Topsil establishes strong growth platform and resolves to expand production capacity

NASDAQ OMX Copenhagen			      11.03.2010
Nikolaj Plads 6
DK-1067 Copenhagen K	


No. 01/10



Topsil establishes strong growth platform and resolves to expand production
capacity 

Topsil expects to achieve better-than-expected profit for 2009, and the group
is strengthening its future growth and earnings potential by signing new raw
materials agreement and five new customer agreements. With a view to meeting
growing demand for its products, the group has resolved to implement a new
growth strategy and expand production capacity by building a new cleanroom
factory in the Frederikssund area, Denmark (Greenfield). The investment will be
partially financed by proceeds from a share issue to be completed in 2010. 

Topsil today signed a new long-term raw materials agreement for polysilicon for
Float Zone (FZ) products with one of the group's two existing suppliers. The
new agreement will expire in 2015 and replaces the existing agreement with the
supplier for the period from 2007 through 2012. 

The new polysilicon agreement is a strategic milestone for Topsil and was made
on commercial terms that are generally more favourable to the group than the
previous agreement. The new agreement stipulates annual minimum and maximum
purchases and allows for increasing volumes year on year, as opposed to the
previous fixed maximum for the full term of the agreement. Topsil will also
have access to more competitive and more stable prices for the period.
Moreover, the new agreement introduces a new raw material product for use in
the medium voltage market and supports the targeted development of an FZ
product with a 
diameter larger than that supplied today. 

Management believes that the new supplier agreement, combined with the existing
agreement signed with the other supplier, running from 2010 through 2017, will
strengthen Topsil's competitive position significantly. With these raw
materials agreements, Topsil will be able to continue to expand capacity and
support its customers' short-term and long-term growth plans to a higher degree
than previously. 


New long-term customer agreements form the basis of future growth
Furthermore, Topsil has entered into five new long-term customer agreements
with the group's largest customers of FZ silicon. Three of the agreements were
concluded with customers who had not previously signed long-term agreements,
whereas the two other agreements were renewals of existing agreements. 

The five new agreements, covering deliveries of increasing FZ volumes up to and
including 2015, also constitute an important milestone for Topsil. Together
with an existing and unchanged customer agreement, which runs until 2012,
Topsil's long-term customer agreements cover deliveries of FZ products for up
to six years. This corresponds to approximately 40% of the group's budgeted
revenue for 2010 - or more than three times the amounts under the
previous agreements. 

Topsil expects the fixed quantities specified under the agreements to be
supplemented to a significant degree by additional sales to the six customers. 


New growth strategy and need for capacity expansion
Based on its strengthened business platform and market position, Topsil will
exploit the favourable market trends to realise its full growth potential by
implementing its new ambitious growth strategy: ‘Seizing the Opportunity'. 

The overall theme of the strategy is to use the group's know-how, technology
and business platform to optimise its niche position in relation to its growth
scenario. This will be achieved by expanding production capacity, implementing
process optimisation and efficiency improvements, increasing the targeted
product offering within specialised applications and meeting customers' future
needs, requests and requirements for products, research and development,
delivery, growth and quality. 

A key element of the strategy is to expand the group's FZ production capacity
to meet customers' growing demand. The group considered expanding the existing
facility at Frederikssund, Denmark. However, due to the new long-term customer
agreements, the improved access to raw materials and the strategy to expand the
group's position in FZ-based products, the Board of Directors has resolved to
build a new factory (Greenfield) in the Frederikssund area, bringing FZ
production and the corporate headquarters to a single location. 

The Board of Directors believes that the establishment of a new cleanroom
factory, making it possible to expand capacity in step with market trends, is a
prerequisite for realising the growth potential of the coming years. In
addition, the new factory will ensure stronger customer loyalty, partly due to
lower cost prices, which will positively affect pricing, partly through
enhanced optimisation of the production flows, in order to achieve improved
quality, stronger yield and reduced delivery times. 

Over the next three years, Topsil is expected to make investments in
production, optimisation, development, etc. of approximately DKK 250-300
million, some two-thirds of which will relate to the Greenfield project. In
addition to using the group's cash flows, the Board of Directors plans to
secure financing of the investment programme by completing a share issue in
2010, expected to bring in proceeds of DKK 75-100 million, and to some extent
by increasing borrowing. 


Profit for FY 2009 better than expected
On 25 March 2010, Topsil will publish the group's annual report for 2009.
However, based on the unaudited financial statements, the group can already now
announce that consolidated revenue for 2009 is expected to be DKK 424 million,
and operating profit before depreciation, amortisation and impairment (EBITDA)
is expected to be DKK 100 million. The profit margin for 2009 is estimated at
20%, and profit for the year before tax at DKK 76 million. 

Accordingly, revenue was in line with the expected DKK 410-430 million
announced in company announcement no. 15/09, while earnings outperformed the
expectations of a profit margin of 17% and profit before tax of approximately
DKK 55-65 million. 

The principal reason for the improvement was an extremely strong performance in
Q4 2009; both within FZ, with its higher-than-ever activity level, and within
CZ, where profitability was restored. 


Outlook
The favourable market trends characterising the principal markets and
applications of the Topsil Group in 2009 are expected to persist in 2010.
Topsil's order book for FZ products for delivery in 2010 is historically high,
which confirms the strong increase in demand especially for externally
irradiated FZ-NTD products. Despite the stabilisation of the underlying market
and signs of an increase in orders, CZ is expected to continue to be
challenged. 

The signing of a new raw materials agreement with higher volumes and the new
customer agreements effective as of 1 January 2010 significantly strengthens
collaboration with the group's largest customers and paves the way for more
stable price and earnings developments in the coming years. With prospects of a
substantial growth potential for years ahead, Topsil wishes to exploit
this opportunity by establishing closer relations with existing and new
customers by offering primarily contract customers more favourable price and
delivery conditions in 2010 than was possible based on the cost levels of
previous years. 

Thus, revenue growth for 2010 will be more moderate than in previous years,
expectedly 5-10%, corresponding to revenue in the order of DKK 440-460 million.
Due to lower purchasing prices and ongoing optimisation measures, however, the
group as a whole is expected to generate an operating profit before
depreciation, amortisation and impairment of goodwill (EBITDA) in the region of
DKK 100-110 million, the EBITDA margin thus remaining at around 23%. Cemat
Silicon S.A., including Cemat70 S.A., is expected to report positive EBITDA for
2010. 

In connection with the publication of its annual report for 2009, Topsil will
provide a detailed account of the expected market trends, the company's growth
targets, strategy and financial guidance for the period up until 2012. 




Topsil Semiconductor Materials A/S


Jens Borelli-Kjær			          Keld Lindegaard Andersen
Chairman of the Board of Directors		Chief Executive Officer

Please direct any questions regarding this announcement to:
Jens Borelli-Kjær, Chairman, tel.: +45 40 16 14 82
Keld Lindegaard Andersen, CEO, tel.: +45 21 70 87 72