 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 per year in prospecting  Drilling running metres  Test quarrying  Stone testing Soapstone reserves