Single-family housing construction and renovation continued at an active pace

The fireplace market grew 3-5% in Finland

Tulikivi’s fireplace sales in Finland grew 12%

Growth came from Kivia Oy The Group preserved its market

position Tulikivi market share -1%, Kivia

market share +1% Focusing on Tulikivi: Mittakivi brand

dropped at the beginning of 2005 New manufacturers and importers

appear; the market is becoming “Europeanized”

Aggressive new players (e.g. Vuoluerkkeri) with good reputations in the fireplace market

Fireplace Business, Finland

The focus of the German fireplace market has shifted to cheaper products

Distribution channels changing Hardware store channel gains in

importance Many fireplace stores are in financial

difficulty Sales fell 15% Importance of German fireplace market

in fireplace exports fell to 30%, and to 17% of all exports

Tulikivi needs to revamp its distribution channel strategy

Two-step import model has come to the end of the road

Goal to significantly increase reseller network

Fireplace Business, Germany

Fireplace exports grew 10% (not counting Germany)

Increases: Russia 36%, France 23%, Belgium 22%, Switzerland 18%, Norway 18%, USA & Canada 7%, Estonia +5%, Italy +2%,

Decreases: Germany -15%, Sweden -10%, Austria -6% Russia is a new focus area New law in France subsidizes funds for

heat-retaining fireplace purchases by 35% of the purchase price (list of qualifying products in preparation)

Belgian importer has worked with its eye on the long term

New growth in Switzerland after a decline Last year’s boom in Sweden and Norway

(fueled by high electricity prices) has not continued

Fireplace Business, other countries

Focus of investment on exports Tulikivi organization is in good shape

(market trailblazer, delivery process, products)

Operations are in the start-up stage and a reseller network is actively being built

Focus on St. Petersburg and Moscow, resellers in other big cities

Target groups: Building firms and building supply

businesses Makers of traditional log houses Wealthy private homebuilders and

their architects Market research has been done in

Moscow, St. Petersburg and Karelia Tulikivi name recognition in its business

area is in the 40-50% range, among contractors and designers 10-20%

Fireplace Business, Russia

Soapstone is a highly sought-after material for heater lining in central Europe and Scandinavia

Tulikivi market share is over 50% Growth is approximately 15% This area is a significant part of

Tulikivi’s business Profitability is equivalent to the

average for the fireplace business Tulikivi has strengths in quality,

delivery record, and handling difficult tooling jobs as well as in service

Customers are the top manufacturers in Europe, for example Nibe and Hark

Fireplace Business, lining stone

Net sales EUR 3.0 million, result clearly in the black

Approximately 25 staff Tulikivi becoming an owner

has helped the reputation of the company and its products

Manufactures products under the Kivia brand and new products such as Salla for the Tulikivi brand

Successful test quarrying at Juurikkaniemi

Fireplace Business, Kivia Oy

Net sales EUR 6.3 million (8.3), on target with goal

Income EUR -0.1 million (-0.9); last six months slightly positive

Unprofitable functions pruned from contract work

Fixed costs -40% Interior decoration stone business as a share

of net sales is approximately 50% (30%, 2003)

Result of the interior decoration stone business is in the black

Total market for interior decoration stones is approximately EUR 15 million and is growing >15 per cent annually.

Tough price competition in deliveries to construction sites. The arrival of Chinese stone in Finland has intensified the struggle for contracts.

Architectural Stone Business

Research & development expenditures EUR 1.5 million (1.3)

New product generation, “On Stone’s Terms” project

Assessment of the use of small blocks, decision on an investment in a small stone sawing line at the beginning of 2005

Changing over to the use of stone from a new quarry

Change in finishing procedures in October Choice of stones by test viewing, further

development Coaching for the Tulikivi Way of Working Launching and certification of quality systems for

customized product factory and lining stones

Development projects

Investments EUR 3.9 million (2.9) Test quarrying in Kuhmo Preparations for quarrying in Koskela Test drilling Quarrying equipment Contouring Finishing

Investments

Foundation of Tulikivi business Company controls an approximately 65-year

supply in Juuka Suomussalmi Kuhmo Paltamo

Long-term investment of about EUR 500 000 per year in prospecting Drilling 3000-5000 running metres Test quarrying Stone testing

Soapstone reserves