STROMSDAL CORPORATION INTERIM REPORT October 30, 2008, at 18.30 (Finnish time) INTERIM REPORT FOR JANUARY- SEPTEMBER 2008 - January-September net sales were EUR 41.8 million (EUR 41.8 million). - January-September pre-tax loss was EUR -4.8 million (EUR -4.2 million). - January-September earnings per share was -0.17 euro (-0.15 euro). - The result impact from the sale of excess pollution rights and electricity hedges was EUR 2.8 million (EUR 0.0 million). - The third quarter net sales were EUR 13.3 million (EUR 14.1 million). - The third quarter pre-tax loss was EUR -2.8 million (EUR -1.2 million). - The third quarter earnings per share was -0.09 (-0.04 euro). - The extensive capital expenditure programme, which the company started in 2007 came to an end with the June 2008 investments. The main benefit of the investment programme is the improved quality control and efficiency in the production of TECTA food packaging paperboard. The capital expenditure for the January-September period amounted to EUR 4.9 million (EUR 2.6 million). MARKETS AND SALES The competition in the European paperboard markets was tight and the continues increasing production costs, and especially the weakening of pound sterling against the Euro makes the competition even more challenging. The average backlog for the period January-September was 10 days (12 days). The company is focusing on high premium-quality graphical paperboards and on specialty paperboards like TECTA food packaging paperboards. The company has increased prices between 5-7 per cent as of October 1, 2008. In addition the company has reduced its currency risks by switching its US dollar agreements to Euro based. NET SALES AND RESULTS Stromsdal Group's consolidated net sales for January 1 - September 30 totalled EUR 41.8 million (EUR 41.8 million). Consolidated operating result was EUR -3.9 million (EUR -3.2 million). Net loss was EUR -4.7 million (EUR -4.3 million). Net sales in July - September period were EUR 13.3 million (EUR 14.1 million). Operating loss was EUR -2.3 million (EUR -0.8 million). Pre-tax loss for the period was EUR -2.8 million (EUR -1.2 million). Net sales were in January - September 2008 the same as previous year. The high share of commodity boards, however, still reduced the financial results for the period. In February the company sold its 2008 excess pollution rights for EUR 0.6 million. The company has for years 2009 - 2012, mainly price hedged, excess pollution rights amounting to EUR 3.0 million. In June the company sold all its electricity price hedges for EUR 2.2 million. Both transactions are booked in the Income Statement under “Other operating income”. Without these transactions operating loss for the period January 1 - September 30 would have been EUR -6.7 million (EUR -3.2 million). On September 30, 2008 the company didn't have any electricity price hedges left. The production volume reached 47,000 tons (46,700 tons). The one week investment shut down in February and the one week investment/maintenance shut down in June significantly weakened the production volume and results for the period. In addition, the main sheeting machine had a serious break-down during April-May, which forced the company during that time to do most of its sheeting outside Juankoski. This break-down meant EUR 0.5 million in extra costs. The insurance will cover most of the expenses and so far the company has accrued EUR 0.2 million as insurance cover. Electricity, energy, pulpwood, labour and transportation costs rose significantly during the period compared to the same time previous year. FINANCIAL POSITION The operative cash flow was EUR -1.1 million (EUR -5.1 million) and included in the operative cash flow is the sale of excess pollution rights and electricity price hedges, total EUR 2.8 million (EUR 0.0 million). Cash flow from investments was EUR -3.9 million (EUR -2.1 million). In June 2006 the Ministry of Trade and Industry granted the company an investment aid of EUR 1.5 million. The first part of the investment aid, EUR 0.5 million was received in March 2007, the second one in February 2008 was EUR 0.4 million and the last one EUR 0.6 million was received in June 2008. The company has during the period borrowed additional EUR 1.0 million for capital expenditure. The company has agreed with its main financiers to postpone all 2008 debt payments. Based upon Annual General Meeting (AGM) decision and authorization on March 26, 2008, the Board of Directors decided on June 17, 2008 to issue for subscription a total of 2,462,600 new shares in deviation of the shareholders' pre-emptive subscription right. The reasoning for the directed share issue is to strengthen company's capital structure and liquidity. The total subscription price of shares was EUR 0.9 million, and EUR 0.3 million was received as cash and EUR 0.6 million was set off receivables from the company. CAPITAL EXPENDITURE During the period January - September 2008 capital expenditure totalled EUR 4.9 million (EUR 2.6 million). Biggest investments were done mainly to improve quality control and efficiency when producing TECTA food packaging paperboard and to develop the surface and printability properties of all coated grades. During summer the unwinder of the offco-machine and the on-line processing of the board machine were renewed by changing the electric motors and the gears as well as their steering. OUTSOURCING Stromsdal and Pyroll Oy signed on June 17, 2008 an agreement concerning the outsourcing of Stromsdal's finishing department to Pyroll as of October 1, 2008. The aim of the co-operation between Stromsdal and Pyroll is to secure the fast deliveries to Stromsdal's customers and to further improve the quality and cost efficiency of Stromsdal's finishing operations. RESEARCH AND DEVELOPMENT During the period, quality improvements, such as higher brightness, were made on the graphical boards and development work intended to broaden Tecta food packaging applications continues. PERSONNEL During the period the company had an average of 216 (216) employees. At the end of the period there were 216 (204) employees, of whom 185 persons were permanent and 31 persons were temporary staff. During the second quarter Stromsdal launched a rationalization program aiming at reducing costs. As part of the rationalization program the company started on May 9, 2008 the co-operation negotiations regarding the whole workforce. The co-operation negotiations ended on June 17, 2008, and the outcome was to reduce the number of employees by a total of 18 and to outsource the whole finishing department, whereby 30 employees will be transferred from Stromsdal to Pyroll as established employees. Thus the total headcount reduction is 48 employees. In addition, job description will change for 13 employees to better reflect today's situation. SHARES AND SHARE CAPITAL The trading volume of Stromsdal Oyj shares for 1 January - 30 September 2008 totalled 1,229,576 (5,624,753), accounting for 4.10 percent (18.76 percent) of the total number of shares. Share turnover came to EUR 0.47 million (EUR 3.71 million) with the period's lowest and highest share price amounting to EUR 0.29 and EUR 0.51, respectively. At the end of the period, the shares closed at EUR 0.31 and the market capitalisation totalled EUR 9.29 million. The AGM on 26 March 2008 resolved that the fund for unrestricted equity established in year 2002 (EUR 2,025,936.63) and the fund for invested unrestricted equity (EUR 5,100,399.45), total EUR 7,126,336.08, are used in full to cover the confirmed loss in the balance sheet. The AGM further resolved that the registered share capital of the company, EUR 10,102,906.80, is reduced without compensation by EUR 3,181,441.98 after which reduction the company's share capital was EUR 6,921,464.82, divided into 27,515,399 shares. Of the amount of the share capital reduction, EUR 3,181,441.98 was used to cover the confirmed loss in the balance sheet in accordance with the provisions in Chapter 14, Section 1.1 of the Finnish Companies Act. The reduction of share capital as resolved results into restriction on distribution of profits during the next three years, as of April 25, 2008, according to Chapter 14, Section 2.2 of the Finnish Companies Act. The AGM resolved to authorize the Board of Directors to decide on the issuing of new shares of the company and on the right to transfer shares in the company that are in the possession of the company. The authorization includes the right to issue special rights as meant in Chapter 10 Section 1 of the Finnish Companies Act, which rights would entitle the holder to receive, against payment, new shares in the company or own shares of the company being in the possession of the company either by paying the subscription price in cash or by using a receivable from the company to set off the subscription price. A maximum amount of 20,000,000 new shares may be issued. A maximum amount of 1,100,000 own shares in the possession of the company may be transferred. In addition, the authorization includes the right to decide on a share issue to the company itself free of charge so that, as a result, the aggregate amount of shares issued to the company is a maximum of one tenth (1/10) of the total amount of shares in the company. This amount includes all the shares in the company being in the possession of the company itself or in the possession of any of its affiliated companies as set out in Chapter 15 Section 11 Paragraph 1 of the Finnish Companies Act. The Board of Directors is entitled to decide on any other issues related with the share issue. The authorization is in force for one year as of the decision of the AGM. The authorization revokes the authorization decided by the shareholder's meeting on 29 March 2007. The Board of Directors decided on June 17, 2008, according to the authorization of the AGM on March 26, 2008, to issue for subscription a total of 2,462,600 new shares in deviation of the shareholders' pre-emptive subscription right. The shares were issued to the Chairman of the Board of Directors Mr Harry Salonaho (855,000 shares) and to four Finnish professional and institutional investors. The subscription price of each new share was EUR 0.35. The shares issued for subscription were subscribed in full, and the total subscription price of shares, EUR 861,910, was recorded entirely to the fund of invested non-restricted equity. The new shares were taken into public trading on June 30, 2008. At the end of the quarter the fully paid share capital amounted to EUR 6,921,464.82 divided on 29,977,999 shares. NEAR FUTURE RISKS The international finance crisis and the increasing difficulties of getting bank financing have seriously effected Stromsdal's business. During week 41 the order intake started, at least temporary, to weaken and many customers informed about payment delays due to financing problems. These customers have not ordered goods from Stromsdal, according to their normal timetable. Due to problems above, the finance situation has become very tight. Stromsdal has today agreed on a EUR 2 million additional financing package, which has improved the liquidity of the company. The price increases of the main raw materials, electricity and transportation costs will raise the production costs and reduce the company's profitability. This negative impact will be compensated by investments and more efficient logistics-, sales- and production processes (i.e. outsourcing of the finishing operations), and with the 5-7 percent price increase as of October 1, 2008. The availability of pulpwood and short-fibre pulp is secured for the coming months, but the risk of Russia increasing the wood duties, would endanger the availability of pulpwood and short-fibre pulp, and would increase prices. Downward markets and unfavourable currency exchange rates, especially the pound sterling has a negative impact on the company's result. The company has almost fully eliminated its US dollar risk. For more information on risk management, please turn to the Financial Statements in the company's Annual Report for 2007. EVENTS AFTER FINANCIAL PERIOD Due to the soft finance and market situation the company decided on October 13, 2008 to start co-operation negotiations with all its employees. The target with the negotiation is to improve operations and to reduce costs. The headcount reduction target is about 50 persons. The aim is to have the cost reductions done as soon as possible, and possible lay-offs and task re-arrangements done by the end of 2008. The company has signed a significant supply agreement mainly for year 2009, which is about 5 per cent of next year's volume target. The supply agreement is one of the biggest ever signed in Stromsdal's history. During the last week Stromsdal has seen a small improvement of its order book, although the market conditions are still very challenging and very difficult to predict. Stromsdal Corporation has agreed with its current financiers about a EUR 2 million financing package in order to improve company's liquidity. The financing package is independent from the corporate and financing restructuring explained below. Stromsdal Corporation has also signed a Letter of Intent with its main financiers and Primaca Partners regarding a significant corporate restructuring and a financial arrangement. If the restructuring will take place Stromsdal will enter into a new business segment, and current loans, approximately EUR 17.7 million, will be converted to equity and in addition equity is planned to be increased by EUR 5 million. The aim of the arrangement is to build in connection with Stromsdal a significant group consisting of Finnish mid-size companies. The corporate and financing restructuring in the Letter of Intent is complex, and its execution requires all parts to be fulfilled and requires also the approval from the Extraordinary Shareholder's meeting, to be held later this year. The intent is to finish all the Letter of Intent arrangements by January 31, 2009. The company is not in a position to determine the probability of a successful corporate restructuring and to it linked the financing restructuring. FUTURE PROSPECTS The future prospects are based on general external financial indicators, order forecasts given by customers and on the company's order book. The soft market situation and the fast weakening order intake mean that EBITDA for the whole year will be negative. The company has previously informed that the target for this year is to achieve positive EBITDA. STROMSDAL CORPORATION CONSOLIDATED INCOME STATEMENT (EUR 1000) -------------------------------------------------------------------------------- | | IFRS | IFRS | IFRS | IFRS | IFRS | -------------------------------------------------------------------------------- | | 7-9/08 | 7-9/07 | 1-9/08 | 1-9/07 | 1-12/07 | -------------------------------------------------------------------------------- | NET SALES | 13 274 | 14 092 | 41 844 | 41 848 | 56 073 | -------------------------------------------------------------------------------- | Changes in | 1 626 | 731 | 489 | 114 | 1 158 | | inventories of | | | | | | | finished and | | | | | | | unfinished goods +/- | | | | | | -------------------------------------------------------------------------------- | Other operating | 73 | 92 | 3 168 | 243 | 309 | | income | | | | | | -------------------------------------------------------------------------------- | Materials and | -12 283 | -11 092 | -33 969 | -31 048 | -42 662 | | services | | | | | | -------------------------------------------------------------------------------- | Empolyee benefits | -2 771 | -2 761 | -8 740 | -8 504 | -11 219 | | expense | | | | | | -------------------------------------------------------------------------------- | Depreciaton | -936 | -888 | -2 810 | -2 635 | -3 458 | -------------------------------------------------------------------------------- | Other operating | -1 293 | -999 | -3 893 | -3 185 | -4 474 | | expenses | | | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT/LOSS | -2 310 | -824 | -3 912 | -3 166 | -4 273 | -------------------------------------------------------------------------------- | Share of associated | 0 | 0 | 0 | 0 | 27 | | companies´ | | | | | | | profits/losses | | | | | | -------------------------------------------------------------------------------- | Financial income and | -448 | -367 | -846 | -1 083 | -1 516 | | expenses | | | | | | -------------------------------------------------------------------------------- | PROFIT/LOSS BEFORE | -2 758 | -1 191 | -4 757 | -4 249 | -5 762 | | TAXES | | | | | | -------------------------------------------------------------------------------- | Income taxes | 11 | -12 | 14 | -5 | 6 | -------------------------------------------------------------------------------- | PROFIT/LOSS FOR THE | -2 747 | -1 203 | -4 744 | -4 254 | -5 756 | | FINANCIAL YEAR | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EARNINGS/SHARE, | -0,09 | -0,04 | -0,17 | -0,15 | -0,20 | | diluted and undiluted | | | | | | -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET (EUR 1000) -------------------------------------------------------------------------------- | | | IFRS | IFRS | IFRS | -------------------------------------------------------------------------------- | ASSETS | | 30.9.08 | 30.9.07 | 31.12.07 | -------------------------------------------------------------------------------- | NON-CURRENT ASSETS | | | | | -------------------------------------------------------------------------------- | Other intangible assets | | 549 | 746 | 724 | -------------------------------------------------------------------------------- | Tangible assets | | 23 576 | 21 921 | 21 930 | -------------------------------------------------------------------------------- | Investments in associated companies | | 526 | 499 | 526 | -------------------------------------------------------------------------------- | Available-for-sale financial assets | | 41 | 44 | 44 | -------------------------------------------------------------------------------- | Receivables | | 776 | 619 | 602 | -------------------------------------------------------------------------------- | Deferred tax assets | | 84 | 70 | 74 | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT ASSETS | | 25 552 | 23 899 | 23 900 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT ASSETS | | | | | -------------------------------------------------------------------------------- | Inventories | | 8 028 | 6 049 | 7 210 | -------------------------------------------------------------------------------- | Trade and other receivables | | 11 908 | 13 500 | 12 436 | -------------------------------------------------------------------------------- | Financial asset recognised in profit | | 0 | 24 | 0 | | or loss | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | | 632 | 2 963 | 2 112 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | | 20 569 | 22 535 | 21 758 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | | 46 121 | 46 435 | 45 658 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS´ EQUITY AND LIABILITIES | | | | | -------------------------------------------------------------------------------- | SHAREHOLDERS´ EQUITY | | | | | -------------------------------------------------------------------------------- | Share capital | | 6 921 | 10 103 | 10 103 | -------------------------------------------------------------------------------- | Issue premium fund | | 1 862 | 1 862 | 1 862 | -------------------------------------------------------------------------------- | Other funds | | 0 | 2 026 | 2 026 | -------------------------------------------------------------------------------- | Reserve for invested non-restricted | | 1 171 | 5 468 | 5 464 | | equity | | | | | -------------------------------------------------------------------------------- | Exchange rate difference | | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Retained earnings | | -4 792 | -8 841 | -10 356 | -------------------------------------------------------------------------------- | TOTAL SHAREHOLDERS´ EQUITY | | 5 162 | 10 617 | 9 099 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | | 16 | 27 | 20 | -------------------------------------------------------------------------------- | Provisions | | 181 | 212 | 181 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | | 15 548 | 14 920 | 15 341 | -------------------------------------------------------------------------------- | Other liabilities | | 115 | 115 | 115 | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT LIABILITIES | | 15 860 | 15 274 | 15 657 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | | | -------------------------------------------------------------------------------- | Accounts payable and other | | 12 184 | 10 195 | 10 695 | | liabilities | | | | | -------------------------------------------------------------------------------- | Liabilities recognised in profit or | | 35 | 0 | 0 | | loss | | | | | -------------------------------------------------------------------------------- | Provisions | | 91 | 46 | 91 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | | 12 788 | 10 302 | 10 116 | -------------------------------------------------------------------------------- | TOTAL CURRENT LIABILITIES | | 25 098 | 20 543 | 20 902 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL SHAREHOLDERS´ EQUITY AND | | 46 121 | 46 435 | 45 658 | | LIABILITIES | | | | | -------------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENT (EUR 1000) -------------------------------------------------------------------------------- | | | IFRS | IFRS | IFRS | -------------------------------------------------------------------------------- | | | 1-9/08 | 1-9/07 | 1-12/07 | -------------------------------------------------------------------------------- | BUSINESS OPERATIONS | | | | | -------------------------------------------------------------------------------- | Operating profit/loss | | -3 912 | -3 166 | -4 273 | -------------------------------------------------------------------------------- | ADJUSTMENTS TO OPERATING PROFIT/LOSS: | | | | | -------------------------------------------------------------------------------- | Depreciation | | 2 810 | 2 635 | 3 458 | -------------------------------------------------------------------------------- | Non-cash transactions | | 21 | -26 | -1 | -------------------------------------------------------------------------------- | CHANGE IN NET WORKING CAPITAL: | | | | | -------------------------------------------------------------------------------- | Increase/decrease in accounts and | | -46 | -3 373 | -1 903 | | other receivables | | | | | -------------------------------------------------------------------------------- | Increase/decrease in inventories | | -818 | -184 | -1 345 | -------------------------------------------------------------------------------- | Increase/decrease in accounts and | | 1 937 | 131 | 473 | | other payables | | | | | -------------------------------------------------------------------------------- | Interest paid | | -1 011 | -979 | -1 234 | -------------------------------------------------------------------------------- | Interest received | | 5 | 5 | 80 | -------------------------------------------------------------------------------- | Dividend received | | 0 | 4 | 4 | -------------------------------------------------------------------------------- | Other financial items paid | | -100 | -101 | -133 | -------------------------------------------------------------------------------- | Taxes paid | | 0 | -1 | -1 | -------------------------------------------------------------------------------- | NET CASH FLOW FROM BUSINESS | | -1 114 | -5 054 | -4 875 | | OPERATIONS (A) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INVESTMENTS | | | | | -------------------------------------------------------------------------------- | Purchase of tangible assets | | -4 863 | -2 565 | -3 462 | -------------------------------------------------------------------------------- | Purchase of intanbible assets | | -30 | -54 | -91 | -------------------------------------------------------------------------------- | Investment aid | | 1 019 | 503 | 503 | -------------------------------------------------------------------------------- | Sale of intangible assets | | 170 | 0 | 0 | -------------------------------------------------------------------------------- | Increase/decrease of long-term | | -174 | 17 | 35 | | receivables | | | | | -------------------------------------------------------------------------------- | CASH FLOW FROM INVESTMENTS (B) | | -3 878 | -2 098 | -3 015 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | FINANCING | | | | | -------------------------------------------------------------------------------- | Share issue | | 292 | 3 040 | 3 037 | -------------------------------------------------------------------------------- | Increase of long-term loans | | 1 844 | 6 334 | 5 334 | -------------------------------------------------------------------------------- | Instalments of long-term loans | | -444 | -1 264 | -405 | -------------------------------------------------------------------------------- | Increase/decrease in short-term loans | | 1 859 | 1 326 | 1 371 | -------------------------------------------------------------------------------- | Instalments of finance leasing | | -39 | -40 | -53 | -------------------------------------------------------------------------------- | NET CASH FLOW FROM FINANCING (C) | | 3 512 | 9 397 | 9 284 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | INCREASE/DECREASE OF LIQUID FUNDS | | -1 480 | 2 245 | 1 394 | | (A+B+C) | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIQUID FUNDS ON 1 JANUARY | | 2 112 | 718 | 718 | -------------------------------------------------------------------------------- | LIQUID FUNDS ON 30 SEPTEMBER AND 31 | | 632 | 2 963 | 2 112 | | DECEMBER | | | | | -------------------------------------------------------------------------------- BUSINESS SEGMENTATION Business segmentation is not presented, as Stromsdal Group only has one business segment. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR 1000) -------------------------------------------------------------------------------- | A = Share capital | | | | | | | | -------------------------------------------------------------------------------- | B = Share issue | | | | | | | | -------------------------------------------------------------------------------- | C = Issue premium | | | | | | | | | fund | | | | | | | | -------------------------------------------------------------------------------- | D = Reserve fund / Reserve for invested non-restricted equity 2007 | | -------------------------------------------------------------------------------- | E = Other funds | | | | | | | | -------------------------------------------------------------------------------- | F = Exchange difference | | | | | | | -------------------------------------------------------------------------------- | G = Retained earnings | | | | | | | -------------------------------------------------------------------------------- | H = Total capital and | | | | | | | | reserves | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | A | B | C | D | E | F | G | H | -------------------------------------------------------------------------------- | SHARE- | 10103 | 0 | 1862 | 5464 | 2026 | 0 | -10356 | 9099 | | HOLDERS´ | | | | | | | | | | EQUITY | | | | | | | | | | 1.1.2008 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share | - | - | - | 862 | - | - | - | 862 | | issue | | | | | | | | | -------------------------------------------------------------------------------- | Share | | | | -7 | | | | -7 | | issue | | | | | | | | | | expenses | | | | | | | | | | booked | | | | | | | | | | directly | | | | | | | | | | to | | | | | | | | | | Sharehold | | | | | | | | | | er's | | | | | | | | | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Convert- | - | - | - | -48 | - | - | - | -48 | | ible | | | | | | | | | | bond | | | | | | | | | | loan | | | | | | | | | -------------------------------------------------------------------------------- | Reduction | -3181 | - | - | - | - | - | 3181 | - | | of share | | | | | | | | | | capital | | | | | | | | | -------------------------------------------------------------------------------- | Loss | | | | -5100 | -2026 | | 7126 | 0 | | covered | | | | | | | | | -------------------------------------------------------------------------------- | Exchange | - | - | - | - | - | - | - | 0 | | rate | | | | | | | | | | differenc | | | | | | | | | | e | | | | | | | | | -------------------------------------------------------------------------------- | Net | - | - | - | - | - | - | -4744 | -4744 | | profit | | | | | | | | | | /loss | | | | | | | | | | for the | | | | | | | | | | financial | | | | | | | | | | year | | | | | | | | | -------------------------------------------------------------------------------- | SHARE- | 6922 | 0 | 1862 | 1171 | 0 | 0 | -4793 | 5162 | | HOLDERS´ | | | | | | | | | | EQUITY | | | | | | | | | | 30.9.2008 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | A | B | C | D | E | F | G | H | -------------------------------------------------------------------------------- | SHARE- | 10103 | 0 | 1862 | 0 | 2026 | 76 | -4663 | 9404 | | HOLDERS´ | | | | | | | | | | EQUITY | | | | | | | | | | 1.1.2007 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share | - | - | - | 5040 | - | - | - | 5040 | | issue | | | | | | | | | -------------------------------------------------------------------------------- | Convert- | - | - | - | 428 | - | - | - | 428 | | ible | | | | | | | | | | bond | | | | | | | | | | loan | | | | | | | | | -------------------------------------------------------------------------------- | Exchange | - | - | - | - | | -76 | 76 | 0 | | rate | | | | | | | | | | differenc | | | | | | | | | | e | | | | | | | | | -------------------------------------------------------------------------------- | Net | - | - | - | - | 0 | - | -4254 | -4254 | | profit | | | | | | | | | | /loss | | | | | | | | | | for the | | | | | | | | | | financial | | | | | | | | | | year | | | | | | | | | -------------------------------------------------------------------------------- | SHARE- | 10103 | 0 | 1862 | 5468 | 2026 | 0 | -8841 | 10617 | | HOLDERS´ | | | | | | | | | | EQUITY | | | | | | | | | | 30.9.2007 | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | 30.9.08 | 30.9.07 | 31.12.07 | -------------------------------------------------------------------------------- | 1. LEASING LIABILITIES (EUR 1000) | | 359 | 63 | 107 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 2. CONTINGENT LIABILITIES AND PLEDGES | 30.9.08 | 30.9.07 | 31.12.07 | | GIVEN | | | | -------------------------------------------------------------------------------- | FOR GROUP´S OWN DEBT (EUR 1000) | | | | | -------------------------------------------------------------------------------- | Mortgages on buildings and leases | | 5 674 | 5 674 | 5 674 | -------------------------------------------------------------------------------- | Mortgages on company assets | | 7 737 | 7 737 | 7 737 | -------------------------------------------------------------------------------- | Pledges given | | 11 817 | 12 477 | 11 478 | -------------------------------------------------------------------------------- | Pledged shares | | 471 | 471 | 471 | -------------------------------------------------------------------------------- | TOTAL | | 25 699 | 26 359 | 25 360 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 3. OTHER PLEDGES GIVEN (EUR 1000) | | 30.9.08 | 30.9.07 | 31.12.07 | -------------------------------------------------------------------------------- | Pledged deposits | | 207 | 7 | 7 | -------------------------------------------------------------------------------- | Mortgages on company assets | | 0 | 0 | 0 | -------------------------------------------------------------------------------- | TOTAL | | 207 | 7 | 7 | -------------------------------------------------------------------------------- Leases and buildings are also burdened by the ownership retention provision recorded by the equipment supplier. It targets equipment worth EUR 1.4 million. Valid bank quarantees to suppliers amount to EUR 660 thousand. -------------------------------------------------------------------------------- | 4. OUTSTANDING DERIVATES CONTRACTS (EUR | 30.9.08 | 30.9.07 | 31.12.07 | | 1000) | | | | -------------------------------------------------------------------------------- | PAR VALUE | | | | | -------------------------------------------------------------------------------- | Foreign currency hedging | | 1 400 | 341 | 0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 5. TANGIBLE ASSESTS (EUR 1000) | 1-9/08 | 1-9/07 | 1-12/07 | -------------------------------------------------------------------------------- | Increases | | 4 864 | 2 564 | 3 371 | -------------------------------------------------------------------------------- | Decreases | | 0 | 0 | -29 | -------------------------------------------------------------------------------- | TOTAL | | 4 864 | 2 564 | 3 342 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 6. RELATED PARTY TRANSACTIONS (EUR 1000) | 1-9/08 | 1-9/07 | 1-12/07 | -------------------------------------------------------------------------------- | Employee benefits | | | | -------------------------------------------------------------------------------- | Board of Directors´remuneration | | 96 | 103 | 129 | -------------------------------------------------------------------------------- | Salaries and other short term | | 471 | 492 | 586 | | empolyee benefits of the | | | | | | management | | | | | -------------------------------------------------------------------------------- | Other benefits due to notice of | | 0 | 32 | 32 | | employment | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY FIGURES | | 30.9.08 | 30.9.07 | 31.12.07 | -------------------------------------------------------------------------------- | Earnings/share, euros | | -0,17 | -0,15 | -0,21 | -------------------------------------------------------------------------------- | Shareholders´ equity/share, euros | | 0,17 | 0,35 | 0,30 | -------------------------------------------------------------------------------- | Research and development costs, | | 0,3 | 0,02 | 0,17 | | Me | | | | | -------------------------------------------------------------------------------- | Gross investments, Me | | 4,9 | 2,6 | 3,5 | -------------------------------------------------------------------------------- | Group personnel average | | 216 | 216 | 213 | -------------------------------------------------------------------------------- | Equity ratio % | | 11,2 | 22,9 | 19,9 | -------------------------------------------------------------------------------- | Current ratio | | 0,8 | 1,1 | 1,0 | -------------------------------------------------------------------------------- | Interest-bearing liabilities, Me | | 28,3 | 25,2 | 25,5 | -------------------------------------------------------------------------------- | Number of shares average | | 28468084 | 28468084 | 28468084 | -------------------------------------------------------------------------------- | Number of shares 30.6./31.12. | | 29977999 | 29977999 | 29977999 | -------------------------------------------------------------------------------- CALCULATION OF GROUP KEY FIGURES: Earnings/share (EPS): Profit/loss for the the financial year Share issue adjusted average number of shares Equity ratio: (Shareholders´ equity + minority interest)*100 Balance sheet total - payments received in advance Current ratio: Financial assets + inventories Current liabilities -------------------------------------------------------------------------------- | MAJOR SHAREHOLDERS | | | -------------------------------------------------------------------------------- | 30 September 2008 | Shares and Votes | % of | | | | Shares and | | | | Votes | -------------------------------------------------------------------------------- | 1 | ATINE GROUP OY | 7 407 406 | 24,70947 | -------------------------------------------------------------------------------- | 2 | BALTISKA HANDELS A.B. | 3 703 704 | 12,35474 | -------------------------------------------------------------------------------- | 3 | SUOMEN TEOLLISUUSSIJOITUS OY | 2 500 000 | 8,33945 | -------------------------------------------------------------------------------- | 4 | SVENSKA HANDELSBANKEN AB (PUBL) | 2 500 000 | 8,33945 | | | FILIALVERKSAMHETEN I FINLAND | | | -------------------------------------------------------------------------------- | 5 | JUANKOSKEN KEHITYSMASUUNI OY | 1 891 694 | 6,31027 | -------------------------------------------------------------------------------- | 6 | FINNVERA OYJ | 1 875 000 | 6,25459 | -------------------------------------------------------------------------------- | 7 | YLITALO JUKKA | 1 137 007 | 3,79281 | -------------------------------------------------------------------------------- | 8 | SALONAHO HARRY | 935 000 | 3,11895 | -------------------------------------------------------------------------------- | 9 | ENTERPACK OY | 698 253 | 2,32922 | -------------------------------------------------------------------------------- | 10 | SAVON VOIMA OYJ | 371 600 | 1,23958 | -------------------------------------------------------------------------------- | 11 | SELIGSON & CO PHOENIX | 325 060 | 1,08433 | -------------------------------------------------------------------------------- | 12 | KESKINÄINEN ELÄKEVAKUUTUSYHTIÖ | 320 500 | 1,06912 | | | ILMARINEN | | | -------------------------------------------------------------------------------- | 13 | OKSANEN MARKKU | 270 687 | 0,90295 | -------------------------------------------------------------------------------- | 14 | VIRALA OY AB | 115 042 | 0,38376 | -------------------------------------------------------------------------------- | 15 | KARGOL OY AB | 112 743 | 0,37609 | -------------------------------------------------------------------------------- | 16 | ÅBACKA MIKAEL LEIF ERIK | 111 111 | 0,37064 | -------------------------------------------------------------------------------- | 17 | PELTOKANGAS RAIMO | 109 000 | 0,36360 | -------------------------------------------------------------------------------- | 18 | MOLIN LEO | 90 000 | 0,30022 | -------------------------------------------------------------------------------- | 19 | SALMINEN URPO KUOLINPESÄ | 81 097 | 0,27052 | -------------------------------------------------------------------------------- | 20 | KONSTSAMFUNDET FÖRENINGEN RF | 80 100 | 0,26720 | -------------------------------------------------------------------------------- | | Total | 24 635 004 | 82,17695 | -------------------------------------------------------------------------------- | | Shares issued total | 29 977 999 | | -------------------------------------------------------------------------------- The interim report has been prepared in accordance with the requirements of IAS 34, Interim Financial Reporting. The accounting policies for the interim report are compatible with those for the financial statements prepared on 31 December 2007. The consolidated reconciliations include the subsidiary Juantehtaan Ympäristö Oy and the associated companies Koillis-Savon Ympäristöhuolto Oy and Juankosken Biolämpö Oy. The above figure have not been audited. The above figures have been rounded and may therefor differ from those given in the official financial statements. STROMSDAL CORPORATION Board of Directors For further information, please contact: Mikael Åbacka, Managing Director Tel. +358 400 737 452 mikael.abacka@stromsdal.fi DISTRIBUTION Helsinki Stock Exchange Major media www.stromsdal.com STROMSDAL is a forest based industry company and its board mill is located in Juankoski, Finland. Stromsdal's sales and customer service network covers more than 30 countries, mainly in Europe. For demanding printing jobs Stromsdal offers its customers premium-quality graphical boards - GraphiArt Duo and GraphiArt Pro - with excellent combination of printability, brightness and stiffness. For food-packaging Stromsdal offers its speciality environmentally friendly product - Tecta - a dispersion coated barrier board, which is 100 per cent plastic-free, bio degradable and fully recyclable. Stromsdal's shares are listed on the Small Cap segment of the Helsinki Stock Exchange (NASDAQ OMX Helsinki Ltd) under the company code STM1V. STROMSDAL CORPORATION Juankoskentie 7 A, P.O. Box 33, FI-73501 Juankoski Tel. +358 20 710 9200, Fax. +358 20 710 9210 www.stromsdal.com