The shareholders of Tulikivi Corporation are invited to the Annual General Meeting to be held on 6 April 2006 at 12 a.m. at the Kivikylä Auditorium in Nunnanlahti, Juuka.
The following matters will be on the agenda of the meeting:
1) Matters specified as being the business of the Annual General Meeting in Article 10 of the Articles of Association.
2) Proposal of the Board of Directors to the Annual General Meeting to quadruple the number of shares in proportion to the holdings of the shareholders without raising the share capital
The Board of Directors proposes that the number of shares be increased under the following terms: 1) The number of shares in the company will be quadrupled in proportion to the holdings of shareholders without raising the share capital. At present, the company’s share capital is EUR 6,192,341.80, which is divided into 2,385,000 Series K shares and 6,721,385 Series A shares with nominal value of EUR 0.68 per share. Due to the increase in the number of shares, each share with a nominal value of EUR 0.68 will be converted into four (4) shares with a nominal value of EUR 0.17 each, after which the number of Series K shares will be 9,540,000 and the number of Series A shares 26,885,540. b) The increase in the number of shares will be carried out in the book-entry system and does not require shareholders to take action. c) It is planned that the increase in the number of shares enters into force at the earliest on 21 April 2006, i.e. after the record date. d) The new shares entitle their holders to a full dividend for the financial year that began on 1 January 2006, and to the other shareholder rights once the increase in the number of shares has been recorded in the Trade Register. e) Other matters related to the increase in the number of shares and the necessary practical measures will be decided on by the company’s Board of Directors. The higher number of shares will improve the liquidity of the shares, and enhance the functionality of the stock market. The increase in the number of shares has no effect on the shareholding structure of the company, shareholder rights or the relations between share series.
3) Proposal of the Board of Directors to amend Articles 3 and 4 of the Articles of Association
Due to the decision to increase the number of shares, the Board of Directors proposes to the Annual General Meeting that in the Articles of Association
Article 3 be amended as follows: Article 3 Minimum and maximum share capital The company’s minimum share capital is 2,550,000 euros and the maximum share capital is 10,200,000 euros, within which limits the share capital can be raised or lowered without amending the Articles of Association.
The shares are divided into Series K shares, which are referred to as common shares, and Series A shares, which are referred to as preference shares, such that the minimum number of Series K shares is 9,540,000 and the maximum number is 21,840,000, and the minimum number of Series A shares is 9,790,000 and the maximum number is 38,160,000.
The Series K and Series A shares differ from each other as follows:
1) Each Series K share confers 10 votes at a General Meeting and each Series A share one vote.
2) Of the profits to be distributed, the dividend that is paid on the nominal value of Series A shares shall be at least 1 percentage point greater than that paid on Series K shares.
A General Meeting of shareholders can resolve to issue only Series K or Series A shares in a rights issue.
and that Article 4 be amended as follows:
Article 4 Nominal value of shares The nominal value of the shares is EUR 0.17.
4) Proposal of the Board of Directors to authorise the Board of Directors to decide on the acquisition of the company’s own shares
The Board of Directors is authorised to decide on the acquisition of the company’s own shares with the following terms:
a) The company’s own shares are acquired to develop the company’s capital structure and to be used as consideration in business and company acquisitions and other structural arrangements, the manner and scope of which will be determined at the discretion of the
Board of Directors. The Board of Directors can also initiate the invalidation of shares by decreasing the share capital.
b) No more than a total of 672,138 Series A shares of the company (a maximum of 2,668,552 new Series A shares after the split) shall be acquired and no more than a total of 238,500 Series K shares of the company (a maximum of 954,000 new Series K shares after the split) shall be acquired.
c) The shares shall be acquired as follows:
The company’s Series A shares may be acquired in disproportion to shareholders’ holdings and are to be acquired through public trading on the Helsinki Stock Exchange as decided upon by the Board of Directors, with the price of the shares being their market rate at the time of purchase, and in accordance with the rules and regulations of the Helsinki Stock Exchange.
The company’s Series K shares are to be acquired in proportion to the shareholders’ holdings by making a purchase offer to shareholders owning Series K shares. The value of the offer is determined by calculating the weighted average value of the Series A shares for a period of two weeks of public trading on the Helsinki Stock Exchange prior to the signing of the purchase offer. In the event that the number of Series K shares stated in the decision reached by the general meeting cannot be acquired in this manner, the Board may acquire the remainder of the shares from those owners of Series K shares who are willing to sell more than their relative proportion of the number of shares to be acquired. In the event that the number of shares offered exceeds the number of shares to be acquired, the Board will consider the ownership of the vendors and number of shares offered and decide how the acquisition is to be divided among those offering their shares for sale.
As the maximum number of shares to be acquired is 10 per cent of the total number of shares in the company and the number of votes conferred by the shares in the company, the acquisition of shares has no considerable effect on the distribution of the share ownership or voting power in the company. Related entities, as defined in the Finnish Companies Act, are estimated to own in total approximately 54.4 per cent of the share capital and approximately 85.2 per cent of the votes conferred by the shares in the company prior to the acquisition of the company’s own shares. As a major part of the shares in the company are planned to be acquired through public trading arranged by the Helsinki Stock Exchange without knowledge of the identity of the transferors of shares, it is not possible to determine the related entities’ share of the share capital and of the votes after the acquisition.
d) The acquisition of shares is to be carried out using distributable earnings. The acquisition therefore reduces the total non-restricted distributable equity.
e) The authorisation for share acquisitions is valid until the Annual General Meeting in 2007, however for not more than one full year after the decision reached by the Annual General Meeting.
f) Other matters pertaining to the acquisition of shares are at the discretion of the Board of Directors.
5) Proposal of the Board of Directors to authorise the Board of Directors to decide on the disposal of the company’s own shares
The Board of Directors is authorised to decide on the disposal of the company’s own shares on the following terms:
a) The authorised total number of shares is not to exceed 672,138 (a maximum of 2,688,552 after the split) Series A shares and 238,500 (a maximum of 954,000 after the split) Series K shares acquired by the company.
b) The Board of Directors is authorised to decide to whom and in what order the shares will be transferred. The Board of Directors has total discretion over the disposal of the shares in disproportion to the shareholders’ pre-emptive rights to the company’s shares.
c) The shares are to be disposed of as consideration in business and company acquisitions or used in other structural arrangements, the manner and scope of which will be determined by the Board of Directors. In addition, the Board of Directors suggests that the Annual General Meeting authorise the Board of Directors to make decisions on the sale of the company’s own Series A shares through public trading on the Helsinki Stock Exchange to secure funds for future business or company acquisitions or investments.
d) The Board of Directors shall determine the transfer price of the shares and the principles used to establish that transfer price. Shares may be transferred in exchange for non-monetary consideration.
e) The authorisation to dispose of shares is valid until the Annual General Meeting in 2007, however for not more than one full year beginning from the decision reached by the Annual General Meeting.
f) Other matters pertaining to the disposal of shares are at the discretion of the company’s Board of Directors.
6) Proposal of the Board of Directors to authorise the Board of Directors to decide on raising the share capital
The Board of Directors proposes that the Annual General Meeting authorise the Board of Directors to increase the share capital in one or more instalments by means of a rights issue and/or through the issuance of convertible bonds such that the share capital can be raised by a maximum of EUR 1,238,468 on the basis of the rights issue and convertible bonds by offering a maximum of 1,821,277 new Series A shares for subscription (a maximum of 7,825,108 split new Series A shares) at the price determined by the Board of Directors and under the other terms set by the Board.
The Board of Directors proposes that the authorisation include the right to waive the pre-emptive subscription right of shareholders provided there is a weighty financial reason for the company to do so. The authorisation can be used to develop the capital structure, expand the shareholder base, as consideration in acquisitions, or when the company acquires business assets, to implement incentive schemes and for other equivalent purposes. The rights issue may also be made against a contribution in kind or by using off-setting rights. The authorisation is valid until the next Annual General Meeting, however for no more than one full year after the decision reached by the Annual General Meeting.
7) Proposal on payment of dividends
The Board of Directors proposes to the Annual General Meeting that a dividend be paid of EUR 0.280 per share for Series A shares and EUR 0.273 per share for Series K shares. The dividend decided upon by the Annual General Meeting is to be paid to shareholders registered by the record date in the shareholder register kept by Finnish Central Securities Depository Ltd. The Board of Directors has agreed that the record date for payment of the dividend shall be 11 April 2006. The Board of Directors proposes to the Annual General Meeting that the dividend be paid after the record period on 20 April 2006.
8) Proposal on the composition of the Board of Directors and the auditor
The appointment committee proposes to the Annual General Meeting that the following people be elected as Board members for the next term of office: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Aimo Paukkonen, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala.
The Board of Directors proposes to the Annual General Meeting that Authorised Public Accountants PricewaterhouseCoopers Oy be elected as the company’s auditor, with Hannele Selesvuo, APA, as chief auditor.
Documents (and appendices to these documents) pertaining to the financial statements for 2005, the Board of Directors’ proposal to quadruple the number of shares and the amendment of the articles of association as well as the Board of Directors’ proposals for authorising the Board of Directors to acquire and dispose of the company’s own shares and to increase the company’s share capital are available for inspection by shareholders at the company headquarters at Kuhnustantie 10, 83900 Juuka, as from 27 February 2006. Copies will be mailed to shareholders on request. The Annual Report will be mailed to shareholders the week of 20 March.
The right to participate in the general shareholders’ meeting is given to shareholders who are registered in the shareholder register kept by Finnish Central Securities Depository Ltd (Suomen Arvopaperikeskus Oy) on 27 March 2006.
A shareholder wishing to participate in the Annual General Meeting is obligated to notify the company thereof by 27 March 2006. The notification must be made either by phone to Ms Kaisa Toivanen, tel. +358 (0)207 636 251, by e-mail to kaisa.toivanen@tulikivi.fi, or by post to the address Tulikivi Corporation/Annual General Meeting, FIN-83900 Juuka, Finland. Any powers of attorney must be submitted together with the preliminary enrolment for the meeting.
Juuka, 17 February 2006
Tulikivi Corporation Board of Directors
DISTRIBUTION: Helsinki Stock Exchange and Principal Media
Additional information: Tulikivi Corporation, FIN-83900 Juuka, Finland, tel. 358-(0)207 636 000, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen
* The Tulikivi Group’s sales grew by 6.1% in 2005 and amounted to EUR 58.6 million (EUR 55.3 million in 2004). * The Group’s comparable earnings improved by 20.2% and the profit before taxes was EUR 6.1 (5.0 comparable with 2004) million. * Cash flow from operating activities before investments was EUR 10.5 (6.5) million. * The order book grew and amounted to EUR 9.2 (5.4) million at the end of the review period. * In the fourth quarter, the Group’s sales grew by 10.7% and comparable earnings improved by 54.7%.
Transition to IFRS The financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS). The Tulikivi Group has applied IFRS standards in its reporting as from 1 January 2005. A release on the transition was published on 3 March 2005. The comparative figures presented in this report are the IFRS figures for 2004 published in the release.
Sales and result In 2005, the Tulikivi Group’s sales increased by 6.1 per cent to EUR 58.6 million (EUR 55.3 million in 2004). The sales of the Fireplace Business was EUR 52.2 (49.0) million, up 6.5 per cent. Virtually all growth was generated by fireplace exports. The Architectural Stone Business posted sales of EUR 6.4 (6.3) million.
The share of sales accounted for by exports was EUR 30.7 (27.7) million, or 52.4 (50.0) per cent. The main export countries were Germany and Sweden. The greatest relative growth was achieved in France, Russia and the Baltic countries. Finland accounted for EUR 27.9 (27.6) million of the sales.
Profit before taxes amounted to EUR 6.1 million, or 10.3 per cent of sales. The comparable result for 2004 was EUR 5.0 million. The difference with the published result, which was EUR 6.1 million, is due to the non-recurring reduction of the disability pension obligation, amounting to EUR 1.2 million, in the final quarter of 2004 due to the change in the pension system under the Employees’ Pensions Act (TEL). The comparable result improved by 20.2 per cent.
The Group’s operating profit was EUR 6.3 (published: 6.3, comparable: 5.1) million. The Fireplace Business posted operating profit of EUR 8.8 (7.5) million and the Architectural Stone Business EUR 0.2 (0.2) million. Unallocated expenses amounted to EUR 2.7 million (EUR 1.5 million including the non-recurring reduction of the disability pension obligation).
The Group’s return on investment was 20.7 (published: 20.3, comparable: 16.5) per cent. Earnings per share were EUR 0.48 (published: 0.48, comparable: 0.39).
Trend in sales and earnings in the last quarter Consolidated sales grew by 10.7 per cent in the October-December period compared with the corresponding period of the previous year and amounted to EUR 17.6 (15.9) million. The Group’s profit before taxes was EUR 2.6 (comparable: 1.7) million and the comparable improvement in earnings was 54.7 per cent.
Cash flow and financing The Group’s financing position remained good. Cash flow from operating activities before investments was EUR 10.5 (6.5) million. The working capital of the Group declined by EUR 1.8 million during the financial year. The current ratio was 1.6 (1.9). The equity ratio was 63.0 (55.3) per cent. The ratio of interest-bearing net liabilities to equity (gearing) was –3.1 (12.1) per cent. Equity per share was EUR 2.80 (2.54). Financial income during the financial year amounted to EUR 0.1 million and financial expenses to EUR 0.3 million. The share of associated company losses was EUR 0.1 million negative.
Changes in the Group structure A subsidiary named OOO Tulikivi Russia was established during the financial year.
Investments and development The Group invested EUR 4.8 (3.9) million in production and quarries. The major investments were earmarked for a cutting line that will promote the use of smaller blocks of stone as well as machinery to upgrade productivity and product finishing.
R&D expenditure totalled EUR 1.7 (1.5) million. The main thrust of product development was on the next generation of products. The new products will be unveiled in March 2006. During the financial year we brought to market fireplaces representing the latest design as well as a coated white soapstone fireplace. The product concept of the Architectural Stone Business was expanded by rounding out the range of interior decoration stones and launching paving stones.
Personnel During the financial year, the Group employed an average of 514 (513) persons and at the end of the year, the Group’s personnel numbered 533 (535) persons. Of these employees, 483 (490) worked for the Fireplace Business and 50 (45) for the Architectural Stone Business. Incentive pay will be paid to employees from the Group’s result for 2005, which had an impact on earnings of EUR 0.7 million including social expenses.
Board of Directors, Managing Director and Auditors At Tulikivi Corporation’s Annual General Meeting, held on 31 March 2005, Bishop Ambrosius, Mr. Juhani Erma, Mr. Eero Makkonen, Mr. Aimo Paukkonen, Mr. Heikki Vauhkonen, Mr. Reijo Vauhkonen and Mr. Matti Virtaala were elected to serve on the Board of Directors. From amongst its number, the Board of Directors appointed Mr. Matti Virtaala as Chairman and Mr. Reijo Vauhkonen as Vice Chairman. The Managing Director of Tulikivi Corporation is Mr. Juha Sivonen. The regular auditor is PricewaterhouseCoopers Oy, Authorized Public Accountants.
Own shares The Board of Directors of Tulikivi Corporation has an authorization from the Annual General Meeting to both buy back and transfer a maximum of 336,069 of the company’s Series A shares and a maximum of 119,250 of the company’s Series K shares. The company did not possess any of its own shares on 31 December 2005.
Quotation and trading of the Series A share In 2005, a total of 1,216,490 Tulikivi Corporation Series A shares were traded on the Helsinki Stock Exchange. The total value of share turnover was EUR 8.8 million. The highest trading price of the share was EUR 9.00 and the lowest EUR 5.55. The closing rate for the report period was EUR 8.16.
Major business risks The company has evaluated its key risks. They are related to the nature of business operations and concern, but are not limited to, amendments to laws and changes in the business environment as well as product liability.
Environmental obligations On the basis of the Mining Act and environmental legislation, Tulikivi Corporation has landscaping obligations that must be met when quarries are eventually shut down. In accordance with the operating principles of the Group, the actions required under these landscaping obligations are carried out continuously. Thus, they do not result in significant additional costs.
Major events after the end of financial year A factory investment valued at about EUR 5 million has been started up in Juuka. The investment will be completed in the autumn of the present year.
The exploration of stone reserves has been expanded into Russia as well. In the January of the present year, we were granted a license for the prospecting and industrial utilization of soapstone in Russia. The financial potential of the project can be assessed once the research results have been completed.
The Board’s dividend proposal The Group’s distributable funds amount to 11.3 million euros and the parent company’s to 9.8 million euros. The Board of Directors will propose to the Annual General Meeting that will convene on 6 April 2006 that a dividend of EUR 0.280 per share be paid for the Series A shares and EUR 0.273 per share for the Series K shares, to a total of EUR 2.5 million.
Outlook for the future Tulikivi’s sales are still rising in both its main and new markets. The company is making further outlays on the development of distribution channels and marketing. Uncertainties regarding the distribution of energy and its rising price increase the demand for fireplaces. The trend in the Group’s sales and earnings is positive at the annual level.
At the end of the review period, the order book was EUR 9.2 (5.4) million, of which the Fireplace Business accounted for EUR 8.9 (4.9) million and the Architectural Stone Business for EUR 0.3 (0.5) million.
CONSOLIDATED INCOME STATEMENT MEUR 1-12/ 1-12/Change, 10-12/ 10-12/Change 2005 2004 % 2005 2004 %
Sales 58.6 55.3 6.1 17.6 15.9 10.7 Other operating income 0.3 0.5 0.1 0.1 Increase/decrease in inventories in finished goods and in work in progress -1.0 0.5 -0.2 0.3 Production for own use 1.2 0.8 0.3 0.0 Raw materials and consumables 9.7 8.9 2.8 2.5 External services 6.6 7.0 1.9 2.0 Personnel expenses 21,0 19.2 6.1 4.6 Depreciation 4.0 4.0 1.0 1.0 Other operating expenses 11.5 11.7 3.3 3.4
Operating profit 6.3 6.3 2.7 2.8 -3.6 Percentage of sales 10.7 11.4 15.5 17.8 Finance costs -net -0.1 -0.2 0.0 0.0 Share of the profit of associated companies -0.1 -0.1
Profit before taxes 6.1 6.1 -1.0 2.6 2.8 -5.8 Percentage of sales 10.3 11.1 15.0 17.6 Income taxes 1.7 1.8 0.8 0.8
Profit for the year 4.4 4.4 0.4 1.8 2.0 -8.5
Earnings per share attributable to the equity holders of the parent company, EUR Basic and diluted 0.48 0.48
CONSOLIDATED BALANCE SHEET MEUR 12/05 12/04 ASSETS Non-current assets Property, plant and equipment Land 0.9 1.0 Buildings 6.2 6.2 Machinery and equipment 8.4 8.3 Other tangible assets 0.8 0.6 Intangible assets Goodwill 0.6 0.6 Other intangible assets 4.1 3.3 Investment properties 0.2 0.2 Available-for-sale investments 0.1 0.1 Receivables 0.2 Deferred tax assets 0.5 0.7 Total non-current assets 22.0 21.0
Current assets Inventories 7.0 7.5 Trade receivables 6.5 6.8 Current income tax receivables 0.1 Other receivables 1.0 0.4 Prepaid expenses 0.3 Financial assets at fair value through profit and loss 0.7 Cash and cash equivalents 4.1 5.1 Total current assets 18.6 20.9 Total assets 40.6 41.9
EQUITY AND LIABILITIES Equity Share capital 6.2 6.2 Share premium 5.4 5.4 Retained earnings 13.9 11.6 Total equity 25.5 23.2 Non-current liabilities Deferred income tax liabilities 0.8 0.7 Provisions 0.3 0.2 Interest-bearing debt 1.8 6.1 Other debt 0.4 0.4 Total non-current liabilities 3.3 7.4 Current liabilities Trade and other payables 10.2 8.8 Current income tax liabilities 0.1 Short-term interest-bearing debt 1.5 2.5 Total current liabilities 11.8 11.3 Total liabilities 15.1 18.7 Total equity and liabilities 40.6 41.9
CONSOLIDATED CASH FLOW STATEMENT MEUR 1-12/ 1-12/ 2005 2004 Cash flows from operating activities Profit for the period 4.4 4.4 Adjustments: Non-cash transactions 4.0 2.8 Interest expenses and income and taxes 1.8 1.9 Change in working capital 1.8 -0.6 Interest paid and received and taxes paid -1.5 -2.0 Net cash flow from operating activities 10.5 6.5 Cash flows from investing activities Acquisition of subsidiaries and Associated companies and loans granted to them -0.1 -0.1 Investments in property, plant and equipment and intangible assets -5.1 -3.5
Grants received for investments and sales of property, plant and equipment 0.3 0.2 Investments in/proceeds on financial assets at fair value through profit and loss, change 0.8 Net cash flow from investing activities -4.1 -3.4
Cash flows from financing activities Loans received 5.6
Repayment of loans -5.3 -4.8 Dividends paid -2.1 -4.6 Net cash flow from financing activities -7.4 -3.8
Change in cash and cash equivalents -1.0 -0.7 Cash and cash equivalents at beginning of period 5.1 5.8 Cash and cash equivalents at end of period 4.1 5.1
KEY FINANCIAL RATIOS AND SHARE RATIOS 12/05 12/04 Order book (31 Dec.), MEUR 9.2 5.4 Gross investments, MEUR 4.8 3.9 Gross investment, % of sales 8.1 7.1 Average number of staff 514 513
Earnings per share, EUR 0.48 0.48 Equity per share, EUR 2.80 2.54 Return on investment, % 20.7 20.3 Equity ratio, % 63.0 55.3 Gearing, % -3.1 12.1 Current ratio 1.6 1.9 Number of shares average 9106385 9106385 Number of shares 31 Dec. 9106385 9106385
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans- Retained Total capital premium lation earnings fund diff.
Equity 1 January 2005 6.2 5.4 11.6 23.2 Translation differences 0.0 0.0 Profit for the year 4.4 4.4 Dividends paid -2.1 -2.1 Equity 31 Dec. 2005 6.2 5.4 0.0 13.9 25.5
Equity 1 January 2004 6.2 5.4 11.9 23.5 Translation differences -0.1 -0.1 Profit for the year 4.4 4.4 Dividends paid -4.6 -4.6 Equity 31 Dec. 2004 6.2 5.4 -0.1 11.7 23.2
BUSINESS SEGMENTS 1-12/ 1-12/ MEUR 2005 2004 Sales 58.6 55.3 Fireplace business 52.2 49.0 Architectural stone business 6.4 6.3
Operating profit 6.3 6.3 Fireplace business 8.8 7.5 Architectural stone business 0.2 0.2 Unallocated group expenses -2.7 -1.5
BUSINESS SEGMENTS QUARTERLY Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ 2005 2005 2005 2005 2004 2004 2004 2004
Sales 17.6 13.4 14.6 13.1 15.9 13.3 12.8 13.3 Fireplace business 15.9 12.1 12.8 11.4 14.3 11.6 11.0 12.1 Architectural stone business 1.7 1.3 1.8 1.7 1.6 1.7 1.8 1.2
Operating profit 2.7 1.8 1.5 0.3 2.8 1.7 0.9 0.8 Fireplace business 3.2 2.5 2.1 0.9 2.2 2.3 1.4 1.6 Architectural stone business 0.1 -0.1 0.1 0.1 0.1 0.1 0.1 -0.1 Unallocated group expenses -0.6 -0,7 -0.7 -0.7 0.5 -0.7 -0.6 -0.7
GIVEN GUARANTEES, CONTINGENT LIABILITIES AND OTHER COMMITMENTS MEUR 12/2005 12/2004
Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 2.9 7.6 Mortgages and pledges given 10.8 10.8 Other mortgages and pledges given by the company on its own behalf 1.7 1.7
Derivatives The impact of off-balance sheet derivatives is immaterial.
LARGEST SHAREHOLDERS ON 31 DECEMBER 2005
Name of shareholder Number of Proportion shares of total votes Vauhkonen Reijo 1,039,673 24.4 % Vauhkonen Heikki 749,938 23.8 % Elo Eliisa 724,255 5.4 % Virtaala Matti 604,723 12.0 % Mutual Pension Insurance Company Ilmarinen 515,595 1.7 % Mutanen Susanna 449,375 7.3 % Investment Fund Phoebus 220,800 0.7 % Vauhkonen Mikko 200,175 3.6 % Nuutinen Tarja 168,635 3.5 % Fondita Nordic Small Cap Placfond 163,100 0.5 % Other shareholders 4,270,116 17.1 %
The Financial Statements have not yet been audited.
The companies included in the Group are the parent company Tulikivi Corporation and subsidiaries Kivia Oy, AWL-Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi Russia. Group companies include also Tulikivi Vertriebs GmbH and The New Alberene Stone Company, Inc., which are dormant. Parent company has a fixed place of business in Germany, Tulikivi Oyj Niederlassung Deutchland. The Group has a associated company Stone Pole Oy.
TULIKIVI CORPORATION
Board of directors Matti Virtaala, Chairman of the Board
Distribution: Helsinki Stock Exchange Central Media
Additional information: Tulikivi Corporation, 83900 Juuka, tel., +358-207-636 000, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen
The Annual General Meeting of Tulikivi Corporation will be held in Juuka, 6 April 2006 from 10:00 onwards. The agenda for the meeting includes the matters specified as being the business of Annual General Meetings. In addition, the Board of Directors will propose the following to the Annual General Meeting:
1) Changing the nominal value of both of the company’s series of shares from EUR 0.68 to EUR 0.17 such that each existing share will be divided into four new shares (split). After the split, the company would have 26,885,540 Series A shares and 9,540,000 Series K shares. Due to the changing of the nominal value and the increase in the number of shares, it will also be proposed to the Annual General Meeting that Articles 3 and 4 of the Articles of Association be amended correspondingly.
2) Renewing the authorization to buy back and dispose of the company’s own shares such that a maximum of 672,138 of the company’s Series A shares shall be acquired/disposed of (a maximum of 2,688,552 new Series A shares after the split) and that a maximum of 238,500 Series K shares shall be acquired/disposed of (a maximum of 954,000 new Series K shares after the split).
3) Authorizing the Board of Directors to decide on raising the share capital such that the share capital could be increased by a maximum of EUR 1,238,468 by granting no more than 1,821,277 new Series A shares for subscription (a maximum of 7,285,108 new Series A shares after the split). The Board of Directors proposes that the authorization include the right to waive the pre-emptive subscription right of shareholders provided there is a weighty financial reason for the company to do so.
The Nomination Committee will propose to the Annual General Meeting that the following persons be elected as members of the Board of Directors for the next term of office: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Aimo Paukkonen, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala.
The Board of Directors will propose to the Annual General Meeting that Authorized Public Accountants PricewaterhouseCoopers Oy be chosen as the company’s auditor, with Hannele Selesvuo as chief auditor.
The Notice of Meeting will be published later.
Juuka, 7 February 2006
TULIKIVI CORPORATION Board of Directors
Distribution: Helsinki Stock Exchange, Central Media
Additional information: Tulikivi Corporation, 83900 Juuka, tel. +358-207 636 000, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen
Tulikivi Corporation will publish its Financial Statement Bulletin for 2005 financial year on Tuesday, February 7, 2006 at 9.00.
Press and analyst conference will be held on the same day starting at 09.30 at Rake-Sali, Erottajankatu 4 C, 3. floor, Helsinki.
Juha Sivonen Managing Director
For additional information, contact: – Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com – Managing Director Juha Sivonen
Distribution: – Helsinki Stock Exchange, – Central media
Tulikivi Corporation and its subsidiaries form the Tulikivi Group, the world’s largest and most technologically advanced processor of soapstone and the world’s largest manufacturer of industrially produced heat-retaining fireplaces. The Group is one of the five largest stone processors in Europe. The Group has net sales of about EUR 60 million. The Group owns six production plants and employs more than 500 people.
*The Russian Federation and the Republic of Karelia grant Tulikivi a permit with prospecting and industrial utilization rights for soapstone deposits in the Republic of Karelia. *The permit for the Medvezhyegorsk area covers most of the soapstone deposits in Karelia classed as suitable for utilization.
In accordance with its corporate strategy, Tulikivi Corporation is investing in making sure that it has the best soapstone reserves in the world. The company has systematically prospected for soapstone deposits for the past 25 years using the expert services of the Geological Survey of Finland, among others. The objective has been to chart the company’s current as well as new soapstone reserves. As a result, Tulikivi Corporation became interested in the soapstone deposits in the Republic of Karelia.
The Karelian Department of the Ministry of Natural Resources of the Russian Federation and the Ministry of Natural Resources of the Republic of Karelia have granted OOO Tulikivi Russia, a wholly- owned subsidiary of Tulikivi Corporation, a permit for the utilization of soapstone deposits in the Medvezhyegorsk area. In addition to prospecting rights, the permit covers the rights for industrial utilization and is valid until the end of 2030.
The soapstone deposits in the Medvezhyegorsk area covered by the permit are estimated to represent a significant share of all soapstone classed as suitable for utilization in the Republic of Karelia. In the near future, Tulikivi will perform more detailed charting and studies in cooperation with the Geology Institute of the Karelian Research Centre of the Russian Academy of Sciences and the Geological Survey of Finland.
Based on the results of the studies, Tulikivi Corporation will decide on the possible industrial utilization of the area’s stone deposits. “We will first conduct more detailed studies on the quality and extent of the deposit, after which we will decide how the stone will be industrially utilized. Tulikivi has invested in marketing in Russia during the last couple of years. Russians are familiar with the idea of heat-retaining fireplaces. The number of potential customers also grows with rapidly increasing wealth. Last year, our sales in Russia actually doubled”, says Juha Sivonen, Managing Director.
The soapstone deposits in the Medvezhyegorsk area are expected to increase Tulikivi’s current reserves considerably.
For additional information, contact:
– Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen
* Tulikivi Corporation will build new production plant in Juuka, with which the company will increase its capacity to meet the prospected increase in demand. * The new production plant will improve the use of raw materials and therefore increase the production profitability. * The new production plant will provide dozens of new jobs in Juuka in upcoming years.
Tulikivi Corporation´s Board of Directors has made a decision to invest in the construction of a new production plant in Juuka. In line with its growth strategy, the Groups´s objective is to continuously develop its production technology in order to ensure growth and profitability. The future outlook of the company is positive, as product sales have been good and demand is expected to continue to grow in the near future both in the main and new market areas, where the company has invested heavily to develop distribution network and marketing. Moreover, the rise in energy prices as well as the decision made by European Union to multiply the use of bioenergy are expected to increase the demand for Tulikivi products.
More capacity and increased efficiency in the use of raw materials
With the new production plant, Tulikivi aims to manufacture high- quality products efficiently. The manufacturing process will be based on the newest technology available, the efficient flow of materials and the precise use of raw materials. The production plant will increase the current production capacity of Tulikivi fireplaces in Juuka by about 20 %, and will enable the company to increase its net sales by almost ten million euros in upcoming years.
Tulikivi´s operations hinge on the possession of sufficient stone reserves that will secure financial growth. The company possesses explored soapstone reserves that will last for about 65 years, as calculated in terms of its present production rate, but new stone deposits are being explored constantly.
The sufficiency of the company´s stone supplies can be increased by using the raw material as precisely as possible. The raw material to be used in the new production plant will mainly consist of leftover blocks that cannot be utilized efficiently on the current production lines due to to their size or shape. During its 25 years of operation, the company has accumulated a considerable amount of unused, low-priced blocks which will now be utilized. This will also have positive environmental effects.
More jobs in Juuka
The investment in the new production plant will also mean new jobs, as it will provide employment for dozens of people in the near future.
The investment will be approximately 5 million euros, and the production plant is due for completion in autumn 2006. The industrial premises with 2,095 square metres of floor space and the cutting-edge machinery and equipment will all be in procured by Tulikivi Corporation.
– Tulikivi Corporation, FI-83900 Juuka, Finland, tel. +358 207 636 000, www.tulikivi.com -Chairman of the Board of Directors Matti Virtaala or Managing Director Juha Sivonen
Distribution: Helsinki Stock Exchange, – Central media
Tulikivi Corporation and its subsidiaries form the Tulikivi Group, the world´s largest and most technologically advanced processor of soapstone and the world´s largest manufacturer of industrially produced heat-retaining fireplaces. The Group is one of the five largest stone processors in Europe. The Group´s net sales are roughly EUR 60 million. The Group owns six production plants and employs over 500 people.
Tulikivi Corporation´s Financial Statements Release for 2005 will be published on February 7, 2006. Annual Report will come out week 12. Annual General meeting will be held on April 6, 2006.
The following interim reports will be published in 2006: – January – March April 21 – January – June July 21 – January – September Oct, 20
Distribution
Helsinki Stock Exchange Central Media
– Sales for the Tulikivi Group were EUR 13.1 (13.3) million for the period. – Profit before tax was EUR 0.3 (0.8) million. – The value of outstanding orders increased in March and continues to increase in April. – The interim financial report has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS).
IFRS reporting As from 1 January 2005, the Tulikivi Group has applied IFRS standards in its reporting. A release on the transition was published on 3 March 2005. The comparative figures presented in this report are the IFRS figures for 2004 published in the release.
Sales and result of operations The Group’s sales were EUR 13.1 million (EUR 13.3 million for the period January to March 2004). Sales for the fireplace business were EUR 11.4 (12.1) million and EUR 1.7 (1.2) million for the architectural stone business. The value of the Group’s outstanding orders was EUR 6.6 (6.9) million at the end of the period, of which EUR 5.9 (5.4) million relates to the fireplace business. The value of outstanding orders for the architectural stone business was EUR 0.7 (1.5) million. Domestic sales were for EUR 7.1 (6.9) million, or 54.1 (51.7) per cent, of total sales. Exports amounted to EUR 6.0 (6.4) million. The main export countries were Germany and Sweden.
The operating profit for the Group was EUR 0.3 (0.8) million. The operating profit for the fireplace business was EUR 0.9 (1.6) million, EUR 0.1 (-0.1) million for the architectural stone business and the unallocated expenses were EUR 0.7 (0.7) million. The increase in marketing activities in the early part of the year had an impact on the expenses of the period of EUR 0.4 million. The increase in development expenditure was EUR 0.1 million. The Group’s profit before tax was EUR 0.3 (0.8) million. In addition to the Group’s current tax for the period, the change in deferred tax liabilities and assets in respect of taxable temporary differences has been taken into account.
Financing activities and investments The Group’s financing position is favourable. Cash flows from operating activities before investments were EUR -3.0 (-1.6) million. The working capital of the Group increased by EUR 3.9 (3.2) million during the period. The equity ratio was 51.6 per cent (56.7 per cent at 31 March 2004). Dividends to be distributed have been deducted from equity, increasing other current liabilities respectively during the year. In 2004, the corresponding general meeting decision was taken in the second quarter of the year. The ratio of interest-bearing net liabilities to equity, or gearing, was 33.3 (15.3) per cent. The current ratio was 1.5 (1.9). Equity per share was EUR 2.33 (2.64).
The Group invested EUR 1.3 (0.7) million in production and stone reserves. During the period, significant investment begun on a machinery line which will promote the use of smaller blocks of stone. Furthermore, investment in machinery to develop productivity and the finishing of products was continued. Development projects progressed according to plan. During the period, a new fireplace design was produced, as well as a novelty in product development, a previo-coated white soapstone fireplace. Tulikivi Oyj has exclusive rights to this technology.
Resolutions of the annual general meeting
Dividend distribution and governing bodies The annual general meeting of Tulikivi Oyj, held on 31 March 2005, decided to distribute a dividend in accordance with the proposal of the board of directors of EUR 0.23 on A shares and EUR 0.22 on K shares, EUR 2.1 million in total.
The following members of the board of directors of the parent company and the subsidiaries carrying on a business were elected: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Aimo Paukkonen, Heikki Vauhkonen, Reijo Vauhkonen and Matti Virtaala.The board elected Matti Virtaala as its chairman and Reijo Vauhkonen as its vice-chairman. Certified Public Accountants PricewaterhouseCoopers Oy from Helsinki were appointed auditors.
Authorization to buy back and transfer the company’s own shares The annual general meeting granted the board of directors an authorization to buy back the company’s own shares (treasury shares). The treasury shares will be purchased with the aim of developing the company’s capital structure and for use as consideration in acquisitions or other structural arrangements in the manner and to the extent decided by the board of directors. Similarly, the annual general meeting granted the board of directors an authorization to transfer the treasury shares. The shares can be transferred as consideration in acquisitions or they can be used in other structural arrangements in the manner and to the extent decided by the board of directors. The board of directors can also decide to sell A shares in public trading on Helsinki Exchanges in order to obtain funds for possible acquisitions or to finance capital expenditures. The board of directors can furthermore propose that the shares be cancelled by lowering the share capital. No more than a total of 336 069 A shares and no more than a total of 119 250 K shares will be bought back. The company’s A shares will be purchased in public trading on Helsinki Exchanges and the K shares as a rule by making a tender offer to Series K shareholders in proportion to their holdings.
The performance and trading of A shares During the period, 255 500 shares were traded, corresponding to EUR 1.7 million. The highest share price was EUR 7.11 and the lowest EUR 5.83. The closing price for the period was EUR 6.20.
Outlook for the future The increase in the building of single-family houses and renovation building continues in Finland. After the beginning of the year, the demand for Tulikivi products in Central Europe has been markedly better than last year. The number of orders has continued to increase in April. Expenditure recognised early in the year will decrease expenses in the latter part of the year. The Group’s sales and result of operations are showing a positive annual trend.
CONSOLIDATED INCOME STATEMENT MEUR 01-03/ 01-03/ Change, 01-12/ 2005 2004 % 2004
Sales 13.1 13.3 -1.9 55.3 Other operating income 0.1 0.2 0.5 Increase/decrease in inventories in finished goods and in work in progress -0.4 0.2 0.5 Production for own use 0.1 0.3 0.8
Raw materials and consumables 2.1 2.3 8.9 External services 1.5 1.8 7.0 Personnel expenses 4.8 5.1 19.0 Depreciation 1.0 0.9 4.0 Other operating expenses 3.2 3.1 12.0
Operating profit 0.3 0.8 -65.0 6.2 Percentage of sales 2.3 6.5 11.4 Finance costs -net – – -0.1
Profit before tax 0.3 0.8 -69.6 6.1 Percentage of sales 1.9 6.3 11.1 Direct taxes 0.2 0.3 1.8
Profit for the period 0.1 0.5 -82.2 4.3
Earnings per share attributable to the equity holders of the parent company, EUR 0.01 0.06 0.48 Basic and diluted
CONSOLIDATED BALANCE SHEET MEUR 03/2005 03/2004 12/2004 ASSETS Non-current assets Property, plant and equipment Land 1.0 0.9 1.0 Buildings 6.4 6.2 6.2 Machinery and equipment 8.3 8.5 8.3 Other 0.8 0.1 0.6 Goodwill 0.6 0.6 0.6 Other intangible assets 3.1 3.5 3.3 Investment properties 0.2 0.2 0.2 Available-for-sale investments 0.1 0.1 0.1 Deferred tax assets 0.6 1.1 0.7 Total non-current assets 21.1 21.2 21.0
Current assets Inventories 7.2 7.3 7.5 Trade receivables 9.2 8.7 6.8 Other receivables 2.2 1.8 0.5 Prepaid expenses 0.2 0.3 Financial assets at fair value through profit and loss 0.7 0.7 Cash and cash equivalents 1.2 2.7 5.1 Total non-current assets 20.0 21.2 20.9 Total assets 41.1 42.4 41.9
EQUITY AND LIABILITIES Equity Share capital 6.2 6.2 6.2 Share premium 5.4 5.4 5.4 Retained earnings 9.6 12.4 11.6 Total equity 21.2 24.0 23.2 Non-current liabilities Deferred income tax liabilities 0.8 0.7 0.7 Retirement benefit obligations . 1.2 . Provisions 0.2 0.1 0.2 Interest-bearing debt 5.3 5.1 6.1 Other debt 0.4 0.4 Total non-current liabilities 6.7 7.1 7.4 Current liabilities Trade and other payables 10.3 8.9 8.8 Current income tax liabilities 0.4 Short-term interest-bearing debt 2.9 2.0 2.5 Total current liabilities 13.2 11.3 11.3 Total liabilities 19.9 18.4 18.7 Total equity and liabilities 41.1 42.4 41.9
CONSOLIDATED CASH FLOW STATEMENT 01-03/ 01-03/ 01-12/ MEUR 2005 2004 2004
Cash flows from operating activities Profit for the period 0.1 0.6 4.4 Adjustments: Non-cash transactions 1.0 0.9 2.8 Interest expenses and income and taxes 0.2 0.3 1.9 Change in working capital -3.9 -3.2 -0.4 Interest paid and received and taxes paid -0.4 -0.2 -2.1 Net cash flow from operating activities -3.0 -1.6 6.6
Cash flows from investing activities Investment in property, plant and equipment and intangible assets -1.3 -0.7 -3.7 Grants received for investments and sales of property, plant and equipment 0.1 . 0.2 Sale of financial asets at fair value through profit and loss 0.8 Net cash flow from investing activities -0.4 -0.7 -3.5
Cash flows from financing activities Loans received 1.8 5.6 Repayment of loans -2.3 -0.8 -4.8 Dividends paid -4.6
Net cash flow from financing activities -0.5 -0.8 -3.8
Change in cash and cash equivalents -3.9 -3.1 -0.7
Cash and cash equivalents beginning of period 5.1 5.8 5.8
Cash and cash equivalents at end of period 1.2 2.7 5.1
KEY FINANCIAL RATIOS AND SHARE RATIOS 03/2005 03/2004 12/2004 Outstanding orders (31 March), MEUR 6.6 6.9 5.4 Gross investment, MEUR 1.3 0.7 3.9 Gross investment, % of sales 10.2 5.1 7.1 Average number of staff 492 545 513
Earnings per share, EUR 0.01 0.06 0.48 Equity per share, EUR 2.33 2.64 2.54 Equity ratio, % 51.6 56.7 55.3 Gearing, % 33.3 15.3 12.1 Current ratio 1.5 1.9 1.9 Interest-bearing liabilities, MEUR 8.2 7.1 8.6 Non interest-bearing liabilities, MEUR 11.7 11.3 10.1
Number of shares average 9106385 9106385 9106385 Number of shares 31 March 9106385 9106385 9106385
STATEMENT OF CHANGES IN EQUITY MEUR Share Share Trans-Dividend Re- Total capital premium lation distri- tained fund diff. bution ear- nings Equity 1 January 2005 6.2 5.4 11.6 23.2 Translation differences 0.0 0.0 Profit for the period 0.1 0.1 Dividends paid -2.1 -2.1 Equity 31 March 2005 6.2 5.4 0.0 -2.1 11.7 21.2
Share Share Trans-Dividend Re- Total capital premium lation distri- tained fund diff. bution ear- nings Equity 1 January 2004 6.2 5.4 11.9 23.5 Translation differences 0.0 0.0 Profit for the period 0.5 0.5 Dividends Equity 31 March 2004 6.2 5.4 0.0 12.4 24.0
BUSINESS SEGMENTS QI/ Q1/ 1-12 MEUR 2005 2004 2004 Sales 13.1 13.3 55.3 Fireplace business 11.4 12.1 49.0 Architectural stone business 1.7 1.2 6.3
Operating profit 0.3 0.8 6.2 Fireplace business 0.9 1.6 7.5 Architectural stone business 0.1 -0.1 0.2 Unallocated group expenses -0.7 0.7 -1.5
BUSINESS SEGMENTS QUARTERLY Q1/ Q4/ Q3/ Q2/ Q1/ 2005 2004 2004 2004 2004
Sales 13.1 15.9 13.3 12.8 13.3 Fireplace business 11.4 14.3 11.6 11.0 12.1 Architectural stone business 1.7 1.6 1.7 1.8 1.2
Operating profit 0.3 2.8 1.7 0.9 0.8 Fireplace business 0.9 2.2 2.3 1.4 1.6 Architectural stone business 0.1 0.1 0.1 0.1 -0.1 Unallocated group expenses -0.7 0.5 -0.7 -0.6 -0.7
COLLATERAL AND SECURITIES GIVEN AND OTHER COMMITMENTS MEUR 3/2005 3/2004 12/ 2004 Loans from credit institutions and other non-current liabilities, secured by mortgages and pledges 7.4 5.6 7.6 Mortgages and pledges given 10.8 8.0 10.8 Other mortgages and pledges given by the company on its own behalf 1.7 1.7 1.7
Environmental guarantees In accordance with the mining and environmental legislation, Tulikivi Corporation has environmental commitments, which have to be met when closing a quarry. The amount of the commitments cannot be reasonably estimated, but it is not expected to be material.
RECONCILIATION OF THE INCOME STATEMENT AND BALANCE SHEET
CONSOLIDATED INCOME STATEMENT 1 JANUARY 2004 TO 31 MARCH 2004 FAS IFRS- IFRS MEUR 1-3/ adjust- 1-3/ 2004 ments 2004 Sales 13.3 13.3 Other operating income 0.2 0.2 Increase/decrease in inventories in finished goods and in work in progress 0.2 0.2 Production for own use 0.3 0.3 Raw materials and consumables 2.4 2.3 External services 1.8 1.8 Personnel expenses 5.1 5.1 Depreciation 1.0 0.1 0.9 Other operating expenses 2.8 -0.2 3.1 Operating profit 0.9 -0.1 0.8 Percentage of sales 7.1 6.5 Finance costs (net) – – Profit before tax 0.9 -0.1 0.8 Percentage of sales 6.8 6.3 Direct taxes 0.3 0.3
Profit for the period 0.6 -0.1 0.5
CONSOLIDATED BALANCE SHEET 31 MARCH 2005 FAS IFRS- IFRS 03/ adjust- 03/ ASSETS 2004 ments 2004 Non-current assets Property, plant and equipment 15.7 15.7 Intangible assets 4.0 0.1 4.1 Investment properties 0.2 0.2 Investments 0.1 0.1 Deffered tax assets 0.7 0.4 1.1 Total non-current assets 20.7 0.5 21.2
Current assets Inventories 7.3 7.3 Trade and other receivables 10.7 -0.2 10.5 Cash and cash equivalents 3.4 3.4 Total current assets 21.4 -0.2 21.2
Total assets 42.1 0.3 42.4
EQUITY AND LIABILITIES Equity Share capital 6.2 6.2 Share premium 5.4 5.4 Retained earnings 8.8 3.6 12.4 Total equity 20.4 3.6 24.0
Non-current liabilities Deferred tax liabilities 0.7 0.7 Retirement benefit obligations 1.2 1.2 Provisions 0.1 0.1 Interest-bearing debt 5.0 0.1 5.1 Other debt Total non-current liabilities 5.8 1.3 7.1 Current liabilities Trade and other payables 13.5 -4.6 8.9
Current income tax liabilities 0.4 0.4 Short-term interest-bearing debt 2.0 2.0 Total current liabilities 15.9 -4.6 11.3
Total liabilities 21.7 -3.3 18.4
Total equity and liabilities 42.1 0.3 42.4
LARGEST SHAREHOLDERS ON 31 MARCH 2005
Name of shareholder Number of Proportion of shares total vote Vauhkonen Reijo 1,038,977 24.4 % Vauhkonen Heikki 749,242 23.8 % Vauhkonen Eliisa 724,255 5.4 % Virtaala Matti 604,027 12.0 % Mutual Pension Insurance Company Ilmarinen 515,595 1.7 % Mutanen Susanna 449,375 7.3 % Vauhkonen Mikko 200,175 3.6 % Nuutinen Tarja 168,635 3.5 % The Finnish Cultural Foundation 110,000 1.1 % Laakkonen Reino 25,000 0.8 % Other shareholders 4,521,104 16.4 %
The interim report has not been audited.
The companies included in the Group are the parent company Tulikivi Corporation, Kivia Oy, Tulikivi U.S. Inc. and AWL-Marmori Oy. Group companies include also Tulikivi Vertriebs GmbH and The New Alberene Stone Company, Inc., which are dormant.
Additional information: Tulikivi Corporation, 83900 Juuka, tel., +358-13-68 11 11, www.tulikivi.com – Chairman of the Board of Directors Matti Virtaala – Managing Director Juha Sivonen