PANOSTAJA GROUP INTERIM REPORT November 1, 2010-July 31,

Panostaja Oyj Stock Exchange Bulletin, September 7, 2011 10:00 a.m.

PANOSTAJA GROUP INTERIM REPORT November 1, 2010–July 31, 2011

The net sales for the third quarter: MEUR 39.5, growth 14%
Operating profit for the third quarter: MEUR 2.2, growth 96%

THIRD QUARTER, MAY–JULY 2011

Net sales MEUR 39.5 (MEUR 34.8), growth 14%
Operating profit MEUR 2.2 (MEUR 1.1), growth 96%
Operating profit before taxes MEUR 1.2 (MEUR 0.5)
Earnings per share (undiluted) 0.5 cents (-0.3 cents)
Cash flow from business operations MEUR 3.5 (MEUR 1.0).
The MEUR 4.7 growth in net sales resulted from the business acquisitions realized during the previous financial period, from the operative development of the digital printing services, and from the recovery of the engineering industry. The impact of the acquisitions on the net sales for the third quarter stood at MEUR 1.2.
The MEUR 1.1 increase in operating profit was primarily the result of growth in net sales.

NOVEMBER 2010–JULY 2011

Net sales MEUR 118.1 (MEUR 97.6), growth 21%
Operating profit MEUR 4.5 (operating loss MEUR 0.8)
Operating profit before taxes MEUR 2.3 (MEUR -0.6)
Earnings per share (undiluted) 1.1 cents (-3.8 cents)
Equity per share EUR 0.66 (EUR 0.64)
Equity ratio 34.0 % (32.8%)
Cash flow from business operations MEUR 3.4 (MEUR 0.6).

Panostaja will specify its result management procedures as the result for the financial period. In 2011, the Group’s net sales are expected to grow approx. 15–20% over the previous year. The profitability of the business areas is estimated to improve significantly resulting in approx. MEUR 2.2–3.0.

The previous result control on June 8, 2011: In 2011, the Group’s net sales are expected to grow approx. 15–20% over the previous year. The profitability of the business areas is estimated to improve significantly resulting in a clearly positive result for the financial period.

Panostaja Oyj’s subsidiary Takoma Oyj altered its result control scheme in June. The bankruptcy petition of Moventas Oy and the business reorganization of its subsidiaries Moventas Wind Oy and Moventas Santasalo Oy have a negative impact on Takoma’s result expectations for the 2011 financial period. Takoma has receivables from the parent company and the subsidiaries that applied for reorganization.

Takoma changed its forecast with regard to operating profit. The full realization of the risk connected to the aforementioned receivables, and the uncertainty as to the continuation of the customer relationship resulted in the Takoma’s operating profit for 2011 being estimated at zero. In its previous result control, Takoma anticipated the net sales to increase significantly during the Group’s 2011 financial year. New customer accounts, recovering demand and operational streamlining were expected to lead to a positive operating profit for 2011.

In the preliminary ruling on the Equity Rebate in respect of Takoma Oyj shares in spring 2008, the Tax Office for Major Corporations decided on the basis of an overall assessment that Panostaja was a capital investor within the meaning of Section 6, Subsection 1 of the Finnish Business Tax Act. For capital investors, capital gains from fixed asset shares are considered taxable income.

Due to the said preliminary ruling, the Tax Office for Major Corporations, in its taxation by direct assessment in 2007, regarded Panostaja Oyj as a capital investor in the aforementioned sense and taxed the company’s certain profits gained from the sale of shares in fixed assets. Panostaja Oyj submitted a claim for rectification over the 2007 taxation to the Tax Rectification Board claiming that the capital gain from fixed asset shares should be exempt from tax. The Tax Rectification Board denied Panostaja Oyj’s claim in August 2009. Panostaja Oyj appealed the decision to the Administrative Court of Helsinki.

In June, Panostaja Oyj was informed that the Administrative Court of Helsinki had rejected the appeal. The Administrative Court considers Panostaja Oyj as a capital investor within the meaning of the Finnish Business Tax Act. Panostaja Oyj has applied for the right to appeal the decision with the Supreme Administrative Court.

Key figures	05/11-07/11	05/10-07/10	11/10-07/11	11/09-07/10
Net sales, MEUR €	39.5	34.8	118.1	97.6
Operating profit, MEUR €	2.2	1.1	4.5	0.8
Profit before taxes, MEUR €	1.2	0.5	2.3	-0.6
Earnings per share (undiluted), cents	0.5	-0.3	1.1	-3.8
Equity per share, EUR			0.66	0.64

Financial position and cash flow:		31 Jul 2011	31 Jul 2010	31 Oct 2010
Net liabilities, MEUR €		47.2	47.8	48.3
Gearing, %		97.8	111.2	114.7
Equity ratio, %		34.0	32.8	31.9
Cash flow from business operations, MEUR		3.4	0.6	1.3

In the financial statement, the profit from discontinued business operations and the profit from continuing business operations have been separated in accordance with the IFRS standard. Unless otherwise specified, the figures listed in this interim report for the 2011 financial period and the reference year 2010 concern the Group’s continuing operations. Therefore, they do not include the Environmental Technology sector, which was sold in April.

MARKET SITUATION

On the whole, Panostaja Group’s business operations continued their positive trend through the third quarter, even though there was considerable variation in the development of different segments. The Group’s management will focus on improving the profitability of these few weak segments. The overall economic situation has become more uncertain, but Panostaja has remained confident that positive development will continue for the remainder of the financial year. There were some clear sights of reinvigoration in the corporate acquisition market already during the second quarter and amount of potential targets has continued to increase, even though the current situation is fairly stagnant due to the uncertainty of the overall economic climate.

FINANCIAL DEVELOPMENT

PANOSTAJA GROUP

MAY-JULY 2011

Panostaja Group’s net sales were MEUR 39.5 (MEUR 34.8) at the end of the quarter. The growth in net sales over the third quarter resulted particularly from the business acquisitions realized during the previous financial period, from the operative development of the digital printing services, and from the recovery of the engineering industry. The impact of the corporate acquisitions on the net sales for the third quarter stood at MEUR 1.2. Net sales increased especially in the Digital Printing Services, Takoma, and Heat Treatment segments.

Of the Group’s twelve segments engaged in business, ten exceeded the net sales for the previous year. Correspondingly, two fell short of the prior levels. Turnover decreased in the Fittings and Technochemical segments. Operating profit increased in seven segments. During the third quarter, net sales increased in the following segments: Digital Printing Services, Value-added logistics, Spare Parts for Motor Vehicles, Heat Treatment, Carpentry Industry, Supports, and Technochemical.

In the third quarter, the Group’s operating profit was MEUR 2.2 (MEUR 1.1 operating profit) and profit before taxes was MEUR 1.1 (MEUR 0.5). The operating profit margin was 5.6% (3.2%). The MEUR 1.1 increase in operating profit was primarily the result of growth in net sales.

NOVEMBER 2010-JULY 2011

Panostaja Group net sales were MEUR 118.1 (MEUR 97.6) at the end of the period under review. Export amounted to MEUR 9.7, i.e. 8.2% of the turnover. Corporate acquisitions realized during the previous quarter affected the MEUR 20.5 increase in operating profit by MEUR 13.5.

Of the Group’s twelve segments engaged in business, ten exceeded the cumulative net sales for the previous year. Two fell short of the prior levels. Correspondingly, nine segments showed an increase and three a decrease in cumulative operating profit from the previous year.

The operating profit was MEUR 4.5 (MEUR 0.8). The operating profit margin was 3.8% (0.8%). The MEUR 3.6 increase in operating profit was primarily the result of growth in net sales and of corporate acquisitions realized over the previous financial period. The effect of the acquisitions on the growth in operating profit was MEUR 1.0. Operating profit improved particularly in the following segments: Safety, Heat Treatment, and Value-added Logistics.

The loss on discontinued business operations was MEUR -0.4. Ecosir Group Oy separated from the Group in April 2011. For the reference year, the net sales on discontinued operations stood at MEUR 2.4, while the operating loss was MEUR -2.6, and the loss for the financial period totaled MEUR -2.2. The Group’s financial statement does not include a figure indicating the profit/loss from discontinued operations for the reference year 2010. Instead, the loss (MEUR -2.2) is separately listed in the Group’s financial statement on row Earnings from discontinued operations. The loss from discontinued operations for the third quarter of 2010 was MEUR -0.2.

Before separating the discontinued operations from continued operations in the financial statement, the Group’s net sales in 2010, for the review period, was MEUR 100.1, while the operating loss stood at MEUR -1.8, and the operating profit before taxes was MEUR -3.4.

The net financing costs of the Group for the review period were approximately MEUR -2.2 (MEUR -1.7). The financial position and liquidity of Panostaja Group remained good. In the period under review, the financial expenses were burdened by the interest costs of repurchased shares of subordinated loan, which amounted to MEUR 0.7.

Personnel

	31 Jul 2011	31 Jul 2010	31 Oct 2010
Average number of employees	1,032	888	967
Employees at the end of the period	1,094	1,023	970

Employees in each segment at the end of the period	31 Jul 2011	31 Jul 2010	31 Oct 2010
Safety	180	158	151
Digital Printing Services	328	256	256
HEPAC Wholesale	37	43	37
Takoma	195	173	168
Value-added Logistics	131	149	123
Fittings	32	37	32
Spare Parts for Motor Vehicles	36	30	31
Heat Treatment	61	65	64
Carpentry Industry	32	37	35
Supports	15	16	16
Fasteners	25	24	24
Technochemical	12	15	14
Environmental Technology		10	9
Other	10	10	10
Group in total	1,094	1,023	970

GROUP STRUCTURE CHANGES

In December 2010, Panostaja Oyj’s subsidiary Digiprint Finland Oy purchased the entire share capital of Suomen Graafiset Palvelut Oy Ltd, which offers print products and services. The net sales of Suomen Graafiset Palvelut Oy Ltd during the financial year ending in April 2010 totaled MEUR 3.2, and the company employed 30 people. The company’s domicile is Kuopio and it has an office in Helsinki.

On June 21, 2011, Digiprint Finland Oy’s subsidiary Kopijyvä Oy purchased the entire share capital of Microtieto Suomi Oy. Through the acquisition, Kopijyvä strengthened its market share in the field of microfilming and microprinting. The company operates in Espoo and employs five people.

At the end of April, the acting management and other shareholders of Ecosir Group Oy purchased EcoSir Group shares held by the Panostaja Oyj to an extent that reduced Panostaja Oyj’s stake in the company to 49%, whereby Ecosir Group Oy is no longer a subsidiary of Panostaja Oyj. In conjunction with the transaction, Panostaja Oyj made an investment of approx. MEUR 2.5 in Ecosir Group Oy’s invested unrestricted equity fund. The investment was carried out by converting MEUR 2.4 of Panostaja Oyj’s receivables and partially by means of a new investment. The arrangement did not significantly affect Panostaja Group’s profit/loss. After the transaction, Panostaja Oyj’s receivables from Ecosir Group total MEUR 2.2. The terms of the receivables match those of subordinated loans. In the future, Panostaja Oyj will report Ecosir Group Oy as an associated company. After the transaction, the purchase cost of associated company shares in Panostaja Oyj’s balance sheet is at MEUR 0.2.

In June, Takoma Oyj’s subsidiary Takoma System Oy purchased the business operations of TL-Tuotanto Oy, a Keminmaa-based company specializing in hydraulics and automation systems, for a price of approx. MEUR 0.8. The net sales of TL-Tuotanto Oy during the financial year ending in December 2010 totaled MEUR 3.4, and the company employed approx. 25 people.

At the end of March, Jouni Arolainen (age 43) was invited to serve as Vindea Oy’s CEO. Before the new assignment, Arolainen worked as the deputy CEO of Vindea Oy. The previous CEO, Risto Rousku, will take a new position outside the Group. Previously, Panostaja Oyj had a 66.1% holding in Vindea Oy’s parent company Vindea Group Oy. As a result of the CEO change, the stake in Vindea Group Oy increased to 70.0%. In conjunction with the change, Risto Rousku relinquished his shareholding and Jouni Arolainen increased his holding to 30%.

SEGMENT INSPECTION

The business operations of Panostaja Group are reported in thirteen segments: Safety, Digital Printing Services, HEPAC Wholesale, Takoma, Value-added Logistics, Fittings, Spare Parts for Motor Vehicles, Heat Treatment, Carpentry Industry, Supports, Fasteners, Technochemical and Other (parent company).

NOVEMBER–JULY

Net sales in the Safety segment grew by MEUR 2.0 from MEUR 15.6 to MEUR 17.6, while the operating profit rose from MEUR 0.0 to MEUR 0.9. Improvement in net sales and profitability were given impetus by increased customer demand and operative efficiency. A corporate acquisition took place in the segment during the period under review: the Group purchased the business operations of the Lahti-based Lukkohuolto Lempiäinen.

Net sales in the Digital Printing Services segment grew by MEUR 8.0. Net sales for the Digital Printing Services segment grew from MEUR 15.0 to MEUR 23.0 and operating profit from MEUR 2.2 to MEUR 2.8. In addition to the development of operative functions, the acquisition of Domus Print Oy in the previous financial period and the acquisition of Suomen Graafiset Palvelut Oy on 16 December 2010 had a positive impact on net sales and operating profit.

Net sales of the HEPAC Wholesale segment increased from MEUR 14.1 to MEUR 14.4, with operating profit remaining on the level of the previous year at MEUR 0.1. Market uncertainty has curbed renovation building. During the period under review, new building projects have been postponed and sales have taken longer to complete.

Net sales in the Takoma segment grew by MEUR 7.8 from MEUR 12.3 to MEUR 21.0. Operating loss decreased from MEUR -1.1 to MEUR -0.8. The growth in net sales was nearly entirely caused by Takoma Gears Oy, which was acquired during the previous financial period. The bankruptcy petition of Moventas Oy, and the business reorganization of its subsidiaries Moventas Wind Oy and Moventas Santasalo Oy, had a negative impact on Takoma’s result expectations for the 2011 financial period. Takoma has receivables from the parent company and the subsidiaries that applied for reorganization. Due to the bankruptcy, Takoma altered its result control scheme. Within the segment the strengthening of order books has stalled, particularly with regard to shipbuilding industry.

Net sales in the Value-added Logistics segment increased from MEUR 11.3 to MEUR 11.4, operating loss of MEUR -0.5 turned to a MEUR 0.1 operating profit. The volumes of customers in the technology industry have clearly increased, but the competitive situation within the segment has become more severe.

Net turnover in the Fittings segment declined from MEUR 9.2 to MEUR 8.4, and the MEUR 0.5 operating profit dropped to MEUR 0.3. The uncertainty of the market has also affected the operations of the Helat segment. The demand among construction and furniture fitting customers has not recovered as expected during the review period.

Net sales in the Spare Parts for Motor Vehicles segment grew from MEUR 6.1 to MEUR 6.8 and operating profit increased from MEUR 0.5 to MEUR 0.7. The demand for original spare parts has remained good for the entire review period. The expansion of the electronic ordering system has increased operational efficiency and accelerated the sale of spare parts.

During the period under review, net sales in the Heat Treatment segment grew by MEUR 1.7, while operating profit increased by MEUR 1.4. Net sales rose from MEUR 4.6 to MEUR 6.3, and operating profit increased from MEUR 0.1 to MEUR 1.5. The demand for heat treatment services and the investments in new equipment stock have shown clear increases. In addition, repair investments in the technology industry clearly affected the growth in this segment.

Net sales in the Carpentry Industry segment increased from MEUR 4.0 to MEUR 4.4. Operating profit grew from MEUR 0.5 to MEUR 0.9. Improvement in net sales and profitability were given impetus by increased customer demand and efficient operative activities. The development was further aided by successful product launches and raising of market share.

Net sales in the Supports segment grew from MEUR 2.5 to MEUR 2.8, while business profit remained at MEUR 0.2. Customer demand in the Supports segment improved in the third quarter after a less than favorable start to the financial period.

Net sales in the Fasteners segment grew from MEUR 2.0 to MEUR 2.3, while operating loss improved from MEUR -0.2 to MEUR 0.0. Customer demand in the segment has remained low, but the segment has nonetheless increased its net sales and operating profit. The competitive situation for the Supports segment, too, has become more severe.

Net sales in the Technochemical segment declined from MEUR 1.5 to MEUR 1.1. Operating loss grew from MEUR -0.1 to MEUR -0.3. Customer demand has increased slightly but the development has been slower than expected.

There were no significant changes in the net sales of the Other segment. Ecosir Group Oy separated from the Group in April. In the future, the parent company will report Ecosir Group Oy as an associated company. In the period under review, two associated companies, Ecosir Group Oy and PE Kiinteistörahasto I Ky, issued reports to the parent company. The value of the associated companies’ shares in the parent company’s balance totals approx. MEUR 2.6.

INVESTMENTS AND FINANCING

The gross investments of the Group in the review period were approximately MEUR 7.7 (MEUR 8.5). The Group’s largest single investments were the acquisition of Suomen Graafiset Palvelut Oy Ltd and TL-Tuotanto Oy, as well as purchasing Takoma’s new production facilities in Akaa. The procurement of the facilities in Akaa was financed with a redemption agreement made with the City of Akaa. The goodwill of the Group has declined as a result of the acquisition of Suomen Graafiset Palvelut Oy Ltd, the adjustment in the sale price of Bewator Oy, and the sale of Ecosir Group Oy.

The assets of the Group were MEUR 15.6 (MEUR 12.5). The Group’s equity ratio was 34.0% (32.8%) and net liabilities with interest totaled MEUR 47.2 (MEUR 47.8).

During the review period, the Group reorganized its financing loans in several segments. The value of the reorganized loans amounts to approx. MEUR 13.

The Group’s liquidity is good. Cash flow from business operations in the period under review was MEUR +3.4 (MEUR 0.6). The third quarter’s share of the positive cash flow was MEUR +3.5 (MEUR 1.0). Panostaja Oyj repurchased shares of the 2006 convertible subordinated loan at a value of MEUR 11.6. In the period under review, the cash flow was burdened by the interest costs of the repurchased shares of a subordinated loan, which amounted to MEUR -0.7.

The Board of Directors approved new 2011 convertible subordinated loan issues totaling MEUR 15. The convertible subordinated loan is divided into equity and liabilities. The equity component is calculated by determining the difference between the monetary amount obtained through the loan issue and the current value of the loan. The equity component of the 2011 convertible subordinated loan, EUR 598,000, has been entered in the invested unrestricted equity fund.

At the end of the review period, Panostaja Oyj’s convertible subordinated loan amounted to MEUR 20.6 of the net liabilities (MEUR 17.2 at the beginning of the period).

The return on equity was 4.5% (-7.3%). The return on investment was 5.4% (-1.9%).

Financial position:
MEUR	31 Jul 2011	31 Jul 2010	31 Oct 2010

Interest-bearing liabilities	67.4	64.5	63.9
Interest-bearing receivables	4.6	4.2	4.3
Cash and cash equivalents	15.6	12.5	11.3
Net interest-bearing liabilities	47.2	47.8	48.3
Equity (belonging to the parent company’s shareholders as well as minority shareholders)	48.2	43.0	42.1

Gearing ratio, %	97.8	111.2	114.7
Equity ratio, %	34.0	32.8	31.9
Return on equity, %	4.5	-7.3	-6.9
Return on investment, %	5.4	-1.9	-1.1

The Annual General Meeting (January 27, 2011) approved the dividend distribution proposed by the Board. The dividend paid was EUR 0.05 per share. The record date for dividend distribution was February 1, 2011 with payment from February 8, 2011. The dividend paid to the parent company’s shareholders totaled MEUR 2.6.

SHARE PRICE DEVELOPMENT AND SHARE OWNERSHIP

Panostaja Oyj’s share price fluctuated between EUR 1.32 and EUR 1.75 during the period under review. The exchange of shares totaled 3,221,446 individual shares, which represents 6.5% of the share capital. The July share closing rate was EUR 1.12. The market value of the company's share capital at the end of July was MEUR 57.9 and the company had 3,870 shareholders (4,041).

Development of share exchange	7-9/2011	7-9/2010	1-9/2011	1-9/2010
Exchanged shares, 1,000 pcs	489	739	3,221	4,410
% of share capital	1.0	1.6	6.5	9.6

Share		31 Jul 2011	31 Jul 2010	31 Oct 2010
Shares in total, 1,000 pcs		51,733	47,403	47,403
Own shares, 1,000 pcs		613	1,269	1,262
Closing rate		1.12	1.41	1.46
Market value, MEUR		57.9	66.8	69.2
Shareholders		3,870	4,041	4,050

The Board decided on December 16, 2010 on a new long-term incentive and commitment plan for the members of the Management Team. During the review period, Panostaja sold 623,561 of its own individual shares to the members of the Management Team, and the latter acquired a total of 950,000 personal or controlling Panostaja shares specified as the maximum quantity in the company’s ownership system.

The Management’s share ownership within the incentive and commitment-building system is distributed as follows:
Pravia Oy (Juha Sarsama)                              350,000 shares
Artaksan Oy (Simo Mustila)                         200,000 shares
Heikki Nuutila                                                200,000 shares
Comito Oy (Tapio Tommila)                             200,000 shares
Total                                                             950,000 shares

The members of the Management Team have partly financed their investments themselves and partly through company loans, and they carry genuine corporate risk with respect to the investment they have made in the system. In order to enable the procurement of the shares and as part of the system, Panostaja’s Board decided to grant a loan with interest in the amount of EUR 1,250,000 maximum to the Management Team members or to the companies in which they have a controlling interest. The Management raised an interest-bearing loan in the total amount of EUR 1,207,127.84 to finance the acquisition.

During the period 2011–2015, members of the Management Team participating in the system may be granted a maximum of 237,500 Panostaja shares as a bonus on the basis of the achievement of set targets. A possible bonus may also be paid in cash to cover taxes and tax-like payments arising from the bonus. Members of the Management Team are obliged not to sell shares received as a bonus for a period of 27 months after having received them.

During the period under review, Panostaja Oyj received four notifications pursuant to Chapter 2, Section 9 of the Securities Markets Act concerning changes to ownership in a company.

On December 16, 2010, Panostaja Oyj announced the buyback of the 2006 convertible subordinated loan and the issue of a new 2011 convertible subordinated loan. On December 16, 2010, Panostaja Oyj received a notice from Etera Mutual Pension Insurance Company, since Etera’s possible future holding in Panostaja Oyj shall be, in total, 3,318,182 shares and votes when Etera uses the rights of exchange respective to Panostaja’s 2011 convertible subordinated loan in full. This holding falls below 10% of Panostaja Oyj’s share capital and number of votes. The holding corresponded to 6.74% of Panostaja Oyj’s post-exchange number of shares and votes by the date of the announcement, taking into account the shares issued.

Furthermore, on December 21, 2010, Panostaja Oyj received a notice from Etera Mutual Pension Insurance Company, since Etera’s possible future holding in Panostaja Oyj shall be, in total, 6,077,182 shares and votes if Etera uses the rights of exchange respective to Panostaja’s 2011 convertible subordinated loan in full. This holding exceeds 10% of Panostaja Oyj’s share capital and number of votes. The shareholding is equivalent to 11.42% of the number of Panostaja Oyj’s post-exchange shares and votes, taking into consideration the shares issued by the date of the bulletin.

As a result of the options issue, on 23 December 2010, the company received Mauno Koskenkorva’s notice of change of holdings. Mauno Koskenkorva’s allotment of Panostaja Oyj's combined number of shares and votes fell under 5%. Mauno Koskenkorva’s allotment totaled 2,375,173 shares. The holding corresponded to 4.98% of Panostaja Oyj’s post-exchange number of shares and votes by the date of the announcement, taking into account the shares issued.

As a result of the issue of shares, the company received Maija Koskenkorva’s notice on January 11, 2011. Maija Koskenkorva’s allotment of Panostaja Oyj's combined number of shares and votes fell under 10%. Maija Koskenkorva's allotment was 5,071,742 shares, which represents 9.80% of Panostaja Oyj's share capital and number of votes.

ADMINISTRATION AND GENERAL MEETING

Panostaja Oyj’s Annual General Meeting was held on 27 January 2011 in Tampere. Jukka Ala-Mello, Satu Eskelinen, Hannu Martikainen and Hannu Tarkkonen were again selected to Panostaja Oyj’s Board of Directors. Mikko Koskenkorva and Eero Eriksson were selected to the Board as new members. Jukka Ala-Mello was selected as Chairperson immediately after the General Meeting, in the Board’s organizational meeting. A Vice Chairperson was not chosen. Authorized Public Accountant Eero Suomela and authorized body of public accountants PricewaterhouseCoopers Oy were selected as general chartered accountants, with Authorized Public Accountant Janne Rajalahti as the responsible public accountant.

The General Meeting approved the closing of the November 1, 2009–October 31, 2010 accounts as well as the proposal of the Board to transfer the profit of the financial period to the profit funds and that dividends would be distributed at a rate of EUR 0.05 per share. The record date for dividend distribution was February 1, 2011 with a payment from February 8, 2011. In addition, the Annual Meeting authorized the Board of Directors to decide on the possible allocation of assets to shareholders in accordance with its discretion on the strength of the company's financial status, either as dividends from profit funds or as allocation of assets from the invested unrestricted equity fund. On the basis of this authorization, the maximum allocation of assets performed totals no more than MEUR 4 (EUR 4,000,000). The authorization includes the right of the Board to decide on all other terms and conditions relating to the said asset distribution. The authorization will remain valid until the next Annual General Meeting.

In addition, the General Meeting granted exemption from liability to the members of the Board and to the CEO. It was decided at the Annual Meeting that the Chairperson of the Board would be paid EUR 40,000 as compensation for the term that begins at the end of the Meeting and ends at the end of the 2012 Annual General Meeting, and that the other members of the Board would obtain compensation for the year totaling EUR 20,000. It was further resolved at the General Meeting that approx. 40% of the compensation remitted to the members of the Board would be paid on the basis of the share issue authorization given to the Board, by issuing company shares to each Board member if the Board member does not own more than one percent of all the company’s shares on the date of the General Meeting. If the share of ownership of a Board member on the date of the General Meeting is over one percent of all company shares, the compensation will be paid in full in monetary form.

Moreover, the Annual Meeting approved the proposal of the Board to revise Section 8 of the company’s Articles of Association as follows:

“Section 8 - Invitation to the Annual General Meeting and participation therein

The invitation to the Annual General Meeting must be published on the Company’s website at the earliest two (2) months and no later than three (3) weeks prior to the Meeting, as well as at least nine days before the record date of the General Meeting. The Board of Directors may also, in accordance with its discretion, announce the General Meeting in one or more newspapers.

In order to be able to participate in the General Meeting, the shareholder must register with the company no later than the day stated in the invitation to the meeting, which may be no earlier than ten (10) days prior to the General Meeting.”

In addition, the Annual General Meeting resolved to cancel the authorization concerning the acquisition of personal shares given at the General Meeting of January 27, 2010, and authorized the Board of Directors to decide on its own regarding the acquisition of shares so that personal shares are acquired in one or several installments and personal shares may be acquired, on the basis of authorization, to the maximum total of 4,700,000. Personal shares may be obtained on the basis of authorization only with unrestricted equity.

Personal shares can be acquired other than in accordance with the proportion of ownership of the shareholders in public trade arranged by NASDAQ OMX Helsinki Oy, at the prevailing market price at the time. In acquiring shares, the rules of NASDAQ OMX Helsinki Oy and Euroclear Finland Oy are observed.

The authorization shall be in effect for 18 months from its issue.

The Board of Directors has not used the authorization granted by the Annual Meeting to acquire its own shares during the review period.

The General Meeting also resolved to authorize the Board of Directors to decide on share distribution as well as rights of option and the issue of other special rights providing entitlement to shares. The total number of shares issued on the basis of authorization can be no more than 30,000,000. The provision of share issues and rights of option as well as that of other rights entitling one to shares may occur on an exceptional basis to shareholders’ right to subscribe for new shares (directed issue).

The authorization issued at the General Meeting on December 18, 2007 to decide on share issues and the provision of special rights with respect to share entitlement is, by similar authorization, cancelled. The authorization shall be valid until January 27, 2016.

SHARE CAPITAL AND OWN SHARES

At the close of the period under review, Panostaja Oyj’s share capital was EUR 5,568,681.60. The total number of shares is 51,733,110.

The total number of shares held by the company at the end of the review period was 612,880 individual shares (at beginning of review period: 1,262,504). Personal shares corresponded to 1.2% of the share quantity and the number of votes at the end of the entire review period.

In accordance with the decisions of the General Meeting on January 27, 2010 and the Board, Panostaja Oyj relinquished a total of 6,777 individual shares as meeting compensation to the members of the Board on December 17, 2010. As per the decisions of the General Meeting on January 27, 2011 and the Board, a total of 9,373 shares were issued on March 10, 2011, followed by a total of 9,913 on June 9, 2011.

In total, 330,000 share subscriptions were approved by the Board on 15 December 2010. These are based on the rights to option given to the company management in 2006. The share subscriptions were made with the A-options of the options program for the year 2006. The new shares were entered in the Trade Register on December 23, 2010. The subscription price of the shares was entered in accordance with the option terms as EUR 0.12 into the share capital, and the remaining part into the fund for unrestricted invested equity.

On December 16, 2010, the Board of Directors decided on the basis of the authorization given at the Annual General Meeting on December 18, 2007, on an issue of shares in which the company offered, in a manner exceptional to the shareholders’ right to subscription, a maximum of 4,000,000 new company shares for registration by domestic institutional investors. The Board approved on December 21, 2010 the subscriptions made during the issue of shares. The issue of shares-based subscription price was EUR 1.45 per share, so that the overall yields of the share issue prior to sales commission as well as the costs totaled EUR 5,800,000. The new shares were entered in the Trade Register on January 11, 2011.

As a result of the subscriptions rendered with the issue of shares and A-options of the 2006 option program, the total number of company shares rose to 51,733,110 shares.

SUBORDINATED LOANS

Panostaja Oyj repurchased shares of the 2006 convertible subordinated loan at a value of EUR 12,288,658 (including interest). The transaction took place on February 7, 2011. The loan shares were bought back at a rate of 100%, with interest up to the date of the transaction. The amount repurchased by the company corresponds to 54.5% of the original total value of the convertible subordinated loan maturing in 2012.

The transaction is connected to the capital arrangement announced on December 16, 2010, with regard to which the company has previously carried out a share issue of 4,000,000 shares and the issue of a new convertible subordinated loan valued at MEUR 15. The transaction was completed to improve the maturity schedule of the company’s non-current liabilities. The loan shares were nullified on February 28, 2011.

After this, an amount of EUR 5,631,250 of the 2006 convertible subordinated loan remains (EUR 17,212,500 at the beginning of the financial period). Each EUR 106,250 share of the 2006 convertible subordinated loan entitles the holder to exchange the share for 62,500 company shares.

The Board utilized the authorization it received in the General Meeting on December 18, 2007 to take out a subordinated loan from domestic institutional investors. The Board approved a total of EUR 15,000,000 subscriptions for the 2011 convertible subordinated loan, and the 2011 loan was subscribed for in full. The interest rate for the loan is 6.5%, and the loan period is February 7, 2011–April 1, 2016. The original share exchange rate is EUR 2.20, and the loan shares can be exchanged for no more than 6,818,181 company shares. The share exchange rate will be entered into the company’s invested unrestricted equity fund.

Trade on the 300 loan shares of the convertible subordinated loan began on the Nasdaq OMX Helsinki stock exchange on February 23, 2011. The Financial Supervisory Authority approved the proposal for the public trade of the convertible subordinated loan shares on February 18, 2011.

At the end of the review period, the total sum of Panostaja Oyj’s subordinated loans stood at EUR 20,631,250.

NEAR-FUTURE RISKS AND FACTORS OF UNCERTAINTY

The most significant risks of the Panostaja Group have been described in the financial statement. The risks the Group faces in the near future are mainly tied to the uncertainty resulting from the global economic situation as well as its possible impact on achieving the goals set for the various segments. The instability of the economic situation may lead to a recurrent decline in customer demand as well as the postponement of major investments, particularly in segments serving the technology sector, which may result in a need for consolidated goodwill write-downs. In the current financial period, credit loss risks represent a factor of uncertainty in some of the segments.

EVENTS AFTER THE REVIEW PERIOD

Ari Suomalainen, the CEO of Suomen Kiinnikekeskus Oy, which belongs to the Panostaja Group, was invited on August 26, 2011 to become a shareholder in the company. Mr. Suomalainen has been the CEO of Suomen Kiinnikekeskus Oy since 2009. He has served as a CEO in the Group since 1991.

On September 6, 2011 Mr. Hannu Rantanen, 51, has been appointed Managing Director at Suomen Helakeskus Oy, which is part of the Panostaja group. Prior to this, Mr. Rantanen has worked e.g. as an Investment Director at Oy Wedeco Management Ab and as a Managing Director at Helatukku Finland Oy. Mr. Rantanen takes up his role as Managing Director on 12th September 2011. Mr. Pekka Koskenkorva, former Managing Director at Suomen Helakeskus Oy, will not continue to work within a group.

PROSPECTS FOR THE REMAINDER OF THE FINANCIAL PERIOD

The Panostaja group will continue to focus on its business idea following its fundamental business strategy and on the development of existing business segments. In the coming years, the retirement of the ‘baby boom’ generation, ever worsening changes in the business environment and globalization will bring to the market a large number of companies that can be acquired. Active development of shareholder value and financial opportunities create a solid foundation for significant operational expansion. The increasing range of SMEs operating in traditional fields enables both expansion into new business areas and growth in existing ones.

Economic trend expectations in the fields of existing business areas are strongly tied to the prospects of customer enterprises. The current economic trend expectations are uncertain, and the growth forecast has generally been cut due to the credit crisis in the euro area and the decelerated economic growth of the United States. In the various business areas of Panostaja Group, the prospects still vary from cautiously positive to neutral. The market still provides sufficient opportunities for corporate acquisitions, and Panostaja Group aims to implement its growth strategy by means of controlled acquisitions. In addition, the divestment of certain business areas is being considered in order to release capital for new projects.

Panostaja Oyj

Board of Directors

For further information, contact Juha Sarsama, CEO: tel. +358 (0)40 774 2099.

Panostaja Oyj
Juha Sarsama
CEO

All forecasts and assessments presented in this financial statement bulletin are based on the current outlook of the Group and the Management of the various business areas with regard to the state of the economy and its development, and the results attained may be substantially different. This interim report has been prepared in accordance with the IAS 34 regulations.

In the financial statement, the profit from discontinued business operating and the profit from continuing business operations have been separated in accordance with the IFRS standard. Unless otherwise specified, the figures listed in this interim report for the 2011 financial period and the reference year 2010 concern the Group’s continuing operations. Therefore, they do not include the Environmental Technology sector, which was sold in April.

The information in the interim report has not been audited.

FINANCIAL INFORMATION

INCOME STATEMENT	05/11	05/10	11/10	11/09
	-07/11	-07/10	-07/11	-07/10	2010
(EUR 1,000)

Net sales	39,510	34,774	118,121	97,637	137,939
Other operating income	149	45	549	329	1 900
Costs in total	35,926	32,479	109,863	94,035	132,337
Depreciations, amortizations and impairment	1,571	1,235	4,341	3,107	4,575
Operating profit/loss	2,162	1,105	4,466	824	2,927
Financial yields and costs	-907	-675	-2,244	-1,675	-2,373
Share of associated company profits	-84	39	80	220	224
Profit before taxes	1,171	469	2,302	-631	778
Taxes on income	-607	-238	-363	270	362
Profit/loss from continuing operations	564	231	1,939	-361	1,141
Loss from discontinued operations	0	-239	-401	-2,211	-4,346
Profit/loss for the financial period	564	-8	1,538	-2,572	-3,205

Attributable to
Equity holders of the parent company	231	164	559	-1,775	-2,775
Minority shareholders	333	-172	979	-797	-430


Earnings/share from continuing operations
EUR, undiluted	0.005	0.002	0.019	0.009	0.034
Earnings/share from continuing operations
EUR, diluted	0.005	0.002	0.019	0.009	0.034
Earnings/share from discontinued operations
EUR, undiluted	0.000	-0.005	-0.008	-0.048	-0.094
Earnings/share from discontinued
operations EUR, diluted	0.000	-0.005	-0.008	-0.048	-0.077
Earnings/share on continuing and discontinued
operations EUR, undiluted	0.005	-0.003	0.011	-0.038	-0.060
Earnings/share on continuing and discontinued
operations EUR, undiluted	0.005	-0.003	0.011	-0.038	-0.060

EXTENSIVE INCOME STATEMENT

Profit/loss for the financial period	564	-8	1,538	-2,572	-3,205
Translation differences	-19	-15	-6	60	80
Extensive result for the period	545	-23	1,532	-2,512	-3,125

Attributable to
Equity holders of the parent company	212	149	553	-1,715	-2,695
Minority shareholders	333	-172	979	-797	-430

BALANCE SHEET
(EUR 1,000)
ASSETS	07/2011	07/2010	10/2010

Non-current assets
Goodwill	36,561	40,964	39,256
Other intangible goods	5,207	5,041	5,641
Property, plant and equipment	21,28	16,527	16,406
Interests in associates	2,616	2,708	2,387
Other non-current assets	12,53	8,393	8,268
Non-current assets total	78,194	73,633	71,958

Current assets
Inventories	26,895	25,808	24,049
Trade and other receivables without interest	21,588	19,805	24,984
Short-term investments	3	828	833
Cash and cash equivalents	15,623	11,681	10,438
Non-current assets total	64,109	58,122	60,304

Assets in total	142,303	131,755	132,262

EQUITY AND LIABILITIES

Equity attributable to parent company shareholders

Share capital	5,569	5,529	5,529
Share premium reserve	4,646	4,646	4,646
Translation difference	-63	-63	-56
Invested unrestricted equity fund	19,014	11,989	11,574
Retained earnings	4,471	7,484	6,497
Total	33,637	29,585	28,19

Minority interest	14,584	13,456	13,922

Equity total	48,221	43,041	42,112

Non-current liabilities
Deferred tax liabilities	1,78	1,649	1,693
Convertible subordinated loan	19,848	17,014	16,999
Financial liabilities	41,803	41,762	32,573
Non-current liabilities total	63,431	60,425	51,265

Current liabilities
Financial liabilities	6,165	5,964	14,416
Trade payables and other liabilities	24,147	21,973	24,108
Provisions	339	352	361
Current liabilities total	30,651	28,289	38,885

Liabilities total	94,082	88,714	90,15

Equity and liabilities in total	142,303	131,755	132,262

CASH FLOW STATEMENT	07/2011	07/2010	10/2010

Net cash flow from (used in) operations	3,354	618	1,264

Net cash flow from (used in) investments	-7,846	-7,825	-14,333

Loans drawn	21,998	10,414	11,150
Loans repaid	-17,328	-13,175	-9,298
Share issue	6,053	0	0
Disposal of own shares	930	28	38
Paid dividends	-2,804	-5,878	-5,868
Net cash flow from (used in) financing	8,849	-8,611	-3,978

Change in cash flows	4,357	-15,818	-17,047

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(EUR 1,000)	Share capital	Share premium reserve	Invested unrestricted equity fund	Translation differences	Profit funds	Minority interest	Total
Equity 11/1/2009	5,529	4,646	11,876	-123	14,792	14,560	51,280
Cost of share-based payments			17
Profit for the period					-1,775	-797	-2,572
Recorded total profit and costs during the financial period			17		-1,775	-797	-2,555
Dividends paid					-5,533	-367	-5,900
Disposal of own shares			28				28
Translation differences				60			60
Changes in minority interest						60	60
Other changes			68				68
Total changes in equity			96	60	-5,533	-307	-5,684
Equity 7/31/2010	5,529	4,646	11,989	-63	7,484	13,456	43,041

Equity 11/1/2010	5,529	4,646	11,574	-57	6,497	13,923	42,112
Profit for the period					559	979	1,538
Recorded total profit and costs during the financial period					559	979	1,538
Dividends paid					-2,555	-265	-2,820
Share subscription	40		276				316
Share issue			5,738				5,738
Disposal of own shares			930				930
Equity component of convertible subordinated loan			481				481
Reward system			15				15
Translation differences				-6			-6
Changes in minority interest					-30	-53	-83
Total changes in equity	40		7,440	-6	-2,585	-318	4,571
Equity 7/31/2011	5,569	4 646	19,014	-63	4,471	14,584	48,221

KEY FIGURES
	07/2011	07/2010	10/2010
Equity per share, EUR	0.66	0.64	0.61
Earnings/share, diluted, EUR	0.01	-0.04	-0.06
Earnings/share, undiluted, EUR	0.01	-0.04	-0.06
Average number of shares during financial period, 1,000	49,791	46,124	46,127
Number of shares at end of financial period, 1,000	51,733	47,403	47,403
Share issues/CL exchanges during financial period, 1,000	4,330	0	0
Number of shares, 1,000, diluted	59,922	56,249	56,252
Return on equity, %	4.5	-7.3	-6.9
Return on investment, %	5.4	-1.9	-1.1
Gross capital expenditure
To permanent assets, MEUR	7.7	8.5	15.7
% of net sales	6.5	8.5	11.4
Interest-bearing liabilities	67,439	64,479	64,015
Equity ratio, %	34.0	32.8	31.9
Average number of employees	1,032	888	967

GROUP DEVELOPMENT ON A QUARTERLY BASIS
(MEUR)	IFRS	IFRS	IFRS	IFRS	IFRS	IFRS
	Q2/10	Q3/10	Q4/10	Q1/11	Q2/11	Q3/11
Net sales	34.7	34.8	40.2	38.3	40.3	39.5
Other operating income	0.2	0.0	1.6	0.2	0.2	0.1
Costs in total	-32.5	-32.5	-38.2	-36.6	-37.3	-35.8
Depreciations, amortizations and impairment	-1.0	-1.2	-1.5	-1.3	-1.5	-1.6
Operating profit/loss	1.4	1.1	2.1	0.6	1.7	2.2
Financing items	-0.6	-0.6	-0.7	-0.6	-0.8	-0.9
Share of associated company profits	0.2	0.0	0.0	0.1	0.1	-0.1
Profit before taxes	1.0	0.5	1.4	0.1	1.0	1.2
Taxes	-0.1	-0.3	0.1	0.0	0.2	-0.6
Profit from continuing operations	0.9	0.2	1.5	0.1	1.3	0.6
Profit from discontinued operations	-1.3	-0.2	-2.1	-0.1	-0.3	0.0
Profit for the period	-0.4	0.0	-0.6	0.0	1.0	0.6
Minority interest	0.1	-0.2	0.4	0.1	0.5	0.3
Parent company shareholder interest	-0.5	0.2	-1.0	-0.1	0.5	0.3

GUARANTEES GIVEN

EUR 1,000	3Q/2011	3Q/2010	2010
Guarantees given on behalf of Group companies
Corporate mortgages	41,422	39,381	41,257
Securities given	55,792	47,134	58,942
Other liabilities	1,359	346	912

Other rental agreements
In one year	5,911	4,251	5,927
In over one year but within five years maximum	16,401	9,444	13,597
In over five years	4,300	4,143	3,957
Total	26,612	17,838	23,481

The nominal or book value has been used as the value of liabilities.

SEGMENT INFORMATION

	05/11-07/11	05/10-07/10	11/10-07/11	11/09-07/10
NET SALES

Safety	5,803	5,293	17,607	15,562
Digital Printing Services	7,813	5,610	22,997	15,041
HEPAC Wholesale	5,196	5,031	14,382	14,090
Takoma	6,280	4,882	20,081	12,267
Value-added Logistics	3,869	3,858	11,413	11,313
Fittings	2,670	3,163	8,407	9,161
Spare Parts for Motor Vehicles	2,369	2,164	6,822	6,089
Heat Treatment	2,176	1,681	6,338	4,592
Carpentry Industry	1,314	1,228	4,429	3,958
Supports	1,054	890	2,776	2,502
Fasteners	797	738	2,263	2,044
Technochemical	339	447	1,146	1,532
Other	14	13	42	40
Eliminations	-184	-224	-582	-554
Group in total	39,510	34,774	118,121	97,637

OPERATING PROFIT

Safety	344	374	947	-13
Digital Printing Services	1,096	723	2,833	2,237
HEPAC Wholesale	-6	36	69	117
Takoma	-434	-362	-785	-1,101
Value-added Logistics	218	63	111	-537
Fittings	46	67	330	477
Spare Parts for Motor Vehicles	303	287	698	524
Heat Treatment	548	-39	1,450	74
Carpentry Industry	288	206	916	494
Supports	216	138	213	184
Fasteners	8	12	-31	-202
Technochemical	-43	-50	-267	-77
Other	-422	-350	-2,018	-1,353
Group in total	2,162	1,105	4,466	824

SEGMENT INFORMATION BY QUARTER

Net sales (MEUR)	2Q/10	3Q/10	3Q/10	1Q/11	2Q/11	3Q/11
Safety	5.8	5.3	6.3	5.8	6.0	5.8
Digital Printing Services	5.1	5.6	6.7	7.0	8.2	7.8
HEPAC Wholesale	4.8	5.0	5.5	4.8	4.4	5.2
Takoma	4.9	4.9	6.8	6.6	7.2	6.3
Value-added Logistics	3.9	3.8	3.8	3.8	3.8	3.9
Fittings	3.2	3.2	3.1	2.7	3.0	2.7
Spare Parts for Motor Vehicles	2.0	2.2	2.4	2.2	2.2	2.4
Heat Treatment	1.7	1.7	2.0	2.0	2.2	2.2
Carpentry Industry	1.5	1.3	1.3	1.6	1.5	1.3
Supports	0.8	0.9	1.1	0.8	0.9	1.0
Fasteners	0.7	0.7	0.8	0.7	0.8	0.8
Technochemical	0.5	0.4	0.6	0.4	0.4	0.3
Other	0.0	0.0	0.1	0.0	0.0	0.0
Eliminations	-0.2	-0.2	-0.3	-0.2	-0.2	-0.2
Group in total	34.7	34.8	40.2	38.3	40.3	39.5

Operating profit (MEUR)	2Q/10	3Q/10	3Q/10	1Q/11	2Q/11	3Q/11
Safety	0.3	0.4	1.2	0.1	04	0.4
Digital Printing Services	1.1	0.7	1.0	0.6	1.1	1.1
HEPAC Wholesale	0.0	0.1	0.2	0.0	0.0	0.0
Takoma	0.0	-0.4	-0.6	-0.2	-0.1	-0.4
Value-added Logistics	-0.2	0.1	0.0	-0.1	0.0	0.2
Fittings	0.2	0.1	0.2	0.1	0.2	0.0
Spare Parts for Motor Vehicles	0.0	0.3	0.3	0.2	0.2	0.3
Heat Treatment	0.2	0.0	0.1	0.5	0.4	0.5
Carpentry Industry	0.3	0.2	-0.1	0.3	0.3	0.3
Supports	0.0	0.2	0.1	-0.1	0.1	0.2
Fasteners	-0.1	0.0	0.0	0.0	0.0	0.0
Technochemical	0.0	-0.1	0.0	-0.1	-0.1	0.0
Other	-0.4	-0.4	-0.2	-0.7	-0.9	-0.4
Group in total	1.4	1.1	2.1	0.6	1.7	2.2

Panostaja Oyj is an active majority shareholder in Finnish SMEs. The core of our operations is based on Finnish entrepreneurship and persevering the development of entrepreneurial activity. Together with our entrepreneur partners, we are cultivating companies to become the best in the field and are thereby creating Finnish success stories.

Panostaja Oyj currently operates in twelve business areas. Oy Alfa-Kem Ab (Technochemical) manufactures and markets industrial chemicals, cleaning agents and various agents for institutional kitchens. Flexim Security Oy (Safety) is a specialist in security technology and services, locking, door automation and access control products and solutions. Heatmasters Group (Heat Treatment) offers thermal treatment services for metals in Finland and internationally, and produces, develops and markets heat treatment technology. KL-Varaosat (Spare Parts for Motor Vehicles) is an importer, wholesale dealer and retailer for original spare parts and supplies intended for Mercedes Benz and BMW cars. Kopijyvä Oy (Digital Printing Services) is one of Finland’s largest companies offering digital printing services. Lämpö-Tukku Oy (HEPAC Wholesale) specializes in HEPAC wholesale operations. Suomen Helakeskus Oy (Fittings) is a significant wholesale dealer concentrating on construction- and furniture-based fittings. Suomen Kiinnikekeskus Oy (Fasteners) is a supply shop in the fastener field. Matti-Ovi Oy (Carpentry Industry) manufactures and markets, as its main product, solid wood interior doors. Takoma Oyj (Takoma) is a machine shop group with an entrepreneur-driven business model and is registered on the stock exchange. Toimex Oy (Supports) works in the HVAC field, manufacturing and selling supports for the purpose. Vindea Oy (Added-value Logistics) is an enterprise specialized in added-value logistics services for the Finnish metal industry.

PANOSTAJA GROUP INTERIM REPORT November 1, 2010-July 31, 2011