Annual report

Financial Statement 1-12/2007


– The Tulikivi Group´s sales were EUR 69,9 million in 2007 (EUR
82,1 million year 2006).
– The Group´s profit before taxes was EUR 0,2 (7,8) million.
– Cash flow from operating activities before investments was EUR
2,5 (12,0) million.
– The order backlog at the end of the year totalled EUR 6.9 (10.4)

Changes in segment reporting and Group structure
As of January 1, 2007, the Group’s business segments are the
Fireplaces Business, Natural Stone Products Business and Other
Operations. The Fireplaces Business includes soapstone and ceramic
fireplaces, and also stone lining for heaters. The Natural Stone
Products Business includes interior decoration stone products for
households and stone deliveries to construction sites. Other
Operations includes expenses that are not allocated to the Group’s
business functions, tax and financial expenses, as well as sales
of ceramic utensils and the expenses of this business.
Kermansavi Oy merged with Tulikivi Corporation as at December 31,

Sales and result
The Group’s sales amounted to EUR 69.9 million (EUR 82.1 million
in 2006). The Fireplaces Business posted sales of EUR 59.7 (72.0)
million, the Natural Stone Products Business sales of EUR 7.4
(7.3) million and Other Operations sales of EUR 2.8 (2.8) million.
The Group´s comparable sales, excluding sales of ceramic
fireplaces and utensils in Q1 amounted to EUR 66.2 million.

Sales in Finland accounted for EUR 38.3 (40.2) million,
representing 54.8 (48.9) per cent of the Group´s total sales.
Exports accounted for EUR 31.6 (41.9) million. The largest
countries for exports were Sweden, Germany and France.

The Group’s operating profit was EUR 1.0 (8.2) million. The
Fireplaces Business had an operating profit of EUR 4.4 (11.0)
million, the Natural Stone Products Business an operating profit
of EUR 0.4 (0.3) million and Other Operations an operating loss of
EUR –3.8 (-3.1) million. The result for Fireplaces Business was
burdened by the decrease in general demand for fireplaces
resulting in drop in sales, additional costs incurred by the
introduction of the domestic distribution channel and the start-up
of the new factory, and non-recurring costs amounting to EUR 0.7
million incurred in adjusting the production to the prevailing
demand. The result of the Other operations includes the loss of
ceramic utensils sales, EUR 0.8 million, comprising non-recurring
expenses amounting to EUR 0.3 million.

Consolidated profit before taxes was EUR 0.2 (7.8) million. Profit
for the year was EUR 0.4 million. The Group´s return on
investment was 2.5 (21.7) per cent. Earnings per share amounted
to EUR 0.01 (0.16).

Cash flow and financing
The Group’s financial position remained good. Cash flow from
operating activities before investments amounted to EUR 2.5 (12.0)
million. Current ratio was 1.6 (1.5). The equity ratio was 43.9
(46.4) per cent. The ratio of interest-bearing net debt to equity,
or gearing, was 64.7 (40.9) per cent. Equity per share amounted to
EUR 0.74 (EUR 0.83). Finance income during the reporting period
amounted to EUR 0.2 million and financial expenses to EUR 1.0

Investments and development activities
The Group’s investments totaled EUR 5.7 (24.1) million. The major
investments during the reporting period were assigned for
production, quarrying machines, opening new quarries and
introduction of new distribution channel.

R&D expenditure totalled EUR 1.6 (1.8) million which is in
comparison to sales 2.3 (2.2) per cent. In development activities
the focus was on developing combustion techniques for fireplaces.
The soapstone reserves were explored in addition to Finland also
in the Russian part of Karelia.

The Group employed an average of 682 people during the reporting
period (664) and at the end of the reporting period 693 (765). Of
the personnel, 549 were employed by Fireplaces, 54 by Natural
Stone Products and 90 by Other Operations. 97.3 per cent of the
employment relationships were permanent and 2.7 per cent
temporary. Salaries and bonuses during the financial year totalled
EUR 21.2 (22.3) million.
Occupational safety has developed well. The number of work
accidents per one hundred thousand working hours was 0.04 (0.06).
The number of personnel was adjusted to meet the group´s

As a result for the co-operation negotiations which ended in
January 2008 67 persons were terminated and 26 persons were laid
off until further notice. A provision for restructuring costs
amounting to EUR 0.7 million was recognised in the financial

Decisions made by Annual General Meeting held on April 13, 2007
Dividend distribution
Tulikivi Corporation´s Annual General Meeting decided on April 13,
2007 to pay dividend EUR 0.090 per A share and 0.088 per K share.

Board of Directors, managing director and auditors
At Tulikivi Corporation’s Annual General Meeting held on April 13,
2007, the following members were elected to the Board of
Directors: Bishop Ambrosius, Juhani Erma, Eero Makkonen, Maarit
Toivanen-Koivisto, Heikki Vauhkonen, Reijo Vauhkonen and Matti
Virtaala. From amongst its members, the Board of Directors elected
Matti Virtaala chairman. Juha Sivonen acted as managing director
for Tulikivi Corporation until May 28, 2007 when he was preceded
by Heikki Vauhkonen.

The firm of authorized public accountants KPMG Oy Ab is the
company’s auditor.

Authorization to acquire company’s own shares
The Board of Directors has an authorization 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 2008.

The Board of Directors has an authorization to decide on share
issues and the conveyance of the company’s own shares in the
possession of the company and the granting of special rights that
give entitlement to shares as set forth in Chapter 10, Article 1
of the Companies Act.

The Annual General Meeting authorized the Board of Directors to
decide on issuing new shares and the conveyance of own shares in
the company’s possession. 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 also includes the right to issue special rights,
as defined in Chapter 10, Article 1 of the Companies Act,
entitling the right holder to subscribe for shares against payment
or by setting off the receivable.

Changes in the articles of association
The articles of association for Tulikivi Corporation were changed
so that they are in accordance with the new Companies Act.

Significant risks related to business operations
The Group´s risks are divided into strategic and operational
risks, damage, casualty and loss risks and financial risks. The
risk analysis and risk management are part of strategic planning
process which is conducted regularly on an annual basis. In the
assessment of risks, their probability and impacts are taken into
account. The risk management strives to ensure that the risks
affecting Tulikivi Group´s business activities are identified and
managed as effectively as possible, in order to achieve Group´s
strategic and economic objectives.

Environmental obligations
Tulikivi´s environmental strategy aims towards systematic progress
in environmental efforts in the specified areas. All of Tulikivi
Corporation´s quarries have the environmental permits required. In
addition the Group has pending renewal processes for environmental
permits. The Group operates in line with environmental permits and
complies with the requirements of the authorities and
environmental protection.

The company bears its responsibilities for the environmental
impacts of its operations. On the basis of the Mining Act and
environmental legislation, the Tulikivi Group has landscaping
obligations that must met when operating the quarries and after
quarries and plants are eventually shut down. The Group´s
operations do not burden the environment with hazardous or
poisonous substances.

The Group is neither party to judicial or administrative
procedures concerning environmental issues nor is it aware of any
environmental risks that would have a significant effect on its
financial position.

Future Outlook
The new domestic distribution channel works more effectively. The
demand for fireplaces is developing in a different way in European
countries. This is reflected especially in demand for lining
stones. The sales of the Group is expected to remain on the same
level as in 2007 but the result is anticipated to improve

The Board´s dividend proposal
The parent company´s distributable equity amounts to EUR 7 504
thousand, of which the profit for the period accounts for EUR 46
thousand. The Board will propose to the Annual General Meeting
that the distributable equity be used as follows:

Dividend payout:
EUR 0.0450/share on Series A shares
EUR 0.0433/share on Series K shares
To a total of EUR 1 655 thousand

Retained in equity 5 849 thousand.
No significant changes have taken place in the company´s financial
position after the end of the financial year. The company´s
liquidity is good and in the view of the Board of Directors the
proposed dividend payout does not jeopardize the company´s

01-12/ 01-12/ Change 10-12/ 10-12/Change
2007 2006 % 2007 2006 %

Sales 69.9 82.1 -14.9 16.8 24.5 -31.3
Other operating income 0.6 0.6 0.1 0.1
Increase/decrease in
inventories in finished
goods and in work in
progress 2.1 -0.3 0.0 -0.1
Production for own use 1.1 1.0 0.2 0.3
Raw materials and
consumables 14.2 14.4 3.4 4.5
External services 11.1 10.5 2.9 3.3
Personnel expenses 27.1 28.7 7.0 8.5
Depreciation and
amortisation 5.7 5.2 1.3 1.5
Other operating expenses 14.7 16.3 3.3 4.5

Operating profit 1.0 8.2 -88.3 -0.7 2.5 -127.0
Percentage of sales 1.4 10.0 -4.0 10.2
Finance costs (net) -0.8 -0.4 -0.2 0.0
Share of the profit of
associated companies 0.0 0.0 0.0 0.0

Profit before tax 0.2 7.8 -97.9 -0.9 2.4 -137.8
Percentage of sales 0.2 9.5 -5.5 9.9
Income taxes 0.2 -2.1 0.5 -0.7

Profit for the year 0.4 5.7 -93.7 -0.4 1.7 -123.8

Earnings per share
attributable to the
equity holders of the
parent company, EUR
basic and diluted 0.01 0.16

MEUR 12/07 12/06
Non-current assets
Property, plant and equipment
Land 1.1 0.9
Buildings 8.6 8.9
Machinery and equipment 12.7 13.8
Other tangible assets 1.4 1.2
Intangible assets
Goodwill 4.3 4.3
Other intangible assets 11.1 10.5
Investment properties 0.2 0.2
Available-for-sale investments 0.1 0.1
Deferred tax assets 1.0 0.6
Total non-current assets 40.5 40.5

Current assets
Inventories 12.7 10.6
Trade receivables 5.3 8.5
Current income tax receivables 0.1 0.0
Other receivables 0.5 2.0
Cash and cash equivalents 3.8 4.9
Total current assets 22.4 26.0
Total assets 62.8 66.5

Share capital 6.3 6.3
Share premium fund 7.4 7.4
Translation difference -0.1
Retained earnings 14.0 17.0
Total equity 27.6 30.7
Non-current liabilities
Deferred income tax liabilities 2.3 3.1
Provisions 0.9 0.8
Interest-bearing debt 17.7 14.7
Other debt 0.3 0.4
Total non-current liabilities 21.2 19.0
Current liabilities
Trade and other payables 9.4 13.7
Current income tax liabilities 0.1 0.4
Current provisions 0.7
Current interest-bearing debt 3.8 2.7
Total current liabilities 14.0 16.8
Total liabilities 35.2 35.8
Total equity and liabilities 62.8 66.5

MEUR 01-12/ 01-12/
2007 2006
Cash flows from operating activities
Profit for the period 0.4 5.7
Non-cash transactions 5.5 5.1
Interest expenses
and interest income and
income taxes 0.6 2.5
Change in working capital -1.8 0.8
Interest paid and received
and taxes paid -2.2 -2.1
Net cash flow from operating
activities 2.5 12.0
Cash flows from investing activities
Acquisition of subsidiaries -11.0
Investment in property, plant and
equipment and intangible assets -5.7 -10.1
Grants received for investments
and sales of property, plant and
equipment 1.4 1.0
Net cash flow from investing
activities -4.3 -20.1

Cash flows from financing activities
Non-current and current
loans taken 8.5 15.3
Repayment of non-current
loans -4.4 -3.8
Dividends paid -3.4 -2.6
Net cash flow from financing
activities 0.7 8.9

Change in cash and cash
equivalents -1.1 0.8

Cash and cash equivalents at
beginning of period 4.9 4.1

Cash and cash equivalents at
end of period 3.8 4.9

12/07 12/06
Order backlog
(Dec. 31), MEUR 6.9 10.4
Gross investment, MEUR 5.7 24.1
Gross investment, % of sales 8.1 29.4
Average number of personnel 682 664

Earnings per share, EUR 0.01 0.16
Equity per share, EUR 0.74 0.83
Return on investment, % 2.5 21.7
Equity ratio, % 43.9 46.4
Gearing, % 64.7 40.9
Current ratio 1.6 1.5

Number of shares, average 37143970 36784755
Number of shares Dec. 31, 2007 37143970 37143970

Share Share Trans- Re- Total
capital premium lation tained
fund diff.earnings

Equity January 1, 2007 6.3 7.4 0.0 17.0 30.7
differences -0.1 -0.1
Contributions -0.1 -0.1
Profit for the year 0.4 0.4
Dividends -3.3 -3.3
Equity Dec.31, 2007 6.3 7.4 -0.1 14.0 27.6

Equity January 1, 2006 6.2 5.4 0.0 13.9 25.5
differences 0.0 0.0
Contributions -0.1 -0.1
Profit for the year 5.7 5.7
Dividends -2.5 -2.5
Share issue 0.1 2.0 2.1
Equity Dec. 31, 2006 6.3 7.4 0.0 17.0 30.7

MEUR 2007 2006
Sales 69.9 82.1
Fireplaces Business 59.7 72.0
Natural Stone Products Business 7.4 7.3
Other Operations 2.8 2.8

Operating profit 1.0 8.2
Fireplaces Business 4.4 11.0
Natural Stone Products Business 0.4 0.3
Other Operations -3.8 -3.1

MEUR Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/
2007 2007 2007 2007 2006 2006 2006 2006

Sales 16.8 16.5 17.4 19.2 24.4 20.5 20.9 16.3
Fireplaces Business 14.4 13.9 14.7 16.7 21.5 17.8 18.1 14.6
Natural Stone Products
Business 1.7 1.7 2.1 1.9 1.8 1.7 2.1 1.7
Other Operations 0.7 0.9 0.6 0.6 1.1 1.0 0.7

Operating profit -0.6 0.3 0.6 0.7 2.4 2.4 1.7 1.7
Fireplaces Business 0.8 0.8 1.4 1.4 3.2 2.8 2.7 2.3
Natural Stone Products
Business 0.0 0.1 0.2 0.1 0.0 0.2 0.0 0.1
Other Operations -1.4 -0.6 -1.0 -0.8 -0.8 -0.6 -1.0 -0.7

This financial statement bulletin is prepared in accordance with
IAS 34 Interim Financial Reporting. Tulikivi has applied same
accounting principles and calculation methods as for the
consolidated financial statements for 2006 with the exception to
the following new or revised standards adopted as from January 1,
– IFRS 7 Financial Instruments: Disclosures
– Amendment of IAS 1, Presentation of Financial Statements –
Capital disclosures
The adoption of these standards mainly affects the notes to
consolidated financial statements. The interpretations effective
as from January 1,2007 did not have an impact on the consolidated
financial statements.

The Group applies the unit of production method for the
depreciation of new quarries instead of the previously used
straight-line depreciation method.
The change in the depreciation method decreased the depreciation
in 2007 by EUR 0.4 million compared to the depreciation method
applied previously. Other minor changes in accounting methods
applied resulted in a decrease in profit of EUR 0.2 million.

The key performance ratios and share ratios are calculated using
the same methods as for the consolidated financial statements for
2006. The formulas can be found in the 2006 annual report, page

Use of estimates
When preparing the financial statements certain assumptions and
estimates regarding future have to be made. The outcomes might
differ from these assumptions and estimates. In addition
judgements have to be made in the application of accounting
principles. The estimates affect the amounts of assets and
liabilities at the balance sheet date, reporting of contingent
liabilities and income and expenses for the reporting period.
Estimates are used i.a. when determining realisability of certain
assets, useful lives of property, plant and equipment and
intangible assets, income taxes, provisions and impairment of

Business combinations

On the basis of additional information gained during the reporting
period, the accounting for the acquisition of the shares in
Kermansavi Oy in 2006, was adjusted by increasing environmental
provisions by EUR 0.2 million, reversing an unjustified
revaluation of EUR 0.05 million and increasing the amount of
deferred tax liabilities recognized with EUR 0.1 million. Due to
these adjustments, the related goodwill increased with EUR 0.3
million, and amounted to EUR 3.6 million on December 31, 2007. The
comparative information for 2006 has been restated.

Income taxes
MEUR 1-12/07 1-12/06
Taxes for the current and previous
reporting periods -1.1 2.1
Deferred taxes 1.3 0
Total 0.2 2.1

Collaterals given
MEUR 12/2007 12/2006
Mortages granted and
collaterals pledged 26.3 29.8
Interest rate swaps
Nominal value 7.4 8.3
Fair value 0.1 0.1
The fair value of derivatives is the gain or loss for closing the
contract based on market rates at the balance sheet date.

Environmental and warranty provisions
MEUR Environ- Warranty
mental provisions
Provisions, Jan. 1, 2007 0.6 0.4
Increase in provisions 0.1 0.4
Effect of discounting -0.3
Used provisions 0 -0.3
Provisions, Dec. 31, 2007 0.4 0.5

Environmental and warranty provisions are included in non-current
provisions. In 2007 a restructuring provision of EUR 0.7 million
has been recognised and it is included in current provisions.

The contingent liabilities include contingent part of Kivia Oy’s
purchase consideration (0.3 MEUR) that has been recognised in
other non- current liabilities in the consolidated financial
In addition the Group has landscaping obligations in accordance
with the Mining Act and environmental legislation, which have to
be fulfilled during the related operations and when closing the
quarries. The cost for monitoring the environment after the
closure of the quarries and the part of the landscaping obligation
that can be reliably measured have been taken into account when
recognising the environmental provisions. The covering works for
banking areas of the quarries is based on the long-term quarrying
plan according to which the surface material of new quarries
opened is utilised. No provision is recognised for this covering,
as this landscaping work is not expected to increase the costs of
normal quarrying operations.
Share capital
Share capital by share series

Number of % of % of Share,
shares shares voting EUR of
rights share
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 Dec.31, 2007 37 143 970 100.0 100.0 6 314 475

There have been no changes in Tulikivi Corporation´s share
According to the articles of association for the dividend paid for
Series A shares shall be 0.0017 EUR higher than the dividend paid
on Series K shares. Each Series K shares confers 10 votes at a
general meeting, while each Series A shares confers one vote. The
Series A share is listed on the OMX Nordic Exchange in Helsinki
and its trading code is TULAV.

Rate development and exchange of Series A shares
During the reporting period, 5.4 million shares were traded, with
the value of share turnover being EUR 14.5 million. The highest
rating for the share was EUR 3.75 and the lowest was EUR 1.53. The
closing rate for the period was EUR 1.56.

Related party transactions

12/2007 12/2006
Sales of goods and services
-sales of goods and services to
associated companies 2 5

Purchases of goods and services
-purchases of goods and services
from associated companies 86 171

Transactions with key management
– leases from related parties 105 103
– leases to related parties 0 2

Transactions with other related parties
Tulikivi Corporation is a founder member of the Finnish Stone
Research Foundation. In 2007 the company has donated EUR
70 thousand (in 2006 EUR 50 thousand) for the 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 124 462
in 2007 (EUR 123 640 in 2006). The rent corresponds with the
market rents. The sales of services to foundation were EUR 33 551
in 2007 (EUR 37 740 in 2006). The foundation did not provide
services to the Group during the reporting period (EUR 30 000 year

Largest shareholders on December 31, 2007
Name of shareholder Shares Proportion
of total

Vauhkonen Reijo 4 140 179 24.2 %
Vauhkonen Heikki 2 999 739 24.1 %
Elo Eliisa 2 957 020 5.9 %
Virtaala Matti 2 417 152 12.6 %
Mutual Pension Insurance
Company Ilmarinen 1 902 380 1.5 %
Mutanen Susanna 1 643 800 7.2 %
Vauhkonen Mikko 797 700 3.6 %
Paatero Ilkka 718 430 0.6 %
Nuutinen Tarja 674 540 3.5 %
Investment Fund Phoebus 608 140 0.5 %
Other shareholders 18 284 890 16.3 %

The Financial Statements have not yet been audited.

The companies included in the Group are the parent company
Tulikivi Corporation and the subsidiaries Kermansavi Oy (merged
with the parent company as at December 31, 2007), Kivia Oy, AWL-
Marmori Oy, Tulikivi U.S. Inc. and OOO Tulikivi. Group companies
include also Uuni Vertriebs GmbH (former Tulikivi Vertriebs GmbH)
and The New Alberene Stone Company, Inc., which are 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 and Leppävirran Matkailukeskus


Board of Directors
Matti Virtaala, Chairman of the Board

Distribution: OMX Nordic Exchange in Helsinki
Central Media

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