TAMFELT CORP. STOCK EXCHANGE RELEASE February 7, 2008 at 8.30 a.m. TAMFELT GROUP'S FINANCIAL STATEMENT BULLETIN FOR 2007 - Net sales 167.5 million euros (155.0 million in 2006) - Operating profit 25.9 million euros (25.9 million) - Operating profit 15.5% of net sales (16.7%) - Profit before tax million 26.2 euros (26.2 million) - Earnings/share, 0.76 euros (0.73 euros) - Equity/share, 3.95 euros (3.90 euros) - Equity/assets ratio 66.5% (70.6%) - Return on net assets, 22.7% (23.7%) - Return on equity, 19.2% (19.4%) - Proposed dividend 0.52 euros per common share and 0.54 euros per preferred share - Outlook: Notwithstanding the threats hanging over the global economy and the tough market situation, Tamfelt is still in a position to retain its performance and return on capital at the present level. BUSINESS ENVIRONMENT Tamfelt is a world-leading supplier of technical textiles. The Group's main products are fabrics for the paper and pulp, mining and chemical industries. Other products include ironer felts and dry filtration products. Tamfelt's biggest customer segment is the paper and pulp industry. In 2007, the demand for paper and board grew slightly beyond the long-term average, with most paper and board machines reporting higher year-on-year utilization rates. Output volumes increased most in Asia, notably in China, but also in Europe. Volumes remained level in the United States and Japan, but slumped in Canada. The prices of pulp and some grades of paper and board rose slightly during the year. Most investments in new paper and board manufacturing capacity are still being made in China and elsewhere in Asia. Pulp industry is investing heavily in South America. The metal market conditions affect the demand for filter fabrics that are consumed in the mining industry. The demand and prices for metals were at a good level, though the long-term peak in price was surpassed in spring 2007. The demand for paper machine clothing exceeded somewhat the long-term average growth. The demand increased especially in China and across Asia. The biggest growth was in dryer fabrics. Specific consumption - the consumption of clothing per paper ton produced - continued a slight decline, which is a result of higher product durability and improved machine performance. For filter fabrics, favourable market situation continued in the mining industry, and the demand from the paper and pulp industries exceeded the normal average. Rising oil price will increase the use of coal as energy source. In an effort to cut emissions from coal burning, high-quality filter fabrics are key. Also the growing production of biofuels requires filtration equipment. Stricter environmental standards overall have boosted the demand for filter fabrics - a trend that will continue to the foreseeable future. Competition from Asia has tightened the situation in some markets. The continuing weakness of the U.S. dollar against the euro affected the profitability of sales from Western Europe to North America and Asia. Stiff competition forced suppliers to cut prices for paper machine clothing in Europe. Customers continue to consolidate purchases and work with fewer suppliers in order to reduce stocks. This means that they require prompter deliveries. Undisturbed operation of paper machine clothing and the achievement of budgeted life time are vital as customers seek to improve their performance. Successful cooperation with customers and machine suppliers to reach these aims ensures the clothing supplier an opportunity for a stronger market position. The shutdowns of several production lines in Finland affect the demand for PMC products in the domestic market. However, by increasing market shares for the remaining machines Tamfelt has managed to compensate sales volumes to a remarkable degree. Clothing suppliers are building new capacity in China and closing down operations in North America. In Western Europe, capacity is consolidated through investments in large and high-performing production lines while smaller units are being shut down. Filter fabric manufacturers are shifting operations to countries where cost levels are lower and market growth is faster than the avarage. PROFIT PERFORMANCE AND FINANCIAL POSITION The Group's net sales grew 8.1 per cent to 167.5 million euros (155.0 million in 2006). Net sales increased in all major markets. Foreign operations contributed 68.9 per cent (66.3) of the consolidated net sales. Tamfelt Group's consolidated operating profit was 25.9 million euros (25.9), corresponding to 15.5 per cent (16.7) of the net sales. Profit for the period amounted to 20.8 million euros (20.1). Return on net assets was 22.7 per cent (23.7) and return on equity was 19.2 per cent (19.4). Earnings per share were up at 0.76 euros. The 2006 earnings per share, 0.73 euros, included 0.07 euros in profit for the disposal of the company's share in the hydroelectric power plant Alakoski. Sales growth is the result of Tamfelt's successful long-term R&D and customer-driven policies. Productivity has been enhanced through timely investments and improved processes and work procedures. Focusing on selected segments has also helped increase profitability. The consolidated balance sheet total was 165.1 million euros (up from 153.6). Consolidated equity was 109.6 million euros (107.8) corresponding to 3.95 euros (3.90) per share. Equity/assets ratio was 66.5 per cent (70.6). Gearing was 10.3 per cent (-4.3). On the balance sheet date, interest-bearing loans amounted to 17.6 million euros (5.2) and the book value of liquid assets to 6.3 million euros (9.8). The Group's net financial items totalled 0.3 million euros (0.3). Tamfelt's overall order backlog is good, though the orders are unevenly distributed on different products. The parent company's net sales were 140.4 million euros (128.8). Operating profit was 18.4 million euros (19.3) and profit for the period 14.5 million euros (17.9). Exports accounted for 63.5 per cent (59.5) of the parent company's net sales. BUSINESS OPERATIONS AND KEY EVENTS Tamfelt is a manufacturer of technical textiles for the paper and pulp industries, mining and chemical industries, for the energy industry and for commercial laundries and wastewater treatment plants. The company focuses on selected segments, namely clothing for large and high-speed paper and board machines and filter fabrics among others for the causticization process, iron pelletizing plants and the desulphurization of flue gases. Paper machine clothing (PMC) comprises forming fabrics, press felts and fabrics, shoe press belts and dryer fabrics. High-quality technical expertise, customer support and laboratory services back up the supplies. Tamfelt is one of the leading suppliers of paper machine clothing to wide and high-speed paper machines in Europe. This is a target segment in which Tamfelt's market shares are growing also in North America and Asia. Tamfelt enjoys a strong position in the filter fabric market for the paper and pulp industries. As a filter fabric supplier to the mining industry, Tamfelt concentrates on certain types of filters and has earned a significant presence in the market. Tamfelt is the world leading supplier of ironer felts for commercial laundries. The Group runs manufacturing operations in Finland, Portugal, Brazil, China and Poland. Tamfelt's plants in Finland are located in Tampere and Juankoski. The Tampere operation produces press felts and fabrics, dryer fabrics, shoe press belts and filter fabrics. Forming fabrics are made at Juankoski. The Portuguese plant concentrates on dry filtration products and ironer felts. The company's Brazilian operation produces filter fabrics for the pulp and mining industries, for biofuel production, and for the chemical and metallurgical industries. In the Chinese joint venture at Tianjin, forming and dryer fabrics are finished. A new forming and dryer fabric plant, 100 percent owned by Tamfelt, was built in Tianjin in 2007. The plant will come on stream in February 2008. In Shanghai, the processing of filter fabrics started in the beginning of 2007. The Polish plant specializes in filter fabrics for wet and dry filtration. In addition, Tamfelt operates a sales company in the United States and in Canada. Tamfelt's strengthening market position - both in paper machine clothing and in filter fabrics - was reflected in growing net sales, which clearly surpassed the average growth of the industry. Net sales were up in all main market areas. Exports and foreign operations improved most in China, North America and in Central and Eastern Europe. New investments, investments in production bottlenecks and focused productivity improving measures helped increase delivery volumes. All the manufacturing units produced higher volumes year-on-year. All PMC products were in good demand, boosted by Tamfelt's successful supplies to paper machines representing cutting-edge technology. The sales of the Group's dry filtration products continued to grow in 2007. Tamfelt continued to contribute as clothing supplier for a number of start-ups of new or rebuilt paper and board machines. Major start-up orders came especially from China and other Asian countries, but from Europe as well. Tamfelt's clothing contributed to a new world record speed at the start-up of a newspaper machine in China. The SAP resource planning system has now been rolled out to all Tamfelt subsidiaries. The system assists in improving business planning, monitoring and intelligence. INCORPORATION OF BUSINESSES In October 22, 2007, Tamfelt Corp. published a Stock Exchange Release announcing an incorporation of the Group's paper machine clothing (PMC) and filter fabric business areas by means of a transfer of undertaking. The transfers have been completed according to plan as of January 1, 2008, and the operation of the new companies, Tamfelt PMC Corp. and Tamfelt Filtration Corp. has started. The parent company for the Group is Tamfelt Corp. As a result of the incorporation, the Group will report the PMC and Filtration businesses as primary segment and the geographical segment as secondary segment for the first time in the Interim Report for January-March 2008 to be published on April 24, 2008. INVESTMENTS The Group's gross investments were record high at 24.5 million euros (up from 11.5). Two major investment projects were carried out in 2007. Press felt manufacturing volume was increased at the Tampere plant with an investment of over 10 million euros. The expenditure included a state-of-the-art needling machine as well as rebuilds of weaving looms and finishing equipment. The building of a forming and dryer fabric plant in Tianjin, China, started in the beginning of 2007. The investment is in line with Tamfelt's long-term strategy. The premises are ready and the mechanical installations of the first phase were completed during the year. After all required equipment is in place and trial runs have been conducted, the production will begin in February 2008. The purpose of the investment is to enhance Tamfelt's competitiveness by improved delivery performance and logistics. Tamfelt is now able to supply Chinese-made dryer and forming fabrics to high-speed and wide paper and board machines in China and across the Pacific area. RESEARCH AND DEVELOPMENT The cost of research and development in 2007 was 2.7 per cent (2.8) of Tamfelt's net sales. The company's R&D is conducted in collaboration with customers, material suppliers, paper machine and filter manufacturers as well as universities and research institutes. Joint initiatives are designed to improve filtration, paper quality, paper machine's runnability and economy. Extensive projects are under way to upgrade fabric structures, raw materials and processes. In spring 2007 Tamfelt joined Forest Cluster Ltd, an innovation company co-founded by 17 key players of the forest industry in order to add momentum to the joint research targets of the field. RISKS AND UNCERTAINTY FACTORS The major risks involved in Tamfelt's activities relate to the maintenance and expansion of market shares. Customers make clothing manufacturers compete for contracts and consolidate their purchases on an ever-smaller number of suppliers. Vigorous competition and declining specific consumption lead to a pressure on prices and a higher business risk. Other uncertainties relate to the availability, price and quality of raw materials, especially as Tamfelt, in some materials, is dependent on a small number of suppliers. The paper and board industries are growing fastest in China and elsewhere in Asia. The mining industry is growing fastest in South America. Tamfelt's customers are increasingly relocating their production capacities to these areas. Clothing suppliers, too, are shifting operations to countries where cost levels are lower. In an effort to stay competitive, Tamfelt continues to improve its performance, cost structure and productivity. Tamfelt is increasingly operating in the South American and Southeast Asian markets, where the risk of credit loss is higher. Tamfelt takes out insurances to cover the risk of damage involved in its activities, as far as this is deemed motivated financially or otherwise. The coverage includes insurance against material damage and business interruption as well as product liability and completed operations liability coverage. Tamfelt focuses on identifying and reducing risks and risk-related damages. However, Tamfelt's business environment involves risks that cannot be covered by insurances or eliminated by other means. The uncertainties of global economy have increased of late and will present additional challenges in the current year. PERSONNEL The average Group employment was 1,469 people (1,415). The parent company employed an average of 1,053 people (1,036). On the last day of the year, the Group employed 1,496 (1,443) and the parent company 1,057 (1,045) people. The Group employment grew by 53 people. The average length of employment in the Group was 13 years (13). At the end of 2007, the average age of personnel was 42 years (41). Labour turnover at the Group level was 6.5 per cent (7.6). During the year, 61 employees moved to new jobs within the parent company. The parent company offered numerous students summer jobs and internships. Cooperation with schools comprised internships around the year and themes for degree projects for many university students. In the parent company, absenteeism through sickness was 6.7 per cent (6.1) of theoretical regular working time. The average pension age was 59 years (61). Investments in high-quality working conditions and further improvement of personnel well-being continued in the company. Tamfelt's annually published personnel report provides more specific information on the company personnel. ENVIRONMENT Tamfelt's environmental management system under the SFS-EN-ISO 14001 standard covering the Tampere and Juankoski plants was certified in 1998 and updated in 2006. The level of Tamfelt's environmental protection fulfils the current statutory requirements. The goals and targets to support sustainable development have been published in Tamfelt's environmental policy. The company's manufacturing processes do not discharge any significant amounts of pollutants to the environment. The key objectives of Tamfelt's environmental management programme are more efficient use of raw materials, reduction of slow-decaying landfill waste and the avoidance of unnecessary use of water and energy. The major environmental initiatives of 2007 focused on waste reduction, improved recycling and efficient energy use at the Tampere and Juankoski facilities. Cloth waste was increasingly channelled to recycling. The total environmental expenditure was 0.2 per cent of the net sales. Tamfelt's annual environmental report provides detailed information on the company's environmental performance. FOREIGN BRANCHES In China, Tamfelt's business is supported by Tamfelt Shanghai Representative Office. CHANGES IN SHARE CAPITAL At the end of 2007, Tamfelt's share capital stood at 27,563,964.00 euros. The aggregate number of shares was 27,563,964, of which 10,119,198 were common shares and 17,444,766 preferred shares. The Annual General Meeting of March 10, 2005 passed a resolution to grant options to the company's key executives. The 2005 option scheme entitles the option holders to subscribe for a total of 437,000 preferred shares, representing a maximum of 1.6 per cent of Tamfelt's share capital and 0.2 per cent of the voting power at the end of the year. Under the 2005 scheme, Tamfelt's share capital can rise by a maximum of 437,000.00 euros. Subscription under this scheme began for E options on November 1, 2007 and will begin for F options on November 1, 2009. OWN SHARES The company held no own shares in 2007. The Board of Directors holds no current authorization to decide on the acquisition or conveyance of the company's own shares. BOARD OF DIRECTORS, AUDITORS AND EXECUTIVE BOARD Tamfelt Corp.'s Annual General Meeting of March 20, 2007 elected Mikael von Frenckell, Martin Lilius, Jouko Oksanen, Vesa Kainu, Niklas Savander and Carl-Magnus Cedercreutz as ordinary members of the Board of Directors. At the organization meeting, Mikael von Frenckell was elected as Chairman and Niklas Savander as Deputy Chairman. Authorized Public Accountants Jari Paloniemi and Veikko Terho were elected to continue as the company's auditors and Authorized Public Accountant Jukka Lahdenpää and authorized public accounting company Moore Stephens Rewinet Oy Ab as deputy auditors. Jyrki Nuutila served as the company's President & CEO and Chairman of the Group Executive Board. Seppo Holkko, Executive Vice President of the PMC Division, served as Deputy to the CEO. In addition to the above, the Group's Executive Board consisted of Heikki Rehakka, Executive Vice President of the Filter Fabric Division, Kimmo Pärssinen, Chief Financial Officer, Jukka Huhtiniemi, Technical Director (until June 30, 2007), Hannu Laine, Executive Vice President of Corporate Planning (until August 31, 2007), and, as personnel representatives Jarmo Järviö, Chief shop steward at the Tampere plant, Jaakko Räsänen, Chief shop steward at the Juankoski plant, and Pirkko Järvelä, clerical personnel representative. Technical Director Jukka Huhtiniemi took over as President of Tamfelt Tianjin PMC Co. Ltd. on July 1, 2007 and Executive Vice President of Corporate Planning Hannu Laine retired on September 1, 2007. OUTLOOK FOR 2008 Global economic uncertainty has remarkably grown lately, and the rate of growth is expected to slow down in 2008. In particular, the impacts of the financial market crisis may reflect in the development of the global economy in an unanticipated manner. In China and Southeast Asia, good economic growth is believed to continue, though less fast than last year. The demand for paper and the production volumes of the forest industry are estimated to grow at the long-term average rate. In Tamfelt's focus area, however, the output volumes of the paper industry will be growing faster than average, and brisk demand for clothing for new high-speed paper and board machines will prevail. In the mining industry, the market trend is expected to remain positive for iron and colour metals, increasing the demand for filter fabrics. Keener environmental awareness and more stringent environmental standards worldwide will boost the demand for filter fabrics and open up new opportunities to step up sales. The record-level investments of the past year have significantly increased the manufacturing capacity of Tamfelt's PMC products as well as filter fabrics. Higher capacity together with a nice volume of orders on hand provides good conditions for business growth. The high investment rate has been planned to continue in 2008, though below the record level of 2007. Effective capital spending and productivity improvement will remain the focus of special attention. The Group's balance sheet structure is expected to stay strong. Big customer corporations make clothing manufacturers compete for contracts and consolidate their purchases on an ever-smaller number of suppliers. Price competition in paper machine clothing has already tightened to the extreme. Notwithstanding the threats hanging over the global economy and the tough market situation, Tamfelt is still in a position to retain its performance and return on capital at the present level. BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT The Board proposes to the Annual General Meeting that a dividend of 0.52 euros be paid on a common share and 0.54 euros on a preferred share. No significant changes have taken place in the company's financial position after the closing of the financial year. The company's cash position is good and, according to the view of the Board of Directors, the proposed distribution of dividend will not endanger the company's solvency. -------------------------------------------------------------------------------- | CONSOLIDATED INCOME STATEMENT, | | | | | | IFRS | | | | | -------------------------------------------------------------------------------- | million euros | | | | | -------------------------------------------------------------------------------- | | 1-12/2007 | % | 1-12/2006 | % | -------------------------------------------------------------------------------- | Net sales | 167.5 | 100 | 155.0 | 100 | -------------------------------------------------------------------------------- | Operating profit | 25.9 | 15 | 25.9 | 17 | -------------------------------------------------------------------------------- | Financial income and expenses | 0.3 | | 0.3 | | -------------------------------------------------------------------------------- | Share of profit of associates | | | | | -------------------------------------------------------------------------------- | Profit before tax | 26.2 | | 26.2 | | -------------------------------------------------------------------------------- | Income taxes | -5.4 | | -6.1 | | -------------------------------------------------------------------------------- | Profit for the period | 20.8 | 12 | 20.1 | 13 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | Equity holders of the parent | 20.9 | | 20.2 | | -------------------------------------------------------------------------------- | Minority interest | 0.0 | | -0.1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share calculated on | | | | | | profit attributable to equity | | | | | | holders of the parent (euro) | | | | | -------------------------------------------------------------------------------- | Basic | 0.76 | | 0.73 | | -------------------------------------------------------------------------------- | Diluted | 0.75 | | 0.73 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET, IFRS | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | million euros | 12/2007 | % | 12/2006 | % | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Assets | | | | | -------------------------------------------------------------------------------- | Non-current assets | | | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 88.5 | | 75.8 | | -------------------------------------------------------------------------------- | Goodwill | 0.3 | | 0.3 | | -------------------------------------------------------------------------------- | Other intangible assets | 4.3 | | 4.0 | | -------------------------------------------------------------------------------- | Investment in associates | | | | | -------------------------------------------------------------------------------- | Other financial assets | 1.4 | | 1.8 | | -------------------------------------------------------------------------------- | Deferred tax assets | 0.9 | | 0.6 | | -------------------------------------------------------------------------------- | | 95.4 | 58 | 82.5 | 54 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | -------------------------------------------------------------------------------- | Inventories | 33.0 | | 32.1 | | -------------------------------------------------------------------------------- | Trade and other receivables | 30.3 | | 29.2 | | -------------------------------------------------------------------------------- | Financial assets at fair value | 1.9 | | 1.8 | | | through profit or loss | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 4.4 | | 8.0 | | -------------------------------------------------------------------------------- | | 69.7 | 42 | 71.1 | 46 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | 165.1 | 100 | 153.6 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity and liabilities | | | | | -------------------------------------------------------------------------------- | Issued capital and reserves | | | | | | attributable to equity holders | | | | | | of the parent | | | | | -------------------------------------------------------------------------------- | Share capital | 27.6 | | 27.6 | | -------------------------------------------------------------------------------- | Share premium | 1.0 | | 1.0 | | -------------------------------------------------------------------------------- | Translation differences | -1.6 | | -0.5 | | -------------------------------------------------------------------------------- | Fair value reserve | 0.1 | | 0.5 | | -------------------------------------------------------------------------------- | Retained earnings | 82.3 | | 79.0 | | -------------------------------------------------------------------------------- | | 109.4 | | 107.6 | | -------------------------------------------------------------------------------- | Minority interest | 0.2 | | 0.2 | | -------------------------------------------------------------------------------- | Total equity | 109.6 | 66 | 107.8 | 70 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-current liabilities | | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 10.6 | | 10.9 | | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 11.7 | | 1.8 | | -------------------------------------------------------------------------------- | | 22.3 | | 12.7 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | | | -------------------------------------------------------------------------------- | Trade and other payables | 27.4 | | 29.8 | | -------------------------------------------------------------------------------- | Provisions | | | 0.0 | | -------------------------------------------------------------------------------- | Current interest-bearing | 5.8 | | 3.3 | | | liabilities | | | | | -------------------------------------------------------------------------------- | | 33.2 | | 33.1 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | 55.5 | 34 | 45.8 | 30 | -------------------------------------------------------------------------------- | Total equity and liabilities | 165.1 | 100 | 153.6 | 100 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED CASH FLOW STATEMENT | | | -------------------------------------------------------------------------------- | million euros | | | -------------------------------------------------------------------------------- | | 1-12/2007 | 1-12/2006 | -------------------------------------------------------------------------------- | Operating activities | | | -------------------------------------------------------------------------------- | Profit for the period | 20.8 | 20.1 | -------------------------------------------------------------------------------- | Adjustments to profit | 15.4 | 12.6 | -------------------------------------------------------------------------------- | Change in working capital: | | | -------------------------------------------------------------------------------- | Change in trade and other | -0.6 | -0.5 | | receivables | | | -------------------------------------------------------------------------------- | Change in inventories | -1.0 | 0.1 | -------------------------------------------------------------------------------- | Change in trade and other | -2.4 | 5.4 | | payables | | | -------------------------------------------------------------------------------- | Change in provisions | | -0.5 | -------------------------------------------------------------------------------- | Interest received | 0.4 | 0.2 | -------------------------------------------------------------------------------- | Interest paid | -1.0 | -0.6 | -------------------------------------------------------------------------------- | Other financial items, net | 0.9 | 0.4 | -------------------------------------------------------------------------------- | Taxes paid | -7.3 | -5.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash from operating activities | 25.3 | 31.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Investing activities | | | -------------------------------------------------------------------------------- | Investment in property, plant and | -23.1 | -10.8 | | equipment | | | -------------------------------------------------------------------------------- | Investment in intangible assets | -1.2 | -0.7 | -------------------------------------------------------------------------------- | Other investments | -0.2 | | -------------------------------------------------------------------------------- | Sale of associates | | 2.3 | -------------------------------------------------------------------------------- | Net cash from investing activities | -24.5 | -9.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financing activities | | | -------------------------------------------------------------------------------- | Subscription for stock options | | 0.1 | -------------------------------------------------------------------------------- | Withdrawal of loans | 16.7 | | -------------------------------------------------------------------------------- | Repayment of loans | -4.3 | -9.0 | -------------------------------------------------------------------------------- | Dividends paid | -16.6 | -11.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net cash from financing activities | -4.2 | -20.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in cash and cash equivalents | -3.4 | 2.5 | -------------------------------------------------------------------------------- | Cash and cash equivalents at the | 9.8 | 7.7 | | beginning of the period | | | -------------------------------------------------------------------------------- | Effect of exchange rate changes | 0.1 | -0.2 | -------------------------------------------------------------------------------- | Effect of changes in the fair value | -0.1 | -0.2 | | of investment | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at the | 6.4 | 9.8 | | end of the period | | | -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN CONSOLIDATED EQUITY -------------------------------------------------------------------------------- | | Issued capital and reserves attributable to | | | | | parent company stock holders | | | -------------------------------------------------------------------------------- | million euros | Share | Sha- | Trans | Fair | Retai | Total | Mino | Total | | | cap-i | re | -lati | value | n-ed | | rity | equit | | | tal | prem | on | re-se | ear-n | | inte | y | | | | ium | diffe | rve | ings | | rest | | | | | rese | rence | and | | | | | | | | rve | s | other | | | | | | | | | | reser | | | | | | | | | | -ves | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity Dec. | 27.6 | 1.0 | 0.1 | 0.8 | 69.8 | 99.2 | 0.3 | 99.4 | | 31, 2005 | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | | -0.6 | | | -0.6 | | -0.6 | | differences | | | | | | | | | -------------------------------------------------------------------------------- | Change of fair | | | | -0.4 | | -0.4 | | -0.4 | | value, | | | | | | | | | | financial | | | | | | | | | | assets | | | | | | | | | | available for | | | | | | | | | | sale | | | | | | | | | -------------------------------------------------------------------------------- | Tax on equity | | | | 0.1 | | 0.1 | | 0.1 | | items | | | | | | | | | -------------------------------------------------------------------------------- | Counter entry | | | | | 0.1 | 0.1 | | 0.1 | | of | | | | | | | | | | share-based | | | | | | | | | | payments | | | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | 20.2 | 20.2 | 0.0 | 20.2 | | period | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | -0.6 | -0.3 | 20.3 | 19.5 | 0.0 | 19.5 | | recognized | | | | | | | | | | income and | | | | | | | | | | expenses | | | | | | | | | | for the period | | | | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | -11.1 | -11.1 | | -11.1 | -------------------------------------------------------------------------------- | Exercised | 0.0 | 0.1 | | | | 0.1 | | 0.1 | | stock | | | | | | | | | | options | | | | | | | | | -------------------------------------------------------------------------------- | Equity Dec. | 27.6 | 1.0 | -0.5 | 0.5 | 78.9 | 107.6 | 0.2 | 107.8 | | 31, 2006 | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | | -1.2 | | | -1.2 | 0.0 | -1.1 | | differences | | | | | | | | | -------------------------------------------------------------------------------- | Change of | | | | | -1.1 | -1.1 | | -1.1 | | accounting | | | | | | | | | | estimates | | | | | | | | | -------------------------------------------------------------------------------- | Change of fair | | | | -0.5 | | -0.5 | | -0.5 | | value, | | | | | | | | | | financial | | | | | | | | | | assets | | | | | | | | | | available for | | | | | | | | | | sale | | | | | | | | | -------------------------------------------------------------------------------- | Tax on equity | | | | 0.1 | | 0.1 | | 0.1 | | items | | | | | | | | | -------------------------------------------------------------------------------- | Counter entry | | | | | 0.1 | 0.1 | | 0.1 | | of | | | | | | | | | | share-based | | | | | | | | | | payments | | | | | | | | | -------------------------------------------------------------------------------- | Profit for the | | | | | 20.9 | 20.9 | 0.0 | 20.8 | | period | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | -1.2 | -0.4 | 19.9 | 18.4 | 0.0 | 18.4 | | recognized | | | | | | | | | | income and | | | | | | | | | | expenses | | | | | | | | | | for the period | | | | | | | | | -------------------------------------------------------------------------------- | Dividends | | | | | -16.6 | -16.6 | | -16.6 | -------------------------------------------------------------------------------- | Equity Dec. | 27.6 | 1.0 | -1.7 | 0.1 | 82.3 | 109.4 | 0.2 | 109.6 | | 31, 2007 | | | | | | | | | -------------------------------------------------------------------------------- SEGMENT REPORTING - secondary segment -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | million euros | 1-12/2007 | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET SALES | | | -------------------------------------------------------------------------------- | Finland | 57.6 | 53.6 | -------------------------------------------------------------------------------- | Other Europe | 68.2 | 67.6 | -------------------------------------------------------------------------------- | Other countries | 59.0 | 45.7 | -------------------------------------------------------------------------------- | Elimination | -17.2 | -11.9 | -------------------------------------------------------------------------------- | Consolidated | 167.5 | 155.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INVESTMENTS | | | -------------------------------------------------------------------------------- | Finland | 14.2 | 9.2 | -------------------------------------------------------------------------------- | Other Europe | 1.1 | 0.5 | -------------------------------------------------------------------------------- | Other countries | 9.1 | 1.8 | -------------------------------------------------------------------------------- | Consolidated | 24.5 | 11.5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | | | -------------------------------------------------------------------------------- | Finland | 136.2 | 126.4 | -------------------------------------------------------------------------------- | Other Europe | 15.3 | 19.3 | -------------------------------------------------------------------------------- | Other countries | 26.0 | 13.2 | -------------------------------------------------------------------------------- | Elimination | -12.4 | -5.3 | -------------------------------------------------------------------------------- | Consolidated | 165.1 | 153.6 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | | | -------------------------------------------------------------------------------- | | 1-12/2007 | 1-12/2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net sales | 167.5 | 155.0 | -------------------------------------------------------------------------------- | Operating profit | 25.9 | 25.9 | -------------------------------------------------------------------------------- | % of net sales | 15.5 | 16.7 | -------------------------------------------------------------------------------- | Profit before taxes and minority | 26.2 | 26.2 | | interest | | | -------------------------------------------------------------------------------- | Profit for the period | 20.8 | 20.1 | -------------------------------------------------------------------------------- | Return on equity, % | 19.2 | 19.4 | -------------------------------------------------------------------------------- | Return on net assets, % | 22.7 | 23.7 | -------------------------------------------------------------------------------- | Equity/assets ratio, % | 66.5 | 70.6 | -------------------------------------------------------------------------------- | Gearing, % | 10.3 | -4.3 | -------------------------------------------------------------------------------- | Gross investment | 24.5 | 11.5 | -------------------------------------------------------------------------------- | % of net sales | 14.6 | 7.4 | -------------------------------------------------------------------------------- | Average employment during the | 1,469 | 1,415 | | period | | | -------------------------------------------------------------------------------- | Earnings/share, diluted, euro | 0.76 | 0.73 | -------------------------------------------------------------------------------- | Equity/share, diluted, euro | 3.95 | 3.90 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMMITMENTS AND CONTINGENCIES | | | -------------------------------------------------------------------------------- | million euros | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Contingent liabilities | 0.7 | 0.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | DERIVATIVE FINANCIAL INSTRUMENTS | | | -------------------------------------------------------------------------------- | million euros | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Forward exchanges, not in hedge | | | | accounting | | | -------------------------------------------------------------------------------- | Fair value | 2.7 | 5.0 | -------------------------------------------------------------------------------- | Value of underlying asset | 2.7 | 4.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Electricity derivatives | | | -------------------------------------------------------------------------------- | Fair value | 2.1 | 2.0 | -------------------------------------------------------------------------------- | Trading value | 1.7 | 2.0 | -------------------------------------------------------------------------------- Auditors' report on the financial statements was given on February 6, 2008. The Annual General Meeting will be held in Tampere at 4.00 p.m. on Tuesday, March 18, 2008. The dividend record date is March 25, 2008 and the proposed payment date is April 1, 2008. TAMFELT CORP. Jyrki Nuutila President & CEO BRIEFING Tamfelt will hold a briefing about the 2007 financial statements for the press and financial analysts at 10.00 a.m. on February 7, 2008 at the Federation of Finnish Textile and Clothing Industries, Eteläranta 10, Helsinki, Finland. INTERIM REPORTS IN 2008 Interim reports will be released as follows: - January-March April 24, 2008 - January-June August 5, 2008 - January-September October 30, 2008 FURTHER INFORMATION February 7, 2008 Jyrki Nuutila, President & CEO, Tamfelt Corp., tel. +358 400 625 030 and Seppo Holkko, President, Tamfelt PMC Corp., tel. +358 40 509 3319. DISTRIBUTION Helsinki Exchanges Major media www.tamfelt.com