HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2010


HONKARAKENNE OYJ     INTERIM REPORT  13 AUGUST 2010 at 15.00 PM                

HONKARAKENNE OYJ'S INTERIM REPORT, 1 JANUARY - 30 JUNE 2010                     

SUMMARY	                                                                        

Interim Report April - June 2010                                                

Honkarakenne Group's consolidated net sales for the second quarter of the year  
amounted to EUR 19.6 million, an increase of 21.8% on the previous year's       
corresponding period (EUR 16.1 million in 2009). Profit before taxes was EUR 2.1
million (EUR 0.7 million in 2009) and the earnings per share amounted to EUR    
0.45 (EUR -0.16 in 2009).                                                       

Interim Report January - June 2010                                              

Honkarakenne Group's consolidated net sales for the half year was EUR 28.1      
million, an increase of 1.8 % on the previous year's corresponding period (EUR  
27.6 million in 2009). Profit before taxes was EUR 0.1 million (EUR -0.6 million
in 2009) and the earnings per share amounted to EUR 0.01 (EUR -0.11 in 2009).   

The financial position of the Group improved during the report period. The      
improvement programme launched in January continues. The net sales of the entire
year is expected to be on the level of the previous year. The Group aims at a   
profitable result during the financial year. The prerequisite of achieving the  
2010 profit target is the development of the Group's orders during the latter   
part of the year. In the end of the second quarter, the order book is 6% smaller
than the corresponding figure from the previous year.                           

--------------------------------------------------------------------------------
| KEY FIGURES              |  4-6/ |  4-6/ |   1-6/ |   1-6/ | change |  1-12/ |
|                          |  2010 |  2009 |   2010 |   2009 |      % |   2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales, MEUR          |  19.6 |  16.1 |   28.1 |   27.6 |    1.8 |   52.3 |
--------------------------------------------------------------------------------
| Operating profit/loss,   |   2.5 |   0.8 |    0.7 |   -0.5 |        |   -3.0 |
| MEUR                     |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Operating profit after   |   2.9 |       |    1.4 |        |        |        |
| non-recurring items,     |       |       |        |        |        |        |
| MEUR                     |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Profit/loss before       |   2.1 |   0.7 |    0.1 |   -0.6 |        |   -3.7 |
| taxes, MEUR              |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Average number of        |       |       |    318 |    381 |        |    351 |
| personnel                |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Earnings/share (EPS),    |  0.45 |  0.16 |   0.01 |  -0.11 |        |  -1.05 |
| EUR                      |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Equity ratio, %          |       |       |   34.9 |   32.3 |        |   28.8 |
--------------------------------------------------------------------------------
| Return on equity, %      |       |       |    0.4 |   -2.5 |        |  -26.3 |
--------------------------------------------------------------------------------
| Shareholders             |       |       |    3.4 |    4.4 |        |    3.5 |
| equity/share, EUR        |       |       |        |        |        |        |
--------------------------------------------------------------------------------
| Gearing, %               |       |       |   79.0 |  117.2 |        |  149.0 |
--------------------------------------------------------------------------------

Esa Rautalinko, President and CEO of Honkarakenne Oyj, in connection with the   
interim report:                                                                 

”Considering the market situation, Honkarakenne had a good second quarter, both 
in terms of net sales and profit. In spite of the improved net sales and profit 
compared to the reference period, the recession continued in all Honkarakenne's 
main markets. However, minor recovery can be noticed both in Finland and Russia.

The focus during the second quarter was on boosting sales and simultaneously on 
carrying out the improvement programme. The Group aims to achieve a profit      
improvement of about EUR 5 million this year. During the first half year, the   
effect of the improvement programme has been approximately EUR 1.6 million.     

During the second quarter, Honkarakenne started concentrating on premium        
segments in limited markets by renewing its marketing materials to better       
support this strategy.                                                          

In connection with the improvement programme, Honkarakenne went through         
productional co-operation negotiations during the second quarter, aiming to     
secure competitiveness regardless of the fluctuation in sales and production. As
a result, Honkarakenne may temporarily lay off personnel for a maximum period of
90 days during the latter part of 2010.”                                        

NET SALES                                                                       

Honkarakenne Group's consolidated net sales for January - June 2010 was EUR 28.1
million, compared to EUR 27.6 million in the same period last year.             

The Group's consolidated net sales for the second quarter of 2010 was EUR 19.6  
million, compared to EUR 16.1 million in the same period last year. The net     
sales for the second quarter increased by EUR 3.5 million and it was 22% higher 
than in the previous year. Domestic net sales increased by EUR 2.8 million 39%  
higher than in the previous year and export net sales by EUR 0.7 million 8%     
higher than in the previous year. Net sales increased especially in Finland and 
Russia.                                                                         

Geographical distribution of net sales:                                         

--------------------------------------------------------------------------------
| DEVELOPMENT OF      |        |        |         |                            |
| SALES               |        |        |         |                            |
--------------------------------------------------------------------------------
| Distribution of net | 1-6/20 | 1-6/20 |         |        |         |         |
| sales, %            |     10 |     09 |         |        |         |         |
--------------------------------------------------------------------------------
| Finland             |  50.2% |  47.1% |         |        |         |         |
--------------------------------------------------------------------------------
| Central Europe      |  19.7% |  21.4% |         |        |         |         |
--------------------------------------------------------------------------------
| Far East            |  10.3% |  12.9% |         |        |         |         |
--------------------------------------------------------------------------------
| Other countries     |  19.8% |  18.6% |         |        |         |         |
--------------------------------------------------------------------------------
| Total               | 100.0% | 100.0% |         |        |         |         |
--------------------------------------------------------------------------------
|                     |        |        |         |        |         |         |
--------------------------------------------------------------------------------
| Net sales, 1000     | 4-6/20 | 4-6/20 |  change | 1-6/20 | 1-6/200 |  change |
| euros               |     10 |     09 |       % |     10 |       9 |       % |
--------------------------------------------------------------------------------
| Finland             |  9,786 |  7,024 |     39% | 14,089 |  12,996 |      8% |
--------------------------------------------------------------------------------
| Central Europe      |  3,591 |  3,476 |      3% |  5,533 |   5,915 |     -6% |
--------------------------------------------------------------------------------
| Far East            |  2,123 |  2,243 |     -5% |  2,877 |   3,560 |    -19% |
--------------------------------------------------------------------------------
| Other countries     |  4,086 |  3,341 |     22% |  5,582 |   5,120 |      9% |
--------------------------------------------------------------------------------
| Total               | 19,586 | 16,084 |     22% | 28,081 |  27,591 |      2% |
--------------------------------------------------------------------------------

The figures for ‘Central Europe' comprise Germany and France as well as the rest
of Europe. The figures for ‘Far East' comprise Japan and Mongolia. The figures  
for ‘Other countries' comprise the CIS countries, USA and Estonia.              

DEVELOPMENT OF PROFIT AND PROFITABILITY                                         

Operating profit in January - June was EUR 0.7 million (EUR -0.5 million) and   
the profit before taxes was EUR 0.1 million (EUR -0.6 million). During the      
second quarter of the year, the result is burdened by the appreciation expense  
of EUR 0.2 million due to the hedging of yen, entered as financial items.       
Comparing the profit before taxes during the first half year to the previous  
year, the effect of the improvement programme is EUR 1.6 million, the effect of 
non-recurring costs related to the programme is EUR -0.7 million, and that of   
the currency hedging appreciation and other assets and liabilities is, in total,
EUR -0.2 million.                                                               

Of the non-recurring costs, 45% are connected to severance pay, 33% to the      
implementation of improvement programme, and 22% to financial arrangements.     

FINANCING AND INVESTMENTS                                                       

The financial position of the Group improved during the report period. The      
equity ratio stood at 34.9% (32.3%) and interest-bearing net liabilities at EUR 
13.1 million (EUR 18.3 million). EUR 4.4 million of the interest-bearing net    
liabilities carries a 25% minimum equity ratio covenant term until 30 September 
2010, after which the minimum is 30%. Group liquid assets totalled EUR 2.4      
million (EUR 2.7 million). The Group also has a EUR 10.0 million bank overdraft 
facility, EUR 1.8 million of which had been drawn on at the end of the report   
period (EUR 4.0 million). Gearing stood at 79.0% (117.2%). The company's capital
expenditure totalled EUR 0.3 million (EUR 1.7 million). The financial position  
of the company is expected to stay on a satisfactory level.                     

MARKET DEVELOPMENT                                                              

On the basis of a report commissioned by RTS Oy, Finnish log house production is
expected to grow by 5% this year. The figure includes production for Finland and
for overseas export.                                                            

PRODUCTS AND MARKETING                                                          

In Finland, Honkarakenne made changes especially to the sauna collection, based 
on the improvement programme, aiming at improved profitability. The changes     
concentrated on developing the efficiency of industrial sauna production.       
In Japan, the main measure was the implementation of a campaign for the Effecta 
house model collection, launched in the first quarter. The Effecta collection   
makes special use of cost-effective structural solutions and choice of          
components.                                                                     

In Western Europe, the launch of the Honka Fusion™ product concept was          
continued, along with co-operation with architects to boost the visibility and  
demand of the concept. The main competition points of the Honka Fusion™ product 
concept include energy efficiency, innovative solutions and strong architectural
design. The first energy-efficient double log wall building directed especially 
to the Western European markets was completed in Germany.                       

In Russia, which is classified under the Other Countries group, recovery is     
noticeable both in large construction projects and in private demand. In the    
second quarter, the first deliveries were made to the second-stage planning area
in Copperlake, near St. Petersburg. In the first-stage of Copperlake,           
Honkarakenne delivered 45 premium-level houses to the area in 2005-2008.        

In the second quarter, Honkarakenne launched an even more air-tight and         
energy-efficient log profile and a corner notch solution to all its markets. As 
with Honkarakenne's other products, all modifications are breathing and         
therefore make possible a healthy indoor air of excellent quality. In addition, 
the new log profile creates a unique visual appearance. The dark shadow line    
between the logs is minimised and the cap in the inside corners, characteristic 
of log buildings, is eliminated with new notching solution.                     

With its marketing measures, Honkarakenne has continued to concentrate on       
premium segments in limited markets. During the second quarter, Honkarakenne    
renewed its marketing materials to better support this focus.                   

RESEARCH AND DEVELOPMENT                                                        

In its R&D operations during the second quarter, Honkarakenne has concentrated  
on developing the air-tightness of log walls. The new sealing solution will be  
launched to market during the third quarter. The new solution will improve      
energy efficiency and decrease overall building costs.                          

In January-June, consolidated R&D expenditure was EUR 0.2 million (EUR 0.2      
million), representing 0.9% of net sales (0.8%). In the report period, the Group
did not capitalize any development expenditure.                                 

STAFF                                                                           

At the end of June, the Group employed on average 318 people (381). This is 63  
less than at the same time in the previous year.                                

During the second quarter, Honkarakenne went through productional co-operation  
negotiations, aiming to secure competitiveness regardless of the fluctuation in 
sales and production. As a result, Honkarakenne may temporarily lay off         
personnel for a maximum period of 90 days during the latter part of 2010.”      

Earlier this year, Honkarakenne also carried out structural co-operation        
negotiations resulting in the termination of 33 contracts of employment (of     
which 12 were pension arrangements) and temporarily laying off 45 employees for 
an indefinite period.                                                           

Some of the laid-off employees were summoned back to work at the end of the     
second quarter due to increasing production volumes.                            

EXECUTIVES INCENTIVE PLAN, RELATED DIRECTED ISSUE AND OWN SHARES                

During the second quarter, the Board of Directors of Honkarakenne Oyj decided on
a new incentive plan directed to the members of the Honkarakenne Executive      
Group. On the basis of authorization granted by the General Meeting of          
Shareholders of Honkarakenne, the Board of Directors of Honkarakenne decided on 
a share issue with payment. In the share issue, a maximum of 220,000            
Honkarakenne new B shares were issued for subscription by Honka Management Oy at
the price of EUR 3.71 per share, in derogation from the shareholders'           
pre-emptive subscription rights. In addition, the executives within the         
incentive plan acquired 49,000 Honkarakenne B shares in the name of the         
established limited company Honka Management Oy. The share acquisitions were    
financed by personal investments by the executives amounting in total to EUR    
200,000, as well as by a loan provided by Honkarakenne to the amount of EUR     
800,000. The plan will be valid until summer 2014, at which time it is intended 
to be dissolved. Through the implementation of the plan, the members of the     
Executive Group hold 5.2% of all Honkarakenne's shares and 2.47% of all         
Honkarakenne's votes. As Honka Management Oy will be consolidated to the overall
figures of the Honkarakenne Group, the acquisition expenses of these shares have
been entered in the Group's financial statement as a deduction to the Group's   
equity.                                                                         

At the end of the report period, the Group held 364,385 of its Honkarakenne B   
shares with a total purchase price of EUR 1,377,609.57. These shares represent  
7.05% of the company's capital stock and 3.35% of all votes.                    

Honkarakenne Oyj's share capital comprises a total of 5,168,968 shares, of which
300,096 are A shares and 4,868,872 are B shares. Each B share carries one (1)   
vote and each A share carries twenty (20) votes. Hence, Honkarakenne's shares in
aggregate carry a total of 10,870,792 votes. The company's total share capital  
is 9,897,936.00 euros.                                                          

COMMITTEES OF THE BOARD OF DIRECTORS                                            

In the second quarter, Honkarakenne's Board of Directors set up an Audit        
Committee. The members of the Audit Committee comprise Mr Lasse Kurkilahti      
(chairman), Mr Tomi Laamanen and Ms Pirjo Ruuska. The main duties of the Audit  
Committee include monitoring and assessing the company's business risk          
management and assisting the Board of Directors in ensuring the balance,        
transparency and clarity of the company's financial information.                

CORPORATE GOVERNANCE                                                            

Honkarakenne Oyj observes the corporate governance code for listed companies    
issued by the Finnish Securities Market Association. The company's website,     
www.honka.com/investors, provides more information on the corporate governance  
systems.                                                                        

FUTURE OUTLOOK                                                                  

The decrease in demand is believed to have stopped on all markets. In Finland   
and Russia, a slight recovery can be seen, but the prolonged sales process and  
the low amount of orders that will be delivered in the long-term affects the    
sales.                                                                          

The Group had order book for EUR 18.8 million at the end of June. At the same   
time last year, this number was EUR 20.0 million. The order book includes orders
whose delivery date is within the next 24 months. Some orders may include       
conditions related to building permits or financing. After the second quarter,  
the order book is 6% smaller than the corresponding figure from the previous    
year.                                                                           

FORTHCOMING RISKS AND UNCERTAINTIES                                             

The most significant uncertainty in achieving a profitable result in 2010 is the
number of incoming orders during the second half of the year.                   

In exports, the value of individual deal is high, and therefore the effect of   
market uncertainty on sales may significantly affect the Group even in the case 
of a single order.                                                              

Overall, the time the markets need to recover to reach a more profitable level  
is a risk.                                                                      

The Group has one significant concentration of credit risks in sales            
receivables, concerning the open sales receivables of one importer. No provision
for doubtful debt has been made for this. The new sales made with this importer 
have been paid in accordance with the agreed terms and conditions. Deliveries to
the importer have continued, and the risks with the open sales receivables have 
not increased. Regarding the sales receivable in question, a payment plan       
agreement was signed during the second quarter of the year.                     

REPORTING                                                                       

This report contains statements that relate to the future; these statements are 
based on hypotheses that the company's management hold currently, as well as the
decisions and plans that are currently in place. Although the management        
believes that the hypotheses relating to the future are well-founded, there is  
no guarantee that the said hypotheses will prove to be correct.                 

This interim report is prepared in line with the standard IAS 34, Interim       
Financial Reporting. The principles adhered to in preparing the annual financial
statements for 2009 also apply to this interim report. The figures have not been
examined by the auditor.                                                        

OUTLOOK FOR 2010                                                                

The net sales of the entire year is expected to be on the level of the previous 
year. The Group aims at a profitable result during the accounting period. The   
financial position and liquidity of Honkarakenne are at a satisfactory level and
make it possible to undertake rationalisation and development of the activity in
2010, if business develops in the expected manner. The prerequisite of achieving
the 2010 profit target is the development of the Group's orders during the      
latter part of the year. In the end of the second quarter, the order book is 6% 
smaller than the corresponding figure from the previous year.                   

HONKARAKENNE OYJ                                                                

Board of Directors                                                              

Further information:                                                            
Esa Rautalinko, President and CEO, tel. +358 400 740 997,                       
esa.rautalinko@honka.com or                                                     
Mikko Jaskari, CFO, tel. +358 (0)400 535 337,mikko.jaskari@honka.com.          

This and previous releases are available to view on the company's website at    
www.honka.com/investors. The following interim report will be published on 12   
November 2010.                                                                  


DISTRIBUTION                                                                    
NASDAQ OMX Helsinki                                                             
Key media                                                                       
Financial Supervisory Authority                                                 
www.honka.com                                                                   








--------------------------------------------------------------------------------
| CONSOLIDATED STATEMENT OF |         |         |         |         |          |
| COMPREHENSIVE INCOME      |         |         |         |         |          |
--------------------------------------------------------------------------------
| (unaudited)               |     4-6 |     4-6 |     1-6 |     1-6 |     1-12 |
|                           |   /2010 |   /2009 |   /2010 |   /2009 |    /2009 |
--------------------------------------------------------------------------------
| (MEUR)                    |         |         |         |         |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net sales                 |    19.6 |    16.1 |    28.1 |    27.6 |     52.3 |
--------------------------------------------------------------------------------
| Other operating income    |     0.3 |     0.3 |     0.6 |     0.4 |      1.6 |
--------------------------------------------------------------------------------
| Change in inventories     |    -0.9 |    -0.5 |     0.5 |    -0.8 |     -2.0 |
--------------------------------------------------------------------------------
| Production for own use    |     0.0 |     0.1 |     0.0 |     0.1 |      0.1 |
--------------------------------------------------------------------------------
| Materials and services    |    -9.7 |    -8.6 |   -15.3 |   -14.6 |    -28.5 |
--------------------------------------------------------------------------------
| Employee benefit expenses |    -3.4 |    -3.3 |    -6.7 |    -6.8 |    -13.2 |
--------------------------------------------------------------------------------
| Depreciations             |    -0.9 |    -1.0 |    -1.9 |    -1.9 |     -4.1 |
--------------------------------------------------------------------------------
| Other operating expenses  |    -2.4 |    -2.3 |    -4.6 |    -4.6 |     -9.1 |
--------------------------------------------------------------------------------
| Operating profit/loss     |     2.5 |     0.8 |     0.7 |    -0.5 |     -3.0 |
--------------------------------------------------------------------------------
| Financial income and      |    -0.4 |    -0.0 |    -0.7 |    -0.0 |     -0.6 |
| expenses                  |         |         |         |         |          |
--------------------------------------------------------------------------------
| Share of associated       |    -0.0 |    -0.1 |     0.0 |    -0.1 |     -0.2 |
| companies' profit         |         |         |         |         |          |
--------------------------------------------------------------------------------
| Profit/loss before taxes  |     2.1 |     0.7 |     0.1 |    -0.6 |     -3.7 |
--------------------------------------------------------------------------------
| Taxes                     |    -0.0 |    -0.1 |    -0.0 |     0.2 |     -0.0 |
--------------------------------------------------------------------------------
| Profit/loss for the       |     2.1 |     0.6 |     0.1 |    -0.4 |     -3.7 |
| period                    |         |         |         |         |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive       |         |         |         |         |          |
| income:                   |         |         |         |         |          |
--------------------------------------------------------------------------------
| Translation differences   |     0.2 |     0.0 |     0.3 |    -0.0 |      0.0 |
--------------------------------------------------------------------------------
| Total comprehensive       |     2.3 |     0.6 |     0.4 |    -0.4 |     -3.7 |
| income for the period     |         |         |         |         |          |
|                           |         |         |         |         |          |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to:          |         |         |         |         |          |
--------------------------------------------------------------------------------
| Equity holders of the     |     2.3 |     0.6 |     0.4 |    -0.4 |     -3.7 |
| parent                    |         |         |         |         |          |
--------------------------------------------------------------------------------
| Minority interest         |     0.0 |     0.0 |     0.0 |    -0.0 |      0.0 |
--------------------------------------------------------------------------------
|                           |     2.3 |     0.6 |     0.4 |    -0.4 |     -3.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/share (EPS), EUR |         |         |         |         |          |
--------------------------------------------------------------------------------
| Basic                     |    0.45 |    0.16 |    0.01 |   -0.11 |    -1.05 |
--------------------------------------------------------------------------------
| Diluted                   |    0.45 |    0.16 |    0.01 |   -0.11 |    -1.05 |
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
| CONSOLIDATED BALANCE SHEET          |  30.6.2010 |   30.6.2009 |  31.12.2009 |
| (unaudited)                         |            |             |             |
--------------------------------------------------------------------------------
| (MEUR)                              |            |             |             |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets                              |            |             |             |
--------------------------------------------------------------------------------
| Non-current assets                  |            |             |             |
--------------------------------------------------------------------------------
| Property, plant and equipment       |       22.8 |        25.7 |        24.3 |
--------------------------------------------------------------------------------
| Goodwill                            |        0.1 |         0.5 |         0.0 |
--------------------------------------------------------------------------------
| Other intangible assets             |        1.2 |         1.4 |         1.3 |
--------------------------------------------------------------------------------
| Investments in associated companies |        2.0 |         2.1 |         2.1 |
--------------------------------------------------------------------------------
| Other investments                   |        0.4 |         0.2 |         0.2 |
--------------------------------------------------------------------------------
| Receivables                         |        0.3 |         0.2 |         0.3 |
--------------------------------------------------------------------------------
| Deferred tax assets                 |        1.5 |         1.5 |         1.5 |
--------------------------------------------------------------------------------
|                                     |       28.2 |        31.7 |        29.7 |
--------------------------------------------------------------------------------
| Current assets                      |            |             |             |
--------------------------------------------------------------------------------
| Inventories                         |       10.1 |        11.3 |         9.4 |
--------------------------------------------------------------------------------
| Trade and other receivables         |        9.6 |         8.4 |         7.5 |
--------------------------------------------------------------------------------
| Cash and bank receivables           |        2.4 |         2.7 |         1.7 |
--------------------------------------------------------------------------------
|                                     |       22.0 |        22.4 |        18.6 |
--------------------------------------------------------------------------------
| Total assets                        |       50.2 |        54.1 |        48.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                                     |  30.6.2010 |   30.6.2009 |  31.12.2009 |
--------------------------------------------------------------------------------
| Shareholders' equity and            |            |             |             |
| liabilities                         |            |             |             |
--------------------------------------------------------------------------------
| Equity attributable to equity       |            |             |             |
| holders                             |            |             |             |
| of the parent                       |            |             |             |
--------------------------------------------------------------------------------
| Capital stock                       |        9.9 |         7.5 |         7.5 |
--------------------------------------------------------------------------------
| Share premium                       |        0.5 |         0.5 |         0.5 |
--------------------------------------------------------------------------------
| Reserve fund                        |        5.3 |         5.3 |         5.3 |
--------------------------------------------------------------------------------
| Unrestricted equity reserve         |        1.9 |             |             |
--------------------------------------------------------------------------------
| Translation differences             |        0.4 |         0.0 |         0.0 |
--------------------------------------------------------------------------------
| Retained earnings                   |       -1.6 |         2.3 |        -1.0 |
--------------------------------------------------------------------------------
|                                     |       16.3 |        15.6 |        12.3 |
--------------------------------------------------------------------------------
| Minority share                      |        0.2 |         0.0 |         0.0 |
--------------------------------------------------------------------------------
| Total equity                        |       16.6 |        15.6 |        12.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities             |            |             |             |
--------------------------------------------------------------------------------
| Deferred tax liabilities            |        0.9 |         0.7 |         0.8 |
--------------------------------------------------------------------------------
| Provisions                          |        0.4 |         0.4 |         0.4 |
--------------------------------------------------------------------------------
| Intrest bearing debt                |       11.7 |        18.7 |        15.6 |
--------------------------------------------------------------------------------
| Non-intrest bearing debt            |        0.0 |         0.6 |         1.0 |
--------------------------------------------------------------------------------
|                                     |       13.0 |        20.5 |        17.8 |
--------------------------------------------------------------------------------
| Current liabilities                 |            |             |             |
--------------------------------------------------------------------------------
| Trade and other payables            |       16.8 |        15.7 |        14.3 |
--------------------------------------------------------------------------------
| Tax liabilities                     |        0.2 |         0.0 |         0.0 |
--------------------------------------------------------------------------------
| Intrest bearing debt                |        3.7 |         2.2 |         4.0 |
--------------------------------------------------------------------------------
|                                     |       20.6 |        17.9 |        18.3 |
--------------------------------------------------------------------------------
| Total liabilities                   |       33.6 |        38.4 |        36.0 |
--------------------------------------------------------------------------------
| Total equity and liabilities        |       50.2 |        54.1 |        48.4 |
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
| STATEMENT OF CHANGES IN EQUITY     |                                         |
| (unaudited)                        |                                         |
--------------------------------------------------------------------------------
| 1000    | Equity attributable to equity holders of the |       |     |       |
| EUR     |                    parent                    |       |     |       |
--------------------------------------------------------------------------------
|         |  a) | b) |  c) |  d) |     e) |    f) |   g) | Total |  h) | Total |
|         |     |    |     |     |        |       |      |       |     | equit |
|         |     |    |     |     |        |       |      |       |     |     y |
--------------------------------------------------------------------------------
| Total   | 7,4 | 52 | 5,3 |     |     27 | -1,12 | 3,81 | 16,05 |   9 | 16,06 |
| equity  |  98 |  0 |  16 |     |        |     4 |    9 |     6 |     |     5 |
| 1.1.200 |     |    |     |     |        |       |      |       |     |       |
| 9       |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Purchas |     |    |     |     |        |   -14 |      |   -14 |     |   -14 |
| e of    |     |    |     |     |        |       |      |       |     |       |
| own     |     |    |     |     |        |       |      |       |     |       |
| shares  |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Total   |     |    |     |     |    -29 |       | -401 |  -430 |  -3 |  -433 |
| compreh |     |    |     |     |        |       |      |       |     |       |
| ensive  |     |    |     |     |        |       |      |       |     |       |
| income  |     |    |     |     |        |       |      |       |     |       |
| for the |     |    |     |     |        |       |      |       |     |       |
| period  |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Total   | 7,4 | 52 | 5,3 |     |     -2 | -1,13 | 3,41 | 15,61 |   6 | 15618 |
| equity  |  98 |  0 |  16 |     |        |     8 |    8 |     2 |     |       |
| 30.6.20 |     |    |     |     |        |       |      |       |     |       |
| 09      |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
|         |  a) | b) |  c) |  d) |     e) |    f) |   g) | Total |  h) | Total |
|         |     |    |     |     |        |       |      |       |     | equit |
|         |     |    |     |     |        |       |      |       |     |     y |
--------------------------------------------------------------------------------
| Total   | 7,4 | 52 | 5,3 |     |     29 | -1,13 |   82 | 12,30 |   9 | 12,31 |
| equity  |  98 |  0 |  16 |     |        |     8 |      |     7 |     |     6 |
| 1.1.201 |     |    |     |     |        |       |      |       |     |       |
| 0       |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Share   | 2,4 |    |     | 1,0 |        |       |      | 3,480 |     | 3,480 |
| issue   |  00 |    |     |  80 |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Managem |     |    |     | 816 |        |  -816 |      |       | 203 |   203 |
| ent     |     |    |     |     |        |       |      |       |     |       |
| Incenti |     |    |     |     |        |       |      |       |     |       |
| ve plan |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Repurch |     |    |     |     |        |  -182 |      |  -182 |     |  -182 |
| ase of  |     |    |     |     |        |       |      |       |     |       |
| own     |     |    |     |     |        |       |      |       |     |       |
| shares  |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Proceed |     |    |     |     |        |   758 | -414 |   344 |     |   344 |
| s from  |     |    |     |     |        |       |      |       |     |       |
| sale of |     |    |     |     |        |       |      |       |     |       |
| own     |     |    |     |     |        |       |      |       |     |       |
| shares  |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Total   |     |    |     |     |    323 |       |   64 |   387 |   0 |   387 |
| compreh |     |    |     |     |        |       |      |       |     |       |
| ensive  |     |    |     |     |        |       |      |       |     |       |
| income  |     |    |     |     |        |       |      |       |     |       |
| for the |     |    |     |     |        |       |      |       |     |       |
| period  |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------
| Total   | 9,8 | 52 | 5,3 | 1,8 |    352 | -1,37 | -268 | 16,33 | 211 | 16,54 |
| equity  |  98 |  0 |  16 |  96 |        |     8 |      |     6 |     |     7 |
| 30.6.20 |     |    |     |     |        |       |      |       |     |       |
| 10      |     |    |     |     |        |       |      |       |     |       |
--------------------------------------------------------------------------------

a) Share capital                                                                
b) Premium fund                                                                 
c) Reserve fund                                                                 
d) Unrestricted equity reserve                                                  
e) Translation difference                                                       
f) Own shares                                                                   
g) Retained earnings                                                            
h) Minority interest                                                            


--------------------------------------------------------------------------------
| CONSOLIDATED CASH FLOW STATEMENT  |       1.1.- |       1.1.- |        1.1.- |
| (Unaudited)                       |   30.6.2010 |   30.6.2009 |   31.12.2009 |
--------------------------------------------------------------------------------
| (MEUR)                            |             |             |              |
--------------------------------------------------------------------------------
| Cash flow from operations         |         1.9 |         2.3 |          1.4 |
--------------------------------------------------------------------------------
| Cash flow from investments, net   |        -0.4 |        -1.0 |         -1.1 |
--------------------------------------------------------------------------------
| Total cash flow from financing    |        -0.8 |        -0.2 |         -0.2 |
--------------------------------------------------------------------------------
|   Share issue                     |         3.5 |             |              |
--------------------------------------------------------------------------------
|   Increase in credit capital      |             |         5.6 |          6.3 |
--------------------------------------------------------------------------------
|   Decrease in credit capital      |        -4.5 |        -5.6 |         -6.2 |
--------------------------------------------------------------------------------
|   Other financial items           |         0.2 |        -0.2 |         -0.3 |
--------------------------------------------------------------------------------
| Change in liquid assets           |         0.7 |         1.1 |          0.1 |
--------------------------------------------------------------------------------
| Liquid assets at the beginning of |         1.7 |         1.6 |          1.6 |
| period                            |             |             |              |
--------------------------------------------------------------------------------
| Liquid assets at the end of       |         2.4 |         2.7 |          1.7 |
| period                            |             |             |              |
--------------------------------------------------------------------------------


NOTES TO THE REPORT                                                             

Calculation methods                                                             

This interim report is prepared in line with the standard IAS 34 Interim        
Financial Reporting. The principles adhered to in preparing the annual financial
statements also apply to this interim report. The interim report should be read 
together with the annual financial statements for 2009. The new revised         
standards or interpretations effective as of 1 January 2010 have no bearing on  
the figures presented for the report period. The figures have not been examined 
by the auditor.                                                                 

Honkarakenne has one operating segment, the manufacture, sales and marketing of 
log houses, under the Honka brand. Geographically, the sales of the Group are   
divided as follows: Finland, Central Europe, Far East, and other countries. The 
internal reporting of the management is in line with IFRS reporting. For this   
reason, separate reconciliations are not presented.                             





--------------------------------------------------------------------------------
| TANGIBLE ASSETS                                       |             Tangible |
--------------------------------------------------------------------------------
| (MEUR)                                                |               assets |
--------------------------------------------------------------------------------
| (Unaudited)                                           |                      |
--------------------------------------------------------------------------------
| Acquisition cost 1.1.2010                             |                 66.9 |
--------------------------------------------------------------------------------
| Translation difference (+/-)                          |                  0.5 |
--------------------------------------------------------------------------------
| Increase                                              |                  0.2 |
--------------------------------------------------------------------------------
| Decrease                                              |                 -0.2 |
--------------------------------------------------------------------------------
| Transfers between balance sheet items                 |                 -0.0 |
--------------------------------------------------------------------------------
| Acquisition cost 30.06.2010                           |                 67.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation 1.1.2010                     |                -42.7 |
--------------------------------------------------------------------------------
| Translation difference (+/-)                          |                 -0.3 |
--------------------------------------------------------------------------------
| Disposals and reclassifications                       |                 -0.1 |
--------------------------------------------------------------------------------
| Depreciation for the period                           |                 -1.6 |
--------------------------------------------------------------------------------
| Accumulated depreciation 30.06.2010                   |                -44.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Book value 1.1.2010                                   |                 24.3 |
--------------------------------------------------------------------------------
| Book value 30.06.2010                                 |                 22.8 |
--------------------------------------------------------------------------------

Own shares                                                                      

Honkarakenne Oyj has not acquired its own shares during the report period. In   
connection with the directed issue in January, the company sold some of the     
equity B shares that it held to a restricted circle of the company's key        
personnel. The number of shares sold was 118,500 at EUR 2.90 per share.         

During the second quarter, the Board of Directors of Honkarakenne Oyj decided on
a new incentive plan directed to the members of the Honkarakenne Executive      
Group. On the basis of authorization granted by the General Meeting of          
Shareholders, the company's Board of Directors decided on an issue of 220,000   
shares with payment. In the share issue, 220,000 Honkarakenne's new B shares    
were issued for subscription by Honka Management at the price of EUR 3.71 per   
share, in derogation from the shareholders' pre-emptive subscription rights. In 
addition, the executives within the incentive plan acquired 49,000 Honkarakenne 
B shares in the name of the established limited company Honka Management Oy.    
Through the implementation of the plan, the members of the Executive Group hold 
5.2% of all Honkarakenne's shares and 2.47% of all Honkarakenne's votes. As     
Honka Management Oy will be consolidated to the overall figures of the          
Honkarakenne Group, the acquisition expenses of these shares have been entered  
in the Group's financial statement as a deduction to the Group's equity.        

At the end of the report period, the Group held 364,385 of its Honkarakenne B   
shares with a total purchase price of EUR 1,377,609.57. These shares represent  
7.05% of the company's capital stock and 3.35% of all votes.                    


--------------------------------------------------------------------------------
| CONTINGENT LIABILITIES           |             |              |              |
--------------------------------------------------------------------------------
| (Unaudited)                      |   30.6.2010 |    30.6.2009 |   31.12.2009 |
--------------------------------------------------------------------------------
| MEUR                             |             |              |              |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| For own loans                    |             |              |              |
--------------------------------------------------------------------------------
|  - Mortgages                     |       26.28 |        25.52 |        25.68 |
--------------------------------------------------------------------------------
|  - Pledged shares                |             |         0.36 |              |
--------------------------------------------------------------------------------
|  - Other quarantees              |        2.43 |         2.90 |         3.29 |
--------------------------------------------------------------------------------
| For others                       |             |              |              |
--------------------------------------------------------------------------------
|  - Guarantees                    |        0.82 |         1.06 |         0.82 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Leasing liabilities              |        0.59 |         0.92 |         0.78 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Rent liabilities                 |        0.05 |         0.14 |         0.09 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nominal values of forward        |         1.7 |          1.5 |            - |
| exchange contracts               |             |              |              |
--------------------------------------------------------------------------------
| Derivative contracts             |        0.41 |         0.29 |         0.31 |
--------------------------------------------------------------------------------


Events in the circle of acquaintances                                           

The Group's circle of acquaintances consists of subsidiaries, associated        
companies and the company's management. The management included in the circle of
acquaintances comprises the Board of Directors, CEO and the company's executive 
group.                                                                          

During the second quarter, equipment transactions worth TEUR 18.2 were made with
acquaintances.                                                                  

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY INDICATORS        |                 |       1-6 |        1-6 |      1-12 |
--------------------------------------------------------------------------------
| (Unaudited)           |                 |      2010 |       2009 |      2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings/share (EPS)  | eur             |      0.01 |      -0.11 |     -1.05 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity      | %               |       0.4 |       -2.5 |     -26.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity ratio          | %               |      34.9 |       32.3 |      28.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders          | eur             |       3.4 |        4.4 |       3.5 |
| equity/share          |                 |           |            |           |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt              | MEUR            |      13.1 |       18.3 |      18.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing               | %               |      79.0 |      117.2 |     149.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross investments     | MEUR            |       0.3 |        1.7 |       2.5 |
--------------------------------------------------------------------------------
|                       | % of net sales  |       1.1 |        6.2 |       4.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Order book            | MEUR            |      18.8 |       20.0 |      23.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number of     | Staff           |       151 |        187 |       170 |
| personnel             |                 |           |            |           |
--------------------------------------------------------------------------------
|                       | Workers         |       167 |        194 |       181 |
--------------------------------------------------------------------------------
|                       | Total           |       318 |        381 |       351 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Due to the issue of new shares. the historical indicators by share have been    
corrected using the following formula: average number of shares x 1.01.         

--------------------------------------------------------------------------------
| CALCULATION OF KEY INDICATORS                                      |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                     | Profit for the period attributable to equity |         |
|                     | holders of parent                            |         |
--------------------------------------------------------------------------------
| Earnings/share      | -----------------------------------------    |         |
| (EPS)               |                                              |         |
--------------------------------------------------------------------------------
|                     | Average number of outstanding shares         |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                     | Profit before taxes - taxes                  |         |
--------------------------------------------------------------------------------
| Return on equity %  | -----------------------------------------    | x 100   |
--------------------------------------------------------------------------------
|                     | Total equity. average                        |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                     | Total equity                                 |         |
--------------------------------------------------------------------------------
| Equity ratio. %     | -----------------------------------------    | x 100   |
--------------------------------------------------------------------------------
|                     | Balance sheet total - advances received      |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt            | Interest-bearing debt - cash and cash        |         |
|                     | equivalents                                  |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                     | Interest-bearing debt - cash and cash        |         |
|                     | equivalents                                  |         |
--------------------------------------------------------------------------------
| Gearing. %          | -----------------------------------------    | x 100   |
--------------------------------------------------------------------------------
|                     | Total equity                                 |         |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
|                     | Shareholders' equity                         |         |
--------------------------------------------------------------------------------
| Shareholders        | -----------------------------------------    |         |
| equity/share        |                                              |         |
--------------------------------------------------------------------------------
|                     | Number of shares outstanding at end of period          |
--------------------------------------------------------------------------------

Attachments

interim report q2 honkarakenne oyj 13082010en.pdf