Interim report 01-03/2010

- The Tulikivi Group´s sales amounted to EUR 10.7 million (EUR
11.0 million, 01-03/2009).
- The Group´s result before taxes was EUR -1.9 (-3.0) million.
Earnings per share were EUR -0.04 (-0.06).
- Cash flow from operating activities before investments was EUR -
2.4 (-1.0)
million.
- Order books were EUR 8.2 (6.6 on 31 March 2009) million on 31
March.
- The Group’s recovering sales and improved cost efficiency, are
expected to improve net sales on the previous year, and the result
for the year is expected to be positive.

Managing Director’s comments:
“During the first quarter, there was a positive development in
demand in Finland. In addition to the demand in Finland, the
export of lining stone products also increased. Net sales from the
export of fireplaces were reduced by the lower demand in Central
Europe. A colder-than-normal winter slowed the completion of
building projects and delayed deliveries, which lowered net sales
at the beginning of the year.

In February we launched our first new interior design fireplaces
and the Tulikivi Green products at the international fireplace
exhibition in Europe. The products were very well received.
Deliveries to consumers will start during the second half of the
year.

On the annual level the positive development that started last
year is continuing. Over the next few months, sales are expected
to be on a clearly higher level than at the beginning of the
year.”

Segment reporting
The Group’s operating segments have been the Fireplaces Segment
and the Natural Stone Products Segment. The Fireplaces Segment
includes soapstone and ceramic fireplaces sold under the Tulikivi
and Kermansavi brands, their accessories, utility ceramics and
fireplace lining stones. The Natural Stone Products Segment
includes interior design stone products for households and stone
deliveries to construction sites. Expenses not allocated to a
segment are recognised under ‘Other items’, which also include
financial costs and taxes. Since the beginning of 2010 segment
reporting has been defined by allocating data and personnel
administration expenses, which were previously included in
expenses not allocated to a segment, to the relevant operating
segments. The comparison information has been changed accordingly.

Net sales and result

The 2009 net sales of the Tulikivi Group totalled EUR 10.7 million
(EUR 11.0 million in January – March 2009). The net sales of the
Fireplaces Business amounted to EUR 9.5 (9.6) million, and those
of the Natural Stone Business were EUR 1.2 (1.4) million.
Construction activity was lower than normal in the Group’s main
market areas during the winter months due to the exceptionally
cold weather and this lowered the Group’s net sales.

Exports accounted for EUR 5.4 (5.6) million, or 50.1 (50.6) per
cent, of total sales. The largest markets for the Group’s exports
were Sweden and France. Sales in Finland totalled EUR 5.3 (5.4).

At the operating profit level, the Group posted a loss of EUR -1.7
(-2.7) million. In accordance with the Group’s segment reporting,
the Fireplaces Business had an operating result of EUR -1.1 (-2.2)
million, and the Natural Stone Products Business an operating
result of EUR -0.2 (-0.1) million, while other items’ expenses
were EUR 0.4 (0.4) million.

The Group’s result before taxes was EUR -1.9 (-3.0) million and
net result was EUR -1.4 (-2.4) million. Earnings per share were
EUR -0.04 (-0.06).

Financing and investments
Cash flow from operating activities before investments was EUR -
2.4 (-1.0) million. At the end of the reporting period, the
Group’s cash and other liquid assets were EUR 9.0 (9.6) million,
and the total of undrawn credit facilities and unused credit
limits amounted to EUR 3 million. The equity ratio was 37.3 per
cent (37.4 per cent on 31 March, 2009). The ratio of interest-
bearing net debt to equity, or gearing, was 76.5 (69.4) per cent.
The current ratio was 2.0 (1.6). Financial income was EUR 0.1
(0.1)million and financial expenses EUR 0.3 (0.4) million. The
equity per share amounted to EUR 0.60 (0.64).

The Group’s investments in production, quarrying and development
were EUR 0.7 (0.5) million. Research and development costs were
EUR 0.5 (0.4) million, i.e. 4.2 (3.4) per cent of net sales. EUR
0.1 (0.1) million of this amount was capitalised in the balance
sheet. Product development focused on the productisation of the
Tulikivi Green products and interior design fireplace that will be
launched for consumers in the autumn. Other large development
projects include the development of the Group's processes and
renewal of the enterprise resource planning system. The aim is to
intensify operations and to implement the Group-wide information
system.

Personnel
The Group employed an average of 361 (399) people during the
reporting period. Salaries and bonuses totalled EUR 3.5 (4.2)
million during the period.

Tulikivi Corporation has an incentive plan which includes a share-
based incentive plan for the Managing Director and key personnel
of the company and an incentive pay scheme for all personnel.
The share-based incentive plan launched in 2008 includes three
earning periods which are the calendar years 2008, 2009 and 2010.
Under the plan, the bonus is determined on the basis of the
Group’s result after financial items and the cash flow from
operating activities after investments. A maximum total of about
360 000 Series A shares and a cash payment corresponding to the
value of the shares can be paid as rewards on the basis of the
entire share-based incentive plan. In 2010 the bonus can amount to
a maximum of 218 750 Tulikivi Corporation Series A shares and a
cash payment corresponding to the value of the shares. A maximum
of 50 000 A shares of this can go to the Managing Director. The
incentive pay scheme is based on of the Group´s result and on the
improvement of productivity. The Managing Director and key persons
also have personal targets in addition to this.

Treasury shares
The company did not purchase or assign any of its own shares
during the period. At the end of the period the company held a
total of 124 200 of its own A series shares which corresponds to
0.3 per cent of the company’s share capital and 0.1 per cent of
all voting rights.

Risks and uncertainties
The Group’s near-term risks are mainly associated with the
increased uncertainty among consumers and the effect of this on
consumers’ building and fireplace projects. The risks and the
means of preventing and controlling them are presented in more
detail in section 38 of the notes to the financial statements in
the 2009 Annual Report.

Events following the end of the reporting period
Resolutions of the Annual General Meeting
Dividends
Tulikivi Corporation´s Annual General Meeting, held on 14 April
2010, resolved to pay a dividend of EUR 0.0250 on Series A shares
and EUR 0.0233 on Series K shares. The dividend will be paid out
on April 26, 2010.

Board of Directors, Managing Director and auditors
Tulikivi Corporation’s Annual General Meeting elected the
following members o the Board of Directors of the parent company
and domestic business subsidiaries: Bishop Ambrosius, Juhani Erma,
Olli Pohjanvirta, Markku Rönkkö, Maarit Toivanen-Koivisto, Heikki
Vauhkonen and Matti Virtaala. The Board of Directors elected Matti
Virtaala as Chairman from amongst its members. The auditor is KPMG
Oy Ab, Authorized Public Accountants, from Helsinki.

Amendment of the Articles of Association
An amendment of the first paragraph of Section 8 (Notice of
meeting) of the Articles of Association was adopted as proposed by
the Board.

Authorisation to repurchase the company’s own shares
The Annual General Meeting authorised the Board to acquire the
company’s own shares as proposed by the Board. More information
about the authorisation in Notes to this interim report.

Authorisation to decide on share issues and on transfer of the
company’s own shares in the possession of the company and the
right to issue special rights which give entitlement to shares as
defined in Chapter 10, section 1, of the Limited Liability
Companies Act
The Annual General Meeting authorised the Board of Directors to
decide on issuing new shares and the transfer of the company’s own
shares in the possession of the company as proposed by the Board.
The authorization also includes the right to issue special rights,
as defined in Chapter 10, section 1, of the Limited Liability
Companies Act, which entitle to subscribe for shares against
payment or by setting off the receivable. More information about
the authorisation in Notes to this interim report.

The transfer the Funds of the Share Premium Account to the Reserve
for Invested Unrestricted Equity
As proposed by the Board, the Annual General Meeting decided that
the share premium account on the company’s balance sheet as of 31
December 2009 will be reduced by EUR 7,334,116.06, by transferring
all the funds in the share premium account on the balance sheet as
of 31 December 2009 to the reserve for invested unrestricted
equity.

Future outlook
Private house building along with the demand of fireplaces has
increased in Finland and this positive development is expected to
continue. Sales of lining stone products have clearly risen, but
sales of fireplaces are yet to increase in Central Europe. New
products will improve the company’s net sales during the second
half of the year. Adjustment measures will be continued in the
Group, with layoffs where necessary.

With the company’s recovering sales and improved cost efficiency,
the full-year net sales are expected to be up from the previous
year and the result is expected to be positive.

The order books at the end of the review period amounted to EUR
8.2 (6.6 on 31 March 2009 and 4.8 on 31 December 2009) million.

INTERIM REPORT January – March 2010, SUMMARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
EUR million
01-03/ 01-03/ Change, 01-12/
2010 2009 % 2009

Sales 10.7 11.0 -2.0 53.1
Other operating income 0.1 0.1 0.6
Increase/decrease in
inventories in finished
goods and in work in
progress 0.0 -0.5 -1.0
Production for own use 0.1 0.1 0.3
Raw materials and
consumables 2.2 2.1 10.2
External services 1.6 1.5 7.6
Personnel expenses 4.4 5.4 20.0
Depreciation and
amortisation 1.2 1.3 5.5
Other operating expenses 3.4 3.1 12.1

Operating profit/loss -1.7 -2.7 36.5 -2.4
Percentage of sales -16.0 -24.7 -4.5
Finance income 0.1 0.1 0.2
Finance expense -0.2 -0.4 -1.1
Share of the profit of
associated company 0.0 0.0 0.0

Profit before tax -1.9 -3.0 36.8 -3.3
Percentage of sales -17.8 -27.7 -6.2
Income tax expenses 0.4 0.7 1.0

Profit/loss for
the period -1.5 -2.4 37.5 -2.4

Other comprehensive income
Interest rate swaps 0.0 0.0 0.0
Translation
differences 0.1 0.0 0.0

Total comprehensive
income for the period -1.4 -2.4 42.1 -2.4

Earnings per share
attributable to the
equity holders of the
parent company, EUR
basic and diluted -0.04 -0.06 33.3 -0.06

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR million 03/10 03/09 12/09
ASSETS
Non-current assets
Property, plant and equipment
Land 1.0 1.0 1.0
Buildings 7.3 7.9 7.4
Machinery and equipment 7.7 9.8 8.1
Other tangible assets 1.0 1.2 1.1
Intangible assets
Goodwill 4.2 4.3 4.2
Other intangible assets 10.7 11.1 10.6
Investment properties 0.2 0.2 0.2
Available-for-sale investments 0.1 0.1 0.1
Receivables
Deferred tax assets 2.0 1.5 1.6
Total non-current assets 34.2 37.1 34.3

Current assets
Inventories 10.2 11.2 10.2
Trade receivables 4.9 4.6 4.1
Current income tax receivables 0.5 0.2 0.3
Other receivables 1.1 1.0 0.9
Cash and other liquid assets 9.0 0.6 10.6
Total current assets 25.7 26.6 26.1
Total assets 59.9 63.7 60.4

EQUITY AND LIABILITIES
Equity
Share capital 6.3 6.3 6.3
Share premium fund 7.4 7.4 7.4
Treasury shares -0.1 -0.1 -0.1
Translation difference 0.0 0.0 -0.1
Revaluation reserve -0.1 -0.1 -0.1
Retained earnings 8.8 10.3 10.4
Total equity 22.3 23.8 23.8
Non-current liabilities
Deferred income tax liabilities 1.8 2.0 1.9
Provisions 1.0 0.9 1.0
Financial liabilities 21.6 20.8 19.9
Other debt 0.1 0.0 0.1
Total non-current liabilities 24.5 23.7 22.9
Current liabilities
Trade and other payables 8.3 9.8 8.7
Current income tax liabilities 0.0 0.1 0.0
Current provisions 0.2 1.0 0.2
Current financial liabilities 4.6 5.3 4.8
Total current liabilities 13.1 16.2 13.7
Total liabilities 37.6 39.9 36.6
Total equity and liabilities 59.9 63.7 60.4

CONSOLIDATED STATEMENT OF CASH FLOWS
EUR million 01-03/ 01-03/ 01-12/
2010 2009 2009
Cash flows from operating activities
Profit for the period -1.5 -2.4 -2.4
Adjustments:
Non-cash transactions 1.2 1.3 5.5
Interest expenses
and interest income and
income taxes -0.2 -0.3 0.0
Change in working capital -1.6 0.7 1.8
Interest paid and received
and taxes paid -0.3 -0.3 -1.2
Net cash flow from operating
activities -2.4 -1.0 3.7

Cash flows from investing activities
Investment in property, plant and
equipment and intangible assets -0.7 -0.4 -2.0
Grants received for investments
and sales of property, plant and
equipment 0.1 0.2
Net cash flow from investing
activities -0.6 -0.4 -1.8

Cash flows from financing activities
Loans taken 3.0 5.1
Repayment of loans -1.6 -0.6 -7.0
Dividends paid and
treasury shares -0.1 -1.1
Net cash flow from financing
activities -1.4 -0.7 -3.0

Change in cash and cash
equivalents -1.6 -2.1 1.1

Cash and cash equivalents at
beginning of period 10.6 11.7 11.7

Cash and cash equivalents at
end of period 9.0 9.6 10.6

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
EUR million
Share Share Trans- Revalu- Trea- Re- Total
capital premium lation ation sury tained
fund diff. reserve shares earnings

Equity January 1,
2010 6.3 7.4 -0.1 -0.1 -0.1 10.4 23.8
Total comprehensive income
for the period 0.1 -1.5 -1.4
Equity March 31.
2010 6.3 7.4 0.0 -0.1 -0.1 8.9 22.3

Equity January 1,
2009 6.3 7.4 0.0 -0.1 -0.1 13.7 27.2
Dividends paid and
treasury shares 0.0 -1.0 -1.0
Total comprehensive income
for the period -2.4 -2.4
Equity March 31,
2009 6.3 7.4 0.0 -0.1 -0.1 10.3 23.8

SEGMENT REPORTING
Operating segments
EUR million 01-03/ 01-03/ 01-12/
2010 2009 2009
Sales 10.7 11.0 53.1
Fireplaces 9.5 9.6 47.8
Natural Stone Products 1.2 1.4 5.3

Operating profit/loss -1.7 -2.7 -2.4
Fireplaces -1.1 -2.2 -0.2
Natural Stone Products -0.2 -0.1 -0.3
Other items -0.4 -0.4 -1.9

OPERATING SEGMENTS QUARTERLY
EUR million
Q1/ Q4/ Q3/ Q2/ Q1/
2010 2009 2009 2009 2009

Sales 10.7 15.6 13.5 13.0 11.0
Fireplaces 9.5 14.4 12.4 11.4 9.6
Natural stone products 1.2 1.2 1.1 1.6 1.4

Operating profit/loss -1.7 0.3 0.7 -0.7 -2.7
Fireplaces -1.1 1.0 1.2 -0.2 -2.2
Natural stone products -0.2 -0.2 0.0 0.0 -0.1
Other items -0.4 -0.5 -0.5 -0.5 -0.4

ASSETS AND LIABILITIES BY SEGMENT ON MARCH 31, 2010
Fire- Natural Other Total
places stone items
products
Assets by segment 43.8 4.2 11.9 59.9
Liabilities by
segment 8.0 0.7 28.9 37.6
Investments 0.6 0.0 0.1 0.7
Depreciation and
amortisation
expenses 1.0 0.1 0.1 1.2

KEY FINANCIAL RATIOS AND
SHARE RATIOS 3/10 3/09 12/09
07

Earnings per share, EUR -0.04 -0.06 -0.06
Equity per share, EUR 0.60 0.64 0.64
Return on equity, % -25.6 -37.0 -9.2
Return on investments, % -13.8 -20.1 -4.3
Equity ratio, % 37.3 37.4 39.4
Net indebtness ratio, % 76.5 69.4 59.4
Current ratio 2.0 1.6 1.9
Gross investments,
EUR million 0.7 0.5 2.1
Gross investments,
% of sales 6.5 4.6 4.0
Research and development
costs, EUR million 0.5 0.4 1.6
%/sales 4.2 3.4 3.1
Outstanding orders (31.March),
EUR million 8.2 6.6 4.8
Average number of staff 361 399 417

Rate development of shares, EUR
Lowest share price, EUR 1.07 0.67 0.67
Highest share price, EUR 1.38 0.85 1.30
Average share price, EUR 1.25 0.73 0.96
Closing price, EUR 1.35 0.70 1.06

Market capitalization at the
end of period, 1000 EUR 49977 25907 39241
(Supposing that the market price of the K-share
is the same as that of the A-share)
Number of shares traded,
(1000 pcs) 1167 673 3959
% of total amount of A-shares 4.2 2.5 14.4
Number of shares
average 37019770 37043690 37023708
Number of shares
at the end of period 37019770 37009970 37019770

NOTES TO THE CONSOLIDATED FINANCIALS STATEMENTS
This financial statement release has been prepared in accordance
with the IAS 34 Interim Financial Reporting standard.

In preparing of this interim report, Tulikivi has applied same
accounting policies as in the 2009 financial statements, with the
exception of the following new/amended standards that the group
has adopted as from January 1, 2010:

- Revised IFRS 3 Business combinations (effective as of 1 July
2009). The revised standard includes several significant changes.
- Amendments to IAS 27 Consolidated and separate financial
statements (effective as of 1 July 2009). The amended standard
affects accounting for step acquisitions and divestments.
- Amendment to IAS 39 Financial Instruments: Recognition and
Measurement - Eligible hedged items (effective as of 1 July 2009)
- IFRIC 17 Distributions of Non-cash Assets to Owners (effective
as of 1 July 2009)
- IFRIC 18 Transfers of assets from customers (effective as of 1
July 2009)
- Improvements to IFRSs (April 2009, mainly effective as of 1
January 2010).
- Amendments to IFRS 2 Share-based Payment – Intra-group cash-
settled share-based payment transaction (effective as of 1 January
2010).

The Group’s view is that the adoption of the standards and
interpretations mentioned above will not have any significant
effect on the financial statements of 2010 reporting period. The
adaptation of the revised IFRS 3 would affect the financial
statements of Tulikivi Group in 2010, should a transaction during
the financial period meet the definition of a business
combination.

The key performance ratios and share ratios are calculated using
the same methods as for the consolidated financial statements for
2009. The calculations rules can be found in the 2009 annual
report, page 76.

Income taxes
EUR million 01-03/10 01-03/09 01-12/09
Taxes for the current and previous
reporting periods -0.1 0.1
Deferred taxes 0.4 0.7 0.6
Total 0.4 0.6 0.7

Collaterals given
EUR million 3/10 3/09 12/09
Loans from credit institutions and
other long term debts and loan
guarantees, with related mortgages
and pledges 22.7 20.7 20.9
Mortgages granted and
collaterals pledged 28.0 25.1 28.6
Other given guarantees and
pledges on behalf of own
liabilities 0.9 0.5 0.5
Derivatives
Interest rate swaps
Nominal value 7.1 12.8 7.3
Fair value -0.3 -0.3 -0.3
Foreign exchange forward contracts
Nominal value 0.2 - 0.1
Fair value
The fair value of derivatives is the gain or loss for closing the
contract based on market rates at the balance sheet date.

Provisions
The Group’s non-current provisions are an environmental provision
of EUR 0.6 million and a warranty provision of EUR 0.4 million.
Current provisions include the latter part of in 2009 recognized
restructuring provision of EUR 0.2 million.

Provisions are itemized in greater detail in notes 26. Provisions
and 34. Contingent liabilities in the consolidated financial
statements in Annual Report 2009.
Contingent liabilities have not changed after the end of the
financial period.

Changes in tangible assets are classified as follows:
3/10 3/09 12/09
Acquisition costs 0.2 0.2 1.1
Proceeds from sale -0.1
Total 0.2 0.2 1.0

Share capital
Share capital by share series

Number of % of % of Share,
shares shares voting EUR of
rights share
capital
K shares (10 votes) 9 540 000 25.7 77.6 1 621 800
A shares (1 vote) 27 603 970 74.3 22.4 4 692 675
Total March 31, 2010 37 143 970 100.0 100.0 6 314 475

There have been no changes in Tulikivi Corporation´s share capital
during the period. According to the articles of association the
dividend paid for Series A shares shall be 0.0017 EUR higher than
the dividend paid on Series K shares. The Series A share is
listed on the NASDAQ OMX Helsinki Ltd. No flagging notifications
were made to the company during the review period. The number of
the shares in the company´s possession at the end of the period
was 124 200 series A shares.

Board authorizations
The Annual General Meeting of April 14, 2010 authorized the Board
of Directors to acquire the company’s own shares. A maximum of 2
760 397 Series A shares in the company and 954 000 Series K shares
in the company can be bought back. The authorization is valid
until the Annual General Meeting 2011.

The Board of Directors has further an authorization to decide on
share issues and the conveyance of the company’s own shares in the
possession of the company.
New shares can be issued or own shares held by the company
conveyed amounting to a maximum of 5 520 794 Series A shares and 1
908 000 Series K shares. The authorization is valid until the
Annual General Meeting 2011.

Related party transactions
The following transactions with related parties took place:
EUR 1000 3/10 3/09 12/09
Sales to associated companies - 5 7
Purchases from associated
ompanies 63 44 148

Leases from related parties 27 32 109
Receivables from the related parties 12 1
Debts to the related parties 2

Transactions with other related parties
Tulikivi Corporation is a founder member of the Finnish Stone
Research Foundation. The company has leased offices and storages
from the property owned by the Foundation and North Karelia
Educational Federation of Municipalities. The rent paid for these
facilities was EUR 33 thousand (32 thousand) in the period. The
rent corresponds with the market rents.

Largest shareholders on March 31, 2010
Name of shareholder Shares Pro-
portion
of total
vote

Vauhkonen Reijo 4 186 827 24.3 %
Vauhkonen Heikki 3 010 974 24.1 %
Elo Eliisa 2 957 020 5.9 %
Virtaala Matti 2 957 020 12.6 %
Mutual Pension Insurance
Ilmarinen 1 902 380 1.5 %
Mutanen Susanna 1 643 800 7.2 %
Vauhkonen Mikko 782 310 3.5 %
Paatero Ilkka 718 430 0.6 %
Nuutinen Tarja 674 540 3.5 %
Investment Fond Phoebus 585 690 0.5 %
Other shareholders
(incl. treasury shares) 18 255 862 16.3 %

The information in the interim report is unaudited.

The companies included in the Group are the parent company
Tulikivi Corporation, Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc.
and OOO Tulikivi. Group companies include also The New Alberene
Stone Company, Inc., which is dormant. The parent company has a
fixed place of business in Germany, Tulikivi Oyj Niederlassung
Deutschland. The Group has interests in associated companies Stone
Pole Oy, Leppävirran Matkailukeskus Oy and Rakentamisen MALL Oy.

TULIKIVI CORPORATION

Board of Directors
Matti Virtaala Chairman of the Board

Distribution: NASDAQ OMX Helsinki Ltd
Central Media
www.tulikivi.com

Additional information: Tulikivi Corporation, 83900 Juuka, tel.
+358-207-636 000, www.tulikivi.com
- Chairman of the Board of Directors Matti Virtaala
- Managing Director Heikki Vauhkonen