Acquisition cost at 1 Jan.	4.7	4.1
Additions	0.4	1.0
Disposals	0.0	-0.4
Reclassifications	0.0	0.0
Acquisition cost at 31 Dec.	5.1	4.7
Accumulated amortization at 1 Jan.	-2.5	-2.2
Accumulated amortization on decreases
and reclassifications	0.0	0.4
Amortization during the period	-0.6	-0.7
Accumulated amortization at 31 Dec.	-3.1	-2.5
Book value at 31 Dec.	2.0	2.3

	2010	2009
Other capitalized expenditure
Acquisition cost at 1 Jan.	8.1	7.1
Additions	1.2	1.9
Disposals	0.0	-1.1
Reclassifications	0.3	0.2
Acquisition cost at 31 Dec.	9.5	8.1
Accumulated amortization at 1 Jan.	-4.7	-4.8
Accumulated amortization on decreases
and reclassifications	0.0	1.1
Amortization during the period	-1.2	-0.9
Accumulated amortization at 31 Dec.	-5.8	-4.7
Book value at 31 Dec.	3.7	3.4
	2010	2009
Advance payments for intangible assets
Acquisition cost at 1 Jan.	0.2	0.2
Additions	0.3	0.3
Reclassifications	-0.3	-0.2
Book value at 31 Dec.	0.3	0.2
Total intangible assets	6.7	6.4

15. Investment property

	2010	2009
Acquisition cost at 1 Jan.	2.3	2.3
Additions	0.0	0.0
Acquisition cost at 31 Dec.	2.3	2.3
Accumulated depreciation at 1 Jan.	-0.5	-0.4
Depreciation during the period	0.0	0.0
Accumulated depreciation at 31 Dec.	-0.5	-0.5
Book value at 31 Dec.	1.8	1.8

The fair values of investment properties do not significantly deviate from the book values, according to evaluations carried out by an independent and qualified real estate evaluator. These independent evaluations are being updated on a regular basis.

16. Shares in associated companies

	2010	2009
Acquisition cost at 1 Jan.	1.1	0.9
Disposals	0.0	0.0
Share of results of associated companies	0.2	0.2
Translation differences	0.0	0.0
Book value at 31 Dec.	1.3	1.1

Associated companies 31 Dec. 2010

				Profit/	Group
		Assets, Liabilities, Net sales,		loss,	share of
	MEUR	MEUR	MEUR		MEUR holding, %
Kumsan A.S., Turkey	5.5	0.8	5.5	1.0	25.1
Kiinteistö Oy Niliharju, Helsinki					25.0

Associated companies 31 Dec. 2009

				Profit/	Group
		Assets, Liabilities, Net sales,		loss,	share of
	MEUR	MEUR	MEUR		MEUR holding, %
Kumsan A.S., Turkey	4.6	1.0	5.0	0.9	25.1
Kiinteistö Oy Niliharju, Helsinki					25.0

The value of shares in associated companies do not include goodwill. All associated companies are unlisted.

17. Financial assets

	2010	2009
Available-for-sale investments
Acquisition cost at 1 Jan.	0.4	0.4
Additions	0.1	0.1
Disposals	0.0	-
Book value at 31 Dec.	0.5	0.4

Available-for-sale investments consist of non-listed shares. Since the fair value of these shares is difficult to determine reliably, they are recognized at acquisition cost less any impairment losses. There were no gains or losses from the sale of available-for-sale investments in 2010.

18. Non-current receivables

	2010	2009
From associates L oan receivables	0.1	0.1
Other non-current receivables
L oan receivables	4.8	4.2
Other receivables	1.2	0.7
	5.9	4.8
Total non-current receivables	6.0	4.9

EUR 0.4 (0.3) million (nominal currency SEK) of other non-current loan receivables mature in 2012 and EUR 4.5 (3.9) million (nominal currency SEK) in 2015. The Group's loan receivables relate mainly to company reorganizations and acquisitions or investments.

19. Deferred tax assets and liabilities

Changes in deferred taxes during the financial year 2010

		Recognized in	Translation
at 1 Jan. 2010	income statement	equity	differences	31 Dec. 2010
1.5	-0.4			1.1
0.1	0.0		0.0	0.2
0.1	0.0			0.1
23.7	4.4			28.1
0.9	0.0			0.9
3.4	-0.7	-0.4		2.3
29.6	3.3	-0.4	0.0	32.6
-12.9				-11.6
16.6				20.9
		Recognized in

Deferred tax assets recognized for losses in Finland, in Sweden and in the Netherlands are based on the expected taxable income of the companies in these countries. It is estimated that these deferred tax assets can be utilized in 2-6 years.

		Recognized in	Recognized in	Translation
	at 1 Jan. 2010	income statement	equity	differences	31 Dec. 2010
Deferred tax liabilities
Valuing tangible assets at fair
value when merging businesses	4.6	-0.3		0.3	4.6
Accelerated depreciation	4.7	0.7		0.2	5.6
Revaluation on investment property at fair value	0.1				0.1
Revaluation of other real estate at fair value	4.8	0.0	0.0		4.7
Finance leases	0.8	0.3			1.2
Other differences	4.0	0.0	0.9	0.2	5.1
Total	19.0	0.6	0.9	0.7	21.2
Offset with deferred tax assets	-12.9				-11.6
Total	6.1				9.6

Changes in deferred taxes during the financial year 2009

		Recognized in	Recognized in	Translation
	at 1 Jan. 2009	income statement	equity		differences 31 Dec. 2009
Deferred tax assets
Intercompany gain on sale of fixed assets	1.8	-0.4			1.5
Intercompany margin in inventory	0.3	-0.1		0.0	0.1
Provisions	0.1	0.0			0.1
Tax losses carried forward	11.6	11.9		0.2	23.7
Revaluation of real estate at fair value	0.9				0.9
Other differences	3.1	0.7	-0.4	0.0	3.4
Total	17.7	12.1	-0.4	0.1	29.6
Offset with deferred tax liabilities	-7.1				-12.9
Total	10.6				16.6

		Recognized in	Recognized in	Translation
	at 1 Jan. 2009	income statement	equity		differences 31 Dec. 2009
Deferred tax liabilities
Valuing tangible assets at fair
value when merging businesses	4.9	-0.3		0.0	4.6
Accelerated depreciation	3.7	1.0		0.0	4.7
Revaluation on investment property at fair value	0.1				0.1
Revaluation of other real estate at fair value	4.8	0.0	0.0	0.0	4.8
Finance leases	0.5	0.3			0.8
Other differences	1.5	2.7	-0.2	0.0	4.0
Total	15.5	3.7	-0.2	0.0	19.0
Offset with deferred tax assets	-7.1				-12.9
Total	8.5				6.1

No deferred tax liability has been recognized for the undistributed profit of non-Finnish subsidiaries since possible distribution of profits would not give rise to any substantial tax effect.

20. inventories

LEVEL 3:

There is no active market for the instrument, a fair market price cannot be reliably derived, and defining the fair value requires significant assumptions.

Fair values by classification of valuation method

L	EVEL 1 L	EVEL 2 L	EVEL 3
Foreign exchange rate derivatives (OTC)	-	-1.9	-
Interest rate derivatives (OTC)	-	-0.4	-
Commodity derivatives	3.3	-	-

No financial assets or liabilities were transferred from one level to another during the financial year.

23. Cash and cash equivalents

	2010	2009
Cash and cash equivalents included in the statement of financial position Cash at bank and in hand	11.0	7.6
Cash and cash equivalents included in the cash flow statement Cash at bank and in hand	11.0	7.6

Finished products and goods 21.4 16.1 Other inventories 12.3 4.3 Advance payments 0.2 0.4 Total inventories 52.2 41.0

2010 2009 Raw materials and consumables 12.3 14.8 Work in progress 6.0 5.4

Other inventories include mainly tools, patterns, fixtures and spare parts.

During the financial year an expense of EUR -0.2 (-0.2) million was recognized to reduce the book value of inventories to their net realisable value.

21. Trade and other short-term receivables

	2010	2009
Trade receivables	27.1	20.5
Loan receivables	1.8	1.0
Derivative receivables	3.9	0.9
Income tax receivables	0.0	0.2
Prepayments and accrued income	5.6	5.4
Other receivables	3.2	5.0
Total trade and other short-term receivables	41.7	32.8

Other receivables inlcude mainly value added tax receivables, and Prepayments and accrued income mainly prepaid accrued expenses.

Trade receivables by currency

	2010	2009
	%	%
EUR	82.5	81.8
SEK	9.4	9.5
TRY	4.8	4.3
GBP	2.9	4.4
USD	0.4	0.1

22. Classification of fair value of financial assets and liabilities

Financial assets and liabilities that are valued at fair value are classfified on three levels, depending on the estimated reliability of the valuation method:

LEVEL 1:

A reliable quoted market price exists for identical instruments quoted on an active market. Electricity price forwards are classified on this level, as their valuations are based on market prices for Nord Pool's similar standardized products.

LEVEL 2:

A market price quoted on the active market exists for similar but not identical instruments. The price may, however, be derived from observable market information. The fair values of interest rate and currency derivatives are calculated by deriving them from price information obtained on the active market and using valuation techniques that are commonly applied in the market.

24. share capital, share premium reserve and other reserves

	Number of		Share capital, Share premium	Cash flow hedges, U	nrestricted equity	Other reserves,
	shares, (1,000)	MEUR	reserve, MEUR	MEUR	reserve, MEUR	MEUR
At 1 Jan. 2009	10,946	21.9	15.0	-2.8	3.4	3.0
Share-based payment	12	-	-	-	-	-
Share issue 2009	6,500	-	-	-	29.0	-
Redemption of convertible capital notes	-	-	-	-	-	-0.9
Comprehensive income	-	-	-	1.5	-	-
At 31 Dec. 2009	17,458	21.9	15.0	-1.3	32.5	2.1
Redemption of convertible capital notes	-	-	-	-	-	0.1
Comprehensive income	-	-	-	3.6	-	-
At 31 Dec. 2010	17,458	21.9	15.0	2.3	32.5	2.2

The translation differences in the Statement of changes in consolidated shareholders' equity contain the translation differences arising from translating the financial statements of non-Euro area business units. Gains and losses from hedging the net investments in non-Euro area units are also included in translation differences if the conditions for hedge accounting are met.

The share premium reserve contains the amount paid for shares in a share issue that exceeds the nominal value of the share if the decision concerning the issue of convertible capital notes on which the subscriptions are based was made before the 2006 change in the Finnish Company Act. The amount exceeding the nominal value when converting convertible captal notes issued after the new Company Act came into force (1 September 2006) is recognized in the unrestricted equity reserve. Cash flow hegdes include the valuations of commodity and interest rate derivatives. Other reserves include the conversion option component of the convertible capital notes. Other reserves shown in the Statement of changes in consolidated shareholders' equity include also unrestricted equity reserve.

After the closing date the Board of Directors has proposed to the Annual General Meeting that no dividend will be paid for 2010.

25. Share-based payment

Share-based incentive scheme

The Board of Directors of Componenta Corporation resolved on 10 March 2010 on a share-based incentive scheme for the period 2010-2012. The scheme has three earning periods, the calendar years 2010, 2011 and 2012. Any bonuses will be paid in 2011, 2012 and 2013 as a combination of company shares and cash. The part to be paid in cash is intended to cover the taxes and taxrelated costs arising from the bonus. The shares may not be disposed of for two years after the end of the earning period. If the employment or service of a key person ends during this restriction period, they must return any shares given as a bonus without consideration.

Any earnings from the incentive scheme were based in 2010 on Componenta Group's net cash flow from operations and result after financial items. At the end of 2010 the target group contained 45 people. If the targets set for the scheme had been achieved in full, a maximum bonus of 161,500 Componenta Corporation shares would have been paid under the incentive scheme for the 2010 earning period. For the 2010 earning period in the scheme, 40,950 shares of Componenta Corporation will be paid to the President and CEO and other key personnel. The President and CEO's share of this is 7,500 shares and other key personnel will receive altogether 33,450 shares. The scheme's impact on the Group's result before tax in 2010 was EUR -0.1 million.

Share-based incentive scheme 2010

Vesting period begins	1.1.2010
Vesting period ends	31.12.2010
Release date of shares	1.1.2013
Maximum number of shares	161,500
Binding time left	2 years
Share price at grant date, EUR	4.61
Share price at end of accounting period, EUR	6.01
Criteria	70% Result after financial itmes
	30% Net cash flow from
	operating activities

Combined pay-out of earning criteria	15% for President and CEO
	and 30% for other key personnel
Share ownership obligation	2 years
Share ownership obligation ending date	1.1.2013
Number of personnel in scheme	45

Calculation of fair value of share bonus in 2010

Number of shares granted	161,500
Share price upon grant, EUR	4.61
Assumed dividend before payment of bonus, EUR	0.00
Fair value (proportion in shares), EUR	4.61
Share price 31 December 2010, EUR	6.01
Pay-out of earning criteria, %	25.4
Assumed number of shares to be rewarded	40,950
Fair value of reward 31 December 2010, MEUR	0.3

26. Pension obligations and other benefit plans

Pension obligations

Most of the Group's pension plans are defined contribution plans. In Sweden Componenta has pension schemes, Alecta/ITP and AMF Pension/Avtalspension SAF-LO, classified as multi-employer defined benefit schemes. However, since Alecta and AMF Pension have not been able to supply the required actuarial valuations, the Swedish pension plans have been treated as defined contribution plans in accordance with IAS 19.30 (a).

Other benefit plans

Under Turkish Labour Law, the Group is required to pay termination benefits to each employee who has completed one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). The amount payable consists of one month's salary limited to a maximum of TL 2,623.23 for each year of service as of 31 December 2010 (31 December 2009: TL 2,365.16).The liability is not funded.

The provision has been shown under other benefit plans in note 27 and has been calculated by estimating the present value of the future probable obligation of the Group arising from the termination benefits to be paid to the employees. The following assumptions were used in the calculation of the total liability in 31 December 2010 and in 31 December 2009; Annual discount rate 5.92% and turnover rate to estimate the probability of retirement 97%. The principal assumption is that the maximum liability for each year of service will increase in line with inflation and therefore the discount rate applied anticipates the effects of future inflation.

27. Provisions

Current

	Other benefit Reorganisation		Other
	plans	provisions	provisions	Total
1 Jan. 2010	-	0.1	1.0	1.1
Translation differences	-	0.0	0.0	0.0
Additions to provisions	-	-	0.1	0.1
Utilized during the period	-	-0.1	0.0	-0.1
31 Dec. 2010	-	0.0	1.2	1.2
1 Jan. 2009	-	0.5	1.4	1.8
Translation differences	-	0.0	0.0	0.0
Additions to provisions	-	-	0.4	0.4
Utilized during the period	-	-0.4	-0.8	-1.1
31 Dec. 2009	-	0.1	1.0	1.1

Non-current

		Re-	Environ
	Other benefit	organisation	mental	Other
	plans	provisions		provisions provisions	Total
1 Jan. 2010	5.8	0.0	0.2	0.6	6.7
Translation differences	0.3	-	-	-	0.3
Additions to provisions	1.9	0.0	0.1	-	2.0
Utilized during the period	-0.4	-	-	-0.1	-0.5
31 Dec. 2010	7.5	0.1	0.3	0.5	8.5
1 Jan. 2009	4.7	0.0	0.2	0.8	5.8
Translation differences	0.0	-	-	-	0.0
Additions to provisions	1.9	-	-	0.3	2.2
Utilized during the period	-0.8	-	-	-0.4	-1.2
31 Dec. 2009	5.8	0.0	0.2	0.6	6.7

The environmental provision relates to the closing of the landfill site used by the old production works in Karkkila in accordance with the demands of environmental authorities. Closure includes piling up various soil layers and landscaping the area. According to the current plan, the project will be completed in 2013.

	2010	2009
Change in provisions recognized as operating
expenses in income statement	-1,5	-0,2

28. Interest-bearing liabilities

	2010	2009
Non-current interest-bearing financial liabilities
L oans from financial institutions	137.9	139.7
Finance lease liabilities	8.4	9.7
Pension loans	12.1	16.0
Capital notes	35.3	23.0
Convertible capital notes - liability portion *)	-	4.7
Bonds	26.7	-
Other liabilities	-	-
	220.4	193.0
Current interest-bearing financial liabilities
L oans from financial institutions	5.1	40.2
Finance lease liabilities	2.9	3.3
Pension loans	3.9	3.9
Capital notes	2.9	-
Convertible capital notes, liability portion*)	2.2	7.4
Bonds	-	-
Other liabilities**)	3.5	1.4
	20.4	56.1
Total interest-bearing liabilities	240.8	249.1

*) The conversion option's value of the convertible capital notes is included in other reserves of equity.

**) The item current other liabilities includes commercial paper loans issued by the Group for EUR 2.0 (0.0) million.

Currency breakdown of interest-bearing financial liabilities

		2010 %	2009 %
Non-current	EUR	82.7	97.4
	SEK	2.2	2.6
	TRY	15.1	-
Current	EUR	84.0	37.6
	SEK	16.0	6.3
	TRY	-	56.1

Cash flows are settled in the nominal currency of each liability agreement.

Range of nominal and effective interest rates for interest-bearing financial liabilities

	2010 Nominal interest rates %	2010 Effective interest rates %	2009 Nominal interest rates %	2009 Effective interest rates %
Loans from financial
institutions	3.0 - 10.2	3.0 - 10.2	1.9 - 9.2	1.9 - 9.2
Finance lease liabilities	1.3 - 7.8	1.5 - 7.8	1.0 - 7.8	1.5 - 7.8
Pension loans	3.8 - 5.4	3.8 - 5.4	3.8 - 5.4	3.8 - 5.4
Convertible capital notes	5.8 - 5.8	10.6 - 10.6	5.8 - 5.8	6.9 - 9.6
Capital notes	6.8 - 10.1	8.3 - 12.2	6.8 - 10.1	8.6 - 12.1
Bonds	8.0 - 8.0	8.8 - 8.8	-	-
Commercial papers	2.5 - 2.5	2.5 - 2.5	-	-

Repayment schedule for interest-bearing financial liabilities 2010

	2011	2012	2013	2014	2015	2016+
Loans from financial
institutions	5.1	137.6	0.1	0.1	0.1	0.0
Finance lease liabilities	2.9	1.8	1.8	1.8	1.6	1.3
Pension loans	3.9	2.6	2.6	2.6	2.6	1.6
Convertible capital notes	2.2	-	-	-	-	-
Capital notes	2.9	4.0	4.0	4.0	23.2	-
Bonds	-	-	26.7	-	-	-
Other interest-bearing
liabilities	3.5	-	-	-	-	-
	20.4	146.1	35.3	8.5	27.5	3.0

Repayment schedule for interest-bearing financial liabilities 2009

	2010	2011	2012	2013	2014	2015+
Loans from financial
institutions	40.2	4.4	135.2	0.0	0.0	-
Finance lease liabilities	3.3	1.9	1.7	1.7	1.6	2.7
Pension loans	3.9	3.9	2.6	2.6	2.6	4.3
Convertible capital notes	7.4	4.7	-	-	-	-
Capital notes	-	10.9	4.0	4.0	4.0	-
Bonds	-	-	-	-	-	-
Other interest-bearing
liabilities	1.4	-	-	-	-	-
	56.1	25.8	143.6	8.4	8.3	7.0

Maturity of finance lease liabilities

	2010	2009
Minimum lease payments fall due as follows:
Not later than one year	3.3	3.8
L ater than one year and not later
than five years	7.7	7.8
L ater than five years	1.4	2.8
	12.3	14.4
Future financial expenses	-1.1	-1.4
	11.3	13.0
Present value of minimum lease payments:
Not later than one year	2.9	3.3
L ater than one year and not later
than five years	7.0	6.9
L ater than five years	1.3	2.7
	11.3	13.0

Capital notes

Convertible Capital Notes 2005

The final instalment of EUR 7.4 million of Componenta Corporation's Convertible Capital Notes dated 15 March 2005 was repaid with the interest in accordance with the terms on 15 March 2010. The accrued interest on the loan for the period 1 January - 15 March 2010 was recorded as an expense in the income statement. During 2010 there were no conversions of notes into shares.

Convertible Capital Notes 2006

Under the authorization of the Extraordinary General Meeting, the Board of Directors of Componenta Corporation decided to issue convertible capital notes in 2006. The notes were issued on 4 December 2006 with the nominal value of EUR 19.7 million. The rate of issue was 95 percent. Notes are due for repayment in full at maturity on 4 December 2011. The fixed interest to be paid annually in arrears on 4 December is 5.75 percent p.a. The loan is not secured. The loan is a subordinated debenture.

The principal and interest may be repaid only to the extent that the amount of the unrestricted equity of Componenta and the amount of all capital notes of Componenta upon payment exceed the amount of loss in accordance with the balance sheet approved for the preceeding financial year or with the balance sheet included in more recent financial statements. Should the conditions for repayment not be met at maturity, the principal shall be repaid in part to the extent that this is possible. The repayment of the remaining part is deferred until the financial statements meet the conditions under which it can be paid. Any unpaid interest shall remain a liability of Componenta and will earn annual interest of 2 percent in excess of the interest rate payable on the notes. Componenta has the right to repay the loan, with interest accumulated up until the payment date, before the maturity date if the conditions stated in the terms of the loan are met.

The convertible notes have been classified partly as a liability and partly as equity. The liability is valued at amortized cost and recorded in current interest-bearing liabilities. The equity of EUR 2.2 million is recorded in the equity reserve. The accrued interest on the loan from 4 December to 31 December 2010 has been recorded as an expense in the income statement and as a liability in accrued expenses. Each note of EUR 1,800 entitles its holder to convert it into 200 Componenta Corporation shares at a conversion price of EUR 9.00 per share. Originally, conversion of the notes could have increased the number of shares by a maximum of 2,188,400 new shares and the shareholders' equity by a maximum of EUR 4,376,800. The conversion period started on 2 January 2007 and ends on 15 November 2011. The dividend rights of the new shares commence from the date on which the new shares are entered in the Trade Register.

By 31 December 2010 2,913 notes had been converted into altogether 582,600 shares. As a result of the conversions parent company's share capital increased by EUR 1.2 million and parent company's unrestricted equity reserve by EUR 4.1 million.

In September 2010 Componenta Corporation issued new capital notes (Capital Notes 2010). In connection with the issue, holders of Capital Notes 2006 and Convertible Capital Notes 2006 were able to convert these capital notes into new capital notes. Altogether EUR 2.8 million of the Convertible Capital Notes 2006 was converted. The outstanding notes can be converted into 259,000 new shares according to the terms and conditions. The balance sheet value of the liability component on 31 December 2010 is EUR 2.2 million.

Capital Notes 2006

Under the authorization of the Extraordinary General Meeting, the Board of Directors of Componenta Corporation decided to issue capital notes in 2006. The notes were issued on 17 November 2006 with the nominal value of EUR 14.2 million. The rate of issue was 95 percent. Notes are due for repayment in full at maturity on 17 November 2011. The fixed interest to be paid annually in arrears on 17 November is 6.75 percent p.a.

The loan is not secured. The loan is a subordinated debenture. The principal and interest may be repaid only to the extent that the amount of the unrestricted equity of Componenta and the amount of all capital notes of Componenta upon payment exceed the amount of loss as stated in the balance sheet approved for the preceeding financial year or with the balance sheet included in more recent financial statements. Should the conditions for repayment not be met at maturity, the principal shall be repaid in part to the extent that this is possible. The repayment of the remaining part is deferred until the financial statements meet the conditions under which it can be paid. Any unpaid interest shall earn interest of 2 percent in excess of the interest payable on the notes.

As from 17 November 2009 Componenta has the right to repay the loan on interest payment dates, with interest accumulated up until the payment date, before the maturity date if the conditions stated in the terms of the loan are met. The accrued interest on the loan from 17 November to 31 December 2010 has been recorded as an expense in the income statement and as a liability in accrued expenses.

In September 2010 Componenta Corporation issued new capital notes (Capital Notes 2010). In connection with the issue, holders of Capital Notes 2006 and Convertible Capital Notes 2006 were able to convert these capital notes into new capital notes. Altogether EUR 8.3 million of the Capital Notes 2006 was converted. The balance sheet value of the notes on 31 December 2010 is EUR 2.9 million.

Capital Notes 2009

The Board of Directors of Componenta Corporation decided, under the authorization given by the extraordinary general meeting shareholders in 2009, to offer a subordinated capital loan. The loan issued on 28 September 2009 had a nominal amount of EUR 12.3 million with a rate of issue of 100 percent. If the terms and conditions for repayment are met, the loan will be repaid in three equal instalments on 28 September 2012, 28 September 2013 and 28 September 2014. The fixed interest of 10.10 percent p.a. will be paid in arrears on the loan capital on 28 September.

The loan is not secured. Receivables based on the capital loan rank lower than Componenta Corporation's other debt commitments. The principal and interest may be repaid only to the extent that Componenta Corporation's unrestricted equity and the sum of all the capital notes exceed on the payment date the amount of the loss as stated in Componenta Corporation's balance sheet approved for the previous financial year or in the balance sheet included in more recent financial statements. Should the conditions for repayment not be met on the due date, that part of the principal shall be repaid as is possible under the repayment conditions. Repayment of the remaining loan will be deferred to future financial periods such that repayments deferred in 2013 and 2014 will take place, if the conditions for repayment are met, on 28 September and after that annually on the basis of the first financial statements that make it possible to pay. Any unpaid interest shall remain a liability of Componenta and will earn annual interest of 2 percent in excess of the interest rate payable on the notes. The loan has a balance sheet value on 31 December 2010 of EUR 12.1 million.

Accrued interest for the period 28 September - 31 December 2010 has been recorded as an expense in the income statement and as a liability in accrued expenses.

Capital Notes 2010

The Board of Directors of Componenta Corporation decided in 2010 to offer a subordinated capital loan to a limited group of selected investors. The notes were issued on 15 September 2010 with the nominal value of EUR 23.4 million. The rate of issue was 100 percent. Notes are due for repayment in full at maturity on 15 September 2015. The fixed interest to be paid annually in arrears on 15 September is 10.00 percent p.a.

The loan is not secured. The loan is a subordinated debenture. The principal and interest may be repaid only to the extent that the amount of the unrestricted equity of Componenta and the amount of all capital notes of Componenta upon payment exceed the amount of loss as stated in the balance sheet approved for the preceeding financial year or with the balance sheet included in more recent financial statements. Should the conditions for repayment not be met at maturity, the principal shall be repaid in part to the extent that this is possible. The repayment of the remaining part is deferred until the financial statements meet the conditions under which it can be paid.

Any unpaid interest shall remain a liability of Componenta and will earn annual interest of 2 percent in excess of the interest rate payable on the notes. The loan has a balance sheet value on 31 December 2010 of EUR 23.2 million. The accrued interest on the loan from 15 September to 31 December 2010 has been recorded as an expense in the income statement and as a liability in accrued expenses.

Bonds

Bond 2010

The Board of Directors of Componenta Corporation decided in 2010 to offer a bond to a limited group of selected investors. The bond was issued on 29 September 2010 with the nominal value of EUR 26.9 million. The rate of issue was 100 percent. The bond is due for repayment in full at maturity on 29 September 2013. The fixed interest to be paid annually in arrears on 29 September is 8.00 percent p.a.

The bond is unsecured. Receivables based on the bond rank equal to Componenta Corporation's other unsecured debt commitments. The bond has a balance sheet value on 31 December 2010 of EUR 26.7 million. The accrued interest on the loan from 29 September to 31 December 2010 has been recorded as an expense in the income statement and as a liability in accrued expenses.

29. Current non-interest bearing liabilities

Trade payables by currency

2010 2009 % % EUR 57.5 58.1 TRY 23.9 22.2 SEK 17.0 17.4 GBP 0.9 2.0 USD 0.8 0.4

	2010	2009
Trade payables to others	52.2	29.3
Accrued expenses and deferred income	27.1	20.1
Derivative liabilities	1.1	2.7
Advances received	0.0	0.0
Other current liabilities	9.1	5.4
Current non-interest bearing liabilities total	89.5	57.5

Componenta did not have trade payables to associated companies in 2010 and 2009. The most significant items in other current liabilities are value added tax payables.

30.Carrying values and fair values of financial assets and liabilities by category

Financial assets

	2010	2010	2009	2009
	Carrying value	Fair value	Carrying value	Fair value
ITEMS RECOGNIZED AT FAIR VALUE
Financial assets recognized at fair value through profit and loss
Derivatives classified as held for trading	0.4	0.4	1.2	1.2
Financial items included in hedge accounting
Derivatives (effective and ineffective portion)	3.4	3.4	0.2	0.2
ITEMS RECOGNIZED AT AMORTIZED COST AND AT COST
Loans and other receivables
Cash and cash equivalents	11.0	11.0	7.6	7.6
L oan receivables	4.9	4.9	5.2	5.2
Trade and other receivables	27.1	27.1	20.5	20.5
Available-for-sale financial assets
Shares and holdings	0.5	0.5	0.4	0.4
Financial liabilities
	2010	2010	2009	2009
	Carrying value	Fair value	Carrying value	Fair value
ITEMS RECOGNIZED AT FAIR VALUE
Financial liabilities recognized at fair value through profit and loss
Derivatives classified as held for trading	2.7	2.7	1.1	1.1
Financial items included in hedge accounting
Derivatives (effective and ineffective portion)	0.3	0.3	2.1	2.1
ITEMS RECOGNIZED AT AMORTIZED COST
Other financial liabilities
L oans from financial institutions	143.0	143.2	179.8	180.4
Finance leases	11.3	11.3	13.0	13.0
Pension loans	16.0	16.4	19.8	20.4
Convertible capital notes - liability component	2.2	2.3	12.1	11.7
Capital notes	38.2	38.3	23.0	22.8
Bonds	26.7	26.7	-	-
Commercial papers	2.0	2.0	-	-
Trade payables and other debt	53.7	53.7	30.7	30.7

The fair values of interest-bearing liabilities have been calculated by discounting the future cash flows for the contract with market rates corresponding to the terms of the contract on the closing date or with estimates of a fair rate.

The carrying values of trade receivables and payables, commercial papers and of finance leases tied to short-term market rates can be assumed to correspond with sufficient accuracy to their fair values due to the short maturity and interest rate renewal periods. The trade receivables are recorded in the balance sheet adjusted by any impairment.

31. Capital management

Componenta Group's objective for capital management is to ensure the Group's viability to operate in all circumstances. The sector in which Group operates is by nature relatively capital intensive and thus requires active measures to optimize the capital structure. The strategically important acquisitions and investments in the past few years have had an impact on the Group's capital structure.

The Board of Directors and Corporate Executive Team regularly monitor the capital structure of the Group. In management reporting the different capital notes are included in shareholders' equity. The Group monitors, in particular, the equity including capital notes to balance sheet total ratio and the company has set the strategic financial target to 40 percent by the end of 2015.

The Group's capital structure is managed among other things with the dividend policy (with the approval of shareholders) and by issuing different types of capital notes. During 2010 the Group has continued its efforts to reduce working capital, for example by optimizing inventories, enhancing the collection of customer receivables and further expanding the sale of trade receivables. Capital notes of EUR 2.9 million will mature in November 2011 and convertible capital notes of EUR 2.3 million in December 2011.

In addition to internal monitoring, the Group reports to its lenders the financial covenants relating to the capital structure as stated in the loan agreements. The Group aims to achieve the interest margin incentives defined in the loan agreements in order to reduce interest expenses.

The key indicators for capital structure

	31.12.2010	31.12.2009
Net gearing, capital notes included in equity	170.5%	200.8%
Equity ratio, capital notes included in equity	26.4%	26.5%

32. Financial risk management

The financial risks relating to Componenta Group's business operations are managed in accordance with the Group Treasury Policy approved by the Componenta Board of Directors. The objective is to protect the Group against unfavourable changes in the financial markets and to secure the performance of the Group and its financial position. Management of financial risks is centralized to the Group Treasury.

Refinancing and liquidity risks

The Group aims to ensure the availability of financing by spreading the repayment schedules, sources of funding and financial instruments in its loan portfolio. The proportion of one source of funding may not exceed a limit set in the Group Treasury Policy. The most important financing instruments used in the Group are the 5-year syndicated credit facility dated 28 June 2007 with a nominal value of EUR 200 million, various capital notes, bilateral loans, a commercial paper programme (EUR 150 million), the sale of receivables without recourse, and lease financing. In September 2010 the company issued new capital notes (EUR 23.4 million) and a bond (EUR 26.9 million). Investors were given the opportunity to prematurely redeem capital notes and convertible capital notes issued in 2006, as a deviation from the original terms and conditions of these notes, and use those as payment in the subscribtion of the new capital notes. Altogether EUR 11.1 million of these notes were used as payment and the combined cash flow effect of these loan arrangements was EUR 39.2 million.

Repayment schedule of the long-term interest bearing debt is presented in the note 28. The Group Treasury Policy states that the Group's liquidity should cover its near-term commitments. The minimum liquidity is defined in the Group Treasury Policy. In addition to cash reserves, the Group ensures its liquidity with unused committed credit facilities that amounted to EUR 64.5 million (EUR 38.5 million) at the end of the fiscal year.

Installments (nominal values) and interest payments

on financial liabilities 2010
	2011	2012	2013	2014	2015	2016+
Loans from financial
institutions	-5.1	-137.8	-0.1	-0.1	-0.1	0.0
Finance leases	-2.9	-1.8	-1.8	-1.8	-1.6	-1.3
Pension loans	-3.9	-2.6	-2.6	-2.6	-2.6	-1.6
Capital notes	-2.9	-4.1	-4.1	-4.1	-23.4	-
Convertible capital notes	-2.3	-	-	-	-	-
Bonds	-	-	-26.9	-	-	-
Commercial papers	-2.0	-	-	-	-	-
Trade payables and other debt-53.7		-	-	-	-	-
Interest expenses on loans	-16.8	-13.3	-6.0	-3.2	-2.6	-0.1
Interest rate swaps, net	-0.8	-0.3	-0.3	0.0	0.0	-
	-90.4	-160.0	-41.8	-11.8	-30.3	-3.2

The figures have not been discounted to correspond to their present values. The figures are valid only on the closing date and the amount of interest on floating rate contracts may vary from actual cash flows. The repayment table for financial liabilities is not meant to portray the Group's expected total cash flow.

There is a significant possibility of variation in future cash flows for currency derivatives concerning the exchange rate difference and for this reason they are not included in the repayment table. Electricity forwards are essentially connected to physical electricity supplies and therefore are treated as part of future electricity purchases. This being the case they are not reported in the Group's cash flow table for financial liabilities. The expected cash flows for currency derivatives, electricity forwards and interest rate options at the closing date correspond to their fair values (Note 33).

For finance leases, repayments of the finance lease liability and interest expenses are used as a sufficient approximation of actual rents paid. Only changes in interest rates cause a small difference in the actual cash flow. The interest to be paid has been calculated with prevailing nominal interest rates. The actual interest payments on variable interest contracts will, therefore, probably differ slightly from the figures in the table.

Installments (nominal values) and interest payments on financial liabilities 2009

	2010	2011	2012	2013	2014	2015+
Loans from financial
institutions	-40.4	-4.4	-135.5	-0.0	-0.0	-
Finance leases	-3.3	-1.9	-1.7	-1.7	-1.6	-2.7
Pension loans	-3.9	-3.9	-2.6	-2.6	-2.6	-4.3
Capital notes	-	-11.2	-4.1	-4.1	-4.1	-
Convertible capital notes	-7.4	-5.2	-	-	-	-
Bonds	-	-	-	-	-	-
Commercial papers	-	-	-	-	-	-
Trade payables and other debt-30.6		-0.0	-	-	-	-
Interest expenses on loans	-14.1	-9.1	-7.4	-1.4	-0.8	-0.4
Interest rate swaps, net	-1.8	-0.6	-	-	-	-
	-101.5	-36.2	-151.3	-9.9	-9.1	-7.3

Foreign exchange risk

The Group's foreign exchange risk is divided into transaction risk, which arises from income and expenses denominated in foreign currencies, and translation risk, which arises from equity investments and related profit or loss denominated in foreign currencies. The transaction position is calculated from the foreign currency denominated trade receivables and trade payables in the balance sheet. These form the part of the transaction position in which changes affect 'Operating profit'. The other part of transaction exposure includes items where the impact of changes in exchange rates are recorded in the income statement in 'Financial income and expenses' such as foreign currency cash in hand and at bank and the Group's internal and external foreign currency loans. The hedging level for both parts of the transaction position is set at 90 - 110 percent. If the total exposure for a specific currency is less than EUR 3 million, however, the hedging decision is taken on a case by case basis.

It is possible to deviate from this definition of the exposures in order to maintain cost-efficiency. This has been done with Componenta Turkey's foreign currency items where the hedging level for both transaction positions is set at 70-130%. However, these hedging levels may stand at 0-130% at the discretion of the Group's President & CEO.

The translation position is determined from the shareholders' equity and retained earnings of those foreign subsidiary and associated companies of the Group whose business currency is not the euro. As stated in the Group Treasury Policy, the translation position is hedged 0 - 100 percent at the discretion of the Group's President & CEO.

To hedge against changes in exchange rates, the Group uses foreign currency loans and deposits and other natural hedging relationships, as well as common derivative instruments such as foreign currency forward contracts and options, for which pricing on the market is reliable. Foreign currency derivatives mature in less than one year.

The currencies with the most significant currency risk exposure are the Turkish lira, the Swedish krona and the British pound sterling.

The table below shows the sensitivity for price changes of the Group's open currency exposures, including the currency derivatives used for hedging (note 33).

	Average rate	Open total	Estimate on potential currency	Impact of change in currency rate + / -
31 Dec. 2010	31 Dec. 2010	exposure MEUR	rate change %	To income statement	To equity
EUR/USD	1.3362	-0.1	10	0.0 / -0.0	-
EUR/GBP	0.86075	3.7	10	-0.1 / 0.1	-0.2 / 0.3
EUR/TRY	2.0491	147.4	10	-0.1 / 0.1	-13.3 / 16.3
EUR/SEK	8.9655	-3.9	10	0.3 / -0.4	0.0 / -0.0
	Average rate	Open total	Estimate on potential currency	Impact of change in currency rate + / -
31 Dec. 2009	31 Dec. 2009	exposure MEUR	rate change %	To income statement	To equity
EUR/USD	1.4406	-0.0	5	0.0 / -0.0	-
EUR/GBP	0.8881	5.7	5	-0.2 / 0.2	-0.1 / 0.1
EUR/TRY	2.1603	120.5	5	0.6 / -0.6	-6.3 / 7.0
EUR/SEK	10.2520	-4.9	5	-0.0 / 0.0	0.3 / -0.3

The Group does not apply cash flow or fair value hedge accounting as stated in IAS 39 for the transaction position.

Interest rate risk

The interest rate risk to which fair values and the cash flow are exposed arises mainly from the Group's loan portfolio, sold trade receivables and finance leases. Because of the cyclical nature of the Group's customer markets, the treasury policy states that the average period for renewing the interest rates of the Group's net liabilities should be at least six months but no more than two years. The average interest fixing period for net liabilities is 17 months (10 months). The interest rate risk is managed by spreading the loan portfolio between fixed and floating interest rate loans and investments. The interest rate risk is spread among several interest rate renewal periods and fluctuations in interest rates affect the Group's financial position in stages. The interest rate risk is managed also by using interest rate derivatives. Interest rate derivatives have been used to increase the number of fixed interest-bearing liabilities, so as to extend the average interest rate renewal period.

The Group values only derivatives at fair value. Interest rate derivatives that hedge the Group's result are divided into derivatives included in cash flow hedge accounting as defined in IAS 39, and assets and liabilities held for trading. Therefore interest rate fluctuations do not affect the carrying values of interest-bearing items, but only interest expenses and income recognized in the income statement. Changes in the fair values of interest rate derivatives classified as held for trading affect financial income and expenses in income statement whereas changes in the fair values of interest rate swaps included in cash flow hedge accounting affect the Group's shareholders' equity.

INCOME STATEMENT - FINANCIAL EXPENSES	31.12.2010 for 2011		31.12.2009 for 2010
	Forecast change in financial expenses	Sensitivity interest rate curve +100bp	Forecast change in financial expenses	Sensitivity interest rate curve +100bp
Interest-bearing financial liabilities	-1.0	-1.3	-1.0	-1.5
Interest rate swaps, interest expenses and income net	0.6	0.8	0.4	0.3
Interest rate swaps, change in fair value	-	0.7	-	0.1
SHAREHOLDERS' EQUITY - HEDGING RESERVE
		Change in fair value		Change in fair value
		interest rate curve +100bp		interest rate curve +100bp
Interest rate swaps, net		0.2		0.3

(Included in cash flow hedge accounting)

The forecast change in financial expenses shows the change in interest expenses if interest rates actually follow the yield curve as priced by the market at the point of reference. The sensitivity analysis estimates the parallel rise in the interest rate curve at 1.0 percentage points. A positive change indicates a decrease and a negative change an increase in interest expenses.

The assumption in the calculations is that loans that mature are refinanced with comparable instruments. It is also assumed that no repayments are made, thus the calculations only take into account the interest rate renewal risk regarding interest-bearing loans and their nominal interest rates. An exception are the interest rate swaps where it is not assumed that the instruments will be rolled-over when they mature.

Credit risk

Each group company is primarily responsible for the credit risk of its own trade receivables. The Group Credit Controlling sets guidelines, monitors credit risk management, and evaluates the creditworthiness of customers and their ability to fulfil their payment obligations.

The Group has no significant concentrations of trade receivables. The customer base is widespread and the trade receivables from any single customer on a consolidated basis do not exceed 5% of the Group's total trade receivables. 94% of sales is to Europe and is spread among several countries.

Many customers are financially sound and solid companies, but in individual cases reports on payment behaviour and capital adequacy from credit rating companies are used to assist in credit decisions. The Group reduces its credit risk exposure by selling its trade receivables to financing companies without recourse.

The overdue trade receivables and customer payment behaviour is monitored on a regular basis at least every fortnight. If overdue trade receivables exceed the limits set by Group's management, the Group Credit Controlling is prepared to suspend deliveries until payment obligations have been met.

Credit losses for the financial year were EUR -0.0 (-0.3) million. The Group's credit loss risk of EUR 46.8 (34.7) million corresponds to the carrying value of financial assets, excluding available-for-sale share holdings. In accordance with the treasury policy approved by the Board of Directors, surplus cash reserves are invested only with institutions that are considered to carry low credit risk. The maximum period of the investment is limited to one week and maximum amounts are defined for each counterparty.

The Group has received bank guarantees and bills of exchange against advances paid and trade receivables from some of its subcontractors, suppliers and customers. The total amount of the guarantees and other commitments received from subcontractors and suppliers is EUR 3.7 million. The total amount of guarantees and other commitments received from customers is EUR 1.6 million. The guarantees cannot be transferred or resold and they cannot be pledged forward.

Outstanding trade receivables fall due as follows

	31.12.2010	31.12.2009
Not due	13.5	17.3
Overdue
less than 1 month	6.9	1.7
1 - 3 months	5.9	0.4
3 - 6 months	0.7	0.2
more than 6 months	0.1	0.9
	27.1	20.5

33. Derivative instruments

Nominal values of derivative instruments

	2010	2009
	Nominal value	Nominal value
Foreign exchange rate derivatives *)
Foreign exchange rate forwards	11.0	6.0
Foreign exchange rate swaps	69.2	43.1
Foreign exchange options	2.8	-
Interest rate derivatives
Interest rate options	28.0	42.0
Interest rate swaps
Maturity in less than a year	28.0	24.0
Maturity after one year but
less than five years	60.0	28.0
Commodity derivatives
Electricity price forwards
Maturity in less than a year	4.0	3.9
Maturity after one year but
less than five years	5.7	4.2

*) Foreign exchange rate derivatives mature in less than a year.

Fair values of derivative instruments

2010	2010	2010	2009
Fair value,
positive	negative	net	net
0.0	-0.3	-0.3	0.1
0.0	-1.5	-1.5	0.1
-	-0.1	-0.1	-
			0.4
0.2	-0.5	-0.3	-2.0
			-0.4
	0.3 3.3	-0.6 0.0	Fair value, Fair value, Fair value, -0.3 3.3

The fair value of derivative instruments corresponds to the gain or loss that would be recognized in the income statement if the contract were closed on the balance sheet date. The fair value of interest rate options, foreign exchange and electricity price forwards is calculated using the prevailing market prices. Interest rate swaps are valued using discounted cash flow analysis using the yield curve prevailing on the reporting date.

The realized and unrealized exchange rate differences for currency derivatives hedging against changes in exchange rates for foreign currency trade receivables and trade payables in the balance sheet are recognized in 'Other operating income'. Exchange rate differences for foreign currency derivatives hedging against foreign currency loans and the accumulated interest difference and interest difference valuations are recognized in 'Financial income and expenses'. The fair values of interest rate derivatives that are not included in cash flow hedge accounting as defined in IAS 39 are recognized in 'Financial income and expenses'. Unrealized valuation gains and losses of derivatives are recognized in current receivables and liabilities.

Sensitivity analysis of electricity price forwards

Changes in the market prices of electricity price forwards would have the following impact on the fair values:

		Change in market price of electricity price forwards
	2010	2009
	15% / -15%	15% / -15%
Change in fair value of electricity price forwards	2.0 / -2.0	1.2 / -1.2

The sensitivity of the open foreign currency and interest rate exposures to changes in market prices is presented in Note 32.

Derivative instruments included in cash flow hedge accounting
		2010		2009
		Fair value,	2009	Fair value,
	2010	effective portion	Nominal	effective portion
	Nominal value	of hedge	value	of hedge
Interest rate derivatives
Interest rate swaps	23.0	-0.2	42.0	-1.5
Commodity derivatives
Electricity price forwards	9.7	3.3	8.1	-0.2

The fair values of interest rate and commodity derivatives designated as cash flow hedges against changes in market prices have been recognized in the hedging reserve of equity and will be recognized through profit and loss when the hedged item affects profit and loss or its occurance is no longer likely. Income statement effects arising from interest rate derivatives are recognized in 'Financial income and expenses' and from electricy forwards in purchases in Operating Profit.

No exchange rate differences have been capitalized for the acquisition cost of subsidiaries during the current or previous year.

Derivative instruments included in hedge accounting on net investments in foreign entities

No foreign exchange derivatives have been designated in the fiscal year or in the previous year as specifically hedges of translation items for foreign currency denominated shareholders' equity. Hedge accounting on net investments in foreign entities does therefore not include derivatives.

Derivate instruments held for trading

	2010 Nominal value	2010 Fair value	2009 Nominal value	2009 Fair value
Foreign exchange rate derivatives Foreign exchange rate forwards Foreign exchange rate swaps Foreign exchange options	11.0 69.2 2.8	-0.3 -1.5 -0.1	6.0 43.1 -0.1	0.1 0.1 -
Interest rate derivatives Interest rate options Interest rate swaps	28.0 65.0	-0.3 -0.1	42.0 10.0	0.4 -0.5

Derivative instruments classified as held for trading are part of the Group's risk management but the hedge accounting principles of IAS 39 are not applied. The Group has no embedded derivatives at the balance sheet date.

34. Other leases

Group as lessee

Minimum lease payment schedule for other non-cancellable leases

	2010	2009
Not later than one year	1.5	1.5
Later than one year but not later than five years	3.9	1.7
Later than five years	0.1	0.2
Minimum lease payments total	5.5	3.5

Other non-cancellable leases mainly comprise real estate, production equipment and car leases. The leases mature on average in 3 - 5 years. Some of the leases contain call options at a strike price that can be expected to correspond to the fair value at the expiry date.

The 2010 income statement includes lease payments of EUR -3.9 (-2.8) million for other non-cancellable leases.

Group as lessor

The minimum lease receivable schedule for other non-cancellable leases

	2010	2009
Not later than one year	0.7	0.7
Later than one year but not later than five years	3.1	2.7
Minimum lease payments total	3.8	3.4

Some of the production and office space that is currently not needed by the Group is leased to external parties. The rental agreements are from one to three years in length and normally contain an option to extend the lease period after the lease expires. Some of the property is classified, in accordance with IFRS, as investment property.

35. Contingent liabilities

	2010	2009
Real-estate mortgages For own debts	15.3	15.2
Business mortgages For own debts	-	-
Pledges For own debts	222.0	198.1
Other commitments *)	4.7	4.4

*) Other commitments in 2010 include bank guarantees of EUR 3.7 (3.3) million.

On June 9, 2010 Componenta B.V. received a writ of summons of Wärtsilä Finland Oy in which Wärtsilä Finland Oy claims that Componenta B.V. shall pay compensations to Wärtsilä Finland Oy amounting to EUR 8.5 million due to certain defects discovered in main bearing caps delivered by Componenta B.V. in 2007 and 2008. Componenta B.V. considers the claims of Wärtsilä Finland Oy to be unfounded and Componenta B.V. has denied the claims. The lawsuit is pending in Roermond district court in the Netherlands.

In Turkey, Componenta Dökümcülük A.S. received a claim on 7 October 2010 from Bursa tax office in which the tax office claims from Componenta Dökümcülük A.S. taxes and tax penalties related to Group's internal invoicing, totalling EUR 3.7 million. Componenta Dökümcülük A.S. has denied the claim and considers it to be unfounded.

In addition to the processes described above, some group companies are involved in few lawsuits and disputes relating to their business. Management believes that the outcome of such lawsuits and disputes will not have a material adverse effect on the Group's result or financial position when taking into consideration the grounds presented for the lawsuits and disputes, insurance coverage in force and the extent of the Group's business.

Secured liabilities

	2010	2009
Liabilities secured with real estate or
business mortgages
L oans from financial institutions	0.2	0.4
Pension loans	7.5	9.5
	7.7	9.9
Liabilities secured with pledges
L oans from financial institutions	108.8	144.0
Pension loans	0.3	0.5
	109.1	144.6

36. Related party disclosures

Group companies

Company	Domicile	Group share of holding, %	Parent company share of holding, %
Componenta Belgium N.V.	Sint-Lambrechts-Woluwe, Belgium	100.0	-
Componenta B.V.	Belfeld, The Netherlands	100.0	100.0
Componenta Dökümcülük Ticaret ve Sanayi A.S.	Orhangazi, Turkey	93.6	93.6
Componenta Finland Oy	Karkkila, Finland	100.0	100.0
Componenta France S.A.S.	Nanterre, France	100.0	-
Componenta Främmestad AB	Essunga, Sweden	100.0	-
Componenta Germany GmbH	Korshenbroich, Germany	100.0	-
Componenta Industri AB	Kristinehamn, Sweden	100.0	-
Componenta Italy Srl	Milan, Italy	100.0	-
Componenta Netherlands B.V.	Tegelen, The Netherlands	100.0	-
Componenta Sweden AB	Kristinehamn, Sweden	100.0	-
Componenta UK Ltd	Staffordshire, United Kingdom	93.6	-
Componenta USA, LLC	Iowa, USA	100.0	-
Componenta Wirsbo AB	Surahammar, Sweden	95.0	-
Karkkilan Koskikiinteistö Oy	Karkkila, Finland	81.0	66.9
Karkkilan Lääkärikeskus Oy	Karkkila, Finland	100.0	100.0
Karkkilan Valimokiinteistö Oy	Karkkila, Finland	100.0	-
Kiinteistö Oy Ala-Emali	Karkkila, Finland	98.2	98.2
Kiinteistö Oy Pietarsaaren Tehtaankatu 13	Pietarsaari, Finland	100.0	-
Kiinteistö Oy Uusporila	Karkkila, Finland	100.0	31.8
Kiinteistö Oy Ylä-Emali	Karkkila, Finland	100.0	100.0
Luoteis-Uudenmaan Kiinteistöt Oy	Karkkila, Finland	100.0	100.0
Pietarsaaren Vanha Valimo Oy	Pietarsaari, Finland	100.0	-
Uudenmaan Rakennustiimi Oy	Karkkila, Finland	100.0	100.0
Vanhan Ruukin Kiinteistöpalvelu Oy	Karkkila, Finland	100.0	100.0

Transactions with related parties

	2010	2009
Sale of goods to associated companies	-	-
Purchase of goods from associated companies Purchase of services from associated companies	-0.3 -	-0.2 -
	-0.3	-0.2

The prices of transactions with related parties are based on the Group's general price lists in force during the financial year.

Remuneration of the Chairman and other members of the Board of Directors, Managing Directors and Deputy Managing Directors

	2010	2009
Remuneration and fees, MEUR *)	-1.7	-1.4
Salaries and fees, 1,000 EUR
President & CEO Deputy CEO & COO	-273 -216	-238 -
Members of the Board Heikki Bergholm Yrjö Julin (till 10.3.2010) Pii Kotilainen (from 10.3.2010) Heikki Lehtonen Marjo Miettinen Juhani Mäkinen Matti Tikkakoski	-50 - -25 -25 -25 -25 -25	-50 -25 - -25 -25 -25 -25

*) The figures include the remuneration of the CEO, deputy CEO and the members of the Board of Directors.

In addition to the remuneration shown above the President and person acting as deputy for the President, have additional pension agreements of EUR 60,000 a year. The agreement includes old age pension after reaching the age of retirement, paid up pension policy rights if the employment of the insured is terminated before reaching the age entitling to old age pension as stated in the insurance policy, disability insurance, and life insurance for the duration of employment, of the paid up pension policy and of pension. The retirement age of the President and CEO is 63 years. If the company terminates the employment of the deputy to the President and CEO, the company is committed to paying the additional annual pension until the end of 2014.

Receivables from and payables to associated companies are listed in notes 18 and 21.

Other related party disclosures

Componenta has granted loan receivables totalling EUR 0.5 (0.4) million to persons who are related parties in this and previous financial years.

37. Events after end of period

Componenta decided to expand its Corporate Executive Team (CET) in January by appointing Olli Karhunen (SVP of Operations Finland), Patrick Steensels (SVP of Operations Holland) and Michael Sjöberg (SVP of Operations Sweden) to CET.

In January 2011, Componenta decided to begin personnel negotiations, as laid down in the Act on Co-operation within Undertakings, at Pietarsaari on 25 January 2011. Componenta is planning to terminate machining operations in Pietarsaari during the first half of the year and to transfer some of the machining work to Främmestad in Sweden and to Orhangazi in Turkey. If all earlier mentioned acts take place, it will mean a reduction of about 120 employees both in foundry and machining operations in Pietarsaari. One-time costs are expected to be EUR 3.0 million and will be incurred during the first quarter. In addition, investment and product transfer costs are estimated to be at some EUR 1.0 million, and these will be incurred during 2011.

PARENT COMPANY INCOME STATEMENT and statement of financial position (according to Finnish Accounting Standards)

Parent company income statement 1.1.-31.12.

MEUR	2010	2009
NET SALES	20.1	19.8
Other operating income	0.8	0.8
Operating expenses	-15.5	-14.3
Depreciation, amortization and write-down
of non-current assets	-0.4	-0.4
OPERATING PROFIT	5.0	5.8
Financial income	18.3	23.6
Financial expense	-26.1	-21.6
Financial income and expenses in total	-7.8	2.0
PROFIT AFTER FINANCIAL ITEMS	-2.9	7.8
Extraordinary items	-	3.4
PROFIT AFTER EXTRAORDINARY ITEMS	-2.9	11.3
Change in untaxed reserves	-	0.0
Income taxes	-	1.2
PROFIT/LOSS FOR THE FINANCIAL PERIOD	-2.9	12.5

Parent company statement of financial position 31.12.

MEUR	2010	2009
ASSETS
NON-CURRENT ASSETS
Intangible assets	1.0	1.1
Tangible assets	0.4	0.4
Investment	240.7	208.6
	242.2	210.1
CURRENT ASSETS
Non-current receivables	99.4	122.4
Current receivables	7.4	12.5
Cash and bank accounts	2.4	0.7
	109.2	135.7
TOTAL ASSETS	351.4	345.8
LIABILITIES AND SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY
Share capital	21.9	21.9
Share premium account	15.1	15.1
L egal reserve	0.0	0.0
U nrestricted equity reserve	33.3	33.3
Retained earnings	53.9	41.4
Profit/loss for the financial period	-2.9	12.5
Shareholders' equity	121.4	124.3
LIABILITIES
Non-current liabilities
Capital loans	35.7	28.6
Other interest bearing liabilities	136.8	148.7
Current liabilities
Capital loans	2.9	7.4
Other interest bearing liabilities	48.0	32.8
Non-interest bearing liabilities	6.6	4.1
Liabilities	230.0	221.6
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY	351.4	345.8

Group development

GROUP DEVELOPMENT 2006-2010

MEUR	2006	2007	2008	2009	2010
Net sales	362.1	634.7	681.4	299.6	451.6
Operating profit	14.5	42.7	47.3	-15.4	13.5
Financial income and expenses	-9.9	-20.0	-28.7	-21.8	-23.5
Profit/loss after financial items	4.6	22.7	18.6	-37.2	-10.0
Profit for the financial period	3.5	21.6	13.9	-28.7	-7.5
Order book at period end	95.4	129.0	73.6	58.8 *)	94.6 **)
Change in net sales, %	5.5	75.3	7.4	-56.0	50.7
Share of export and foreign activities in net sales, %	82.4	89.1	87.6	82.7	88.1

*) Order book on 15 January 2010

**) Order book on 10 January 2011

	31.12.2006	31.12.2007	31.12.2008	31.12.2009	31.12.2010
Statement of financial position total	484	497	448	388	420
Net interest bearing debt	251	243	262	242	230
Invested capital	360	371	339	317	311
Return on investment, %	6.6	11.9	13.6	-4.1	5.0
Return on equity, %	5.9	23.0	14.8	-45.1	-10.3
Equity ratio, %	19.2	20.3	15.9	17.5	16.8
Net gearing, %	270.7	241.3	369.1	356.4	325.0
Investments in non-current assets	123.6	64.5	46.0	17.9	8.5
Number of personnel at period end, excluding leased personnel	4,316	4,314	4,294	3,614	4,016
Average number of personnel, excluding leased personnel	2,196	4,206	4,395	3,684	3,853

Net sales by market area

MEUR	1-12/2009	1-12/2010
Sweden	39.8	81.7
Germany	58.6	76.0
Turkey	49.4	73.7
Finland	51.8	53.8
UK	31.2	47.5
Benelux countries	19.2	35.2
France	20.2	27.8
Italy	12.1	20.7
Other European countries	5.5	9.1
Other countries	11.7	26.1
Total	299.6	451.6

Quarterly development by market area

MEUR	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10	Q3/10	Q4/10
Sweden	11.0	8.0	8.7	12.1	15.5	21.9	19.5	24.8
Germany	16.9	12.7	14.4	14.5	15.2	20.9	18.6	21.2
Turkey	9.0	15.3	10.2	14.9	14.3	19.1	18.8	21.5
Finland	21.4	11.8	9.0	9.6	11.0	13.6	12.9	16.3
UK	7.6	7.9	7.8	7.8	9.9	12.0	12.5	13.1
Benelux countries	6.8	2.6	5.0	4.9	7.1	9.4	8.7	10.0
France	6.2	5.9	3.6	4.6	6.1	7.1	6.5	8.1
Italy	4.4	2.9	1.6	3.2	3.8	4.2	5.9	6.8
Other European countries	1.0	1.6	0.8	2.1	2.2	2.2	2.5	2.3
Other countries	3.8	1.9	3.7	2.3	6.1	6.9	6.5	6.6
Total	88.1	70.6	64.8	76.1	91.2	117.3	112.3	130.7

Group development

MEUR	1-12/2009	1-12/2010
Net sales	299.6	451.6
Operating profit	-15.4	13.5
Net financial items *)	-21.8	-23.5
Profit after financial items	-37.2	-10.0

*) Net financial items are not allocated to business segments

Group development by business segment

Net sales, MEUR	1-12/2009	1-12/2010
Turkey	116.2	204.8
Finland	80.4	103.6
Holland	69.5	85.1
Sweden	41.5	84.7
Other business	49.9	65.3
Internal items	-57.9	-91.9
Componenta total	299.6	451.6

Operating profit, MEUR	1-12/2009	1-12/2010
Turkey	2.2	15.2
Finland	-3.9	-0.2
Holland	-10.2	-1.5
Sweden	-8.8	0.8
Other business	4.6	-1.0
One-time items	0.0	-0.1
Internal items	0.7	0.4
Componenta total	-15.4	13.5

Order book, MEUR	12/2009*)	12/2010**)
Turkey	28.1	47.8
Finland	11.8	15.7
Holland	12.5	16.4
Sweden	10.5	22.0
Internal items	-4.1	-7.4
Componenta total	58.8	94.6

*) Order book on 15 January 2010

**) Order book on 10 January 2011

Group development by quarter

MEUR	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10	Q3/10	Q4/10
Net sales	88.1	70.6	64.8	76.1	91.2	117.3	112.3	130.7
Operating profit	-6.1	-4.3	-3.2	-1.7	0.3	4.0	3.4	5.8
Net financial items *)	-4.7	-5.7	-6.5	-4.9	-5.9	-6.2	-5.5	-5.9
Profit after financial items	-10.9	-10.1	-9.7	-6.5	-5.6	-2.2	-2.1	-0.1

*) Net financial items are not allocated to business segments

Quarterly development by business segment

Net sales, MEUR	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10	Q3/10	Q4/10
Turkey	24.9	28.4	27.4	35.6	40.6	53.1	51.5	59.6
Finland	29.1	19.5	15.4	16.4	20.8	27.0	25.1	30.6
Holland	23.9	15.8	15.4	14.4	18.7	23.4	20.8	22.1
Sweden	10.5	9.5	8.7	12.9	15.8	21.3	20.6	26.9
Other business	12.9	12.1	12.3	12.5	14.3	16.2	16.8	18.1
Internal items	-13.1	-14.7	-14.4	-15.7	-19.0	-23.7	-22.5	-26.7
Componenta total	88.1	70.6	64.8	76.1	91.2	117.3	112.3	130.7
Operating profit, MEUR	Q1/09	Q2/09	Q3/09	Q4/09	Q1/10	Q2/10	Q3/10	Q4/10
Turkey	-0.4	0.4	1.1	1.1	3.2	3.3	4.5	4.3
Finland	0.5	-1.2	-1.5	-1.7	-0.6	0.7	-0.9	0.6
Holland	-4.1	-2.7	-1.9	-1.5	-0.1	0.2	-1.0	-0.5
Sweden	-3.2	-1.7	-2.1	-1.9	-1.4	0.0	0.6	1.6
Other business	0.8	0.8	1.0	2.1	-0.7	-0.1	0.0	-0.2
One-time items	0.0	0.1	0.1	0.0	0,0	0.0	0.0	-0.1
Internal items	0.4	0.0	0.1	0.3	0.0	-0.2	0.3	0.2
Componenta total	-6.1	-4.3	-3.2	-1.7	0.3	4.0	3.4	5.8
Order book at period end, MEUR	Q1/09	Q2/09	Q3/09	Q4/09*)	Q1/10	Q2/10	Q3/10	Q4/10**)
Turkey	17.1	23.3	22.2	28.1	32.6	42.4	42.5	47.8
Finland	11.4	10.4	9.9	11.8	13.6	15.8	16.7	15.7
Holland	13.8	13.4	10.6	12.5	13.4	14.6	14.7	16.4
Sweden	6.0	6.4	9.3	10.5	13.3	16.5	18.7	22.0
Internal items	-2.3	-1.8	-2.9	-4.1	-5.0	-5.7	-6.8	-7.4
Componenta total	46.2	51.7	49.0	58.8	68.0	83.6	85.8	94.6

*) Order book on 15 January 2010

**) Order book on 10 January 2011

shareholders anD Shares

Largest registered shareholders on 31 December 2010

Shareholder	Shares	Share of total voting rights, %
1 Lehtonen Heikki	5,311,340	30.42
Cabana Trade S.A.	3,501,988
Oy Högfors-Trading Ab	1,806,052
Lehtonen Heikki	3,300
2 Etra Capital Oy	4,347,464	24.90
3 Varma Mutual Pension Insurance Company	978,968	5.61
4 Ilmarinen Mutual Pension Insurance Company	724,266	4.15
5 Finnish Industry Investment Ltd	666,666	3.82
6 Finnish Cultural Foundation	236,000	1.35
7 Bergholm Heikki	230,516	1.32
8 Laakkonen Mikko	200,000	1.15
9 Lehtonen Anna-Maria	178,823	1.02
10 Fund Alfred Berg Small Cap Finland	131,077	0.75
11 Kukkonen Jorma	127,000	0.73
12 Caldanos Oy	105,000	0.60
13 Ålandsbanken Finland Value	98,000	0.56
14 Handelsbanken Finnish shares Fund	88,000	0.50
15 Mandatum Life Insurance Company Limited	77,000	0.44
Nominee-registered shares	592,183	3.39
Other shareholders	3,365,495	19,28
Total	17,457,798	100.00

The members of the Board of Directors own 32.1% of the shares. All shares have equal voting rights.

If all the warrants were converted to shares, the holding of shares by the members of the Board of Directors would decrease to 31.7%.

Breakdown of share ownership on 31 December 2010

Number of shares	Shareholders	%	Shares	%
1 - 100	521	21.77	34,050	0.20
101 - 500	1,000	41.79	293,768	1.68
501 - 1,000	388	16.21	316,285	1.81
1,001 - 5,000	356	14.88	831,905	4.77
5,001 - 10,000	43	1.80	321,043	1.84
10,001 - 50,000	63	2.63	1,401,985	8.03
50,001 - 100,000	7	0.29	487,405	2.79
100,001 - 500,000	9	0.38	1,745,953	10.00
500,001 -	6	0.25	12,025,404	68.88
Total = total issued	2,393	100.00	17,457,798	100.00

Shareholders by sector on 31 December 2010 %

Finnish companies	42.83
Financial institutions and insurance companies	2.26
General government bodies	9.76
Non-profit institutions	2.00
Households	19.10
Nominee-registered shares and other foreign shareholders	24.04
	100.00

PER SHARE DATA

	2010	2009
Earnings per share (EPS), EUR	-0.45	-2.30
Earnings per share, with dilution (EPS), EUR *)	-0.45	-2.30
Cash flow per share, EUR	1.44	1.16
Equity per share, EUR	3.63	3.51
Dividend per share, EUR **)	0.00	0.00
Payout ratio, %	0.00	0.00
Effective dividend yield, %	0.00	0.00
P/E multiple	neg.	neg.
Share price at year end, EUR	6.01	4.12
Average trading price, EUR	5.29	4.45
Lowest trading price, EUR	4.02	3.60
Highest trading price, EUR	6.44	5.73
Market capitalization at year end, MEUR	104.6	72.0
Trading volume, 1,000 shares	8,483	3,511
Trading volume, %	48.6	20.1
Weighted average of the number of shares, 1,000 shares	17,458	12,312
Number of shares at year end, 1,000 shares	17,458	17,458

*) Earings per share with dilution has been restated for the financial year 2009.

The effect of the dilution was erroneusly taken into account although the dilution decreased the loss of earnings per share.

**) For the year 2010 a proposal of the Board of Directors.

Componenta Corporation (CTH) monthly share trading volume in 2006 - 2010, pcs

Componenta Corporation (CTH) share price development in 2006 - 2010, EUR

Calculation of key financial ratios

Return on equity -% (ROE)	=	Profit/loss after financial items – income taxes x 100 Shareholders' equity without preferred capital notes + non-controlling interest (quarterly average)
Return on investment -% (ROI)	=	Profit/loss after financial items + interest and other financial expenses x 100 Shareholders' equity + interest bearing liabilities (quarterly average)
Equity ratio, %	=	Shareholders' equity, preferred capital notes excluded + non-controlling interest x 100 Balance sheet total - advances received
Earnings per share, EUR (EPS)	=	Profit/loss after financial items – income taxes +/- non-controlling interest Average number of shares during the financial period
Earnings per share with dilution, EUR	=	As above, the number of shares has been increased with the warrants outstanding. When calculating the dilution effect of warrants, the number of shares has been adjusted with the number of own shares which, the company could have acquired, if it would have used the funds generated from the warrants to buy back of own shares at market price. (= average trading price). After tax interest expense of the convertible loan has been added to the profit of the period. Number of shares that can be subsricbed by the loan, has been added to the number of total shares.
Cash flow per share. EUR (CEPS)	=	Net cash generated from operating activities Average number of shares during the financial period
Average trading price, EUR	=	Trading volume Number of shares traded during the financial period
Equity per share, EUR	=	Shareholders' equity, preferred capital notes excluded Number of shares at period end
Dividend per share, EUR	=	Dividend Number of shares at period end
Payout ratio, %	=	Dividend x 100 Earnings (as in Earnings per share)
Effective dividend yield, %	=	Dividend per share x 100 Market share price at period end
Market capitalization	=	Number of shares x market share price at period end
P/E multiple	=	Market share price at period end Earnings per share
Net interest bearing debt	=	Interest bearing liabilities + preferred capital notes - cash and bank accounts
Net gearing, %	=	Net interest bearing debt x 100 Shareholders' equity, preferred capital notes excluded + non-controlling interest

The proposal of the Board of Directors for the distribution of profits

The distributable equity of the parent company statement of financial position is EUR 84,374,950.82. The Board of Directors proposes to the Annual General Meeting to be held on 28 February 2011 that no dividend will be paid for the financial year 2010.

Helsinki 24 January 2011

Heikki Bergholm Pii Kotilainen Marjo Miettinen

Chairman

Juhani Mäkinen Matti Tikkakoski Heikki Lehtonen President & CEO

To the Annual General Meeting of Componenta Corporation

We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Componenta Corporation for the year ended 31 December, 2010. The financial statements comprise the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.

Responsibility of the Board of Directors and the Managing Director

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company and the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the consolidated financial statements

In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

Opinion on the company's financial statements and the report of the Board of Directors

In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland.

The information in the report of the Board of Directors is consistent with the information in the financial statements.

Helsinki 25 January 2011

Oy Audicon Ab

Authorised Public Accountants

Marja-Leena Turunen

Authorised Public Accountant

Annual General Meeting

The Annual General Meeting of Componenta Corporation will be held at 9.00 a.m. on Monday, 28 February 2011 at the company's headquarters in Käpylä, in the auditorium of the Sato building at Panuntie 4, 00610 Helsinki, Finland.

1. Right to participate and registration of the

shareholders registered in the shareholders' register

A shareholder, who on the record date of the General Meeting, 16 February 2011, is registered as a shareholder in the company's shareholders' register maintained by Euroclear Finland Ltd, is entitled to attend the General Meeting. A shareholder whose shares have been entered into his/her personal bookentry account is registered in the company's shareholders' register. Changes in shareholdings occurring after the record date of the General Meeting shall not affect the right to attend the General Meeting or the number of votes of the shareholder.

A shareholder, who is registered in the shareholders' register, wishing to participate in the General Meeting is required to register his/her participation no later than 22 February 2011 at 4:00 pm by letter to the address Componenta Corporation, Panuntie 4, 00610 Helsinki, by telephone +358 10 403 2744, by telefax +358 10 403 2721 or by email ir.componenta@componenta. com. The registration letter or message must have arrived prior to the expiration of the registration period.

The shareholder, his/her authorised representative or proxy representative shall, where necessary, be able to prove his/her identity and/or right of representation at the meeting venue.

2. Right to participate and registration of the holders of nominee registered shares

A holder of nominee registered shares has the right to participate in the General Meeting by virtue of such shares based on which he/she on the record date of the General Meeting, i.e. on 16 February 2011, would be entitled to be registered in the shareholders' register of the company held by Euroclear Finland Ltd. The participation in the General Meeting requires, in addition, that the shareholder on the basis of such shares has been temporarily entered in the shareholders' register held by Euroclear Finland Ltd at the latest by 23 February 2011 at 10:00 am. A holder of nominee registered shares shall be deemed to have registered for the General Meeting if the shareholder has been notified for temporary entry in the shareholders' register as described above.

A holder of nominee registered shares is advised to request without delay necessary instructions regarding the temporary registration in the shareholders' register of the company, the issuing of proxy documents and registration for the General Meeting from his/her custodian bank. The account management organisation of the custodian bank shall notify a holder of nominee registered shares, who wants to participate in the Annual General Meeting, for temporary registration in the shareholders' register of the company at the latest by the time stated above.

3. Proxy representative and power of attorney

A shareholder may participate in the General Meeting and exercise his/her rights at the meeting by way of proxy representation. A shareholder may have several proxy representatives, who represent the shareholder with shares booked on different book-entry accounts. In such case the shares represented by each proxy representative shall be notified in connection with the registration for the meeting. The representative of a shareholder shall produce a dated proxy document or otherwise provide reliable evidence of the right to represent the shareholder. Any proxy documents are requested to be sent in original to Componenta Corporation, Panuntie 4, 00610 Helsinki before the expiration of the registration period.

4. Other information

A shareholder who is present at the General Meeting has the right to request information on the matters considered at the meeting pursuant to chapter 5, section 25 of the Companies Act.

Dividend and dividend policy

The Board of Directors proposes to the Annual General Meeting that that no dividend will be paid for the 2010 fiscal year.

The Board of Directors takes the financial performance, financing structure and growth expectations into account when making its proposal for the dividend to be paid. The target is to pay a dividend of 30% - 50% of net profit.

Financial information

In 2010 Componenta will publish three interim reports:

• January - March	on 20 April 2011
• January - June	on 15 July 2011
• January - September	on 18 October 2011

The press conferences for representatives of media and analysts held when the interim reports are published will be webcast simultaneously on the company's website at www.componenta.com.

This Annual Report 2010 is available as a web version and as a printable pdf version.

Componenta's publications and releases are available immediately after their release date at www.componenta.com/releases. Publications and interim reports printed on paper will only be sent to those who have requested it from the company. Publications printed on paper can be ordered from Componenta's website at www.componenta.com/orderreports, by telephone at +358 10 403 2744 or by e-mail at ir.componenta@componenta.com.

By registering at Componenta's web pages at www.componenta.com/releaseservice you can order all company releases directly into own e-mail.

In addition to the Annual Report, Componenta will publish Sustainability Report 2010 during the spring 2011.

All Componenta's publications are both in Finnish and English.

Information about the share

Componenta Corporation is listed on the NASDAQ OMX Helsinki, starting from 19 March 2001, in OMXH Small Caps in the Industrials sector. Componenta has one series of shares.

Trade code at NASDAQ OMX Helsinki: CTH1V ISIN code: FI0009010110

Investor relations

Componenta IR team's target is to provide comprehensive information on the IR pages at www.componenta.com/investors about Componenta and its business environment to institutional investors, small investors, analysts and the press. It is important for us that information concerning Componenta is always easily available to our stakeholders, regardless of time or place.

30 days prior to the publication of any financial statements or quarterly reports Componenta has a closed window period during which we do not meet with capital market representatives nor comment on result development.

Contact our investor relations by e-mail at ir.componenta@componenta. com.

Componenta Corporation

Panuntie 4 FI-00610 Helsinki, Finland Tel. +358 10 403 00 Fax +358 10 403 2721

Componenta Corporation www.componenta.com