Annual Report 2018

www.tulikivi.com

The year 2018 in brief	4
Strategic policies	7
Product groups	9
Managing Director's review	12
Growth and Profitability	15
Stone supplies and reserves	19
Corporate responsibility	20
Highlights of the year 2018	24
Management	28
Management Group	30
Corporate Governance Statement 2018	32
Salary and remuneration report	36
Information for shareholders	38
Annual summary	39
Tulikivi Corporation's Board of Directors' report
and financial statements for 2018	40
Board of Directors' report	41
Consolidated Financial Statements, IFRS	44
Financial and share-related key figures	84
Calculations of Key Ratios	86
Parent company financial statements, FAS	87
Tulikivi Corporation's shareholders
and management ownership	100
Signatures to Board of Directors' report
and financial statements	101
Auditors' report	102
Contact information	104

8 Fireplaces 10 Sauna 11 Interior

The year 2018 in brief

The Tulikivi Corporation is a stock-exchange listed family business and the world's largest manufacturer of heat-retaining fireplaces. The company has three product groups: Fireplaces, Sauna and Interior.

Tulikivi and its costomers value wellbeing, intrior design and the benefits of bioenergy. Tulikivi's net sales are approximately EUR 26.8 million (EUR 29.3 million in 2017), of which exports account for about half. Tulikivi empolys approximately 200 people.

The companies in the Group are the parent company Tulikivi Corporation, Tulikivi U.s. Inc. and OOO Tulikivi. Group companies also include Tulikivi GmbH and The New Alberene Stone Company Invc. which are dormant.

The formulae for calculating key figures are on page 86.

	2018	2017	Change, %
Net Sales, MEUR	28.6	29.3	-2.4
Operating result, MEUR	-1.0	-0.4	-179.3
Result before income tax, MEUR	-1.8	-1.2
Return on investments, %	-3.8	-1.2
Solvency ratio, %	27.4	30.7
Earnings per share, EUR	-0.03	-0.02
Equity per share, EUR	0.16	0.19
Payment of dividend on
A share, EUR	-	-
K share, EUR	-	-

Net Cash Flow from Operating Activities, MEUR

Investments and Depreciation, MEUR

Return on Investments, %

per Geographical Area, %

2.2%

45.1% 52.7%

Net Sales

91.6%

Fireplaces

Finland Rest of Europe

USA

Interior Stone Products

8.4%

per Business Area, %

Net Sales

Own Production

(calculated 2010) British Standard PAS 2050

Formation of Carbon Footprint in Tulikivi's

Energy Consumption Transportations Materials

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Fireplace's Life Cycle

Monthly Development of the Average Price of the A share, EUR

0.17

0.17 0.16 0.16 0.16

2015

2014 2016 2017 2018

1 2 3 4 5 6 7 8 9 10 11 12

0.15

0.16 0.17

0.14

0.10

0.0 0.5 1.0 1.5 2.0 2.5 3.08

3.5 4.0

3.71

1.49

0.66 0.80

0.20

0.20 0.18

0.25

50 25 0

0.15

0.10

0.05

0.00

Monthly Development of the Trading Volume of A share, %

0.25

-23.8

2015

-15.9

-10.5

-17.6

2015

0.21 0.19

0.16

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

3.0 2.72

1.91 2.43

1.36 1.00

Finland Export

30.7

27.4

12.9

15.7 28.6

13.4

15.9 29.3

Clericals Workers

5 15

161

Women Men

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

²² ¹⁰

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

12 20 15

Age Distribution of Personnel, Dec. 31, 2018

2014 2016 2017 2018

33.4

2014 2015 2016 2017 2018

15.1 15.5

36.9

2015

⁸ ¹⁰ ⁸

16.9 15.0

32.0 30.5

Year 2013

17.9

39.0

21.4

39.3

100

150

200

250

³ ⁴ 1

273

Tulikivi in the future

Tulikivi is the market leader of heat retaining fireplaces. Our turnover in 2018 is 30 M€, of which more than half comes from export.
Tulikivi's mission is to produce the finest warmth in a natural, aesthetic and experiential way with the heating expertise and experience of the world's northernmost fireplace factory.
Tulikivi's vision is to be European consumer brand in 2025, known for bringing authentic, nature bound thermal experiences to urbanized living and leisure.
The sales growth is focused on exports and new collections as well as om renewed product groups.

Product groups

Tulikivi has three product groups: Fireplaces, Sauna and Interior.

Fireplaces

The fireplace product group consists of four customer-oriented collections.

The Karelia-collection is the most advanced heat-retaining fireplace collection regarding design, combustion technology and thermal properties., which meets the wishes of even the most demanding customers in Central Europe. Soapstone's new surface treatment technology emphasizes the modern design of products. They meet even the toughest demands in the world with their combustion technology. The collection has a unique patented whirlpool technology that allows you to burn both wood and pellets in your fireplace. The heat output the Karelia models is adjustable for both low-energy and traditional houses. Pielinen collection models are based on modern Scandinavian design and new soapstone surface treatment technology. The products in the collection are compact and easy to install. They are particularly well suited to the Central European market and

to markets where there is no knowledge of heat-retaining fireplaces. The special features of the Pielinen products are the versatile door solutions that are developed together with partners. In addition, Tulikivi has a classic collection of favorite models from recent decades. It consists of heat-retaining fireplaces, baking ovens and stoves all made of soapstone. The strengths of the collection's fireplaces include classic design and unmatched heating properties.

Tulikivi's Kermansavi collection is a stylish collection of heatretaining fireplaces and bakeovens, the main markets of which are in Finland and neighboring areas. The strength of this collection is a versatile range of colors suitable for different interiors, high quality and suitability for the Finnish construction methods.

The products emphasize timeless design, convenience, innovative technology and high quality. Product development focuses on clean combustion, which is why most Tulikivi fireplaces already beat the world's toughest emission standards.

Besides the standard models, custom-made fireplaces can also be ordered from Tulikivi to meet the customer's own specific requirements.

The Fireplaces product group also includes the Tulikivi Green products. These pellet, air-heating, water-heating and fireplace control systems are connected to the fireplace and improve the efficiency of its use. They are especially suitable for heating in low-energy and passive buildings.

Tulikivi is the world's largest manufacturer of heat-retaining fireplaces, and in Finland it is the market leader in this sector. The products in the Fireplaces product group are on sale in all of the company's markets in Europe, North America, Russia and Asia. Most customers are building new homes or renovating existing homes, and they value bioenergy as a form of heating and appreciate the economic advantages of wood-based heating. Tulikivi fireplaces appeal to customers because of their ecofriendliness, energy efficiency, aesthetics and durability, and because of the enjoyable heat they produce.

Tulikivi Sauna

Tulikivi launched production for its Sauna product group in 2011. The main products are electric and woodburning sauna heaters clad with soapstone, other natural stone, ceramic tiles or cast stone, or with a metal finish. Tulikivi also manufactures sauna heaters for smoke saunas and commercial saunas. Thanks to the large stone compartments in Tulikivi's sauna heaters, they always give an enjoyable and gentle sauna experience.

In sauna heaters, Tulikivi's strengths are its careful attention to safety and design. The modern and unique design has gained re cognition e.g. a prestigious Fennia Prize in the international Fennia Prize competition.

The Sauna products are sold under the Tulikivi brand, and their principal markets are Finland, Russia and Sweden. The Sauna product group accessories include sauna stones, heater lights, glass covers, soapstone interior design products and tiles, and electric sauna heater control units that allow the temperature in the sauna to be regulated to the nearest degree. Tulikivi sauna heaters can also be directly connected to a building automation system.

Tulikivi Interior

The main products in the Interior product group are countertops made of different natural or composite stone materials and tiling for different rooms in the home. Tulikivi has an extensive interior stone product collection.

In home construction, natural stone is a genuine and timeless material that is extremely well suited for use in kitchens and bathrooms and for floors, walls and stairs. Each stone product is individual and unique, and natural stone products can be combined almost limitlessly. As an interior design material, natural stone is eco-friendly and fire safe and it also raises the value of the home, because stone wears better than many other surface materials.

Tulikivi also has a large paving stone collection that includes products for path and patio paving, garden borders, wall cladding, stairs and other uses in a garden or yard.

The Interior product group's most important customer segment consists of Finnish fitted kitchen suppliers, with which Tulikivi works very closely. Products are also sold directly to home builders and renovators who appreciate the natural aesthetic quality, eco-friendliness and durability of Tulikivi's interior stone products.

The Interior products are mostly manufactured at Tulikivi's own factory in Espoo, and their principal market is Finland. Soapstone interior design products and countertops are also manufactured for export to various project sites abroad.

Soapstone tiles are Tulikivi's specialty. They are very handy especially for bathroom floors as they are not slippery even when wet. In spaces with floor-heating the heat-retaining capability of soapstone comes to its full potential.

Managing Director's review

Programme of changes will continue

Over the past few years, Tulikivi has been carrying out an extensive restructuring programme to improve its operations. In the process, the company's debt has decreased by around EUR 12 million since 2013, and it has invested around EUR 5 million in reorganisation. The company has also made significant investments in a new range of ceramic fireplaces, as well as its Karelia and Pielinen collections and their production technology. These collections have met with a positive response among end customers and dealers, and they will enable profitable growth. The sale of the talc deposit in Suomussalmi will strengthen the company's financial position.

Net sales stopped declining towards the end of the year and profitability improved

The Tulikivi Group's net sales in 2018 totalled EUR 28.6 million (EUR 29.3 million in Jan-Dec/2017). The operating result in 2018 totalled EUR -1.0 million (-0.4), and the result before taxes was EUR -1.8 (-1.2) million, including a goodwill impairment loss of EUR -0.5 (0.0). The comparable operating result in 2018 was EUR -0.5 (-0.4) million.

The overall fireplace market in our principal market areas decreased in 2018. The autumn fireplace season started slowly after the long and hot summer, which is why our net sales were lower than expected in the second half of the year. A decrease in inventories had a negative effect on profitability of EUR 1.2 million. We were able to decrease fixed costs as planned.

Intense competition in the Finnish fireplace market

Export sales of Tulikivi products increased Net sales in exports in the financial year were EUR 15.7 (15.9) million, or 54.9% (54.4%) of total net sales. The principal export countries were Russia, Germany, France, Sweden and Denmark. Export sales of Tulikivi products grew in the Central European and Scandinavian markets, however, thanks to the new collections. In Russia, the biggest export country, net sales in euros were at the 2017 level despite the weakening of the rouble against the euro. Net sales from heater lining stones declined.

In Central Europe, the new Karelia and Pielinen fireplace collections continued to significantly increase dealers' and consumers' interest in Tulikivi products. This has enabled us to open new dealer locations and reactivate old ones. These collections have increased our market share in Central Europe.

The products in the collections are based on modern Scandinavian design and feature a new soapstone surface finish technique. The Pielinen products are compact and easy to install. They are particularly well suited for the Central European market, as well as markets where there is no expertise in installing heat-retaining fireplaces.

New models added to successful collections The Group's investments during the financial year totalled EUR 1.1 (1.5) million, most of which was used for product development. A new Saramo model with a horizontal door and the Senso fireplace controller have been added to the Karelia collection. The Senso makes it easier to use the fireplace and reduces emissions. In addition, three new door types will be launched in the popular Pielinen collection in the first quarter of 2019.

Large soapstone reserves

The company has substantial reserves of soapstone that is suitable for the manufacture of fireplaces and saunas, and construction and interior stone products such as tiles and mosaics. The total soapstone reserves of the company are 12.9 million cubic metres, of which 9.0 million cubic metres are covered by quarrying plans. In addition to these reserves, the company estimates that it has talc reserves of roughly 20 million tonnes located in the mining district of the Suomussalmi plant. Progress in the talc project

In spring 2017, Tulikivi announced its decision to study opportunities to exploit the talc reserves in the Suomussalmi deposit. Tulikivi's soapstone reserves in Suomussalmi have talc reserves that are believed to be suitable for talc production. The talc grades of the deposit have been shown to correspond to previous talc projects carried out in Finland in terms of talc content, yield and brightness. Based on the results from the drilling tests that it commissioned, Tulikivi estimates that there are approximately 20 million tonnes of talc ore in Suomussalmi.

In February 2018, as part of this process, the company ordered an official ore study of part of the Haaponen deposit in Suomussalmi from the Geological Survey of Finland that meets the international JORC code. The first stage of the study covered a roughly six-million-tonne portion of the talc deposit. The purpose of the study was to verify the concentration capacity of the deposit for the purposes of talc production.

Following the positive results, a decision was made to expand the JORC study to cover 12 million tonnes. The drilling indicated that the area of the deposit is larger than was estimated earlier and that it continues at a consistent quality and volume to 100 metres, the depth now studied. The GTK is currently carrying out laboratory tests on additional samples from the additional drilling work and its reports should be completed in early 2019.

The results of the studies conducted in the Suomussalmi talc deposit project in 2018

Helsinki, March 3, 2019 Heikki Vauhkonen, Managing Director 2014 2015 2016 2017 2018

Return on Investments, %

-2.1

4 2 0

39.3

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

2014 2016 2017 2018

2015

0.8

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

2.4

0.20

3.5 3.3

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0 Investments and Depreciation, MEUR

1.1 1.3

-2.9

2014 2015 2016 2017 2018

-1.4

-0.4

-1.0

Share Price of the A Share, Dec. 31, EUR

2014 2015 2016 2017 2018

Own Production

0.17

(calculated 2010) British Standard PAS 2050

investments depreciation

1.1

0.10

1.5

2.4 2.5 2.1

Formation of Carbon Footprint in Tulikivi's

0.19

2014 2015 2016 2017 2018

0.21

Energy Consumption Transportations Materials

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Fireplace's Life Cycle

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

5.0 0 -5.0 -10.0 -15.0 -20.0 -25.0

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

-23.8

2015

0.30

-13.5

0.25

2014 2016 2017 2018

-15.9

-10.5

-17.6

2015

Monthly Development of the Trading Volume of A share, %

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

3.0 2.72

1.91 2.43

2014 2016 2017 2018

0.21 0.19

0.16

1.36 1.00

Gearing, %

89.8

-0.04

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

0.20 0.15

0.20 0.18

0.25

150 175

0.10

0.05

0.00

1 0 -1 -2 -3 -4 -5 -6

-3.3

-3.9

-0.06

2015

113.4

Monthly Development of the Average Price of the A share, EUR

0.17

0.17 0.16 0.16 0.16

2015

2014 20145 2016 2017 2018

2014 2016 2017 2018

125.0

2014 2016 2017 2018

1 2 3 4 5 6 7 8 9 10 11 12

0.15

0.16 0.17

0.14

0.10

0.0 0.5 1.0 1.5 2.0 2.5 3.08 3.71

3.5 4.0

1.49

0.66 0.80

-0.03

-0.02

135.3

-0.03

156.6

-2.1

-1.2

-1.8

Finland Export

30.7

27.4

12.9

15.7 28.6

13.4

15.9 29.3

Clericals Workers

5 15

161

Women Men

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

²² ¹⁰

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

12 20 15

Age Distribution of Personnel, Dec. 31, 2018

2014 2016 2017 2018

33.4

2014 2015 2016 2017 2018

15.1 15.5

36.9

2015

⁸ ¹⁰ ⁸

16.9 15.0

32.0 30.5

Year 2013

17.9

39.0

21.4

39.3

100

150

200

250

³ ⁴ 1

273

Net Sales per Business Area, % 2014 2015 2016 2017 2018 -2 -4 -6 -5.4 -7.7 -4.3 -8 -10 -3.8 exceeded our expectations. The expansion of the JORC report to 12 million tonnes means that the deposit is the largest known in Finland. The studies and cash flow models carried out as part of the studies have confirmed our view that if utilised the deposit could be profitable. The project has also prompted so much interest among potential buyer candidates and partners that in October 2018 the company appointed Initia Ltd to provide financial advice on the sale of the deposit. The process to sell the deposit is proceeding despite unforeseen delays in the JORC report.

8.4% Net sales will grow and profitability will improve in 2019

91.6% Fireplaces Interior Stone Products The highly successful development work on the Karelia and Pielinen collections provides us with an opportunity to increase our market share and profitability in both Finland and in exports in 2019.

Future outlook for wood heating

Renewable energy could replace a substantial share of the fossil fuels used in Europe to heat low-rise houses

The EU has set goals for replacing fossil fuels with renewable energy by 2020. They include EU-level goals for the use of wood and pellets. In Finland, wood is the main source of renewable energy.

Market pressure or taxation will increase consumer energy prices

The cost of energy is a major reason for buying a fireplace in Finland and abroad. The prices of oil, gas and electricity have been unusually low due to the recession. This has affected the development of the fireplace market. In addition to economic trends, tax policies affect the price of energy. Additional taxes, such as electricity tax and tighter taxation of oil heating, could increase the price of energy. Real-time pricing and electricity transmission charges could also increase the price consumers have to pay for energy.

Heat-retaining fireplaces are best for low-energy houses

Heat-retaining fireplaces are known for their practicality and great heating capacity in conventional houses. According to a study carried out by VTT Technical Research Centre of Finland in 2014, a heat-retaining fireplace is the best choice for modern low-energy houses, in addition to conventional houses. In both house types, a single heat-retaining fireplace can supply more than 50 per cent of the annual need for heating energy. This is because the fireplace releases heat evenly to the rooms, at a relatively low output. In low-energy houses, room-heating stoves and fireplace inserts generate high momentary heat. Rooms quickly become too hot, and ventilation is needed to remove the excess heat. As of 2018, the annual efficiency of heat-retaining fireplaces can be calculated at 3,000 kWh instead of 2,000 kWh. This will make heat-retaining fireplaces more competitive in comparison to other modes of heating by offering an affordable heating solution also for new houses.

EU defines allowable emission levels for wood burning

In 2014, the EU determined permitted emission levels for fireplaces, to be implemented in 2022. Tulikivi's export models already meet these requirements. In Finland, the permitted emission levels are already low and will become substantially lower when the new regulations come into effect.

Small-scale combustion of wood is the only form of energy independent of other energy forms

Fireplaces are an important part of Finland's security of supply. The same applies to Europe's security of supply. Fireplaces are the only way to create energy that is independent of other energy sources. They are an important part of crisis preparedness in society in case the availability and distribution of energy are affected.

Trends

Urbanization creates demand for new products and services
The ease of purchasing is highlighted in consumer purchasing decisions
The popularity of renewable energy is increasing
Consumers invest in personal well-being, health and experiences

• Increasing net sales by expanding target group

Two target groups: modern and traditional consumers
Collections designed together with customers, such as Karelia and Pielinen
Increasing net sales with clear product concept
- More efficient sales and marketing thanks to genuine differentiation factors
- More efficient sales with a collection that is easier to embrace
Scaling back the number of individual products
- Improves manufacturing efficiency
- Reduces fixed costs thanks to lower number of support functions
Modular collection
- Lower-priced subcontracted parts
- Smaller stocks

Shareholders and Management Ownership December 31, 2018

10 Major shareholders according to number of shares Shares registered in the name of a nominee are not included.	K shares	A shares	Proportion, %
1. Vauhkonen Heikki	5 809 500	1 064 339	11.48
2. Elo Mutual Pension Insurance Company		4 545 454	7.59
3. Ilmarinen Mutual Pension Insurance Company		3 720 562	6.21
4. Elo Eliisa	477 500	2 631 036	5.19
5. Toivanen Jouko	100 000	2 431 259	4.23
6. Finnish Cultural Foundation	100 000	2 158 181	3.77
7. Skandinaviska Enskilda Banken Ab (Publ) Helsinki Branch		1 856 314	3.10
8. Mutanen Susanna	846 300	797 500	2.75
9. Danske Bank A/S Helsinki Branch		1 621 748	2.71
10. Fennia Mutual Insurance Company		1 515 151	2.53

10 Major shareholders according to number of votes Shares registered in the name of a nominee are not included.	Votes/K shares	Votes/A shares	Proportion, %
1. Vauhkonen Heikki	58 095 000	1 064 339	45.86
2. Mutanen Susanna	7 975 000	846 300	6.84
3. Elo Eliisa	4 775 000	2 631 036	5.74
4. Elo Mutual Pension Insurance Company		4 545 454	3.52
5.Vauhkonen Mikko	3 975 000	343 810	3.35
6. Ilmarinen Mutual Pension Insurance Company		3 720 562	2.88
7. Toivanen Jouko	1 000 000	2 431 259	2.66
8. Finnish Cultural Foundation	1 000 000	2 158 181	2.45
9. Skandinaviska Enskilda Banken Ab (Publ) Helsinki Branch		1 515 151	1.44

The members of the Board and Managing Director control 5 810 000 K shares and 1 557 056 A shares representing 46.26 % of votes.

Stone supplies and reserves

In accordance with its strategy, Tulikivi Corporation strives to ensure that the company is in possession of the best possible soapstone reserves. The company has been systematically examining soapstone reserves for over 40 years, for example by using the expert services of the Geological Survey of Finland. The aim of examination has been to evaluate current soapstone reserves in greater detail as well as to seek new soapstone reserves.

Tulikivi Corporation's stone supplies and reserves total over 12,9 million m3. Examined and evaluated deposits are located at Nunnanlahti, Kuhmo, Paltamo and Suomussalmi. The company has in total eight valid mining patents: two at Suomussalmi, one at Kuhmo, one at Paltamo and four at Juuka. The total area of the mining patents is 340 ha. Soapstone is currently quarried and products are manufactured at Nunnanlahti and Suomussalmi. In 2018, the examination of deposits focused on Suomussalmi. Examination of potential deposits and further work on current deposits will continue in 2019.

Stone supplies used sparingly

In geographic terms quarrying is limited to small areas in comparison with, for example, clear cutting of forest resources. A total of approximately 70 000 cubic metres of soapstone is annually quarried from the company's quarries. Approximately from 15000 to 20 000 cubic metres of quarried soapstone is delivered to three soapstone factories. Adjoining rock, which is not part of the deposits, is quarried annually just under from 50 000 to 70 000 cubic metres. Soil needs also to be moved when excavating quarries in order to access the deposits, from time to time. When a quarry is closed, the area will be made safe and the quarry's stacking area will be landscaped.

In accordance with Tulikivi's environmental strategy, sparing use of natural resources is considered important. The overall yield of raw material is improved through development of the production technologies and product development as well as taking account of the properties of raw material. Tulikivi's strategic objective is to ensure sufficient raw material reserves for decades to come.

Environmental aspects of operations

Soapstone is extracted by sawing. The extraction does not require chemical treatment, and no chemicals are used in the quarrying. The saws used in the quarrying run on electricity and do not require cooling water. Only rapeseed

or tall oil are used for lubricating the blades. The rainwater entering the quarry is pumped into sedimentation pools through measurement pits. Water samples are taken three times a year in order to monitor the environmental impact of the quarrying operation. Watering is used to prevent the dust from spreading. The noise from the extraction is mainly sawing and machine noise. The noise levels emitted from quarrying are within the permitted limits. In the quarrying work, the explosion breaking of adjoining rock takes place two or four times a month, on average.

Quarrying process accords with environmental and mining permits The principal goals of Tulikivi's operations are as follows: a safe and healthy working environment, the sparing use of natural resources and the management of quarrying and production processes that minimizes adverse environmental effects. Tulikivi takes environmental considerations into account in its procurement of raw materials, in production and in the end products. Tulikivi monitors the environmental effects of its operations in accordance with officially approved monitoring programmes. Tulikivi has permits for its entire production and for the storage and use of blasting materials, granted by the environmental and mining authorities.

Environmental and corporate responsibility

Tulikivi's operations are guided by the company's values. Accordingly, it complies with the relevant legislation and regulations in all its activities and operates responsibly towards society at large, the environment and the company's stakeholders. The most important stakeholders for Tulikivi are its customers, personnel, shareholders, finance providers and other cooperation partners, both

in Finland and abroad.

Environmental responsibility

The aim of environmental work is to improve the company's ability to use natural resources sparingly, and to manage processes and products in a way that minimises their impact on the environment. The safety and quality of products and operations are defined in the company's quality, environmental, occupational health and occupational safety policies. Tulikivi has been granted an ISO 9001 quality certificate. Work on environmental and safety matters is continuously being developed in accordance with the ISO 14001 and OHSAS 18001 standards.

Tulikivi carries out long-term product development in order to ensure and enhance the environmentally friendly aspects of its products. The products must be as durable and safe as possible and their environmental

impact must be minimised at all stages of their

life cycle. The aims of Tulikivi's research and development work include the provision of reliable information on the environmental impacts of its products in production and use, and the improvement of eco-efficiency and material efficiency. To improve material efficiency, Tulikivi utilizes waste materials from other parts of the ceramics industry as a raw material for its ceramic fireplaces. The materials and components used in the products are tested regularly and the products must pass type approval tests. Tulikivi's soapstone has been approved as a material

that can come into contact with food, for example. We strive to increase our suppliers awareness of their environmental responsibilities and to act in accordance with the principles of sustainable development.

Material choices, energy consumption and modes of transport together account for a significant proportion of the environmental impact of our products in the production chain. Using bioenergy-fuelled fireplaces as a heating source instead of electricity helps to cut the CO2 emissions of energy generation, thus offsetting the carbon footprint of fireplace production. Tulikivi's fireplaces already beat the world's strictest emissions standards (BimSchV), and the company is continuing its research into even cleaner combustion.

All of Tulikivi Corporation's operational quarries and production plants have valid mining and environmental permits. Tulikivi monitors the environmental impact of quarrying and complies with the officially approved supervision programmes. Operating principles have been drawn up for the quarries, and these require regular analysis of operating risks, taking into account both safety and environmental considerations. Landscaping is carried out as part of normal quarrying operations and at quarries that have ceased operating.

The raw materials used at the production plants include soapstone, natural stone and ceramic material. No substances that are hazardous to the environment are used in the processing of soapstone, and none are produced in the manufacturing process. The production plants use closed process water circulation. Tulikivi has identified energy efficiency improvement and further development of waste management as areas of its operations that require development input. Improvements in energy efficiency are being made in accordance with the energy efficiency agreement of the Confederation of Finnish Industries (EK). The purpose of the agreement is to meet Finland's international commitments in mitigating climate change, based on the national energy and climate strategy. Tulikivi is committed to the measures set out in the energy efficiency agreement's action programme for 2008–2016. The agreement aims to increase the efficiency of corporate energy use by at least 9 per cent, and to continuously improve energy efficiency and promote renewable energy sources. Waste management is being developed at all of Tulikivi's sites by adopting a waste sorting system, aiming to reduce the amount of and fill waste and to reuse as much waste as possible for energy production and other purposes. Recyclable waste (e.g. board and paper) goes for recycling via normal waste management. Tulikivi has joined the Environmental Register of Packaging PYR Ltd and is a member of SELT ry (Electrical and Electronic Equipment Producers' Association).

Financial responsibility 2.4 2.4 2.5 2.1 2014 2015 2016 2017 2018

3.5 3.3

-7.7

Investments and Depreciation, MEUR

-2.9

Return on Investments, %

2014 2015 2016 2017 2018

-4.3

-1.4

2014 2015 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

2014 2016 2017 2018

2015

0.8

32.0 30.5 29.3 28.6

-0.4

-1.2

2.0 1.9 1.6

-1.0

-3.8

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

2.4

0.20

3.5 3.3

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

Tulikivi's operations affect many stakeholders: customers, suppliers, service providers, employees, investors and the public sector. The direct financial impact of Tulikivi's operations on stakeholders comprised the following in 2018. Customers generated a total of EUR 28.6 million (29.3) in net sales. This consisted of Tulikivi and Kermansavi fireplaces, natural stone products, sauna heaters and product-related services sold to customers. Tulikivi paid EUR 7.5 million (6.0) to suppliers of goods and semi-finished products and EUR 9.4 million (10.9) to service providers. In addition, the company paid EUR 0.2 million (0.6) for machinery and equipment. investments depreciation Share Price of the A Share, Dec. 31, EUR 2014 2015 2016 2017 2018 1.1 1.3 1.5 1.1 2014 2015 2016 2017 2018 0.20 0.17 0.21 0.19 0.10 8.4% 91.6% Net Sales per Business Area, % Fireplaces Interior Stone Products

Employees' salaries and bonuses totalled EUR 8.6 million (9.1), and the related pension and other insurance contributions were EUR 1.7 million (2.0). The effect of the restructuring provision has been accounted for in the figures for the period. Finance providers were paid EUR 0.7 million (0.8) net in interest and other financial expenses. Shareholders were paid no dividends for 2018 or for 2017. 0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.06 -0.03 -0.02 -0.04 Formation of Carbon Footprint in Tulikivi's Own Production

-3.9

0.19

2014 20145 2016 2017 2018

0.10

-2.1

1.1

investments depreciation

1.5

2.4 2.5 2.1

-1.2

-1.8

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

1 0 -1 -2 -3 -4 -5 -6

-3.3

Social responsibility

-0.11

125

1 0 -1 -2 -3 -4 -5 -6

0.17

Investments and Depreciation, MEUR

1.1 1.3

-2.9

2014 2015 2016 2017 2018

-1.4

-0.4

-1.0

-3.3

Share Price of the A Share, Dec. 31, EUR

2014 2015 2016 2017 2018

0.21

Tulikivi is a responsible employer and its products are safe, expertly prepared. Employee's commitment to work and good craftsmanship ensure the quality of products. Success of the turnkey delivery is guaranteed Gearing, % 135.3 150 175 (calculated 2010) British Standard PAS 2050 Transportations Materials

2015

Formation of Carbon Footprint in Tulikivi's Own Production Net Sales

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

USA

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Fireplace's Life Cycle

per Geographical Area, %

2.2%

45.1% 52.7%

Net Sales

91.6%

Fireplaces

Finland Rest of Europe

USA

Interior Stone Products

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

-3.8

2014 2015 2016 2017 2018

-4.3

2014 2016 2017 2018

2015

0.8

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

39.3

-2.4

-2.1

-8 -10

4 2 0 -2 -4 -6 -5.4

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

8.4%

per Business Area, %

Net Sales

Return on Investments, %

-7.7

-2.1

4 2 0 -2 -4 -6 -5.4

-8 -10 39.3

100 75 Formation of Carbon Footprint in Tulikivi Fireplace's Life Cycle

89.8

113.4

125.0

Energy Consumption

1 2 3 4 5 6 7 8 9 10 11 12

0.15

0.16 0.17

0.14

0.10

0.20 0.20 0.18 0.17 0.16 0.16 0.16 0.17 The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

0.15

0.10

0.05

0.00

by specialized oven champion, installer and sales network. Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, % 0.40 0.35 125 113.4 125.0 135.3 150

Gearing, %

175

-0.04

-13.5

5.0 0 -5.0 -10.0 -15.0 -20.0 -25.0

-0.06

2015

-3.9

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

2014 20145 2016 2017 2018

-2.1

-1.2

-1.8

-23.8

2014 2016 2017 2018

-0.03

2015

2014 2016 2017 2018

-15.9

-0.02

-10.5

156.6

-0.03

-17.6

Tulikivi Group's average personnel was 200 (208 in 2017) employees. The average number of employees is calculated in full time equivalent. The number of personnel was adjusted to meet sales development mainly by temporary lay-offs. 0.30 0.25 0.20 0.15 0.10 -0.03 0.25 0.21 0.19 0.30 100 75 50 25 0 89.8

Training of employees was focused on the controlling current situation. This includes related knowledge requirements in legislation or other regulation (e.g. GDPR) as well as first aid and occupational safety training. Learning by doing is still the most important way of learning in the company. Apprenticeship training is used increasingly and three people were under training at the end of the year. 0.05 0 2014 2016 2017 2018 156.6 2014 2016 2017 2018 2015 Monthly Development of the Average Price of the A share, EUR 0.20 0.15 0.25 2014 2016 2017 2018 2015 0.20 0.18 0.17 0.16 0.16 0.16 0.15 0.16 0.170.14 0.17

Professional skills of oven champions, installers and sales network is maintained through annual training on topical issues. Sales network was targeted training on technical sales and sales training. In addition, training was provided for utilizing web network in sales and customer service, as well as data protection matters. 0.10 0.05 0.00 1 2 3 4 5 6 7 8 9 10 11 12

Focus in the occupational health care is on preventive actions, but also the basic level of health care is included in the occupational health care. In accordance with the model of early support discussions for functional capacity takes place regularly in cases sickness absences amounts to 40 sick leave hours and Monthly Development of the Trading Volume of A share, % 3.08 3.71 3.0 2.72 3.5 4.0

1.49

0.66 0.80

0.0 0.5 1.0 1.5 2.0 2.5

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

1.91 2.43

1.36 1.00

0.10

³ ⁴ 1

3.0 2.72

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

0.66 0.80

Monthly Development of the Trading Volume of A share, %

0.30

-13.5

0.25

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

-23.8

2015

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

5.0 0 -5.0 -10.0 -15.0 -20.0 -25.0

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

17.9

2015

39.0

21.4

39.3

2014 2016 2017 2018

-15.9

-10.5

-17.6

1.49

0.0 0.5 1.0 1.5 2.0 2.5 3.08 3.71

3.5 4.0

100

150

200

250

0.16

Year 2013

273

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

12 20 15

1.36 1.00

Age Distribution of Personnel, Dec. 31, 2018

2014 2016 2017 2018

33.4

2014 2015 2016 2017 2018

15.1 15.5

2014 2016 2017 2018

36.9

2015

⁸ ¹⁰ ⁸

1.91 2.43

16.9 15.0

32.0 30.5

0.21 0.19

Finland Export

30.7

27.4

100

150

200

250

³ ⁴ 1

12.9

15.7 28.6

17.9

39.0

21.4

39.3

Finland Export

30.7

27.4

12.9

15.7 28.6

13.4

15.9 29.3

Clericals Workers

5 15

161

Women Men

13.4

15.9 29.3

0.16

Clericals Workers

5 15

Year 2013

273

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

²² ¹⁰

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

12 20 15

Age Distribution of Personnel, Dec. 31, 2018

2014 2016 2017 2018

33.4

2014 2015 2016 2017 2018

15.1 15.5

36.9

2015

⁸ ¹⁰ ⁸

16.9 15.0

32.0 30.5

161

Women Men

⁽calculated 2010) British Standard PAS 2050

after on 12-month follow-up period. Workplace surveys have been carried out in various locations in collaboration with the occupational health care and the Institute of Occupational Health.

2014 2016 2017 2018

0.21 0.19

0.16

In 2018 new initiatives were made 72 (81) pieces. The accident frequency rate was 22 (23) accidents per million working hours.

Community spirit

Gearing, %

89.8

-0.04

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

0.20 0.15

0.20 0.18

0.17

0.25

150 175

0.10

0.05

0.00

1 0 -1 -2 -3 -4 -5 -6

-3.3

-3.9

-0.06

2015

113.4

8.4%

per Business Area, %

Net Sales

Return on Investments, %

-7.7

-2.1

4 2 0 -2 -4 -6 -5.4

-8 -10 39.3

91.6%

2.2%

45.1% 52.7%

Fireplaces

Finland Rest of Europe

USA

Interior Stone Products

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

-3.8

2014 2015 2016 2017 2018

-4.3

2014 2016 2017 2018

2015

0.8

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

2.4

0.20

3.5 3.3

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0 Investments and Depreciation, MEUR

1.1 1.3

-2.9

2014 2015 2016 2017 2018

-1.4

-0.4

-1.0

Share Price of the A Share, Dec. 31, EUR

2014 2015 2016 2017 2018

Own Production

0.17

(calculated 2010) British Standard PAS 2050

investments depreciation

1.1

0.10

1.5

2.4 2.5 2.1

Formation of Carbon Footprint in Tulikivi's

0.19

2014 2015 2016 2017 2018

0.21

Energy Consumption Transportations Materials

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Fireplace's Life Cycle

Monthly Development of the Average Price of the A share, EUR

0.17 0.16 0.16 0.16

2015

2014 20145 2016 2017 2018

2014 2016 2017 2018

125.0

2014 2016 2017 2018

1 2 3 4 5 6 7 8 9 10 11 12

0.15

0.16 0.17

0.14

0.10

0.0 0.5 1.0 1.5 2.0 2.5

3.5 4.0

-0.03

-0.02

135.3

-0.03

156.6

-2.1

-1.2

-1.8

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

5.0 0 -5.0 -10.0 -15.0 -20.0 -25.0

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

-23.8

2015

0.30

-13.5

0.25

2014 2016 2017 2018

-15.9

-10.5

-17.6

2015

Tulikivi Corporation is a member of numerous organisations and forums, including Finland Chamber of Commerce, the Finnish Natural Stone Association, the Chemical Industry Association, the Central Association of Chimney Sweeps, the Finnish Family Firms Association, Confederation of Finnish Construction Industries, the Association for Finnish Work, the Federation of Finnish Enterprises, the Fireplace and Chimney Association TSY, TTS –Työtehoseura (Work Efficiency Institute), the Finnish Clean Energy Association, HKI Industieverband Haus-, Heiq- und Kuchenteknik e. V., Teknikföretaper Geographical Area, % gens Branschgruppen AB Monthly Development of the Trading Volume of A share, % 3.08 3.71 1.49 0.66 0.80 0.57 0.43 1.91 2.43 1.36 1.00 3.0 2.72

1 2 3 4 5 6 7 8 9 10 11 12

Age Distribution of Personnel, Dec. 31, 2018 40 50 60 31 45 39

2014 2016 2017 2018

33.4

2014 2015 2016 2017 2018

15.1 15.5

36.9

2015

16.9 15.0

32.0 30.5

Finland Export

30.7

27.4

12.9

15.7 28.6

13.4

15.9 29.3

GenderDistribution of Personnel,Dec.31,2018

Personnel per Segments Average During the

Year 2013

273

250 300

17.9

39.0

21.4

39.3

Tulikivi adds Saramo to its Karelia range of fireplaces

The internationally popular Karelia range of fireplaces now includes Saramo, a fireplace with a wide horizontal door. You can use the firebox to cook: it is big enough for a long salmon fillet, for example, to be cooked on the embers.

At 75 centimetres, the horizontal door is the widest in heat-retaining fireplaces. You can burn firewood or pellets in the firebox, even alternately, without having to use a pellet basket. The fireplace is available in four alternative soapstone surfaces: dark Nobile tiles that have been textured using watercutting; embossed Grafia soapstone tiles; traditional smooth soapstone; and horizontally ribbed soapstone. The tiles are aligned with the door, giving the fireplace a harmonious appearance.

An impressively wide view of the flames

Designed by Mika Moilanen, Design Manager at Tulikivi, the Karelia range currently includes 14 fireplaces. "Saramo is characterised by its exceptionally wide horizontal door," says Moilanen. "The shape of the door resembles that of a television screen, which makes for an eye-catching display that you can admire and enjoy while relaxing by the fireplace. At 75 cm by 45 cm, this is the widest door ever in heat-retaining fireplaces," says Moilanen. Fireplaces in the Karelia range have highly advanced combustion technology, so even pellets burn with large, bright flames. You don't need a pellet basket – you can place the pellets directly into the firebox in the same manner as firewood.

"The firebox is also ideal for cooking. Karelia fireplaces have been designed with cooking in mind: the delivery includes a metal rack on which you can cook food on the embers or in residual heat," says Moilanen.

Tulikivi Senso - A new smart device application for cleaner burning

Emissions from small-scale combustion have sparked a great deal of discussion recently. The cleanliness of combustion can be controlled by adjusting the volume of air that enters the firebox at different stages of burning.

In practice, however, few people have the patience or skill to monitor the air controls carefully enough. Tulikivi has developed a solution: the Senso fireplace controller for automated air intake. The control unit adjusts the air controls automatically at each stage of combustion, ensuring that an appropriate amount of air enters the firebox. Its electronic control system is based on sensors installed in the fireplace. The fireplace controller also includes a smart device application that advises you how to use your fireplace efficiently. It tells you when to add more firewood and when to stop increasing the temperature. The Senso fireplace controller can be installed in all heat-retaining fireplaces

included in Tulikivi's Karelia range.

"Rather than being a remote control for fireplaces, Tulikivi Senso is an invention that helps users save wood by using it more efficiently for heating. The system independently controls air the intake, which has a significant effect on emissions from burning wood. It opens and closes the air control lever automatically according to each stage of the combustion process. This ensures that wood is burned cleanly," says Heikki Vauhkonen, Managing Director of Tulikivi.

In the small-scale combustion of wood, the highest volume of particulates is generated when the wood is not burning cleanly. Tulikivi has invested in advanced combustion technology for new fireplaces, which means cleaner combustion. For example, the fireplaces in the Karelia range already meet the emission requirements that will be implemented in 2022.

Clean combustion is also affected by how much air is let into the fireplace during each stage of burning, and through which inlet. During the ignition phase and the embers phase, a large volume of air is needed through the grate to burn the embers away rapidly. During the combustion phase, the volume of air entering through the grate is limited, and a maximal volume of secondary air is directed towards the tops of the flames – that is, above the firewood or pellets.

"To minimise emissions from the combustion process, the Senso fireplace controller tells you how to use your fireplace efficiently. It lets you know when to add firewood and when to stop increasing the temperature," Vauhkonen explains.

Board of Directors

Jyrki Tähtinen (b.1961)

LL.M, MBA, Attorney at Law. Member of the Board of Directors of Tulikivi Corporation since 2015. Chairman of the Board since April 13, 2015.

Other key positions of trust: Chairman of the

Board of Borenius Attorneys Ltd. Member of the Board of JSH Capital Ltd.

Primary work experience: Borenius Attorneys

Ltd. : President and CEO 1997-2008, Partner since 1991, and prior to this, has worked as a lawyer for other law firms and for the City of Helsinki since 1983.

Tulikivi Corporation share ownership:

Series A shares: 42 553 pieces

Markku Rönkkö (b. 1951)

M.Sc. (Econ. & Bus.Admin.).Member of the Board of Directors of Tulikivi Corporation since 2009, Member of the Audit Committee since 2009.

Other key positions of trust: Member of the Boards of Directors of Goodwiller Ltd., Mikrobioni Ltd. and Potwell Ltd. Shareholder/partner at Boardman Ltd. Member of Iisalmi city council and the board.

Primary work experience: Järvi-Suomen Portti Ltd: Managing Director 2008-2011, Karelia-Upofloor Ltd: Managing Director 2006-2007, Savon Voima Plc: Managing Director 2004- 2006, Olvi Plc: Managing Director 1985 -2004, CFO 1983-1985 , IS-Yhtymä Ltd: CFO 1977-

1982, part-time authorized public accountant in a number of companies 1984-2003. Tulikivi Corporation share ownership: Series A shares: 159 453 pieces

Reijo Svanborg (b. 1943)

M. Sc. (Eng.) Member of the Board of Directors of Tulikivi Corporation since 2015,Member of the Audit Committee since 2015.

Other key positions of trust: Member of the Boards of High Metal Production Ltd, Suomen Puukerrostalot and Finndomo Ltd. Chairman of the Board of Enero Ltd.

Primary work experience: Finndomo Ltd: Managing Director 2001-2007, Tulikivi Corporation: Managing Director 1997-2001, Tebelmkt/Tetra Pak Tebel N.B.V: Managing Director 1990-1996, Oy Hackman Ab: Strategy Director 1989-1990, Hackman Catertec Oy: Managing Director 1983-1989.

Tulikivi Corporation share ownership: Series A share 216 208 pieces

Heikki Vauhkonen (b.1970)

LLB, BBA, Member of the Board of Directors of Tulikivi Corporation since 2001, Managing Director April 2007 – April 2013, Chairman of the Board April 16, 2013- August 22, 2013,

Managing Director since August 23, 2013. Member of the Management Group since 2001. Has worked for Tulikivi since 1997.

Other key positions of trust: Member of the Board of Directors of Tulikivi Corporation since 2001, Member of the Supervisory Board of Fennia since 2011, Member of the Board of Directors of Suomen Lähienergialiitto ry since 2015, Member of the Board of Directors of Rakennusteollisuus RTT ry since 2012.

Primary work experience: Tulikivi Corporation: Managing Director August since 2013, Chairman of the Tulikivi Board of Directors April 2013- August 2013, Managing Director 2007- April 2013, Marketing Director 2002- 2007, Tulikivi U.S., Inc.: Vice President 1997- 2001.

Tulikivi Corporation share ownership:

Series A shares 1 064 339 pieces Series K shares 5 809 500 pieces

Jaakko Aspara (b. 1981)

Vice-Rector, professor (Hanken School of Economics). D.Sc. (Econ.), DA, M.Sc. (Tech.). Member of the Board of Tulikivi Corporation since 2016.

Other key positions of trust: Member of the Boards of HOK-Elanto (since 2014), Makes ry (since 2018), MARK Finnish Marketing Federation (since 2012). Vice Chairman of the Board of TEN (Ethics Council of Market Research Industry. Since 2013).

Primary work experience:

Helsinki School of Economics: Professor 2007- 2014, Aalto University School of Business: Pro-

fessor 2014, Hanken Schoolf of Economics: Professor 2014 -, Head of Department (Marketing) 2016-2018.

Tulikivi Corporation share ownership: No shareholding

Paula Salastie (b.1978)

BBA, Member of the Board Directors of Tulikivi since 2017

Other key positions of trust: Member of the Board of Directors of Teknos Group Ltd., Member of the Board of Directors of Datacenter Ltd., Member of the Board of Directors of Kemianteollisuus KT Ry, Member of the Board of Directors of Association of Finnish Paint Industry, Member of the Supervisory Board of Elo Mutual Pension Insurance Company, delegate of the Family Business Network Finland, Chairman of the Board of Directors of Teknos Ltd., Chairman of the Board of Directors of Teknos AB, Chairman of the Board of Directors of Teknos A/S, Member of the Board of Directors of Teknos Sp. z.o.o. Supervisory Board, Chairman of the Board of Directors of PS Holding Ltd.

Primary work experience: Group executive since 2015, Chairman of the Board of Directors 2011 – 2015, Director of Architectural Coatings 2009 – 2010, arrangements regarding change of generation 2007 – 2008. Pyramid Invest Ltd.: Managing Director, investor 2005 – 2009.

Tulikivi Corporation share ownership: No shareholding

Heikki Vauhkonen (b. 1970)

LLB, BBA, Member of the Board of Directors of Tulikivi Corporation since 2001, Managing Director April 2007 – April 2013, Chairman of the Board April 16, 2013- August 22, 2013, Managing Director since August 23, 2013. Member of the Management Group since 2001. Has worked for Tulikivi since 1997.

Primary work experience: Tulikivi Corporation: Managing Director August since 2013, Chairman of the Tulikivi Board of Directors April 2013- August 2013, Managing Director 2007- April 2013, Marketing Director 2002-2007, Tulikivi U.S., Inc.: Vice President 1997-2001.

Tulikivi Corporation share ownership:

Series A shares 1 064 339 pieces Series K shares 5 809 500 pieces

Saskia Kerkkanen (b. 1975)

BBa & Ba (Hons.) Marketing Manager. Member of the Management Group since 2015. Has worked for Tulikivi since 2012.

Primary work experience: Tulikivi Corporation: Marketing Manager since 2013, Digital Marketing Planner 2012-2013, Aplicom Oy: Marketing communications coordinator 2005- 2012, Iittala Group: Project Manager 2004

Other key positions of trust: Member of the board of Directors Silvast Creative 2016-

Tulikivi Corporation share ownership: No shareholding

Simo Kortelainen (b. 1980)

M.Sc. (Econ.) Manager of Soapstone Production and Quarrying in Juuka Suomussalmi. Member of the Management Group since 2015. Has worked for Tulikivi since 2008.

Primary work experience: Manager of Soapstone Production and Quarrying since 2015, Production Control Specialist 2014-2015, Accounting and Information System Specialist 2011-2013, Accounting Consultant (entrepreneur)

Tulikivi Corporation share ownership: No shareholding

Markku Prättälä (b. 1967)

Automation technician. Sales Director, Finland. Member of the Management Group since 2015. Has worked for Tulikivi since 2006.

Primary work experience: Tulikivi Corporation: Sales Director, Finland since 2015, Sales Manager 2013-2015, Factory and Product Manager 2009-2013, Sales Manager/Kermansavi-fireplaces 2006-2008, Kermansavi Oy: Sales Manager 2004-2006, Varkauden Educa: Managing Director 2003

Tulikivi Corporation share ownership: Series A shares 15 525 pieces

Martti Purtola (b. 1966)

M.Sc (Eng.) Sales Director, Scandinavia, Middle-Europe and lining stones. Member of the Management Group since 2015. Has worked for Tulikivi 1999-2005 and since 2008.

Primary work experience: Tulikivi Corporation: Sales Director, Germany and lining stones since 2015, Director, saunas and design fireplaces 2011-2014, Business Development Manager 2009-2011, Product Manager 2008-2009, Kesla Oyj: Sales Manager 2006-2008, Tulikivi Corporation: Product Manager 2003-2006, Kiantastone Oy: Marketing Manager 1999-2002, Halton Oy: product development engineer 1996-1999, Enerpac Oy: Sales Engineer 1992-1996.

Tulikivi Corporation share ownership:

Series A shares 15 000 pieces

Jari Sutinen (b. 1962)

D.Sc.(Tech.) M.Sc. (Eng.). Product Development Manager. Member of the Management Group since 2015. Has worked for Tulikivi since 2005.

Positions of trust: Member of the Varparanta water cooperative 2007-2016.

Primary work experience: Tulikivi Corporation: Product Development Manager since 2009, Laboratory Manager 2005-2009, IVO Consulting/ Fortum Engineering /Enprima Engineering Ltd, research engineer, product manager, Engineering Consultant 1998-2005, Tampere University of Technology: researcher 1990-1998.

Tulikivi Corporation share ownership: Series A shares 15 000 pieces

Jouko Toivanen (b. 1967)

D.Sc. (Tech.), M.Sc. (Eng.). Director of Finance and Administration. Member of the Management Group Group since 1995. Has worked for Tulikivi since 1993.

Positions of trust: Member of the Board of Directors of the Finnish Natural Stone Association.

Primary work experience: Tulikivi Corporation: Director of Finance and Administration since 2013, Director, lining and interior decoration stone products 2011-2013, Director of Natural Stone Products Business 2003-2011, Financial Director 2001-2007, Director of operational accounting and management systems 1999-2001, Financial Manager 1997-1999, Accounting Manager 1995-1997,

Tulikivi Corporation share ownership: Series K shares 100 000 pieces Series A shares 2 431 259 pieces

Report on the Corporate Governance Statement 2018

and in the Annual Report. The administration of Tulikivi Corporation and its

subsidiaries is based on the law, the Articles of Association and the Finnish Corporate Governance Code, which entered into force on 1 January 2016. The company complies with the NASDAQ OMX Helsinki Guidelines for Insiders. This Corporate Governance Statement has been prepared in accordance with the recommendations of the Finnish Corporate Governance Code. The company deviates from the recommendations of the Corporate Governance Code regarding Recommendation 18a Nomination Committee. The composition of the Nomination Committee deviates from the recommendations of the Finnish Corporate Governance Code because Heikki Vauhkonen, the Managing Director, is a member of the Committee. The reason is that Tulikivi is a family company.

The Corporate Governance Code is publicly available on the Securities Market Association website at www.cgfinland.fi/en/.

Tulikivi Corporation prepares its consolidated financial statements and interim reports in accordance with the International Financial Reporting Standards (IFRS) adopted by the EU. In communications, the Group complies with the

Securities Markets Act, the applicable standards of the Financial Supervisory Authority and NASDAQ OMX Helsinki's regulations. The Board of Directors' Report and the parent company's financial statements are prepared in accordance with the Finnish Accounting Act and the instructions and statements of the Finnish Accountancy Board.

Organisation of the Tulikivi Group The Corporate Governance Statement is

The companies in the Group are the parent company Tulikivi Corporation, Tulikivi U.S. Inc. in the published separately from the Board of Directors' report and is available on the company's website

USA and OOO Tulikivi in Russia. Group companies also include Tulikivi GmbH and The New Alberene Stone Company, Inc., which are dormant.

The Board of Directors, which is elected by the Annual General Meeting, the Board committees, the Managing Director and the Management Group, which assists the Managing Director, are responsible for the Tulikivi Group's administration and operations.

Description of the composition and operations of the Board of Directors and the Board committees

The Board of Directors is responsible for the company's administration and the due organisation of operations. The Board of Directors is composed of no fewer than five and no more than seven members. The Annual General Meeting elects the members of the Board for one year at a time. The Board of Directors elects a chairman from among its members. The Board of Directors of the Group's parent company decides on the composition of the subsidiaries' Boards of Directors.

Composition of the Board of Directors

Tulikivi Corporation's Annual General Meeting of 19 April 2018 decided that the Board shall have six members.

Personal information of the members of the Board of Directors:

•Jyrki Tähtinen, b. 1961. Chairman of the Board. LL.M., MBA, attorney-at-law. Board member-ship in several companies. Tulikivi Corporation's Series A shares 42,553.
•Jaakko Aspara, b. 1981. D.Sc. (Econ. & Bus. Admin.), D.A. (Industrial Design), M.Sc. (Tech.). Board membership in several companies. No shareholding.
•Markku Rönkkö, b. 1951. M.Sc. (Econ. & Bus. Admin.). Board membership in several companies. Tulikivi Corporation's Series A shares 159,453.
•Paula Salastie, b. 1978. BBA. Board membership in several companies. No shareholding.
•Reijo Svanborg, b .1943. B.Sc. (Eng.). Board membership in several companies. Tulikivi Corporation's Series A shares 216,208.
•Heikki Vauhkonen, b. 1970. Managing Director of Tulikivi Corporation. LL.B., B.Sc. (Econ. & Bus. Adm.). Tulikivi Corporation's Series K shares: 5,809,500 and Series A shares: 1,064,339. Jaakko Aspara, Markku Rönkkö, Paula Salastie, Reijo Svanborg and Jyrki Tähtinen are Board members who are independent of the company. The company's goal is that both genders are represented on the Board. It has succeeded in reaching this goal..

Primary duties of the Board of Directors

Pursuant to the Limited Liability Companies Act, the Board of Directors must see to the administration of the company and the appropriate organisation of its operations. The Board of Directors is responsible for the appropriate arrangement of the control of the company accounts and finances. The Board directs and supervises the company's operational management; appoints and dismisses the Managing Director; approves the company's strategic objectives, budget, total investments and their allocation, and the reward systems employed; decides on agreements that are of far-reaching consequence and the principles of risk management; ensures that the management system is operational; confirms the company's vision, values to be complied with in operations and organisational model; approves and publishes the interim reports, annual report and financial statements; and determines the company's dividend policy and summons the General Meeting. It is the duty of the Board of Directors to promote the best interests of the company and all of its shareholders.

In 2018, the company's Board of Directors convened 14 times. The average participation rate of the Board members in these meetings was

85.7%. The participation rate was lowered by the long sick leave of a member of the Board of Directors. The attendance of each member at the meetings is shown in the table below. The Board of Directors conducts a self-assessment annually.

Board Committees

The Board of Directors has two committees: the Nomination Committee and the Audit Committee. The Board of Directors appoints the members and Chairmen of the committees.

The Nomination Committee was composed of Jyrki Tähtinen (Chairman), Markku Rönkkö (member) and Heikki Vauhkonen (member). The composition of the Nomination Committee deviates from the recommendations of the Finnish Corporate Governance Code because Heikki Vauhkonen, the Managing Director, is a member of the Committee. The reason is that Tulikivi is a family company. The duties of the Nomination Committee include the preparatory work for proposals for the election of directors to be presented to the General Meeting, the preparation of matters relating to the compensation of members of the Board of Directors and succession planning for members of the Board of Directors. The Nomination Committee met once in 2018. The Audit Committee was composed of Markku Rönkkö (Chairman), Reijo Svanborg (member) and Heikki Vauhkonen (member). The Audit Committee's task is to assist and expedite the work of the Board by dealing with issues associated with the company's financial reporting and control and ensuring communication with the auditors. The Audit Committee met five times in 2018. The average participation rate of the committee members in these meetings was 100.0%.

Managing Director

Tulikivi Corporation's Managing Director is Heikki Vauhkonen. Pursuant to the Limited Liability Companies Act, the Managing Director sees to the executive management of the company in accordance with the instructions and orders provided by the Board of Directors. The Managing Director must ensure that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. The Managing Director must supply the Board of Directors and its members with the information necessary for the performance of the Board's duties. The Managing Director may undertake measures that are unusual or extensive in view of the scope and nature of the activities of the company only if so authorised by the Board of Directors or if it is not possible to wait for a decision of the Board of Directors without causing essential harm to the business operations of the company. In the latter case, the Board of Directors must be notified of the measures as soon as possible. The Managing Director is responsible for operational management, the implementation of the budget, the Tulikivi Group's financial result and the activities of his or her subordinates.

Management Group

In operational management and planning, the Management Director has been assisted by the Management Group, the members of which are as follows, in addition to the Managing Director himself: Jouko Toivanen, Director of Finance and Administra-

tion, Markku Prättälä, Sales Director, Finland, Saskia Kerkkänen, Marketing Manager, Martti Purtola, Director Sales & Marketing Scandinavia, Central Europe and Lining Stone, Jari Sutinen, Product Development Manager and Simo Kortelainen, Manager of Soapstone Production and Mining. The Management Group met 46 times in 2018.

Personal information of the members of the Management Group:

•Heikki Vauhkonen, b. 1970. Managing Director of Tulikivi Corporation. LL.B., B.Sc. (Econ. & Bus. Adm.). Tulikivi Corporation's Series K shares: 5,809,500 and Series A shares: 1,064,339.
•Jouko Toivanen, b. 1967. Tulikivi Corporation's Director of Finance and Administration. D.Sc. (Tech.), M.Sc. (Eng.). Tulikivi Corporation's Series K shares: 100,000 and Series A shares: 2,431,259.
•Markku Prättälä, b. 1967. Tulikivi Corporation's Sales Director, Finland. Automation technician. Tulikivi Corporation's Series A shares 15,525.
•Saskia Kerkkänen, b.1975. Tulikivi Corporation's Marketing Manager. BBa & Ba (Hons.) No shareholding.
•Martti Purtola, b. 1966. Tulikivi Corporation's Director Sales & Marketing Scandinavia, Central Europe and Lining Stone. B.Sc. (Eng.). Tulikivi Corporation's Series A shares 15,000.
•Jari Sutinen, b. 1962. Tulikivi Corporation's Product Development Manager. D.Sc. (Tech.),

Participation by Board members in the meetings of the Board, Audit Committee and Nomination Committee and Nomination Board.

1 January–31 December 2018	Board meetings	Audit Committee	Nomination Board
Jyrki Tähtinen	14/14		1/1
Jaakko Aspara	14/14
Markku Rönkkö	14/14	5/5	1/1
Paula Salastie	2/14
Reijo Svanborg	14/14	5/5
Heikki Vauhkonen	14/14	5/5	1/1

M.Sc. (Eng.). Tulikivi Corporation's Series A shares 15,000.

•Simo Kortelainen, b. 1980. Tulikivi Corporation's Manager of Soapstone Production and Mining. M.Sc. (Econ.) No shareholding.

Description of the main characteristics of the internal control and risk management systems associated with the financial reporting process

1. Description of the control environment

Tulikivi's business idea and values

The Tulikivi Group specialises in fireplaces, sauna heaters and interior stone products that are of a high quality and made from natural materials. Our customers appreciate the environmentally friendly and aesthetically pleasing nature of our products, the comfort created by these products and the benefits of wood heating. Tulikivi is a versatile company that appreciates its customers, entrepreneurship and fair play.

Environmental Policy

Engaging in mining activities requires the forming of a mining concession and an environmental permit. Mining operations are regulated by the Mining Act and environmental legislation. The director in charge of ing process performed each year and also part of the operational management. The purpose of internal control and risk management is to ensure that all operations are efficient and profitable,

quarrying is responsible for ensuring that mining permits are valid and up to date. Tulikivi's environmental strategy is geared towards systematic progress in environmental efforts in

specified sub-areas. The aim of environmental work is to improve the company's ability to use natural resources sparingly and to manage processes and products in a way that minimises their environmental loading. The Group complies with the environmental legislation and norms that concern its operations, and, through the continuous improvement of Tulikivi's operations, it engages in preventive environmental work. The Group acknowledges and is aware of its responsibility as an environmental operator.

Planning and monitoring processes

The Group plans its operations and ensures the efficiency of the operations during its annual strategy planning and budgeting process. The implementation of the plans and changes in the operating environment are monitored through monthly, quarterly and annual reporting.

In the Tulikivi Group, risk analysis and risk management form part of the regular strategic plann-

FIGURE: Division of responsibilities in internal control and risk management

Responsible person/group	Responsibilities
Board of Directors	- establishes guidelines for internal control - ensures effective monitoring - approves risk management principles - reviews auditors' reports - establishes incentive systems
Audit Committee	- evaluates the efficiency of internal control - attends to issues related to reporting - maintains contact with auditors
Managing Director, assisted by the Management Group	- oversees the different areas of internal control and ensures their efficiency - ensures operational compliance with company values - adjusts operating principles and policies - ensures efficient and appropriate use of resources - establishes control mechanisms (approval principles, reconci liation and reporting practices) - establishes risk management methods and practices
Members of the Management Group, according to responsibility area: domestic sales, marketing, product development, exports, production, purchasing, administration and economy	- delegate specific control tasks in their respective areas of responsibility to people responsible for different operations - ensure the efficiency of internal control in their respective areas of responsibility - oversee risk management in their areas of responsibility
Director of Finance and Administration	- internal accounting: monitoring and analysis of results - external accounting and reporting
Auditor	- statutory audits - expanded audits assigned by the Board of Directors or the Audit Committee - reports to the Board of Directors and the Audit Committee

based on reliable information and compliant with provisions and operating policies.

Control responsibilities

Based on the organisational structure and job descriptions, powers and responsibilities are delegated to persons with budgetary responsibility and to those in charge within the line organisation. Compliance with laws and regulations is ensured through the operational handbook and other internal guidelines.

In 2018 the focus of operations was on optimising the use of information systems and improving the quality of reporting. The enterprise resources

planning system contains the necessary internal control mechanisms.

Internal control is performed by the parties mentioned above, using external specialists when needed. In 2018 auditing focused on sales functions, controls regarding the purchasing process and payment transactions, and inventories and assets. In view of the Group's size and the nature of its activities, it has not been deemed necessary to appoint an internal auditor. The Board may choose to use an external expert in certain fields.

Risk management is part of the company's control system. The purpose of risk management is to ensure that business risks are identified and

FIGURE: Planning and monitoring process

Internal control is a part of the planning and monitoring process.

constantly monitored and evaluated as part of normal business operations.

2. Risk assessment

The purpose of risk management is to ensure that the Tulikivi Group's business risks are identified and managed as effectively as possible. This allows the Group to achieve its strategic and financial goals. All goals have been assigned risk limits. If these risk limits are exceeded, or if other divergences from operating plans so require, the person in charge will initiate enhanced risk management procedures. Regu-lar reporting indicates when financial risk limits have been exceeded.

3. Reporting system, internal control and risk management

In accordance with the reporting system, the Managing Director reports monthly to the Board of Directors on the operations and performance of the Group and its various business units and on any divergence from the budget and adjusted projections. The Managing Director also reports quarterly to the Board of Directors on the operating profit based on the interim reports, semi-annual reports or annual financial statements. The Managing Director must also report immediately on fundamental changes in the operating environment. The relevant persons in charge report according to the internal reporting system.

The parent company's Director of Finance and Administration is responsible for Group-level reporting. The parent company's financial department handles accounts and group-level accounting for domestic companies. The accounts and reporting of foreign subsidiaries are handled locally, using qualified ac-counting firms or external experts. The parent company's auditors compare the contents of the Russian subsidiary's Russian reporting with the financial reporting delivered to the parent company for the consolidated financial statements.

Financial reporting guidelines, competence development, reliable information systems, standard control mechanisms and expanded audits ensure accuracy in reporting. Any reported divergences from the budget and operating plans call for closer analysis to find the underlying causes.

The Director of Finance and Administration and the auditors monitor the accuracy of financial reporting. Periodic information system evaluations also serve this purpose. The Group seeks to ensure operational

FIGURE: Risk identification and management

Risk analysis and prioritization	- identifying risks at the group level and in different areas of responsibility - evaluating the effects and probability of risks - determining risk limits for set goals - determining control points - identifying risks related to reporting
Risk management	- establishing risk management procedures - assigning responsible persons for different procedures - setting a time frame for implementation - establishing procedures for monitoring implementation
Risk management process control	- responsible persons report to the Managing Director on risk materialization, implemented measures and their effectiveness - risk evaluations related to controls
Risk management process continuity	- measures implemented during a reporting period, as well as foreseeable changes in the business environment, will affect the plans and risk management measures for the subsequent period - risk identification requires continuous collection of background information

compliance with laws and regulations by using 5.Monitoring

external experts and services.

To ensure the effectiveness of financial reporting, the Tulikivi Group has guidelines that all units must comply with. Organisational competence is ensured through briefings and training. Accounting schedules and any changes to accounting policies and laws are reviewed in preparatory meetings related to annual financial statements.

The Audit Committee evaluates the functionality of the financial reporting system quarterly on the ba-sis of performance analyses of profit outlooks experts regularly evaluate their reliability.

and assessment of the reporting accuracy. The evaluation also includes studying the risks associated with malpractice and illegal activity. The

auditors audit the contents of the deviation reporting during the extended audit. The Management Group members monitor the accuracy of result reporting on a monthly basis and, within their respective areas of responsibility evaluate the reasons for any deviation.

4. Communications

The guidelines for reporting and accounting principles are provided to all financial personnel and those who produce information and auditing results for the financial system. The Managing Director reports any defects observed in the field of internal control, including the accuracy of reporting, to the Audit Committee. In its meetings, the Audit Committee processes the audit reports and extended audit reports and the statements for those reports provided by the persons in

charge. Moreover, the Audit Committee reports to the Board about any observations it has made and any guidelines or recommen-dations it has supplied to the organisation.

The Managing Director is responsible for communications at the Tulikivi Group. The Group's communications guidelines cover both internal and external communications. They also specify the persons with the right to speak on behalf of the company.

The efficiency of internal control is evaluated regularly in conjunction with management and governance and separately on the basis of audit reports. In financial reporting, continuous monitoring measures include comparing goals with actual results, implementing reconciliations and monitoring the regularity of operational reports.

The Board of Directors' annual plan includes planning and monitoring meetings. The Group's information systems are largely well-established, and external

6.The company's insiders and insider administration

The company complies with the valid NASDAQ OMX Helsinki Guidelines for Insiders. The members of the Tulikivi Corporation Board of Directors and Management Group have been specified as managers as referred to in the Market Abuse

Regulation. A Tulikivi manager may not trade in Tulikivi shares during the 30 days preceding financial results announcements. Managers and

persons closely related to them must notify the company and the Financial Supervisory Authority of all transactions made on their own account concerning the company's financial instruments. The company must publish such information in a stock exchange release. Persons and parties with access to specific insider information are entered in a project-specific insider list. A person or party entered in a project-specific insider list may not engage in trading while they are on the list.

7. Auditing

The auditor is elected at the Annual General Meeting for a term ending at the conclusion of the subsequent Annual General Meeting. The Tulikivi Corporation Annual General Meeting of 19 April 2018 appointed KPMG Oy Ab, Authorised Public Accountants, as auditor, with Kirsi Jantunen, APA, as chief au-ditor. In 2018, the auditor was paid EUR 54,000 for the audit and EUR 6,000 for services not associ-ated with the audit

Salary and Remuneration Report 2018

Board Members

The Annual General Meeting of Tulikivi Corporation decides the remuneration of the members of the Board of Directors.

The annual remuneration of the members of the Board of Directors was EUR 19 000 as of 20th April 2017, of which was paid in cash. In addition, the part-time Chairman of the Board of Directors was paid a monthly fee of EUR 4 500 (4 500) and the member of the Board responsible for secretarial duties received a monthly fee of EUR 1 400 (1 400). The members of the Board's Audit Committee and Nomination Committee were paid a meeting attendance allowance of EUR 330 (330) per meeting.

In 2018, no other fees than those related to their duties on the Board and the committees, were paid to the members of the Board of Directors.

Salaries of the Managing Director and other management and the principles of the incentive systems

The remuneration of the Managing Director and of the other members of the Management Group is composed of a fixed basic salary and, as determined in the incentive plan, annual incentive payment (variable) and a share-based payment.

The Board of Directors decides the Managing Director's salary, fees and other terms of his service contract.

The incentive plan for the other members of the Management Group and for the managing

directors of foreign subsidiaries is determined by the Board of Directors, and their fixed salaries by the Managing Director together with the Board Chairman.

The fixed salary of the Managing Director was EUR 185 526 (183 419) in 2018. The Managing Director did not receive any annual incentive payments in 2018 and 2017. The Managing Director's period of dismissal is three months. If the company terminates his service contract, the period of dismissal is 12 months. A separate severance payment will not be paid at the termination of the service contract. The CEO's pension cover is arranged through a statutory pension insurance (YEL). Pension payments totaled EUR 35 766 (32 645).

The fixed salaries of the other members of the Management Group and of the managing directors of foreign subsidiaries were EUR 407 068 (598 123) in 2018 while any variable part of salary based on sales growth was paid in 2018 and 2017.

Stock options for management and key personnel

To support the commitment of management and key personnel to the implementation of the performance improvement programme, the Board of Directors of Tulikivi Corporation decided on September 17, 2013 on a new stock option programme for the key personnel of Tulikivi Corporation, on the basis of the authorization granted by the Annual General Meeting on April 16, 2013. The purpose of the stock options is to provide an

incentive to key personnel to commit to long-term work in order to increase shareholder value. A further purpose of the options is to commit key personnel to their employer. The plan's target group includes approximately 14 key persons, including the members of the Management Group. The maximum total number of stock options

issued is 1,800,000, and they entitle their owners to subscribe for a maximum total of 1,800,000 new A shares in the company or existing A shares held by the company. The option rights are divided into three classes. The share subscription period, for the stock option 2013A will be 1 May 2016—31 May 2018, for the stock option 2013B, 1 May 2017—31 May 2019, and the for stock option 2013C, 1 May 2018—31 May 2020.

The share subscription price for all stock options is EUR 0.33 per share. The Board of Directors will determine separate financial targets based on the company's performance improvement programme for each option type, which must be met in order to the option to be granted. The number of 2013A stock options is 500 000, 2013B 650 000 and 2013C 650 000. The EBITDA target set for their subscription was not met in the 2014 to 2018 reporting period reporting period, and hence stock options were not issued in 2018. The Board decided to extend the monitoring period to the 2019 reporting period to option types 2013C.

Incentive pay scheme

The Tulikivi Corporation has an incentive pay scheme for the whole personnel. The Board of Directors determines the earnings criteria and the amount of the incentive pay. The incentive scheme is in force for one year at a time. The

Board of Directors approves the payment of incentive plan remunerations to the Managing Director, members of the Management Group and the managing directors of foreign subsidiaries, and the Managing Director approves the payments to others after relevant calculations have been prepared.

The incentive pay scheme covers the whole personnel and is based on the consolidated result. The result for 2018 (2017) did not justify the incentive payment.

Auditing

The auditor is appointed at the Annual General Meeting for a term ending at the conclusion of the subsequent Annual General Meeting. The auditor is KPMG Oy Ab, Authorized Public Accountants. In 2018, the auditing company was paid a total of EUR 60 359 (74 104), of which the portion of statutory audit amounted to EUR 53 852 (65 145).

							Annual fees paid to members of the Board of Directors in 2018 for their Board and committee work (EUR):
--	--	--	--	--	--	--	---------------------------------------------------------------------------------------------------------	--	--

	Annual remunerations	Audit Committee	Total
Aspara Jaakko, Member of the Board	19 000		19 000
Rönkkö Markku, Member and Secretary of the Board	35 800	1 650	37 450
Salastie Paula, Member of the Board	19 000		19 000
Svanborg Reijo, Member of the Board	19 000	1 650	20 650
Tähtinen Jyrki, Member and Part-time Chairman of the Board	73 000		73 000
Vauhkonen Heikki, Member of the Board	19 000	1 650	20 650
Total	184 800	4 950	189 750

Information for Shareholders

Annual General Meeting

The Annual General Meeting of Tulikivi Corporation will be held in the Ekberg Extra, Bulevardi 9 A, II krs., Helsinki, on April 24, 2019, at 13.00. Financial statement documents will be available for inspection at the company's Internet site and head office in Nunnanlahti as from March 29, 2019. Copies of these documents will be sent to shareholders upon request. The right to participate in the Annual General Meeting rests with a shareholder who by April 10, 2019 at the latest has been registered in the company's shareholder list that is maintained by Euroclear Finland Ltd. Shareholders who wish to attend the Annual General Meeting must notify the company thereof by April 14, 2019, either by telephoning mat +351 207 636 301 (Monday to Friday 8 a.m. to 4 p.m.) by emailing: [email protected],

by writing: Tulikivi Corporation / Annual General Meeting, Kuhnustantie 65, FI-83900 Juuka. Holders of nominee registered shares: instructions for the partisipants in the general meeting in address www.tulikivi.com> Investors>General Meeting> General Meeting 2019.

Payment of Dividends

The Board of Directors proposes to the Annual General Meeting that the dividend will not be paid for year 2019.

Share Register

We request shareholders to report any changes in their personal details, address and share Monday to Friday 8.00 a.m. to 4 p.m., excluding ownership to the book-entry register in which the shareholder has a bookentry securities account.

Financial Reports

Tulikivi Corporation will publish the following financial reports in 2019:

Financial Statement Release for 2018 February 15, 2018 Annual Report for 2018, week 13 Interim Report for January –March May 3, 2019 Interim Report for April-June August 16, 2019 Interim Report for July-September November 1, 2019.

The Annual Report, Interim Reports and the company's stock exchange releases are published in Finnish and English.

The Annual Report will be published on the company´s website in week 13. Financial reports are posted on the company´s website, www.tulikivi.com, on their day of publication. If

you have questions concerning investor relations, please contact the company´s director of finance and administration Jouko Toivanen, Tel. +358 207 636 330.

TULIKIVI CORPORATION´S ANNUAL SUMMARY OF STOCK EXCHANGE RELEASES 2018

9.2.2018 Report of the Corporate Governance Statement 2017
9.2.2018 Financial statement release, Jan-Dec 2017
14.3.2018 Notice to General Meeting of Tulikivi Corporation
23.3.2018 Tulikivi Corporation's Annual Report
20.4.2018 Tulikivi Corporation Resolutions of the Annual General Meeting and organisation of the Board
27.4.2018 Tulikivi Corporation interim report 1-3/2018
10.8.2018 Tulikivi Corporation's half year financial report 1-6/2018
7.9.2018 Progress made in preparations to sell the Suomussalmi talc deposit
25.9.2018 Initia Ltd to advise Tulikivi on the sale of the Suomussalmi talc deposit
26.10.2018 Interium Report 1-9/2018: Net sales decreased in Q3, outlook for whole year un-changed 26 October 2018 at 1 p.m.
2.11.2018 Tulikivi Corporation has concluded an agreement with its finance providers on the 2018–2019 repayment programme and its terms
20.12.2018 Tulikivi Corporation lowers its 2018 net sales ans profit outlook
21.12.2018 Tulikivi Corporation Annual General Meeting and financial reporting in 2019
21.12.2018 The Suomussalmi Jorc report will expand to 12 million tonnes

Board of Directors' Report and Financial Statements of Tulikivi Corporation for year 2018

41
44
44
45
46
47
48

84
86
87
87
88
91
92
100
102

These are the financial statements of Tulikivi Corporation, that have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the IAS and IFRS standards as well as the SIC and IFRIC interpretations upon force as at December 31, 2018. The term IFRS refers to the standards and interpretations upon these in the Finnish

Accounting Act and regulations issued by virtue to it and endorsed in the EU in accordance with the procedure defined in the EU Regulation (EY) No 1606/2002. The notes to the consolidated financial statements also conform with Finnish Accounting and Corporate Legislation.

The consolidated financial statements are presented in thousands of Euros.

BOARD OF DIRECTORS' REPORT 2018

Operating environment

The recovery of low-rise construction and renovation projects over recent years, as well as the improvement in consumer confidence, have increased construction activity in Finland. Low-rise construction starts have begun to increase in the EU, which will boost the performance of the fireplace market in the near future. Demand for Tulikivi products is growing in Russia, but is dependent on the exchange rate of the rouble.

Net sales and result

The Tulikivi Group's fourth-quarter net sales totalled EUR 8.7 million (EUR 8.6 million in the fourth quarter of 2017). Fourth-quarter operating result totalled EUR -0.5 million (0.0) and the profit before taxes was EUR -0.7 (-0.2) million, including an impairment loss of goodwill of EUR -0,5 (0.0). As a result of impairment testing conducted in conjunction with the preparation of its finan-cial statements, Tulikivi has decided to recognise an EUR 0.5 million impairment loss on goodwill in the Group's balance sheet. The impairment loss concerns the goodwill generated by the acquisition of Kermansavi Oy in 2006. The impairment loss has no impact on cash flow or on the indicators of the parent company Tulikivi Corporation. Comparable fourth-quarter operating result was EUR -0.5 (-0.4) million and the profit before taxes EUR -0,2

(-0.2) million. The sales growth of the new Karelia and Pielinen collections continued to develop well in the last quarter but the demand for traditional and lining stone products was weaker than had been anticipated. Net sales from saunas and interior stones continued to grow in the fourth quarter. Net sales were increased by the good demand for electric sauna heaters and the successful sales of interior stones to project sites.

Tulikivi Group net sales in 2018 totalled EUR 28.6 million (EUR 29.3 million in Jan-Dec/2017). The operating result in 2018 totalled EUR -1.0 million

(-0.4), and the profit before taxes was EUR -1.8 (-1.2) million, including a goodwill impairment loss of EUR -0.5 (0.0). The comparable oper-ating result in 2018 was EUR -0.5 (0.4) million, and the result before taxes was EUR -1.3 (-1.2) million. The overall fireplace market in our principal market areas decreased in 2018. The autumn fireplace season started slowly after the long and hot summer, which is why our net sales were lower than expected in the second half of the year. Due to the decline in net sales in 2018, the sales margin decreased from 2017. A decrease in inventories had a negative effect on profitability of EUR 1.2 million. We were able to decrease fixed costs as planned.

The company's order books amounted to EUR 3.0 (2.9) million at the end of the financial year. In the fourth quarter, the company's order intake was EUR 8.4 (8.3) million. Orders increased for interior stone products and saunas and for fireplace exports, and decreased for heater lining stones and for fireplaces in Finland.

Net sales in Finland increased in the financial year and were EUR 12.9 (13.4) million, or 45.1% (45.6%) of total net sales. Fireplace sales in Finland declined because low-rise housing construction did not reach the level of growth forecasted and the sales of fireplaces in the renovation market fell. Thanks to updated collections, changes to distribution channels and closer cooperation with the home-building industry, we have been able to increase our market share in 2018 according to statistics published by Rakennustutkimus RTS Oy. Net sales in exports in the financial year were EUR 15.7 (15.9) million, or 54.9% (54.4%) of total net sales. The principal export countries were Russia, Germany, France, Sweden and Denmark. Export sales of Tulikivi products grew in the Central European and Scandinavian markets, however, thanks to the new collections. In Russia, the biggest export country, net sales in euros was at the 2017 level despite the weakening of the rouble against the euro. In Central Europe, the new Ka-relia and Pielinen fireplace collections continued to significantly increase dealers' and consumers' interest in Tulikivi products. This has enabled us to open new dealer locations and reactivate old ones. These collections have increased our market share in Central Europe.

The new fireplace collections have been very well received in Finland and abroad. Low-rise construction is not expected to increase significantly in Finland despite the good general economic situation. We are continuing our efforts to enhance sales efficiency in Finland to increase renovation sales.

The highly successful development work on the Karelia and Pielinen collections provides us with an opportunity to increase our market share and profitability in both Finland and exports in 2019

Financing

Finland Export

30.7

27.4

13.4 15.9 29.3

12.9 15.7 28.6

Clericals Workers

5 15

161

Women Men

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

Women Men

²² ¹⁰

Clericals Workers

Personnel per Segments Average During the

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

18 12

GenderDistribution of Personnel,Dec.31,2018

161

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

Clericals Workers

18 12

5 15

Age Distribution of Personnel, Dec. 31, 2018

18 12

Clericals Workers

5 15

161

2014 2016 2017 2018

33.4

30.7

27.4

36.9

33.4

30.7

2015

2014 2016 2017 2018

Age Distribution of Personnel, Dec. 31, 2018

Year 2013

Personnel per Segments Average During the

Clericals Workers

273

Fireplaces Interior Stone

²² ¹⁰

Net cash flow from operating activities was EUR 0.5 (0.9) million in the fourth quarter, and EUR 1.6 (1.9) million during the financial year. Working capital decreased by EUR 1.0 (1.5) million during the financial year. Inventories decreased by EUR 1.2 million during the financial year. At the end of 2018, working capital stood at EUR 1.3 (2.2) million. Loan repayments totalled EUR 0.3 (0.7) million in the financial year. Interest-bearing liabilities stood at EUR 15.4 (15.7) million at the end of the financial year, and net financial expenses for the financial year were EUR 0.8 (0.8) million. The equity ratio at the end of the financial year was 27.4% (30.7%). The ratio of interest-bearing net debt to equity, or gearing, was 156.6% (135.3%). The current ratio was 0.5 (0.5), and equity per share was EUR 0.16 (0.19). At the end of the financial year, the Group's cash and other liquid 12.9 15.7 28.6

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

Gearing, %

89.8

113.4

125.0

-0.04

-0.06

-0.03

2015

2014 2016 2017 2018

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

-0.04

-0.06

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

-0.04

1 0 -1 -2 -3 -4 -5 -6

-3.3

0.20 0.15 0.10 0.05 0.00

0.20 0.18

0.17

0.20 0.15 0.10 0.05 0.00

0.20 0.18

0.25

0.20 0.18

0.17

0.17 0.16 0.16 0.16

0.25

Monthly Development of the Average Price of the A share, EUR

2015

89.8

113.4

89.8

150 175

Gearing, %

150 175

Gearing, %

2015

Monthly Development of the Average Price of the A share, EUR

0.17

1 2 3 4 5 6 7 8 9 10 11 12

0.17 0.16 0.16 0.16

0.15 0.16 0.17

Monthly Development of the Average Price of the A share, EUR

2015

2014 2016 2017 2018

0.17 0.16 0.16 0.16

0.15 0.16 0.17

0.14 0.10

2015

2014 2016 2017 2018

per Geographical Area, %

2.2%

45.1% 52.7%

Finland Rest of Europe USA

Net Sales

91.6%

per Geographical Area, %

2.2%

45.1% 52.7%

Net Sales

per Geographical Area, %

2.2%

45.1% 52.7%

91.6%

Fireplaces

Interior Stone Products

Fireplaces

Interior Stone Products

Finland Rest of Europe USA

Interior Stone Products

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

-3.8

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

-3.8

0.20

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

2014 2015 2016 2017 2018

-4.3

-3.8

-1.2

2014 2016 2017 2018

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2015

2014 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

0.8

2.0 1.9 1.6

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

-2.9

-2.4

-1.4

-2.9

2014 2015 2016 2017 2018

2.4

2014 2015 2016 2017 2018

3.5 3.3

1.1 1.3

0.20

0.21

Share Price of the A Share, Dec. 31, EUR

0.17

2014 2015 2016 2017 2018

3.5 3.3

1.1 1.3

Investments and Depreciation, MEUR

2.4

3.5 3.3

2.4

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

0.20

0.17

Own Production

(calculated 2010) British Standard PAS 2050

Investments and Depreciation, MEUR

2014 2015 2016 2017 2018

1.1 1.3

2014 2015 2016 2017 2018

1.5

2.4 2.5 2.1

-2.9

-1.4

-0.4

2014 2015 2016 2017 2018

-1.4

-0.4

-1.0

-0.4

-1.0

1 0 -1 -2 -3 -4 -5 -6

Share Price of the A Share, Dec. 31, EUR

investments depreciation

2014 2015 2016 2017 2018

1.5

2.4 2.5 2.1

1.1

investments depreciation

Own Production

Formation of Carbon Footprint in Tulikivi's

2014 2015 2016 2017 2018

Own Production

0.17

0.21

0.19

Share Price of the A Share, Dec. 31, EUR

(calculated 2010) British Standard PAS 2050

(calculated 2010) British Standard PAS 2050 investments depreciation

1.1

0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11

0.10

1.5

1.1

2.4 2.5 2.1

Formation of Carbon Footprint in Tulikivi's

Energy Consumption Transportations Materials

0.19

0.10

2014 2015 2016 2017 2018

Formation of Carbon Footprint in Tulikivi's

0.21

0.19

0.10

Energy Consumption Transportations Materials

0.20 0.15 0.10 0.05 0.00

0.25

150 175

Energy Consumption Transportations Materials

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Fireplace's Life Cycle

Formation of Carbon Footprint in Tulikivi

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

8.4%

91.6%

per Business Area, %

Net Sales

per Business Area, %

8.4%

Return on Investments, %

2014 2015 2016 2017 2018

-7.7

2014 2015 2016 2017 2018

-4.3

-1.2

-2.1

2014 2015 2016 2017 2018

0.8

Return on Investments, %

-7.7

-4.3

2014 2015 2016 2017 2018

39.3

4 2 0 -2 -4 -6 -5.4

-8 -10

2015

4 2 0 -2 -4 -6 -5.4

Return on Investments, %

4 2 0 -2 -4 -6 -5.4

-2.1

-8 -10 -2.1

0.8

-8 -10

-7.7

Net Sales

8.4%

per Business Area, %

Net Sales

39.3

2015

32.0 30.5 29.3 28.6

2014 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

2014 2016 2017 2018

125.0

135.3

156.6

2014 2016 2017 2018

1 2 3 4 5 6 7 8 9 10 11 12

0.15 0.16 0.17

0.14 0.10

0.14 0.10

0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5

0.66 0.80

0.0 0.5 1.0 1.5 2.0 2.5

1.49

3.08 3.71

3.0 2.72

1.49

3.5 4.0

Monthly Development of the Trading Volume of A share, %

3.08 3.71

3.5 4.0

3.08 3.71

3.5 4.0

1.49

1.91 2.43

0.66 0.80

0.57 0.43

1 2 3 4 5 6 7 8 9 10 11 12

Monthly Development of the Trading Volume of A share, %

0.66 0.80

3.0 2.72

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

-0.03

-0.02

-0.03

-0.02

-0.03

135.3

156.6

-0.03

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

156.6

-0.06

2015

2014 2016 2017 2018

-0.03

-0.02

113.4

125.0

135.3

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

0.25

2015

2014 2016 2017 2018

0.30

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

0.25

0.21 0.19

2015

2014 2016 2017 2018

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

0.30

0.25

2015

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

0.30

Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, %

Monthly Development of the Trading Volume of A share, %

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

3.0 2.72

1.91 2.43

1.36 1.00 1.91 2.43

1.36 1.00

2014 2016 2017 2018

0.21 0.19

0.16

1.36 1.00 70

39.0

36.9

2015

39.0

³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15

²² ¹⁰

Year 2013

273

³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

GenderDistribution of Personnel,Dec.31,2018

³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15

39.0

36.9

33.4

2015

2014 2016 2017 2018

Age Distribution of Personnel, Dec. 31, 2018

assets totalled EUR 0.8 (0.6) million.

On 31 October 2018 the company signed a new financing agreement with its finance providers which replaced the earlier three-year agreement, including its amendments, which was signed on 11 December 2015. The financing agreement includes a repayment programme for 2018–2019 in relation to the responsibilities of the finance providers and loan covenants to finance providers. The financing agreement includes covenants concerning EBITDA, the equity ratio and the ratio of debt to EBITDA, for example. The company has negotiated a waiver on its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 December 2018. In the company manage-ment's opinion, the company will not meet its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 March 2019 and 30 June 2019. As a result of this, long-term financial liabilities have been classified as short-term financial liabilities in these financial statements in ac-cordance with the IFRS standard. However, the management believes that it will receive waivers from its finance providers on said covenants and that as a result, they will not demand the repay-ment of debt. The company has agreed with its finance providers that it will commence negotiations on the 2020 repayment programme and its terms no later than 30 September 2019. Development of Net Sales, MEUR Operating Result, MEUR -0.4 -2.4 -2.9 -1.4 -1.0 Development of Net Sales, MEUR Operating Result, MEUR 1 0 -1 -2 -3 -0.4 -2.9 -1.4 -1.0 1 0 -1 -2 -3 -0.4 -1.0

As a result of posting a loss, the parent company's equity has fallen to less than 50% of share capi-tal. The parent company's equity was EUR 0.8 million (consolidated equity EUR 9.3 million) in the financial statements, while share capital was EUR 6.3 million (consolidated share capital EUR 6.3 million). As a result, the company's Board of Directors has taken action as referred to in Chapter 20, section 23, subsection 1 of the Limited Liability Companies Act. The financial statements as referred to in the Limited Liability Companies Act will be for the period January–December 2018. As required in the Limited Liability Companies Act, the Annual General Meeting that will decide on the Board's proposal concerning measures required by the company's Investments and Depreciation, MEUR investments depreciation Share Price of the A Share, Dec. 31, EUR 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2.4 1.1 1.3 3.5 3.3 1.5 1.1 2.4 2.5 2.1 Investments and Depreciation, MEUR investments depreciation Share Price of the A Share, Dec. 31, EUR 0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -4 -5 -6 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 1.1 1.3 3.5 3.3 1.5 1.1 2.4 2.5 2.1 Investments and Depreciation, MEUR investments depreciation Share Price of the A Share, Dec. 31, EUR 0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -4 -5 -6 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 1.5 1.1 2.4 2.5 2.1 -3.3 -0.04

Formation of Carbon Footprint in Tulikivi's

Energy Consumption Transportations Materials

0.19

0.10

-0.11

150 175

2014 2015 2016 2017 2018

Formation of Carbon Footprint in Tulikivi's

0.21

0.19

0.10

Energy Consumption Transportations Materials

0.20 0.15 0.10 0.05 0.00

0.25

Energy Consumption Transportations Materials

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Fireplace's Life Cycle

Formation of Carbon Footprint in Tulikivi

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

financial situation will be the company's Annual General Meeting to be held on 24 April 2019. The Board of Directors' proposal to the Annual General Meeting will consider, among other things, the company's positive performance budgeted for 2019 and what is stated this financial statements release on the Suomussalmi talc deposit.

Investments and product development

The Group's investments in the financial year came to EUR 1.1 (1.5) million, including EUR 0.2 million in the talc project. A new Saramo model with a horizontal door and the Senso fireplace controller have been added to the Karelia collection. The Senso makes it easier to use the fireplace easier and reduces emissions. In addition, three new door types will be launched in the popular Pielinen collection in the first quarter of 2019.

Research and development expenditure in was EUR 0.9 (1.0) million in the financial year, or 3.1% (3.6%) of net sales. EUR 0.4 (0.5) million of this was capitalised on the balance sheet.

Suomussalmi talc reserves 1

Gearing, %

89.8

113.4

125.0

0.20 0.15 0.10 0.05 0.00

0.20 0.18

0.17

0.20 0.15 0.10 0.05 0.00

0.20 0.18

0.25

0.20 0.18

0.17

0.17 0.16 0.16 0.16

0.25

Monthly Development of the Average Price of the A share, EUR

2015

113.4

89.8

150 175

Gearing, %

-0.11

89.8

150 175

Gearing, %

Monthly Development of the Average Price of the A share, EUR

1 2 3 4 5 6 7 8 9 10 11 12

0.17

0.17 0.16 0.16 0.16

0.15 0.16 0.17

Monthly Development of the Average Price of the A share, EUR

1 2 3 4 5 6 7 8 9 10 11 12

2015

2014 2016 2017 2018

0.17 0.16 0.16 0.16

0.15 0.16 0.17

0.14 0.10

2015

2014 2016 2017 2018

113.4

125.0

135.3

2014 2016 2017 2018

1 2 3 4 5 6 7 8 9 10 11 12

0.15 0.16 0.17

0.14 0.10 0.14 0.10

0.0 0.5 1.0 1.5 2.0 2.5 0.0 0.5 1.0 1.5 2.0 2.5

0.0 0.5 1.0 1.5 2.0 2.5

1.49

3.08 3.71

3.0 2.72

1.49

0.66 0.80

0.57 0.43

1 2 3 4 5 6 7 8 9 10 11 12

3.5 4.0

Monthly Development of the Trading Volume of A share, %

3.08 3.71

0.66 0.80

3.5 4.0

3.08 3.71

3.5 4.0

1.49

1.91 2.43

3.0 2.72

Monthly Development of the Trading Volume of A share, %

0.66 0.80

0.57 0.43

1 2 3 4 5 6 7 8 9 10 11 12

125.0

135.3

156.6

135.3

156.6

5.0

On 20 April 2017, Tulikivi announced its decision to study opportunities to exploit the talc re-serves in the Suomussalmi deposit. Tulikivi's soapstone reserves in Suomussalmi have talc reserves that are believed to be suitable for talc production. On 13 June 2017, Tulikivi announced that according to analyses conducted by the Geological Survey of Finland, the talc grades of the deposit correspond to previous talc projects carried out in Finland in terms of talc content, 0 -1 -2 -3 -4 -5 -6 2014 20145 2016 2017 2018 -3.3 -3.9 -2.1 -1.2 -1.8 2014 20145 2016 2017 2018 -3.3 -3.9 -2.1 -1.2 -1.8 0 -5.0 -10.0 -15.0 -20.0 -25.0 2014 20145 2016 2017 2018 -3.9 -2.1 -1.2 -1.8

yield and brightness. Based on the test results received then and the drilling tests that were earlier carried out for the purpose of soapstone production, Tulikivi estimates that there are approximately 20 million tonnes of talc ore in Suomussalmi. On 24 August 2017, Tulikivi announced that during summer 2017, it had explored potential partners' interest in exploiting the Suomussalmi talc deposit on the basis of the Geological Survey of Finland's analysis and the earlier drilling tests.

In September 2017, based on the feedback received, Tulikivi's Board of Directors launched preparations for the sale of the talc deposit. In February 2018, as part of this process, the company ordered an official ore study of part of the Haaponen deposit in Suomussalmi from the Geological Survey of Finland that meets the international JORC code. The first stage of the study will cover a roughly six-milliontonne portion of the talc deposit. The purpose of the study is to verify the concentration capacity of the deposit for the purposes of talc production. Other studies will also be conducted concerning talc quarrying and concentration. The project has been granted EUR 0.1 million in EU structural funding. Tulikivi announced on 25 September 2018 that it had appointed Initia Ltd to provide financial advice on the sale of the Suomussalmi talc deposit as of 24 September 2018. Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR 5.0 0 -5.0 -10.0 -10.5 -13.5 Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR 5.0 0 -5.0 -10.0 -15.0 -10.5 -13.5 Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR -10.5 -13.5

On 21 December 2018, Tulikivi announced that the Suomussalmi talc deposit JORC report will expand to 12 million tonnes. The drilling indicated that the area of the deposit is larger than was estimated earlier and that it continues at a consistent quality and -20.0 -25.0 2014 2016 2017 2018 -23.8 -15.9 -17.6 2015 -20.0 -25.0 2014 2016 20172018 -23.8 -15.9 -17.6 2015 2014 2016 2017 2018 -23.8 -15.9 -17.6 2015

-15.0

2015

2014 2016 2017 2018

Monthly Development of the Trading Volume of A share, %

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

3.0 2.72

1.91 2.43

1.36 1.00 1.91 2.43

1.36 1.00 1.36 1.00 volume to 100 metres, the depth now studied. The GTK is currently carrying out laboratory tests on additional samples from the additional drilling work and its reports should be completed in early 2019. Overall, the results of the studies conducted under the Suomussalmi talc deposit project in 2018 exceeded the company's expectations. As a result of the JORC report, the size of the deposit has been increased to 12 million tonnes, making it the largest known talc deposit in Finland.

Evaluation of the possible success or financial impact of sales is premature.

Personnel

The Group had an average of 200 (208) employees during the financial year. Salaries and bonuses during the financial year totalled EUR 8.6 (9.1) million. The number of personnel will be adjusted through lay-offs in accordance with the level of demand. The Tulikivi Group has an incentive pay scheme for all personnel. The company also has a stock option scheme for management that was launched in 2013.

Annual General Meeting 70 70 70

Tulikivi Corporation's Annual General Meeting, held on 19 April 2018, resolved not to distribute a dividend on the 2017 financial year. Jaakko Aspara, Markku Rönkkö, Paula Salastie, Reijo Svanborg, Jyrki Tähtinen and Heikki Vauhkonen were elected as members of the Board of Directors. The Board elected Jyrki Tähtinen as its Chairman. The auditor appointed was KPMG Oy Ab, Authorised Public Accountants, with Kirsi Jantunen, APA, as principal auditor. Finland Export 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 17.9 15.1 15.5 21.4 16.9 15.0 39.3 32.0 30.5 13.4 15.9 29.3 Finland Export 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 17.9 15.1 15.5 21.4 16.9 15.0 39.3 32.0 30.5 13.4 15.9 29.3 12.9 Finland Export 60 50 40 30 20 10 0 2014 2015 2016 2017 2018 17.9 15.1 15.5 21.4 16.9 15.0 39.3 32.0 30.5 13.4 15.9 29.3 12.9 15.7 28.6

Age Distribution of Personnel, Dec. 31, 2018

Personnel per Segments Average During the

Women Men

Fireplaces Interior Stone

Clericals Workers

Women Men

²² ¹⁰

Clericals Workers

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

18 12

GenderDistribution of Personnel,Dec.31,2018

161

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

5 15

Clericals Workers

18 12

Age Distribution of Personnel, Dec. 31, 2018

18 12

5 15

161

Clericals Workers

5 15

161

12.9 15.7 28.6

30.7

27.4

Women Men

Year 2013

Fireplaces Interior Stone

Personnel per Segments Average During the

Clericals Workers

273

³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15

²² ¹⁰

Year 2013

273

³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15

GenderDistribution of Personnel,Dec.31,2018

</=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65

273

²² ¹⁰

Personnel per Segments Average During the

0.17

2014 2015 2016 2017 2018

Own Production

(calculated 2010) British Standard PAS 2050

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

-1.4

-2.9

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

3.5 3.3

2.4

1.1 1.3

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

0.20

0.17

Own Production

(calculated 2010) British Standard PAS 2050

Own Production

Formation of Carbon Footprint in Tulikivi's

2014 2015 2016 2017 2018

0.17

0.19

0.21

(calculated 2010) British Standard PAS 2050

per Geographical Area, %

2.2%

45.1% 52.7%

Finland Rest of Europe USA

Net Sales

91.6%

per Geographical Area, %

2.2%

45.1% 52.7%

Net Sales

91.6%

per Geographical Area, %

2.2%

45.1% 52.7%

91.6%

Fireplaces

Interior Stone Products

Fireplaces

Interior Stone Products

Finland Rest of Europe USA

Interior Stone Products

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

-3.8

0.20

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

2014 2015 2016 2017 2018

-4.3

-3.8

-1.2

2014 2016 2017 2018

2015

2014 2016 2017 2018

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

Net Cash Flow from Operating Activities, MEUR

0.8

2.0 1.9 1.6

32.0 30.5 29.3 28.6

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

8.4%

per Business Area, %

Net Sales

8.4%

per Business Area, %

Return on Investments, %

2014 2015 2016 2017 2018

-7.7

-4.3

-1.2

2014 2015 2016 2017 2018

-2.1

2014 2015 2016 2017 2018

0.8

Return on Investments, %

-7.7

-4.3

2014 2015 2016 2017 2018

39.3

2015

39.3

4 2 0 -2 -4 -6 -5.4

-8 -10

4 2 0 -2 -4 -6 -5.4

-2.1

-8 -10

4 2 0 -2 -4 -6 -5.4

Return on Investments, %

-2.1

0.8

-8 -10

-7.7

Net Sales

8.4%

per Business Area, %

Net Sales

39.3

32.0 30.5 29.3 28.6

2015

2014 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

In response to the company's equity falling below 50% of its share capital, the Annual General Meeting decided on restructuring measures. In accordance with the Board of Directors' proposal, the Annual General Meeting decided that the Board shall continue the measures it has already initiated and investigate other measures to restructure the company when the parent company's equity is below 50% of its share capital. Investments and Depreciation, MEUR 2014 2015 2016 2017 2018 -2.4 -2.9 -1.4 -1.0 Investments and Depreciation, MEUR -1 -2 -3 -4 -5 -6 2014 2015 2016 2017 2018 -2.9 -1.4

-0.4

-1.0

-0.4

The Annual General Meeting authorised the Board of Directors to decide on issuing new shares and on the transfer of Tulikivi Corporation shares held by the company in accordance with the proposals of the Board. Tulikivi can issue new shares or transfer treasury shares as follows: a maximum of 15,656,622 Series A shares and a maximum of 2,304,750 Series K shares. Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR 1 0 -1 -2 -3 -4 -5 -3.3 -3.9 -2.1 -1.2 -1.8 investments depreciation Share Price of the A Share, Dec. 31, EUR 2014 2015 2016 2017 2018 2.4 1.1 1.3 3.5 3.3 1.5 1.1 2.4 2.5 2.1 investments depreciation Share Price of the A Share, Dec. 31, EUR 0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 2014 2015 2016 2017 2018 1.1 1.3 3.5 3.3 1.5 1.1 2.4 2.5 2.1

The authorisation includes the right to decide on a directed rights issue, deviating from the shareholders' right of pre-emption, provided that there is compelling financial reason for the company. The authorisation also includes the right to decide on a bonus issue to the company itself, where the number of shares issued to the company is no more than one tenth of the total number of the company's shares. The authorisation also includes the right to issue special rights referred to in chapter 10, section 1 of the Limited Liability Companies Act, which would give entitlement to Tulikivi shares against payment or by setting off the receivable. The authorisation includes the right to pay the company's share rewards. The Board is authorised to decide on other matters concerning share issues. The authorisation 0.02 0.0 -0.02 -0.04 -0.06 -0.08 -0.09 -0.10 -0.11 -6 2014 20145 2016 2017 2018 2014 2016 2017 2018 -0.06 -0.03 -0.02 -0.03 2015 -0.04 Formation of Carbon Footprint in Tulikivi's Own Production 2014 2015 2016 2017 2018 0.20 0.17 0.21 0.19 0.10 Formation of Carbon Footprint in Tulikivi's Own Production -0.10 -0.11 2014 2015 2016 2017 2018 0.17 0.21 0.19 0.10 125 100 75 50 25 0 150 175

Gearing, % 2014 2016 2017 2018 125 100 75 50 25 0 113.4 125.0 135.3 156.6 2015 89.8 150 175 Formation of Carbon Footprint in Tulikivi Fireplace's Life Cycle (calculated 2010) British Standard PAS 2050 Transportations Materials Formation of Carbon Footprint in Tulikivi Fireplace's Life Cycle (calculated 2010) British Standard PAS 2050 Transportations Materials 0.20 0.15 0.10 0.05 0.00 0.25

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

Energy Consumption

1 2 3 4 5 6 7 8 9 10 11 12

0.15 0.16 0.17

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

0.14 0.10

Monthly Development of the Average Price of the A share, EUR

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

0.17

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

0.17 0.16 0.16 0.16

0.20 0.15 0.10 0.05 0.00 0.20 0.18

0.25

per Geographical Area, %

2.2%

45.1% 52.7%

Net Sales

91.6%

Fireplaces

Finland Rest of Europe USA

Interior Stone Products

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

-1.2

-3.8

2014 2015 2016 2017 2018

-4.3

2014 2016 2017 2018

2015

0.8

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

-2.1

4 2 0 -2 -4 -6 -5.4

39.3

2015

2.4

-8 -10

0.20

per Business Area, %

8.4%

Net Sales

3.5 3.3

-7.7

4 2 0 -2 -4 -6 -5.4

-8 -10

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

Net Sales

Investments and Depreciation, MEUR

Return on Investments, %

1.1 1.3

-7.7

-4.3

2014 2015 2016 2017 2018

-2.9

-2.1

0.8

Return on Investments, %

2014 2015 2016 2017 2018

-1.4

-0.4

2014 2015 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

2.0 1.9 1.6

2014 2016 2017 2018

2015

32.0 30.529.3 28.6

2014 2016 2017 2018

Net Cash Flow from Operating Activities, MEUR

0.8

2014 2015 2016 2017 2018

32.0 30.5 29.3 28.6

Development of Net Sales, MEUR Operating Result, MEUR

-1.0

2.0 1.9 1.6

Development of Net Sales, MEUR Operating Result, MEUR

2.0 1.0 0 -1.0 -2.0 -3.0 -4.0 -5.0

-2.4

2.4

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

0.20

Share Price of the A Share, Dec. 31, EUR

2014 2015 2016 2017 2018

Own Production

Net Sales

91.6%

per Geographical Area, %

2.2%

45.1% 52.7%

per Geographical Area, %

2.2%

45.1% 52.7%

0.17

per Business Area, %

8.4%

(calculated 2010) British Standard PAS 2050

investments depreciation

1.1

-3.8

0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0

-1.2

-3.8

0.10

Fireplaces

Interior Stone Products

1.5

2.4 2.5 2.1

2014 2015 2016 2017 2018

-4.3

-1.2

Formation of Carbon Footprint in Tulikivi's

0.19

Fireplaces

2014 2015 2016 2017 2018

91.6%

0.21

Energy Consumption Transportations Materials

Finland Rest of Europe USA

Interior Stone Products

Tulikivi's Processes Processes and Purchases of Partners Transportations Other

The carbon equivalent was calculated per a kilo of soapstone; the result is 0.612 CO2 eqv kg/kg.

Formation of Carbon Footprint in Tulikivi

Finland Rest of Europe USA

Fireplace's Life Cycle

8.4%

per Business Area, %

Net Sales

Return on Investments, %

-7.7

-2.1

4 2 0 -2 -4 -6 -5.4

-8 -10 39.3

is valid until the 2019 Annual General Meeting. 0

-2.1

Treasury shares -2

1 0

-1

The company did not purchase or assign any treasury shares during the reporting period. At the end of the period, the total number of Tulikivi shares held by the company was 124,200 Series A shares, corresponding to 0.2 per cent of the company's share capital and 0.1 per cent of all voting rights. -3 -4 -5 -6 2014 20145 2016 2017 2018 -3.3 -3.9 2014 20145 2016 2017 2018 -3.3 -3.9

-2.1

-1.2

-1.8

Board of Directors' proposal on use of distributable equity 5.0 0 0.02

The parent company has no distributable equity. The Board will propose to the Annual General Meeting that no dividend be paid out for 2018. -5.0 -10.0 -15.0 -10.5 -13.5 0.0 -0.02 -0.04 -0.06 -0.06 -0.03 -0.02 -0.03 -0.04 -0.06 -0.03 -0.02 -0.03 -0.04

-15.9

Near-term risks and uncertainties -20.0 -0.09

125.0

0.30

-0.08

0.0 0.5 1.0 1.5 2.0 2.5 3.08 3.71

3.5 4.0

1.49

0.66 0.80

The Group's most significant risk is a decline in net sales in the principal market areas. A potential halt in the resumed growth in new construction and renovation projects would affect the demand for Tulikivi products in Finland. The slower-than-predicted recovery of the markets in Central Europe and the uncertain economic situation in Russia also affect the demand for fireplaces. Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, % -25.0 0.40 0.35 0.30 2014 2016 2017 2018 -23.8 2015 Gearing, % -0.10 -0.11 2014 2016 2017 2018 2015 135.3 156.6 150 175 Gearing, % 2014 2016 2017 2018 2015 135.3 156.6

Improving the Group's financing position and securing the continuation of financing require an im-provement in profitability. If the company's business operations and result do not develop as planned, the repayment of its loans may create a greater burden on the company's cash flow than anticipated. A further risk is that the company will 0.25 0.20 0.15 0.10 0.05 0 2014 2016 2017 2018 0.25 0.21 0.19 2015 2014 2016 2017 2018 125 100 75 50 25 0 113.4 2015 89.8 2014 2016 2017 2018 113.4 2015 89.8

125.0

Monthly Development of the Average Price of the A share, EUR Monthly Development of the Average Price of the A share, EUR

Monthly Development of the Trading Volume of A share, %

1 2 3 4 5 6 7 8 9 10 11 12

0.57 0.43

3.0 2.72

1.91 2.43

1.36 1.00

not succeed in negotiating a sufficient repay-ment programme and terms with its financiers. -5.0 -5.0

Result Before Income Tax, MEUR Return on Equity, % Development of the Sales, MEUR

With regard to the company's foreign currency risk, the most significant currencies are the Russian rouble and the US dollar. About 90% of the company's cash flow is in euros, meaning that the company's exposure to foreign currency risks is very low. A weakening of currencies may have an adverse effect on the sales margin. -15.0 -20.0 -25.0 2014 2016 2017 2018 -23.8 -15.9 -17.6 2015 -13.5 -15.0 -20.0 -25.0 2014 2016 2017 2018 -23.8 -15.9 -17.6 2015 -13.5

The risks are described in more detail on page 82 of the 2017 annual report and in the 2018 an-nual report that will be published during the week beginning 15 March 2019 (week 13). 60 50 40 30 21.4 16.9 15.0 39.3 32.0 30.5 29.3 0.40 0.35 0.30 0.25 0.25 0.21 0.19 0.30 0.40 0.35 0.30 0.25 0.20 0.25 0.21 0.19 0.30

20 10

Future outlook 0.15 0.10 0.10

0.15

0.20

5.0 0

-10.0

-17.6

Net sales are expected to increase in 2019, and the comparable operating profit is expected to be positive. Finland Export 0 2014 2015 2016 2017 2018 0.05 0 0.05 0

2015

2014 2016 2017 2018

17.9

15.1 15.5

-10.5

13.4 15.9

0.16

30.7

1.00

Monitoring of strategy implementation 2015

The Group's strategy covers all key operating and financial targets until 2021. Under the strategy, the company's annual organic growth target will be over 10 per cent once the economy improves. The aim is also that the profit before taxes will be 10 per cent of net sales within the next three years. The target for return on equity is more than 20 per cent. Corporate acquisitions in support of the strategy are also possible. Due to the unstable operating environment, no strategic targets have been met. The Group has increased the efficiency of its operations to improve profitability. Over the past five 45 40 35 30 25 20 15 10 5 0 0.16 2014 2016 2017 2018 36.9 33.4 2015 39.0

60 Monthly Development of the Trading Volume of A share, % Monthly Development of the Trading Volume of A share, %

Year 2013

273

Personnel per Segments Average During the

Fireplaces Interior Stone

Clericals Workers

²² ¹⁰

GenderDistribution of Personnel,Dec.31,2018

years, Tulikivi has undergone an extensive restructuring programme to improve its operations. In the process, the company's debt has decreased by around EUR 12 million since 2013, and it has invested around EUR 5 million in reorganisation and restructuring. The company has also made significant investments in a new range of ceramic fireplaces, as well as its Karelia and Pielinen collections and their production technology. These collections have met with a positive response among end customers and dealers, and they will enable profitable growth in 2019. To increase its net sales, the company seeks to accelerate the growth in the sales of the Karelia and Pielinen collections in Finland and abroad. Special attention will also be paid to sales efficiency measures. The company's profitability will improve in 2019 as a result of its streamlined cost structure and more favourable distribution of sales. 12.9 15.7 28.6 Finland Export Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, % 50 40 30 20 10 0 45 40 35 30 25 20 15 10 5 0.16 2014 2015 2016 2017 2018 17.9 15.1 15.5 21.4 16.9 15.0 39.3 32.0 30.5 13.415.9 29.312.9 36.9 33.4 39.0 Finland Export Earnings per Share, EUR Equity/Share, EUR Solvency Ratio, % 50 40 30 20 10 0 45 40 35 30 25 20 15 10 5 2014 2015 2016 2017 2018 17.9 15.1 15.5 21.4 16.9 15.0 39.3 32.0 30.5 13.4 15.9 29.312.9 15.7 28.6 36.9 33.4 30.7 39.0

15.7 28.6

30.7

27.4

70 60

Key ratios and ownership information 0 2014 2016 2017 2018 2014 2016 2017 2018 2015 2014 2016 2017 2018 2015

The key figures concerning the Group's financial performance, as well as key figures per share and their calculation formulas, are presented in the financial statements, along with the company's shareholders and the management's holdings. Age Distribution of Personnel, Dec. 31, 2018 50 60 45 Age Distribution of Personnel, Dec. 31, 2018 50 60 45 39

Corporate Governance Statement 30 40 30

150

Year 2013

27.4

Tulikivi Corporation will issue its Corporate Governance Statement for 2018 separately from the Annual Report. The Corporate Governance Statement has been prepared in accordance with Finnish Corporate Governance Code, which entered into force on 1 January 2016. Information about corporate governance can be found under "Corporate Governance and Management" on Tulikivi's website at www.tulikivi.com/en/tulikivi/corporation. Age Distribution of Personnel, Dec. 31, 2018 Clericals Workers GenderDistribution of Personnel,Dec.31,2018 0 10 20 </=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65 ³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15 18 1 200 250 Clericals Workers GenderDistribution of Personnel,Dec.31,2018 0 10 20 </=25 </=30 </=35 </=40 </=45 </=50 </=55 </=60 </=65 >65 ³ ⁴ 1 ⁸ ¹⁰ ⁸ 12 20 15 18 12 5 1 200 250

Group structure 39 150

Clericals Workers

161

Women Men

The companies included in the Group are the parent company Tulikivi Corporation, Tulikivi U.S. Inc. in the USA and OOO Tulikivi in Russia. Group companies also include Tulikivi GmbH and The New Alberene Stone Company, Inc., which are dormant. 12 5 15 Clericals Workers Women Men 0 50 100 ²² ¹⁰ 54 Clericals Workers Women Men 0 50 100 ²² ¹⁰ 54

Year 2013

273

161

5 15

161

Fireplaces Interior Stone

Consolidated Financial Statements, IFRS

Consolidated Statement of Comprehensive Income

EUR 1 000	Note	Jan. 1 - Dec. 31, 2018	Jan. 1 - Dec. 31, 2017
Sales	3	28 583	29 281
Other operating income	4	266	305
Increase/decrease in inventories of finished goods and in work in progress		-940	231
Production for own use		501	740
Raw materials and consumables		-7 053	-6 953
External services		-3 474	-4 108
Personnel expenses	5	-10 312	-10 655
Depreciation and amortisation	6	-1 906	-2 097
Impairment		-508	0
Other operating expenses	7	-6 182	-7 111
Operating result		-1 025	-367
Financial income	8	45	25
Financial expenses	9	-778	-825
Share of result of associates		0	0
Result before income tax		-1 758	-1 167
Income taxes expense	11	-38	-74
Result for the year		-1 796	-1 241
Other comprehensive income
Items that may be reclassified to profit or loss
Cash flow hedges	10	6	93
Translation differences	10	-15	-104
Other comprehensive income, net of tax		-9	-11
Total comprehensive result for the year		-1 805	-1 252
Calculated from result attributable to the equity holders of the parent company
earnings per share, EUR
basic/diluted	12	-0.03	-0.02

Consolidated Statement of Financial Position

Assets Non-current assets Property, plant and equipment 13 6 865 7 850 Goodwill 15 3 654 4 162 Other intangible assets 15 9 708 9 614 Investment properties 14 92 92 Other financial assets 17 26 26 Deferred tax assets 18 3 069 3 171 Other receivables 77 174 Total non-current assets 23 491 25 089 Current assets Inventories 19 6 925 8 122 Trade and other receivables 20 3 376 2 852













Cash and cash equivalents 21 798 567
Total current assets 11 099 11 541
36 630 Total assets 34 590
Equity and liabilities
Capital and reserves attributable to equity holders of the Company
Share capital 22 6 314 6 314
Treasury shares 22 -108 -108
The invested unrestricted equity fund 22 14 407 14 407
Translation differences 22 37 52
Revaluation reserve 22 0 -6
Retained earnings -11 340 -9 499
Total equity 9 310 11 160
Non-current liabilities
Deferred income tax liabilities 18 653 755
Provisions 24 251 255
Other non-current liabilities 0 65
1 075 Total non-current liabilities 904
Current liabilities
Trade and other payables 18 8 977 8 697
Current tax liabilities 16 5
Provisions 25 5 27
Short-term interest-bearing liabilities 26 15 378 15 666
Total current liabilities 24 376 24 395
Total liabilities 25 280 25 470
Total equity and liabilities 34 590 36 630

Consolidated Statement of Cash Flows

EUR 1 000	Note	Jan. 1 - Dec. 31, 2018	Jan. 1 - Dec. 31, 2017
Cash flows from operating activities
Result for the year		-1 797	-1 241
Adjustments:
Non-cash transactions	29	2 304	1 646
Interest expense and finance costs		778	825
Interest income		-43	-23
Dividend income		-2	-2
Income taxes	11	38	74
Changes in working capital:
Change in trade and other receivables		-300	292
Change in inventories		1 197	-259
Change in trade and other payables		226	1 462
Interest paid		-791	-797
Interest received		38	23
Dividends received		2	2
Income tax paid		-27	-60
Net cash flow from operating activities		1 623	1 942
Cash flows from investing activities
Purchases of property, plant and equipment (PPE)		-279	-425
Purchases of intangible assets		-844	-1 066
Proceeds from sale of tangible assets		61	15
Investments in other investments		-30	-47
Net cash flow from investing activities		-1 092	-1 523
Cash flows from financing activities
Repayments of borrowings		-288	-727
Net cash flow from financing activities		-288	-727
Net decrease (-) / increase (+) in cash and cash equivalents		243	-308
Cash and cash equivalents at the beginning of the year		567	894
Exchange gains (+) / losses (-)		-12	-19
Cash and cash equivalents at the end of the year	21	798	567

Consolidated statement of changes in equity

Attributable to equity holders of the Company	Note	Share capital	The invested unrestricted equity fund	Revaluation reserve	Treasury shares	Translation differences	Retained earnings	Total equity
EUR 1 000
Equity at January 1, 2017		6 314	14 407	-99	-108	156	-8 273	12 397
Total comprehensive result for the year				93		-104	-1 241	-1 252
Transactions with owners
Share option scheme							15	15
Equity at December 31, 2017		6 314	14 407	-6	-108	52	-9 499	11 160
Equity at January 1, 2018		6 314	14 407	-6	-108	52	-9 499	11 160
Total comprehensive result for the year				6		-15	-1 796	-1 805
Transactions with owners							-49	-49
Share option scheme							4	4
Equity at December 31, 2018	22, 27.5	6 314	14 407	0	-108	37	-11 340	9 310

Notes to the Consolidated Financial Statements

Basic Information of the Group

The parent company is Tulikivi Corporation (Business ID 0350080-1) and it is domiciled in Juuka, Finland. Its registered address is 83900 Juuka, Finland.

A copy of the consolidated financial statements is available on the Internet at www.tulikivi.com or at the parent company's head office, located at the above address.

Tulikivi Corporation's Board of Directors has approved these financial statements for publication at its meeting held on February 13, 2019. Under the Finnish Limited Liability Companies Act, shareholders may approve or reject the financial statements at the Annual General Meeting held after publication. The Annual General Meeting also has the right to decide on making changes to the financial statements.

1. Accounting Principles for Financial Statements

1.1. Basis of Preparation

These are the financial statements of the Group, that have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the IAS and IFRS standards as well as the SIC and IFRIC interpretations in force as at December 31, 2018. The term IFRS refers to the standards and interpretations that are approved for adoption in the Finnish Accounting Act and regulations issued by virtue to it and endorsed in the EU in accordance with the procedure defined in the EU Regulation (EY) No 1606/2002. The notes to the consolidated financial statements also

comply with the additional requirements under the Finnish accounting and company legislation. The consolidated financial statements have been prepared under the historical cost

convention except for financial assets and financial liabilities (including derivatives) carried at fair value through profit or loss. The consolidated financial statements are presented in thousands of euros.

Tulikivi Group has applied as from 1 January 2018 the following new and amended standards that have come into effect.

IFRS 9 Financial Instruments* (effective for financial years beginning on or after 1 January 2018): IFRS 9 replaces the earlier guidance in IAS 39. The new standard includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The impact of IFRS 9 to the consolidated financial statements has been assessed and it had no significant impact to the consolidated financial statements.
IFRS 15 Revenue from Contracts with Customers (effective for financial years beginning on or after 1 January 2018): The new standard replaces current IAS 18 and IAS 11 -standards and related interpretations. In IFRS 15 a five-step model is applied to determine when to recognise revenue, and at what amount. Revenue is recognised when (or as) a company transfers control of goods or services to a customer either over time or at a point in time. The standard introduces also extensive new disclosure requirements. The impacts of IFRS 15 on Tulikivi Group's consolidated financial statements have been assessed as follows: Contracts with Customers have been reviewed through a five steps model, promises to customers have been identified, key concepts of IFRS 15 are analyzed for different revenue streams through a five-stage model. The chosen approach is the cumulative effect method, i.e. the cumulative effect is recognized at the date of initial application in 1 January 2018. Standard changes had no significant impact on revenue recognition.

Other standards had no impact on Tulikivi Group's consolidated financial statements. Tulikivi Group has not yet adopted the following standards or interpretations that the IASB has issued. The Group will adopt them as from their effective dates, or if the effective date is different from the beginning of the financial year as from the beginning of the following financial year.

Adoption of new and amended standards and interpretations applicable in future financial years. -IFRS 16 Leases* (effective for financial years beginning on or after 1 January 2019): The new standard replaces the current IAS 17 – standard and related interpretations. IFRS 16 requires the lessees to recognise the lease agreements on the balance sheet as a rightof-use assets and lease liabilities. The accounting model is similar to current finance lease accounting according to IAS 17. There are two exceptions available, these relate to either short term contacts in which the lease term is 12 months or less, or to low value items i.e. assets of value USD 5 000 or less. The lessor accounting remains mostly similar to current IAS 17 accounting. The company adopted the IFRS 16 Leases standard on 1 January 2019 thus the Group has made an impact assessment of the standard. According to the standard, the lessee recognizes the right of use asset and liability. The impact of IFRS 16 leases to the opening balance of 2019 was EUR 1.5 million, of which EUR 0.9 million is non-current liability and EUR 0.6 million is current liability. Increase in buildings was EUR 1.3 million and increase in machinery and equipment was EUR 0.2 million. As a result of IFRS 16 rental expenses are estimated to decrease by approximately EUR 0.6 million and depreciations to increase by approximately EUR 0.6 million in the financial year 2019.

The preparation of the consolidated financial statements in conformity with IFRS requires the management make certain estimates and judgements. Information about the areas where the management has exercised judgment in the application of the Group's accounting principles is presented under "Critical management judgments in applying the entity's accounting principles and major sources of estimation uncertainty".

1.2. Accounting Policies for the Consolidated Financial Statements

Subsidiaries

The consolidated financial statements include

the parent company, Tulikivi Corporation, and all its subsidiaries. Subsidiaries are companies, over which the Group has control. Control exists when the Group owns more than half of the voting rights, or it has otherwise control. Also the existence of potential voting rights is considered when assessing the conditions of control if the instruments entitling to potential voting rights are currently exercisable. Control means the power to govern financial and operating policies of an entity so as to obtain benefits from its activities. Group holds over 20 per cent of the voting rights or otherwise has significant influence, but no control. Investments in associates are accounted for using the equity method. When the Group's proportionate share of losses in an associate exceeds the book value of the interest, the investment is recognized in the balance sheet to zero value and further losses are not recognized unless the Group has committed to fulfil the associates' obligations. The investment in an associate includes goodwill identified on acquisition. Unrealized

Intragroup share holdings are eliminated using the acquisition method. The consideration transferred and the identifiable assets acquired and liabilities assumed in the acquired company are measured at fair value at the acquisition date. gains between the Group and an associate are eliminated according to the ownership interest of the Group.The Group's share of the associate's profit or loss for the year is separately disclosed below operating profit. Respectively, the Group's share in the changes

Subsidiaries are consolidated from the date on which control is transferred to the Group, and the disposed subsidiaries until the control recognized in other comprehensive income of an associate is recognized in other comprehensive income of the Group.

unrealized gains on transactions between group companies, and intragroup distribution of profits are eliminated. Unrealized losses are Translation of Foreign Currency Items The results and financial positions of subsidiaries are measured using the currency of the primary

also eliminated unless the loss is due to impairment. Tulikivi Corporation owns its subsidiaries in full, therefore the Group's profit for the year or equity do not include noncontrolling interests. All business combinations of the Group have taken place before the economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in euros, which is the parent company's functional and presentation currency.

ceases. Intragroup transactions, balances and

effective date of the revised IFRS 3(2008).

Associates

Foreign currency transactions

Transactions in foreign currencies are translated into the functional currency using the foreign exchange rate prevailing at the transaction date.

Associated companies are all entities over which the Group has significant influence. Significant influence mainly arises when the In practice, exchange rates close to the rates prevailing at the dates of the transactions are

usually used. Monetary items are translated into functional currency using the exchange rates prevailing at the reporting date. Non-monetary items are translated using the exchange rate at the transaction date.

Exchange differences of transactions in foreign currencies and translation of monetary items are recognized in profit or loss. Exchange differences resulting from business operations are recognized in the respective items in the income statement as part of the operating profit. Gains or losses arising from borrowings and cash in bank are recognized in finance income and expenses.

Translation of financial statements of foreign subsidiaries

Income and expenses in the statements of comprehensive income of the foreign Group companies are translated at exchange rates at the dates of the transactions and the statements of financial position are translated at closing rates at the reporting date. Exchange differences arising from translation of comprehensive income with different exchange rates in the statement of comprehensive income and in the statement of financial position are recorded within equity and this change is recognised in other comprehensive income. Translation differences arising from eliminating the cost of foreign subsidiaries and from translating the foreign subsidiaries' accumulated post-acquisition equity are recognised in other comprehensive income. When a subsidiary is disposed of, in part or in full, the accumulated translation difference is transferred to profit or loss as part of the gain or loss on disposal. The Group has not acquired, nor sold any foreign subsidiaries during the financial year ended or in the previous financial year.

Goodwill arisen from the acquisitions of foreign entities and related fair value adjustments to the assets and liabilities of the acquired entities are recognized as assets and liabilities of the said foreign entities and are translated to euro using the exchange rates at the reporting date. The fair value adjustments and goodwill arisen from the acquisitions occurred prior to January 1, 2004, have been recognized in euro.

Property, Plant and Equipment

Property, plant and equipment assets are measured in the balance sheet at cost less accumulated depreciation and impairment charges.

Cost includes expenditure directly attributable to the acquisition of an item of property, plant and equipment. Cost of a self-constructed asset includes material costs, direct employee benefit costs and other direct costs attributable to the cost of preparing the asset for its intended use. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of the asset.

A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

When the asset consists of several items with different useful lives, each item will be dealt with as a separate asset. In this case the replacement costs of the item are capitalized and any remaining part of the asset is derecognised. Otherwise subsequent costs are included in the book value of an item of

property, plant and equipment only when it is Government Grants

probable that the future economic benefits associated with the item will flow to the Group and that the cost can be measured reliably. Other repair and maintenance costs are charged to the income statement when they occur. Depreciation is calculated using the straight-line method based on the useful lives of the assets. Land areas are not depreciated except for mining areas, where depreciations are recognised based on the consumption of the rock material and stacking area filling time.

The useful lives are as follows:

Buildings	25 to 30 years
Constructions	5 years
Process machinery	3 to 15 years
Motor vehicles	5 to 8 years
Other property	3 to 5 years
Equipment	3 to 5 years

investment property(buildings) 10 to 20 years The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each

financial year-end.

Depreciation of property, plant and equipment is discontinued when the item of property, plant and equipment is classified as being held for sale in accordance with the IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations. The Group had no items of property, plant and equipment classified as held for sale during the years 2018 and 2017.

Gains and losses on disposal of property, plant and equipment are recognised in profit or loss and presented in other operating income and expenses. Gain/loss on sale is determined based

on the difference between the disposal price and the residual value.

Government grants, for example grants from the state, related to the purchase of property, plant and equipment or intangible assets are deducted from the carrying amount of the asset when there is a reasonable assurance that the grant will be received and the group will comply with attached conditions. The grants are recognised in profit or loss through the depreciation/amortisation made over the useful life of the asset. Grants received as compensation for expenses already incurred are recognised in profit or loss of the period in which they become receivable. Such government grants are presented within other operating income.

Investment Properties

Investment properties are properties held in order to earn rental income or capital appreciation. Investment properties are measured at cost less accumulated depreciation.

Intangible Assets

- Goodwill

Goodwill arising on business combinations taking place after January 1, 2010 is recognised as the excess of the aggregate of the consideration transferred, the recognised amount of noncontrolling interests and previously held equity interest in the acquired company, over the

Group's share of the fair value of the net identifiable assets acquired. No business combinations have taken place in the Group since January 1, 2010.

Business combinations taken place between January 1, 2004 and December 31, 2009 have been accounted for in accordance with the previous IFRS standard (IFRS 3(2004)). The goodwill arisen from the acquisitions occurred

before January 1, 2004 represents the carrying amount of goodwill at the date of transition to IFRSs based on the previous accounting principles. The cost includes expenditure that is directly attributable to the acquisition, such as professional fees. Goodwill is not amortised but tested annually for impairment. For this purpose the goodwill has been allocated to cash-generating units or, if an associate is in question, goodwill is included in the cost of the associate. The goodwill is measured at historical cost less impairment.

- Research and development costs

Research costs are expensed in the income statement as incurred. Development costs arising from planning of new or improved products are capitalized as intangible assets in the balance sheet when costs arising from the development phase can be reliable measured, the entity can demonstrate the technological and commercial feasibility of the product and the Group has the intention and resources to complete the development work. Capitalised development costs comprise material, labour and test costs incurred in bringing the assets capable of operating in the manner intended by management. Development costs previously expensed cannot be capitalized later.

Amortisation of an asset begins as soon as the project commences. Assets not available for use are tested annually for impairment. Subsequent to initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses. The useful life of the capitalized development costs is 5 years during which the

capitalized costs are expensed using the straight-line method.

- Costs of exploration and evaluation of mineral resources

Costs of exploration and evaluation of soapstone are mainly capitalised. However, costs of exploration and evaluation of soapstone are expensed in statement of comprehensive income when there is significant uncertainty related to commercial viability. Elements of cost of exploration and evaluation are geographical studies, exploration drilling, trenching, sampling and activities in relation to evaluating the technical feasibility and commercial viability of extracting mineral resources. After initial recognition Group applies the cost model and the assets are amortised over 5 to 10 years. The exploration and evaluation assets are classified as a separate intangible asset category until technical feasibility and commercial viability is demonstrable. Afterwards the exploration and evaluation assets are reclassified to other intangible assets. The exploration and evaluation activities start when the Ministry of Employment and the Economy has granted a right of appropriation.

- Other intangible assets

Intangible assets are recognized in the balance sheet only if the cost of the item can be measured reliably and it is probable that the future economic benefits associated with the asset will flow to the Group.

Costs arising from establishing the soapstone quarries and construction of roads, dams and other site facilities related to the quarry are also capitalised. It can take years to establish a quarry. Amortisation of quarry lands, basins and other auxiliary structures begins when the quarry is ready and taken into production use, and the amortisation is allocated over the useful life of the quarry, that is, over the extraction period using the unit of production method. The extraction periods vary by quarries and can reach tens of years. The amount of amortisation in unit of production method is the portion of the cost equalling to the portion of extracted rock during the reporting period from the estimated total extractable amount of rock of the quarry. The amortisation period of quarries in

production phase varies from ten to twenty years. The amortisation of construction expenses of roads and dams begins in the construction year.

Intangible assets with a finite useful life are recognised as expenses on a straight-line basis over the known or estimated useful life of the asset. Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

Amortisation periods of other intangible assets are as follows:

Patents and trademarks	5 to 10 years
Development costs	5 years
Distribution channel	10 years
Mineral resource exploration
and evaluation costs	5 to 10 years
Quarrying areas
and basins = unit of production method
Quarrying area roads and dams 5 to 15 years
Computer software	3 to 10 years

Others 5 years

The useful life of the trademark related to Kermansavi Fireplaces has been assessed to be indefinite, because there is no foreseeable limit to the period which this asset is expected to generate net cash inflows.

Inventories

Inventories are measured at the lower of cost and net realisable value. The cost is determined using the weighted average cost method. The cost of quarried blocks is affected by the stone yield percentage. The cost of acquiring finished products includes all costs of purchase, including

direct transportation, handling and other costs. The cost of own finished goods and work in progress consists of raw materials, direct labor, other direct costs and related variable and fixed

production overheads systematically allocated on a reasonable basis on a normal capacity of the production facilities. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Leases

- Group as lessee

The leases of the Group are agreements under which substantially all the risks and rewards incidental to the leased assets are retained by the lessor and the agreements are therefore classified as operating leases. Payments made under operating leases are charged to the income statement as rental expenses on a straight-line basis over the lease term. When a lease includes both land and buildings elements, the classification of each element as either a finance lease or an operating lease is assessed

separately. The Group has no leases classified as finance leases.

- Group as lessor

Assets leased out by the Group are leased under operating leases. The assets are included in property, plant and equipment or investment properties in the balance sheet. They are depreciated over their useful lives consistent with the Group's normal depreciation policy. Part of the leased assets is subleased. Lease income from operating leases is recognized on a straight-line basis over the lease term.

Impairment

The Group assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is assessed. The recoverable amount is annually tested for impairment for the following assets independent of the existence of indicators of impairment: goodwill, indefinite-lived intangible assets and intangible assets not yet available for use. Mineral resource exploration and evaluation assets are tested always before reclassification of the assets in question. For the purpose of assessing criteria for recognising an impairment loss assets are grouped at the lowest levels for which there are separately identifiable cash-generating units with separately identifiable cash flows. The Group's corporate assets, which contribute to several cash-generating units and which do not generate separate cash flows, have been allocated to cash-generating units in a reasonable and consistent manner and they are tested as a part of each cash-generating unit.

The recoverable amount of an asset is the higher of the fair value less costs to sell and value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or a cash-generating unit. A pre-tax rate, which reflects the market view on the time value of money and asset-specific risks is used as the discount rate.

An impairment loss is recognized when the carrying amount exceeds the recoverable amount. The impairment loss is immediately recognized in profit or loss. If an impairment loss is allocated to a cash-generating unit, it is first recognised as a deduction of the goodwill allocated to the unit and then on pro-rata basis to unit's other assets. By recognition of an impairment loss the useful life of the asset to be depreciated / amortised is reassessed. For other assets except for goodwill, the impairment loss is reversed in case there is a change in those estimates that were used when the recoverable amount of the asset was determined. The increased carrying amount must not, however, exceed the carrying amount that would have been determined if no impairment loss had been recognized in prior years. Previously recognized impairment loss on goodwill is not reversed under any conditions.

Employee Benefits - Pension obligations

Pension plans are classified either as defined benefit plans or defined contribution plans. In defined contribution plans the group makes fixed contributions into a separate entity. The group has no legal or constructive obligation to pay any further contributions if the receiver of payments is not able to pay the pension benefits in question. All other pension plans that do not meet these conditions are defined benefit plans. The contributions made to defined contribution plans are recognised in profit or loss in the period, which they are due. Group's pension plans are defined contribution plans.

- Share-based payments

The Tulikivi Group operates a stock option scheme for management and key personnel. As the EBITDA goal set for 2018 was not achieved, no incentive pay was paid and no options were distributed for 2018.

Provisions and Contingent Liabilities

A provision is recognized when the Group has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. A provision is measured at the present value of the expenditure required to settle the obligation. The discount factor used in the calculation of the present value is determined so that it reflects the current market assessment of the time value of money and risks related to the obligation. The amount of provisions is assessed at each reporting date and adjusted to correspond to the current best estimate. Changes in provisions are recognised in income statement in the same item as the provision was originally recognised.

A warranty provision is recognized when the product subject to the warranty is sold. The

amount of the warranty provision relies on the statistical information of historical warranty realization.

A provision for restructuring is recognised when the Group has prepared a detailed restructuring plan and the restructuring either has commenced or communicated the restructuring plan to those affected by it. No provisions are recognised on expenses related to the Group's continuing operations.

A provision of onerous contracts is recognized when the incremental costs exceed the benefits received from the contract. Based on environmental legislation the group has restoration obligations related to the factory and quarry areas. A provision is recognised in the consolidated financial statements for the estimable environmental obligations.

A contingent liability is a contingent obligation as a result of a past event and its existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. An existing obligation which probably does not require settling the payment obligation or which can not be reliably estimated is also considered a contingent liability. A contingent liability is disclosed in the notes.

Current and Deferred Taxes

Income tax expense comprises current tax based on taxable income for the period and deferred tax. Taxes are recognised in profit or loss, except when they relate to items recognised directly in equity or in other comprehensive income. In this case, also tax is recognised within the item in question. Current

tax is the amount of income taxes payable in respect of the taxable profit for the period and is calculated on the basis of the local tax legislation.

Deferred taxes are calculated on temporary differences between the carrying amounts of balance sheet items and their taxable values. However, the deferred tax is not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination or that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax is recognised for investments in subsidiaries and associates, with the exception that the Group is able to control the timing of the reversal of the temporary difference and it is not probable that the temporary difference will reverse in the foreseeable future.

The Group´s most significant temporary differences arise from depreciation of property, measuring derivatives at fair value, tax losses carried forward and fair value measurement associated to business combinations. Deferred tax is determined using the tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. The recognition criteria of a deferred tax asset in this respect are assessed at each reporting date.

Non-recurring items

For the sake of comparability between

reporting periods the Group classifies certain income and expense items as non-recurring in its financial reporting. The following items are presented as non-recurring items: income and expenses arising from Group's restructuring plans, one-time impairment losses on goodwill and other assets as well as other exceptional non-recurring items, which materially skew the comparability of profitability of Group's business functions over time.

Revenue Recognition - Sold goods and rendered services

The Group recognises revenue from sold goods and rendered services so that it expresses the sale of goods and rendering of services to customers as an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

- Lease income

Lease income is recognised on a straight-line basis over the lease term.

- Construction contracts

The Group did not have any construction contract revenues in 2018 and 2017.

- Interest income and dividends

Interest income is recognized according to the effective interest rate method and dividend income when the right to the dividend is arisen.

Non-Current Assets Classified as Held for Sale and Discontinued Operations

The Group did not have non-current assets classified as held for sale nor discontinued operations during in 2018 or 2017.

Financial Assets

Group's financial assets are classified to following groups:

financial assets measured at fair value through profit and loss (FVPL)
financial assets measured at amortised cost (AC), and

• financial assets measured at fair value through other comprehensive income (FVOCI) Classification of financial assets is made based on their purpose of use upon initial recognition. Classification relies on the objectives of business model assessment and the contractual cash flows from financial assets, or by applying the fair value option upon initial recognition. Tulikivi Group recognizes all its financial assets at amortised cost. At the end of the financial year 2018 the Group had no financial assets measured at fair value through profit and loss (FVPL).

Transaction costs are included in the initial value of all the financial assets not carried at fair value through profit or loss. Regular purchases and sales of financial assets are recognized on the trade date which is the date when the Group commits to purchase or sell the financial asset.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred

substantially all risks and rewards of ownership. Financial assets at fair value through profit or loss are financial assets held for trading or financial assets which are classified at initial recognition in this category. The classification can only be changed under extremely rare conditions.

Financial assets measured at amortised cost

Tulikivi Group recognises all trade receivables that are non-derivative assets at amortised cost. Financial assets at amortised cost are

financial assets with fixed or determinable payments that are not quoted in an active market and the Group does not hold them for trading or does not explicitly designate assets at fair value through other comprehensive income at initial recognition.

Trade and other receivables are recognized at amortised cost. Based on the Group's trade receivables are held within a business model whose objective is to collect the contractual cash flows, and those cash flows that are solely payments of principal and interest.

These assets are recognised at amortised cost using the effective interest method (EIR). The carrying amounts of current trade receivables are expected to substantially equal their fair values. Group measures credit losses at an amount equal to the lifetime expected credit losses for the trade receivables. Tulikivi Group

recognises a loss allowance for expected credit losses on financial assets measured at amortised cost.

Trade and other receivables are classified as current or non-current based on their maturity, to the latter if they have a maturity

of more than 12 months. Tulikivi Group calculates the loss allowance of expected credit losses based on the simplified and general approach Group measures loss allowance at an amount equal to the lifetime expected credit losses for the trade receivables. Expected credit losses are based on the historical information on defaulted receivables. Loss allowance and any changes to it are recognized by recognizing impairment gains and losses in profit and loss.

Financial assets recognized at fair value through other comprehensive income

Financial assets recognized at fair value through other comprehensive income are non-derivative assets that are specifically designated this category. They are recognized as non-current assets.

Assets in this group can contain investments in equity instruments and interest-bearing securities. These assets are carried at fair value, or when the fair value can not be measured reliably, at cost. The fair value of financial assets is determined based on market bid prices. If no quoted market prices are available for the available-for-sale financial assets, the Group applies other methods of measurement. These can include, for example, recent transactions between independent parties, discounted cash flows and measurements of similar instruments. Market information is mainly applied in measurement minimising the application of factors determined by the Group itself. Valuation methods are referred in the fair value

hierarchy note.

Tulikivi Group has made irrevocable decision to recognize unquoted equity instruments to fair value through other comprehensive income. These investments are considered permanent in nature and short-term profits are not seeked.

The changes in fair value of these assets are recognised in other comprehensive income, net of tax, and presented within equity in the "revaluation reserve". When interest-bearing securities classified as fair value through other comprehensive income are sold or they are impaired, the accumulated fair value adjustments recognised in equity are transferred to the income statement as a reclassification adjustment. Interest income from interest securities are recognised in finance income using the effective interest method. The Group had no assets recognized as fair value through other comprehensive income in 2017 and 2018 apart from unquoted equity instruments.

For the equity instruments only dividends are recognised in profit or loss, unless they clearly represent a repayment of part of the cost of the investment. The amounts recognised in OCI are not reclassified to profit or loss under any circumstances.

Financial assets through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading or financial assets which are classified at initial recognition in this category. The classification can only be changed under extremely rare conditions. The financial assets measured at fair value through profit or loss include the financial assets held for trading or financial assets that include one or more embedded derivatives that alter significantly the cash flows under a contract, when the compound financial instrument as a whole is measured at fair value. Assets classified as held for trading have been acquired principally for the purpose of short-term profit taking from market price changes.

Derivatives that are not financial guarantee contracts or that do not qualify for hedge accounting are classified as held for trading. Derivatives and financial assets with maturities less than 12 months are included in current assets. The Group had no embedded derivatives or financial guarantee contracts in 2018 and 201. Financial assets at fair value through profit or loss are measured at fair value based on quoted market prices at the reporting date. Fair values of interest rate swaps are determined based on the present value of future cash flows and fair values of forward exchange agreements based on forward exchange rates at the reporting date. The Group applies commonly accepted valuation methods in measuring derivatives and other financial instruments that are not held for sale. Unrealized and realized gains and losses from changes in fair value are recognized in the income statement when they arise.

Financial Liabilities

Financial liabilities are initially recognized at fair value. Transaction costs are included in the initial carrying amount for those financial liabilities carried at amortised cost.

Subsequently financial liabilities, except for derivative liabilities, are measured at amortized cost using the effective interest rate method. Financial liabilities may comprise of current and non-current items. Financial liabilities are classified as current liabilities unless the Group has an unconditional right to postpone the settlement of the liability at least 12 months from the reporting date.

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of the cost of that asset when it is probable that they will result in future economic benefits and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred. Fees related to the establishment of loan facilities are recognised as transaction costs to the extent that it is probable that some or all of the loan facility will be drawn down. In these cases, the fees are deferred (capitalised) until the draw-down occurs. As the loan is drawn down, any related transaction fees are recognised as part of transaction expenses. To the extent that it is probable that the loan facility will not be drawn down, the fees are capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. The principles applied in determination of fair values of all financial assets and financial liabilities are presented in note 28. Carrying amounts of financial assets and financial liabilities by categories and their fair values.

Derivative contracts and hedge accounting Derivatives are initially recognized at fair value on the date a derivative contract is entered

into and are subsequently remeasured at their fair value. Gains and losses from the fair value measurement are recognized following the purpose of use of the underlying derivative. Changes in the fair value of derivatives that are designated and qualify as effective hedges are presented in the income statement, together with any changes in the hedged item. When the group enters into a derivative contract, it is accounted for either as a hedge of the fair value of receivables or liabilities or firm commitments (fair value hedge), or in respect of foreign currency risk, hedges of cash flows related to highly probable forecast transaction or as a derivative not qualifying for hedge accounting.

At the inception of hedge accounting the group documents the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and at least each reporting date, of whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in fair values or cash flows of hedged items.

- Fair value hedges

The fair value changes of derivatives satisfying the criteria of fair value hedges are recognised in profit or loss. The fair value changes of the hedged asset or liability are treated in a similar manner in respect of the hedged risk. The Group held no derivative contracts meeting the

criteria of fair value hedges in 2018 or 2017.

- Cash flow hedges

The effective portion of changes in the fair values of derivatives designated and qualifying as cash flow hedges are recognised in other comprehensive income and presented in the revaluation reserve in equity. The cumulative gain or loss in equity is transferred to profit or loss in the same period as the hedged cash flows affect profit or loss. Gains or losses on derivatives hedging forecast foreign currency denominated sales are recognised as sales adjustments when those sales are realised. The ineffective portion of the changes in fair values is recognised in profit or loss in finance income or finance expenses. If the forecast transaction that is hedged results in the recognition of a non-financial asset, such as an item of property, plant and equipment, the gains and losses recognised in equity are accounted for as a cost adjustment of the item in question. When a hedging instrument designated as a cash flow hedge expires or is sold or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss remains

in equity until the forecast transaction realizes. However, if the forecast transaction is no longer expected to occur, the cumulative gain or loss deferred in equity is immediately transferred to the profit or loss.

The fair values of hedging instruments are presented in Note 28 Commitments. Changes in the revaluation reserve are shown in note 10. Other comprehensive income.

Treasury Shares

If Tulikivi Corporation repurchases its own

equity instruments the cost of these instruments is deducted from equity.

Operating Profit / Result

The IAS 1 Presentation of Financial Statements does not define the concept of operating profit. The Group has defined it as following: The operating profit is the net amount attained when the sales are added by other operating income, deducted by purchase expenses adjusted with changes in finished goods and work in progress and costs of production for own use, by employee benefit expenses, by depreciation and amortisation, by possible impairment charges and by other operating expenses. All other items are presented below operating profit in the income statement. Exchange rate differences and the fair value changes of derivatives are included in operating profit if they result from business operations, otherwise they are recognised in the financial items. Negative operating profit is referred to as Operating result in the reporting.

Critical Management Judgments in Applying the Entity's Accounting Principles and Major Sources of Estimation Uncertainty

In preparing the consolidated financial statements estimates and assumptions about the future are made, the actual outcome of which might differ from the assumptions and estimates made previously. In addition, judgment is exercised in applying the accounting principles.

- Sources of estimation uncertainty

Judgments and assumptions are based on the

Directors best estimate as at the reporting date. The estimates are based on earlier experience and assumptions of the future

considered to be most probable at the reporting date, relating to i.a. expected development of the economic environment in which the Group operates affecting the sales volumes and expenses. The Group follows realisation of the estimates, the assumptions and the changes in the underlying factors regularly in co-operation with business units by using various, both internal and external sources of information. Possible revisions to estimates and assumptions are recognized in the period in which the estimates and assumptions are revised and in any future periods affected.

In Tulikivi the key assumptions about the future and major sources of estimation uncertainty as at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next

financial year are related to, amongst others, deferred tax assets, measurement of inventories, property, plant and equipment related to quarries, fair value measurement and impairment testing of assets acquired in business combinations, that are described in detail below. The Group management believes that these are the key areas in the financial statements, since they include the most complex accounting policies and require most significant estimates and assumptions. In addition, changes in the estimates and assumptions used in these areas of financial statements are estimated to have the most extensive effects.

- Impairment testing

The Group tests goodwill, intangible assets not yet available for use and indefinite-lived intangible assets annually for potential impairment and assesses indications of impairment of property, plant and equipment and intangible assets at each reporting date. In addition, in respect of mineral resource exploration and evaluation assets, impairment tests are performed when the assets are reclassified. The recoverable amounts of the cash-generating units are assessed based on their value in use. The preparation of such calculations requires the use of estimates, especially in respect of future growth estimates of the cash-generating units and changes in profitability.

Further information on the sensitivity of the recoverable amount to the changes in the assumptions used is in Note 16.3. Impairment testing.

2. Segments

In connection with the performance improvement programme, the organisation has been streamlined and the Fireplace and Interior Stone businesses have been integrated. Therefore, as of the beginning of 2014, the company is no longer reporting these segments saparately.

2.1. Geographical information 2018	Finland	Rest of Europe	USA	Group Total
Sales	12 884	15 077	622	28 583
Assets	23 452	39	0	23 491
2017
Sales	13 364	15 105	812	29 281
Assets	25 008	81	0	25 089

Non-current assets exclude financials instruments and deferred tax assets.

Geographical segments' sales are presented based on the country in which the customer is located and assets are presented based on location of the assets.

2.2. Information on most important clients

Group's revenue was distributed so that no one external client generated over 10 per cent of the company's total revenue in 2018 (2017).

3. Net sales per goods and services	2018	2017
Sales of goods	26 919	26 942
Rendering of services	1 664	2 339
Sales, total	28 583	29 281
4. Other operating income
Proceeds from sale of PPE	59	5
Other income	207	300
Other operating income, total	266	305
5. Employee benefit expense
Wages and salaries	-8 578	-9 070
Pension costs - defined contribution plans	-1 420	-1 198
Other social security expenses	-310	-372
Share-based compensation	-4	-15
Employee benefit expense, total	-10 312	-10 655
The restructuring provision, note 24, doesn't include unpaid personnel costs in 2018 (21 thousand in 2017). Information on key management personnel compensation is disclosed in note 34.3. Key management compensation.
5.1. Group's average number of personnel for the financial period

Group's average number of personnel for the financial period, total	200	208
Group's personnel at 31 December.	247	258

1 000 euro	2018
6. Depreciation, amortisation and impairment
Depreciation and amortisation by class of assets
Intangible assets
Trademarks	-10
Capitalised development costs	-380
Other intangible assets	-235
Amortisation on quarries based on the unit of production method *)	-146
Amortisation of intangible assets, total	-771
Tangible assets
Buildings	-445
Machinery and equipment	-659
Motor vehicles	-14
Depdeciation on land areas based on the unit of production method *)	-17
Other tangible assets	0
Depreciation of tangible assets, total	-1 135
Investment property
Buildings
Impairment
Inpairment of Goodwill	-508
Total depreciation, amortisation and impairment	-2 414

*) The Group applies the unit of production method based on the usage of stone in calculating the amortisation for quarries, precipitation basins and mining rights. Land areas are depreciated on a unit-of-use basis based on the consumption of the rock material or stacking area filling time.

7. Other operating expenses

Losses on sales of tangible assets	0
Rental expenses	-1 007
Real estates costs	-264
Marketing expenses	-1 112
Other variable production costs	-1 721
Other expenses	-2 078
Other operating expenses, total	-6 182

7.1. Research expenditure

Research costs expensed totalled EUR 516 thousand (497 thousand in 2017).

7.2. Auditors' fees

KPMG Oy AB
Audit fees	54
Other fees	6

KPMG Oy AB
Audit fees	54	65
Other fees	6	9
Audit fees, total	60	74

Tulikivi Group's statutory auditor KPMG Oy Ab has not provided any non-audit services which are prohibited under the EU 537/2014 regulation.

EUR 1 000	2018	2017
8. Finance income
Dividend income on available for sale financial assets	2	2
Foreign exchange transaction gains	34	5
Interest income on trade receivables	5	10
Other interest income	4	8
Finance income, total	45	25
9. Finance expense
9.1. Items recognised in profit or loss
Interest expenses on financial liabilities at amortised cost and other liabilities	-580	-621
Foreign exchange transactions losses	-36	-6
Other finance expense	-162	-198
Finance expense, total	-778	-825

Exchange rate differences recognised in sales and purchases totalled EUR 2 thousand (loss) in 2018 (2017: loss of EUR 2 thousand).

10. Other comprehensive income

Financial items recognised in other comprehensive income:

Before Tax After Before Tax After taxes effects taxes taxes effects taxes 6 0 6 93 0 93 -15 0 -15 -104 0 -104 -11 0 -11 -9 0 -9 2018 2017 38 74 0 0 38 74 The reconciliation between the tax expense in the income statement and the tax calculated based on the Group's domestic tax rate (20 per cent in 2018). -1 759 -1 167 352 233 -5 6 0 4 -18 -27 -388 -345 5 76 16 -21 -74 -38		2018			2017


	Cash flow hedges
	Translation differences
	Other comprehensive income, total
	11. Income taxes
	Current tax
	Deferred tax
	Income taxes, total

	Profit before tax
	Tax calculated at domestic tax rates 20 per cent
	Effect of foreign subsidiaries different tax bases
	Income not subject to tax
	Unrecognised taxes of previous losses
	Unrecognized deferred taxes on provisions
	Expenses not deductible for tax purposes
	Other
	Income statement tax expense

12. Earnings per share

Earnings per share is calculated by dividing the profit attributable to equity holders of the parent company by the weighted average number of ordinary shares in issue during the year.

Profit attributable to equity holders of the parent company (EUR 1 000)						-1 797	-1 241
Weighted average number of shares for the financial period						59 747 043	59 747 043
Basic/diluted earnings per share (EUR)							-0.02
13. Property, plant and equipment 2018	Land	Buildings	Vehicles and machinery	Motor vehicles	Other tangible assets	Advances	Total
Cost January 1	1 284	15 095	16 021	1 426	1 807	45	35 678
Additions	0	0	159	22	0	0	181
Disposals	0	0	-454	0	0	-25	-479
Translation differences and other adjustments	0	0	0	0	0	0	0
Cost December 31	1 284	15 095	15 726	1 448	1 807	20	35 380
Accumulated depreciation and impairment January 1	-490	-11 236	-13 822	-1 410	-871	0	-27 829
Depreciation	-17	-445	-659	-14	0	0	-1 135
Translation differences and other adjustments	0	0	-5	0	0	0	-5
Depreciation related to the disposals	0	0	454	0	0	0	454
Accumulated depreciation and impairment December 31	-507	-11 681	-14 032	-1 424	-871	0	-28 515
Property, plant and equipment, Net book amount January 1	794	3 859	2 199	16	936	45	7 849
Property, plant and equipment, Net book amount December 31, 2018	777	3 414	1 694	24	936	20	6 865

The Group's production machinery within property, plant and equipment has carrying amount of EUR 1 630 (2 063) thousand.

There were no disposals of machinery and equipment and accumulated depreciation on disposals in 2018 (53 thousand 2017). The Group started to use a new fixed asset register software in 2018. Part of fully depreciated assets have been scrapped in order to clarify accounting. Scrapping does not have a significant impact on carrying amount of property, plant and equipment. There were no construction under Machinery and equipment (EUR 20 thousand in 2017). The Group did obtain government grants EUR 18 thousand in 2018 (160 thousand in 2017) to acquisitions of plant and equipment. Government grants are deducted in arriving at the carrying amount of the related assets.

2017	Land	Buildings	Vehicles and machinery	Motor vehicles	Other tangible assets	Advances	Total
Cost January 1	1 288	15 087	15 530	1 516	1 807	160	35 388
Additions	0	8	576	0	0	0	584
Disposals	-4	0	-81	-90	0	-115	-290
Translation differences and other adjustments	0	0	-4	0	0	0	-4
Cost December 31	1 284	15 095	16 021	1 426	1 807	45	35 678
Accumulated depreciation and impairment January 1	-472	-10 789	-13 100	-1 487	-854	0	-26 702
Depreciation	-17	-447	-750	-13	-17	0	-1 244
Translation differences and other adjustments	0	0	1	0	0	0	1
Depreciation related to the disposals	0	0	27	90	0	0	117
Accumulated depreciation and impairment December 31	-489	-11 236	-13 822	-1 410	-871	0	-27 828
Property, plant and equipment, Net book amount January 1	816	4 298	2 430	29	953	160	8 686
Property, plant and equipment, Net book amount December 31, 2017	795	3 859	2 199	16	936	45	7 850

EUR 1 000
	2018
14. Investment property	Buildings	Buildings
Buildings
Acquisition cost January 1 and December 31	28
Accumulated depreciation and impairment January 1 and December 31	-28
Net book amount (buildings) December 31	0
Land	Land
Acquisition cost January 1	92
Cost December 31	92
Net book amount (land) December 31	92
Fair value *)	92

*) The value of the real estates, that have market value on active markets, is based on the opinions of real estate agents.

The Group has categorised the fair value measurement for all of its investment properties as a Level 3 fair value since observable market data was not comprehensively available when fair value was determined.

Net book amount (land and buildings) December 31	92	92

15. Intangible assets

15.1. Goodwill and other intangible assets 2018	Goodwill	Patents and trademarks	Development costs	Internally generated capitalised intangible assets	Mineral resource exploration and evaluation assets	Quarry lands and mining patents	Other intangible assets	Total
Cost January 1	4 162	3 388	5 109	5 975	123	3 280	5 242	27 279
Additions	0	0	0	209	0	112	163	484
Capitalised development costs	0	0	380	0	0	0	0	380
Impairments	-508	0	0	0	0	0	0	-508
Cost December 31	3 654	3 388	5 489	6 184	123	3 392	5 405	27 635
Accumulated amortisation and impairment January 1	0	-723	-4 163	-3 372	-99	-1 077	-4 068	-13 502
Depreciation related to the disposals	0	-10	-380	-130	-4	-53	-194	-771
Accumulated amortisation and impairment December 31	0	-733	-4 543	-3 502	-103	-1 130	-4 262	-14 273
Goodwill and other intangible assets, Net book amount January 1	4 162	2 665	946	2 603	24	2 203	1 174	13 777
Goodwill and other intangible assets, Net book amount December 31, 2018	3 654	2 655	946	2 682	20	2 262	1 143	13 362

Internally generated intangible assets are costs incurred from opening new quarries and construction of basins. The carrying amount of intangible assets includes costs incurred from opening quarries EUR 4 879 (4 829) thousand in total. Costs from opening quarries are a few €/m3 for the total stone reserves of the quarry in question. Book value is the carrying amount of each quarry at the balance sheet date. Carrying amount includes the cost of opening a quarry, concession fees, coagulation basin and the attributable carrying amounts of roads.

Other intangible assets consist of licences, software, connection fees as well as of expenditures arisen from gates and asphalting works.

The group received EUR 101 thousand public grants in 2018 (no public grants in 2017) for development costs and other intangible assets. The public grants have been recognised as deduction of the carrying amount.

There were no classification changes relating to the mineral resources exploration and evaluation assets, that is, there were no transfers to other intangible assets during the reporting period or comparative period. There haven't been recognised any expenditures relating to mineral resources exploration and evaluation directly as an expense in the income statement.

In 2018 and 2017 there were not any deductions of intangible assets / accumulated amortisations on deductions.

At the end of the current financial year, there were no under construction under other intangible assets.

2017	Goodwill	Patents and trademarks	Development costs	Internally generated capitalised intangible assets	Mineral resource exploration and evaluation assets	Quarry lands and mining patents	Other intangible assets	Total
Cost January 1	4 162	3 386	4 573	5 677	123	3 156	5 169	26 246
Additions	0	2	0	298	0	124	73	497
Capitalised development costs	0	0	536	0	0	0	0	536
Cost December 31	4 162	3 388	5 109	5 975	123	3 280	5 242	27 279
Accumulated amortisation and impairment January 1	0	-712	-3 733	-3 254	-97	-999	-3 855	-12 650
Depreciation related to the disposals	0	-12	-430	-118	-2	-78	-213	-853
Accumulated amortisation and impairment December 31	0	-724	-4 163	-3 372	-99	-1 077	-4 068	-13 503
Goodwill and other intangible assets, Net book amount January 1	4 162	2 674	840	2 423	26	2 157	1 314	13 596
Goodwill and other intangible assets, Net book amount December 31, 2017	4 162	2 664	946	2 603	24	2 203	1 174	13 776

16. Goodwill

16.1. Goodwill allocation The Group's goodwill totals EUR 3.7 (4.2) million. Of that amount EUR 3.0 million has been allocated to Ceramic fireplaces unit and EUR 0.6 million to Interior stones , which form separate cash-generating units. Of the value of the Kermansavi trademark acquired in the acquisition of Kermansavi Oy, amounting to EUR 3.2 million, EUR 2.7 million has been allocated to Ceramic fireplaces unit and EUR 0.5 million to Utility ceramics unit. The amount has been derecognised in full as impairment losses transpired in impairment testing during previous years. The useful life of the trademark has been estimated to be indefinite. Beacause of its established brand, the management believes that the trademark will generate net cash inflows for the group for an undefined period of time.

The carrying amounts of goodwill and trade mark were allocated as follows:	Interior stone products	Kermansavi fireplaces
2018
Goodwill	632	3 042
Trademark		2 712
Total	632	5 754
2017
Goodwill	632	3 542
Trademark		2 712
Total	632	6 254

16.2. Recognition and allocation of impairment losses

As a result of impairment testing conducted in conjunction with the preparation of its financial statements, Tulikivi has decided to recognise an EUR 0.5 million impairment loss on goodwill in the Group's balance sheet. The impairment loss concerns the goodwill generated by the acquisition of Kermansavi Oy in 2006.

16.3. Impairment testing

For impairment testing purposes the recoverable amounts of the business operations are determined based on value-in-use calculations. The cash flow projections are based on the forecasts approved by management co- vering a five-year period. The pre-tax discount rate applied was 11.0 per cent (10.8 per cent in 2017) for Kermansavi fireplaces, and 10.4 per cent (10.4 per cent in 2017) for Interior Stone unit, which equal the weighted average cost of capital, including the risk premium. The estimated 5 per cent growth in revenue in Kermansavi stoves is based on agreements with prefabricated house companies and on the new collection. Sales margin is improved through switch to purchased ceramic tiles and through invitation to tender for fireplace doors and other parts. Simplification of distribution channels in Finland, temporaty dismissals according to demand among factory workers and officers and restructuring operations started in the year 2018 are decreasing significantly variable and fixed costs in Kremansavi-stoves and interior decoration stones. Within decoration stones turnover incresced 5 percent based on the improved views of new of new construction and renovation. Numbers concerning on Kermansavi-stoves and interior decoration stones are average terminal year numbers.

The key assumptions used in determining value in use were as follows: 1. Sales margin Operating result of Kermansavi fireplaces is assumed to slightly improve resulting from the renewed product collection and efficiency measures under the performance improvement programme being carried out. Operating result

of Interior Stone unit is assumed to improve resulting from the optimization of operations through restructuring. 2. Discount rate: determined as the weighted average cost of capital (WACC) where the cost of capital is the weighted average cost of equity and liability components including the adjustment for risk.

EUR 1 000
The discount rate and growth rate	Interior stone Kermansavi fireplaces
	2018	2017	2018	2017
Discount rate	10.4	10.4	11.0	10.8
Growth rate (average for the forecast period)	5.0	5.0	5.0	5.0

The cash amount recoverable with the assumptions made less book value is presented in the following table.			2018	2017
Interior stone			496	1 777
Kermansavi fireplaces			-508	685
Sensitivity analysis of impairment tests

Effects of potential changes in the variables on other factors have not been taken into account in the sensitivity analysis. The change in result has been tested on the operating profit level.

Effect on impairment if the discount rate rises by 1 per cent or if profit is 20 per cent lower than the target.

	Effect of changes in discount rate, in thousands of euro		Effect of changes in profit, in thousands of euro
	2018	2017	2018	2017
Interior stone	-	-	-	-
Kermansavi fireplaces	-783	-284	-1 536	-1 075

Increase of 0.00 ( 0.68) per cent -point in the interest rate would result in recognition of impairment loss for Kermansavi stoves. Increase of 5.7 (12.3) per cent -point in the interest rate would result in recognition of impairment loss for Interior stone. Decrease of 0.00 (0.84) percent -point and of 1.5 (4.9) per cent -point in operating margin would result in recognition of impairment loss for Kermansavi stoves and Interior Stones respectively.

16.4. Mineral resource exploration and evaluation assets

Mineral resource exploration and evaluation assets belong to the Fireplaces business segment. The carrying amount of capitalised exploration and evaluation expenditure is EUR 20 (24) thousand. Impairment tests are per- formed always when theclassification of assets in question changes and if there is an indication of impairment. Change in classification is dealt with more thoroughly in the accounting principles, section Mineral resource ex- ploration and evaluation assets.

17. Other equity instruments recognised in comprehensive income	2018	2017
Financial assets available for sale
Balance sheet value January 1	26	26
Balance sheet value December 31	26	26

Financial assets available for sale are investments in unquoted shares. They are measured at cost, since their fair values can not be determined reliably. The company has made an irrevocable decision to recognise unlisted shares in other comprehensive income. There have been no changes in the item during the financial year.

EUR 1 000
18. Deferred tax assets and liabilities
18.1. Changes in deferred taxes during year 2018:	Jan. 1, 2018	Recognised through profit and loss	Recognised in other comprehensive income	Recognized in equity	Translation differences	Dec. 31, 2018
Deferred tax assets:
Provisions	0	0	0	0	0	0
Unused tax losses	1 222	-271	0	0	0	950
Accumulated depreciation / amortisation not yet deducted in taxation	1 739	170	0	0	0	1 909
Change in the revaluation reserve	0	0	0	0	0	0
Other items	210	0	0	0	0	210
Deferred tax assets, total	3 171	-101	0	0	0	3 069
Deferred tax liabilities:
Capitalisation of intangible assets	0	0	0	0	0	0
Valuation of tangible and intangible assets at fair value in a business combinations	-643	102	0	0	0	-541
Other items	-112	0	0	0	0	-112
Deferred tax liabilities, total	-755	102	0	0	0	-653
Changes in deferred taxes during year 2017:	Jan. 1, 2017	Recognised through profit and loss	Recognised in other comprehensive income	Recognized in equity	Translation differences	Dec. 31, 2017
Deferred tax assets:
Provisions	0	0	0	0	0	0
Unused tax losses	1 413	-191	0	0	0	1 221
Accumulated depreciation / amortisation not yet deducted in taxation	1 556	183	0	0	0	1 739
Change in the revaluation reserve	0	0	0	0	0	0
Other items	211	-1	0	0	0	210
Deferred tax assets, total	3 180	-9	0	0	0	3 170
Deferred tax liabilities:
Capitalisation of intangible assets	-10	10	0	0	0	0
Valuation of tangible and intangible assets at fair value in a business combinations	-643	0	0	0	0	-643
Other items	-111	-1	0	0	0	-112
Deferred tax liabilities, total	-764	9	0	0	0	-755

The Group has recognized deferred tax assets for the part of deductible temporary differences. Deferred tax assets are recognized for some unused tax losses as well as depreciation and amortization charges not yet deducted in taxation to the extent that it is probable that future taxable profit will be available against which the deferred tax assets can be utilized. In addition, deferred tax assets offer the company tax planning opportunities. The losses in question expire gradually over 2021 - 2025. Deferred tax assets have not been recognized in respect of losses for the financial period 2018. Due to the completed performance improvement programme in 2013 - 2016, the cost structure of the company has been improved significantly. Consequently, it is considered that the financial performance of the company will be positive during the following strategy period 2019 - 2021.

The company has been reorganized significantly in all personnel groups during the last two years. The performance improvement programme caused non-recurring expenses for 2013-2016. However, this program increased the competitiveness of the company. Due to the changes that have been mainly structural, fixed expenses have been reduced from 16 million euros to 8 million euros. During the performance improvement programme, the production has been centralized in Juuka, the office in Germany has been terminated, the distribution channels in Sweden have been changed, the Kermansavi-collection has been renewed and several new prefabricated house contracts have been signed. The difficult situation in the markets and big changes in the company reduced the sales in 2013-2017. However, when the situation in the markets improves and the sales will increase, the current cost structure are likely to better the result. The substantial decline in net sales has been halted thanks to the renewal of the soapstone fireplace collections in 2017-2018. Growth in total net sales was not yet achieved in 2018 because most of the sales of the new collections have merely replaced that of preceding collections in the ongoing transition phase. However, the highly successful development work on the Karelia and Pielinen collections provides an opportunity to increase net sales and profitability in 2019 in both Finland and exports. Recarding to the succesful development in Karelia- and Pielinen-collections, in the year 2019 there is a possibility to turnover increase and profitability improvement in Finland and export operations. In addition, deferred tax assets offer the company tax planning opportunities.

The Group has EUR 8 165 (6 796) thousand tax losses carried forward, of which no deferred tax asset was recognized, as it is unlikely that the Group will generate taxable profit, before the expiration of the tax losses against which tax losses can be utilized. Of non-recognised losses, EUR 56 thousand will expire in 2019, EUR 44 thousand in 2020, EUR 494 thousand in 2021, EUR 24 thousand in 2022, EUR 196 thousand in 2023, EUR 497 thousand in 2025, EUR 168 thousand in 2026, EUR 148 thusand in 2027 and EUR 105 thousand in 2028. The losses expire as follows: 2023: EUR 277 thousand and 2024: EUR 674 thousand.

EUR 1 000	2018	2017
19. Inventories
Raw materials and consumables	3 048	3 304
Work in progress	1 692	2 097
Finished goods	2 185	2 721
Inventories, total	6 925	8 122

In 2018 raw materials, consumables and changes in finished goods and in work in progress recognized as an expense amounted to EUR 16 406 (18 658) thousand. Furthermore, a write-down of inventories to net realisable value was made, amounting to EUR 184 (182) thousand.

20. Trade and other receivables
20.1. Current trade and other receivables
Trade receivables	2 645
Accrued incomes
Prepayments	0
Other accrued income	578
Other receivables	153
Current receivables, total	3 376

20.2. Aging analysis of trade receivables and impairment losses at balance sheet date

2018	Gross	Impairment (%)	Impairment euro	Net
Not past due	1 773	0.3	5	1 768
Past due 1-30 days	565	1.6	9	556
Past due 31-60 days	64	3.6	3	61
Past due 61-90 days	97	6.6	6	91
Past due over 90 days	191	10.6	22	169
Total	2 690		45	2 645
2017	Gross		Impairment	Net
Not past due	1 610			1 610
Past due 1-30 days	427			427
Past due 31-60 days	103			103
Past due 61-90 days	33		15	18
Past due over 90 days	196		128	68
Total	2 369		143	2 226

EUR 1000
20.3. Trade receivables by risk categories
2018	Gross	Impairment	Net
Largest customers by customer groups
Stove producers	351	3	348
Distributors of fireplaces in foreign countries	944	18	926
Construction companies	34	1	33
Distributors in home country	1 178	16	1 162
End users	183	7	176
Trade receivables, total	2 690	45	2 645

2017
Largest customers by customer groups	Gross	Impairment	Net
Stove producers	108		108
Distributors of fireplaces in foreign countries	748	29	719
Construction companies	137	5	132
Distributors in home country	1 005	88	917
End users	371	21	350
Trade receivables, total	2 369	143	2 226

Trade and other receivables

The carrying amounts of trade and other receivables equal with their fair values, since discounting has not material effect owing to short maturities.

Credit risk related to receivables is presented in note 27.3. Credit risk.

21. Cash and cash equivalents	2018	2017
Cash in hand and at bank	798	567

	22. Notes to shareholders' equity

Share series	Number of shares	% of shares	% of voting rights	Share, EUR of share capital
K shares (10 votes) at December 31,2018	7 682 500	12.8	59.5	810 255
A-shares (1 vote) total at December 31, 2018	52 188 743	87.2	40.5	5 504 220
Shares total at December 31, 2018	59 871 243	100.00	100.00	6 314 475
Effect of changes in the number of shares	Number of shares	Share capital, EUR	Treasury shares, EUR	Total, EUR
January 1, 2011	37 143 970	6 314 475	-108 319	6 206 156
Acquisition of own shares	-124 200
December 31, 2011	37 019 770	6 314 475	-108 319	6 206 156
December 31, 2012	37 019 770	6 314 475	-108 319	6 206 156
Issue of shares	22 727 273			0
Shares total at December 31, 2018 and December 31, 2018	59 747 043	6 314 475	-108 319	6 206 156

According to the articles of association the company shall distribute from distributable profit EUR 0.0017 per share more to the company's series A shares than for the company's series K shares. Tulikivi Corporation's series A share is listed in the NASDAQ OMX Helsinki Ltd. Shares do not have nominal value. Maxium share capital was EUR 10 200 in 2018 and 2017.

Share premium fund and invested unrestricted equity fund

Payments for share subscriptions under the old Companies Act (29.9.1978/734) have been recognised in share capital and share premium fund in accordance with the terms of the share issues. As decided by the Annual

general meeting the funds of the share premium account, EUR 7 334 thousand, has been transfered to the invested unrsetricted equity fund in 2010. The proceeds received from the share issued carried out in 2013, amounting to EUR 7 500 thousand, are recognised in the invested unrestricted equity fund. The related transaction costs, totalling EUR 427 thousand, are

debited to the invested unrestricted equity fund. The invested unrestricted equity fund amounted to EUR 14 407 thousand at December 31, 2013. Tulikivi Corporation's directed rights issue of up to approximately EUR 7.5 million was on 17 October 2013. According to the final result, a total of 22 920 917 of the company's Series A shares were subscribed, correspon- ding to some 101 per cent of the offered 22 727 273 shares. On 21 October 2013 the company's Board of Directors approved the subscriptions of 22 ⁷²⁷ 273 Series A shares under the terms of the share issue. All shares subscribed in the share issue have been paid in full. Shares subscribed in the share issue were registered in the Trade Register on October 22, 2013 and are traded on the NASDAQ OMX Helsinki Ltd exchange together with the company's existing Series A shares as of October 23, 2013. As a result of registering the new shares in the Trade Register, the number of the company's Series A shares is 50 331 243 and the number of the company's

Series K shares is 9 540 000. The lead manager of the share issue was Pohjola Corporation Finance Ltd. On March 4, 2014 the company received a request to convert 397 500 Series (1 460 000 in 2013) K shares into Series A shares. This conversion was registered in the Trade Register on March 14, 2014, following which the number of Tulikivi Series A shares is 52 188 743 and the number of Series K shares 7 682 500.

Translation differences

Translation differences consist of translation differences related to translation of the financial statements of foreign entities into Group reporting currency.

Revaluation reserve

The revaluation reserve includes the effective portion of changes in the fair value of derivatives that qualify as cash flow hedges.

Treasury shares

Treasury shares include the cost of own shares held by the Group. It is presented as a deduction from equity.

During the reporting period, Tulikivi Oyj has neither acquired nor disposed any own shares in 2018 (2017). At the reporting date, the company held 124 200 (124 200) own A shares, which represents 0.2 per cent of the share capital and 0.1 per cent of the voting rights. The acquisition price is EUR 0.87 /share on average. The acquisition of own shares has not had any significant effect on the distribution of ownership or voting rights of the company.

No dividend was paid in 2018 and 2017.

23. Share-based payments

Stock options for management and key personnel

Terms of share-based payments / Option rights

Option rights are used to encourage the key employees to work on a long-term basis to increase shareholder value. The option rights also aim at committing the key employees to the employer. The option program is targeted to approximately 14 key employees, including the members of the Management Group. The Board of Directors decides on the distribution of the option rights annually. For all key employees, the prerequisite for receiving stock options is share ownership in the company.

The management of Tulikivi Group and the key employees are entitled to subscribe the company shares if the separately established vesting criteria are met, as follows:

The maximum total number of stock options issued is 1,800,000, and they entitle their owners to subscribe for a maximum total of 1,800,000 new A shares in the company or existing A shares held by the company. The option rights are divided into three classes. The share subscription period, for the stock option 2013A will be 1 May 2016—31 May 2018, for the stock option 2013B, 1 May 2017—31 May 2019, and the for stock option 2013C, 1 May 2018—31 May 2020. The share subscription price for all stock options is EUR 0.33 per share. The basis for the subscription price is the subscription price used in the share issue of Tulikivi Corporation carried out in October 2013. Each year dividends and equity returns will be deducted from the share subscription price. Dividends and equity returns paid annually will be deducted from the subscription price.

The theoretical market value of one stock option has been calculated through the use of Black & Scholes stock option pricing model with the following input factors:

options 2013A, theoretical market value EUR 0.10: share price EUR 0.32, share subscription price EUR 0.33, risk free interest rate 0.89 per cent, validity of stock options approximately 4.5 years and volatility 37 per cent. - options 2013B, theoretical market value EUR 0.03: share price EUR 0.21, share subscription price EUR 0.33, risk free interest rate 0.13 per cent, validity of stock options approximately 4.5 years and volatility 33 per cent. - options 2013C, theoretical market value EUR 0.04: share price EUR 0.22, share subscription price EUR 0.33, risk free interest rate 0.24 per cent, validity of stock options approximately 4.2 years and volatility 38 per cent. The theoretical market value of the stock options has not been adjusted downward for the probability of not fulfilling the targets established for the vesting criterion.

The Board of Directors will determine separate financial targets based on the company's performance improvement programme for each option type, which must be met in order to the option to be granted. For vesting of each stock option class, the Board of Directors will establish financial targets related to the company's performance improvement program separately for each stock option class. The number of stock options 2013A is 500 000, 2013B is 650 000 and 2013C is 650 000. As the EBITDA goal set for 2014 to 2018 was not achieved, no incentive pay was paid and no options were distributed for 2014 to 2018. The Board decided to extend the monitoring period to the 2019 reporting period to option type 2013C.

EUR 1000

EUR 1000
24. Provisions	Environmental provision		Warranty provision		Restructuring provision
	2018	2017	2018	2017	2018	2017
Provisions January 1	185	188	75	100	21	372
Increase in provisions	0	5	73	47	0	21
Effect of discounting, change	3	-2	0	0	0	0
Used provisions	-6	-6	-73	-72	-21	-10
Discharge on recerves	0	0	0	0	0	-362
Provisions December 31	182	185	75	75	0	21

Environmental provision

A provision for Tulikivi Group's estimable environmental obligations has been recognised. The provision covers the costs from future closure of quarries related to monitoring waters, security arrangements and stacking area lining work. For the quarries open at the moment, the costs are estimated to incur on average in ten years from now. The discount rate used in determining the present value is 4 (4) per cent. The undiscounted amount of environmental provision was EUR 399 (423) thousand.

Warranty provision

There is a warranty period of five years related to certain products of Tulikivi Group. During the warranty period faults consistent with the warranty contract are fixed at company's expense. Warranty provision is based on previous years experience on the faulty products, taking into consideration improvements.

Restructuring provision

The restructuring provision doesn't include unpaid personnel costs in 2018 (21 thousand in 2017).

	2018	2017
Non-current provisions	251	254
Current provisions	6	27
Proviosions, total	257	281
25. Interest-bearing liabilities
Bank borrowings	12 221	12 448
TyEL pension loans	3 157	3 218
Balance sheet value	15 378	15 666
25.1. Current
Current portion of non current bank borrowings	12 221	12 448
Current portion of non current TyEL borrowings	3 157	3 218
Total	15 378	15 666

The terms of interest-blearing liabilities

Debt obligations are denominated in euro.

On 31 October 2018 the company signed a new financing agreement with its finance providers which replaced the earlier three-year agreement, including its amendments, which was signed on 11 December 2015. The financing agreement includes a repayment programme for 2018–2019 in relation to the responsibilities of the finance providers and loan covenants to finance providers. The financing agreement includes covenants concerning EBITDA, the equity ratio and the ratio of debt to EBITDA, for example. The company has negotiated a waiver on its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 December 2018. In the company management's opinion, the company will not meet its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 March 2019 and (the 12-month rolling EBITDA covenant is EUR 2.8 million, and the ratio of net debt to EBITDA covenant is EUR 5.5 million) or at 30 June 2019 (the 12-month rolling EBITDA covenant is EUR 3.1 million, and the ratio of net debt to EBITDA covenant is EUR 5.0 million). As a result of this, long-term financial liabilities have been classified as short-term financial liabilities in these financial statements in accordance with the IFRS standard. However, the management believes that it will receive waivers from its finance providers on said covenants and that as a result, they will not demand the repayment of debt. The company's management expects the company to meet the equity ratio covenant at 31 March 2019 (23.0) and at 30 June 2019 (24.0). The company has agreed with its finance providers that it will commence negotiations on the 2020 repayment programme and its terms no later than 30 September 2019. The weighted average of effective interest rates on longterm financial loans was 3.4% (3.3%) in December 31, 2018.

The total debt of the group include loans of 15.4 million euros (15.7 million euros) which comprise loan covenants related to Group's equity ratio, EBITDA or the ratio between the interest-bearing debt and EBITDA. Breaches in covenants may require negotiations with the creditor or the arrangement of additional collaterals for the loans.

26. Trade and other payables	2018	2017
26.1. Non-current
Other non-current liabilities	0	65
26.2. Current
Trade payable	4 072	3 686
Advances received	583	298
Accrued expenses
Wages and social security expenses	3 400	3 465
Discounts and marketing expenses	227	239
External services	11	293
Interest liabilities	3	33
Other accrued expenses	96	147
Accrued expenses, total	3 737	4 177
Other liabilities	585	536
Current trade and other payables, total	8 977	8 697

Other accrued expenses comprise accrued interest expenses and accruals related to other operating expenses.

27. Financial risk management

The Group's activities expose it to various financial risks. The objective of the Group's financial risk management is to minimisize the unfavourable effects of the changes in the finance market to its profit for the period. The main financial risks to which the Group is exposed are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Group finance has been centralised in parent company, and the financing of the subsidiaries is mainly taken care of by internal loans. The liquidity of the Group companies is centralised by consolidated accounts. The finance department is responsible for investing the liquidity surplus and for financial risk management in accordance with the policies approved by the Board of Directors.

27.1. Foreign exchange risk:

The group's currency risks arise from commercial transactions, monetary items in the statement of financial position and net investments in foreign subsidiaries. The most important currencies in respect of the Group's foreign currency risk are US Dollar (USD) and Russian Rouble (RUB). Over 90 per cent of the Group's cash flows are denominated in euro, thus, the Group's exposure to foreign currency risk is not significant. Foreign currency risk can be hedged with forward contracts. The Group did not have any open forward contracts at the year-end 2018. The group does not apply hedge accounting as defined in IAS 39 on forward contracts.

The functional currency of the parent company is Euro. Foreign currency assets and liabilities translated to euro using the balance sheet rate are as follows:

	2018		2017
Nominal values, EUR 1 000	USD	RUB	USD	RUB
Non-current assets	0	42	0	39
Current assets	366	602	301	489
Non-current liabilities	0	2	0	2
Current liabilities	20	321	10	290
Position	346	321	291	236
Net position	346	321	291	236

The equity-related foreign currency translation position, which mainly pertains to the foreign subsidiaries, was minor at the balance sheet date 2018 and 2017. The Group does not hedge the foreign equity exposure.

The table below analyses the effect of strengthening or weakening of Euro against the currencies below assuming that all other variables remain constant. The sensitivity analysis is based on assets and liabilities denominated in foreign currencies at the balance sheet date. The sensitivity analysis takes into account the effect of the foreign currency forwards.

	2018		2017
	Income	Share capital	Income	Share capital
+/- 10 per cent change in EUR/USD
exchange rate, before income taxes	+/- 31	+/- 0	+/- 23	+/- 0
+/- 10 per cent change in EUR/RUB
exchange rate, before income taxes	+/- 31	+/- 0	+/- 23	+/- 0

27.2. Interest rate risk

The Group's short-term money market investments expose Tulikivi to interest rate risk but their effect as a whole is not material. The Group's result and cash flows from operating activities are mainly independent from changes in interest rates.

The Group is exposed to cash flow interest rate risk, which largely relates to the loan portfolio. The Group can borrow funds with fixed or floating rates and use interest rate swaps in order to hedge against risks arising from fluctuation of interest rates. The share of the loans with floating rates amounted to EUR 15.4 (13.1) million representing 100.0 per cent (84.0 per cent) for the interest-bearing liabilities at the year end.

Sensitivy analysis of interest rate risk	Result before income tax	Share capital
+/- point change in market rate	+/- 307	+/-
Interest rate risk	2018	2017
EUR 1 000	Balance sheet value	Balance sheet value
Fixed rate instruments
Financial liabilities	0	2 565
Floating rate instruments
Financial liabilities	13 378	13 152
Interest rate derivatives
Accrued interest costs payable	6	6

27.3.Credit risk

The Group has no significant concentration of credit risk since it has a large clientele and receivables of single costumer or a group of customers is not material for the Group. The positive result impact of credit losses resulting from sales receivables recognised in profit or loss during the financial year and the depreciation of receivables has been EUR 68,000 (a decrease of EUR 129,000) as a result of the positive recognition of a EUR 98,000 credit loss provision calculated in accordance with IFRS 9. Credit risk related to commercial activities has been reduced by customer credit insurances. These covered 31.3 (21.1) per cent of the outstanding accounts at balance sheet date. Business units are responsible for credit risk related to trade receivables. The aging analysis of trade receivables is presented in note 20.2. The group's maximum credit risk exposure for trade receivables is their carrying amount at the year-end less any compensation received from customer credit insurances.

Financial instruments involve a risk of the counterparty not being able to meet its obligations. Liquid assets are invested in objects with good credit rating. Derivative contracts are entered only with banks with good credit rating.

The maximum credit risk related to group's other financial assets than trade receivables equals their carrying amounts at the balance sheet date.

27.4. Liquidity risk

The group strives to continuously asses and monitor the amount of capital needed for business operations in order to ensure that the group has adequate liquid funds for financing its operations and repayment for loans due. The Group aims at ensuring the availability and flexibility of financing is ensured, in addition to liquid funds, by using credit limits and different financial institutions for raising funds. There were no unused credit limits and undrawn credit facilities in 2018 at the balance sheet date.

Company's financial situation is tight, because operative cash flows were lower in the biginning the year than last year's autumn. Regarding that the company has negotiated loan payments to the en of the year. As a result of the declining net sales in 2018 and the EUR 1.2 million decrease in inventories, the company's plants operated at a lower capacity than in 2017 and the sales margin decreased on 2017. In years 2019 - 2021 the company's objective is to increse turnover regarding to new Karelia- and Pielinen-collections. Increased turnover would improve company's financial situation.

On 31 October 2018 the company signed a new financing agreement with its finance providers which replaced the earlier three-year agreement, including its amendments, which was signed on 11 December 2015. The financing agreement includes a repayment programme for 2018–2019 in relation to the responsibilities of the finance providers and loan covenants to finance providers. The financing agreement includes covenants con- cerning EBITDA, the equity ratio and the ratio of debt to EBITDA, for example. The company has negotiated a waiver on its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 December 2018. In the company management's opinion, the company will not meet its covenants concerning EBITDA and the ratio of net debt to EBITDA at 31 March 2019 and 30 June 2019. The company's management expects the company to meet the equity ratio covenant at 31 March 2019 (23.0) and at 30 June 2019 (24.0). As a result of this, long-term financial liabilities have been classified as short-term financial liabilities in these financial statements in accordance with the IFRS standard. However, the management believes that it will receive waivers from its finance providers on said covenants and that as a result, they will not demand the repayment of debt. The com- pany has agreed with its finance providers that it will commence negotiations on the 2020 repayment programme and its terms no later than 30 September 2019. The company has decreased liabilities around EUR 12 million since the year 2013 so the company believes to receive a enough good outcome from the financing negotiation in the end of 2019 for the year 2020. Should the company not meet its financial targets or its cove- nants under financing agreements and should it not be able to successfully restructure its short- or long-term financing or the sell talc reserves, it may run out of working capital, its financing agreements may be termi- nated and it may face difficulty in continuing its business operations.

The following table summarises the maturity profile of the group. The undiscounted amounts include interests and capital repayments.

Maturity analysis

December 31, 2018
Type of credit	Balance sheet value	Total cash flows	0-6 months	6-12 months	1-2 years	3-5 years	Later than 5 years
Loans from credit institution and TyEL pension loans	15 378	15 815	185	15 630	0	0	0
Cash flows from derivatives	6	0	0	0	0	0	0
Trade and other payables	5 240	5 240	5 240	0	0	0	0
Total	20 618	21 055	5 425	15 630	0	0	0
December 31, 2017
Type of credit	Balance sheet value	Total cash flows	0-6 months	6-12 months	1-2 years	3-5 years	Later than 5 years
Loans from credit institution and TyEL pension loans	15 666	16 197	543	15 654	0	0	0
Cash flows from derivatives	6	0	0	0	0	0	0
Trade and other payables	4 520	4 520	4 520	0	0	0	0
Total	20 192	20 717	5 063	15 654	0	0	0

EUR 1 000
Derivatives, nominal value Interest rate swaps	2018	2017
Arrive at maturity 2018	0	1 936
Total Interest rate swaps	0	1 936

The fair values of interest rate swaps are determined using a method based on the present value of future cash flows, supported by market interest rates at the balance sheet date and other market information. Financial assets at fair value are discloded in Note 28.

27.5. Capital management

The objective of the Group's capital management is through an optimal capital structure to support the business operations by ensuring the normal operating conditions and increase shareholder value by striving at the best possible return. The capital structure is effected i.a. through dividend distribution and share issues. The Group may change and adjust the dividends distributed and capital repaid to the shareholders or the number of new shares issued or decide on sales of assets in order to repay liabilities. The equity presented in the consolidated statement of financial position is managed as capital.

The group monitors the develoment of capital on the basis of the equity ratio, for which 40 per cent is set as the lowest limit for dividend distribution by the Board Directors. Financing agreement made 31th of November, 2018 includes a restriction concerning distribution of dividends and repurchase of own shares if the company would break the covenants defined in the financing agreement.

The group calculates equity ratio using the following formula:

100*Equity / (Balance sheet total - Advances received)

	2018
Equity	9 310
Balance sheet total	34 590
Advances received	583
Solvency ratio, %	27.4

28. Carrying amounts of financial assets and financial liabilities by categories and their fair values

Balance sheet, 2018	Financial assets or liabilities at fair value through profit or loss	Description of the measurement of amortised cost (financial assets)	Other items measured through comprehensive income	Financial liabilities at amortised cost	Carrying amounts of balance sheet items	Fair value	Hierarchy of fair value
Long-term assets
Other receivables	0	0	26	0	26	26	2
Other financial assets
Short-term assets	0	2 420	0	0	2 420	2 420
Trade and other receivables	0	567	0	0	567	567
Cash and cash equivalents	0	2 987	26	0	3 013	3 013
Carrying amounts of financial assets by categories
Long-term liabilities	0	0	0	0	0	0	2
Interest bearing liabilities	0	*) 0	0	0	0	0	2
Derivatives		0		65	65	65
Short-term liabilities
Interest bearing liabilities	0	0	0	15 666	15 666	15 716	2
Trade and other payables	0	0	0	4 223	4 223	4 223	2
Carrying amounts of financial liabilities by categories	0	0	0	19 954	19 954	20 004

*) Includes cash flow hedging instruments recognized in the revaluation reserve, amounting to EUR 0 (6) thousand.

The levels in a fair value hierarchy are as follows:

Level 1: fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 3: fair values are not based on observable market data (non-observable inputs) but to large extent on management estimates and application of those in generally accepted valuation models. There were no trans-

fers between levels of the fair value hierarchy during the financial year ended and the comparative financial year. 28.1. Reconciliation of financial liabilities with cash flow from financing
	2017	Cash flows	Not influenced by cash flow			2018
			Changes in exchange rates	Changes in fair values	Other changes
Long-term financial liabilities	0	0	0	0	0	0
Short-term financial liabilities	15 666	-288	0	0	0	15 378
Total	15 666	-288	0	0	0	15 378

Carrying amounts of financial assets and financial liabilities by categories and their fair values

Balance sheet, 2017	Financial assets or liabilities at fair value through profit or loss	Loans and receivables	Available for sale financial assets	Financial liabilities at amortised cost	Carrying amounts of balance sheet items	Fair value	Hierarchy of fair value
Long-term assets
Other receivables	0	0	26	0	26	26	2
Other financial assets
Short-term assets	0	2 420	0	0	2 420	2 420
Trade and other receivables	0	567	0	0	567	567
Cash and cash equivalents	0	2 987	26	0	3 013	3 013
Carrying amounts of financial assets by categories
Long-term liabilities	0	0	0	0	0	0	2
Interest bearing liabilities	6	*) 0	0	0	6	6	2
Derivatives				65	65	65
Short-term liabilities
Interest bearing liabilities	0	0	0	15 666	15 666	15 716	2
Trade and other payables	0	0	0	4 223	4 223	4 223	2
Carrying amounts of financial liabilities by categories	0	0	0	19 954	19 954	20 010

*) Includes cash flow hedging instruments recognized in the revaluation reserve, amounting to EUR 6 (99) thousand.

The levels in a fair value hierarchy are as follows:

Level 1: fair values are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: fair values are based on inputs other than quoted prices included within level 1. However, the fair values are based on information that is observable for the asset or liability either directly (i.e. as prices) or indi- rectly (i.e. derived from prices). The fair value of these instruments is measured on the basis of generally accepted valuation techniques which primarily use inputs based on observable market data. Level 3: fair values are not based on observable market data (non-observable inputs) but to large extent on management estimates and application of those in generally accepted valuation models.

There were no transfers between levels of the fair value hierarchy during the financial year ended and the comparative financial year.

28.1. Reconciliation of financial liabilities with cash flow from financing
	2016	Cash flows	Not influenced by cash flow			2017
			Changes in exchange rates	Changes in fair values	Other changes
Long-term financial liabilities	13 008	-727	0	0	-12 281	0
Short-term financial liabilities	3 358	0	0	0	12 281	15 666
Total	16 363	-727	0	0	0	15 666
Derivatives				2018		2017
Interest rate swaps, nominal value				0		1 936
Interest rate swaps, fair value				0		-6

EUR 1 000
29. Adjustments of cash generated from operations	2018	2017
Non-cash transactions:
Depreciation and amortisation	1 906	2 097
Change in provisions	-25	-378
Impairment	508	0
Exchange differences	18	-140
Other	-103	67
Non-cash transactions, total	2 304	1 646

30. Leases

Operating leases

30.1. Group as lessee

Future aggregate minimum lease payments under non-cancellable operating leases:
Not later than 1 year		268
Later than 1 year and not later than 5 years		15
Later than 5 years		0
Total		283

The Group has leased several production and office facilities. The agreements are mainly made for the time being. Fixed-term leases include an option to continue the agreement after the initial date of expiration. The income statement for 2018 includes expensed lease rentals EUR 697 (773) thousand.

The future lease payments for machinery and equipment
Due not later than 1 year	161	185
Due later	90	189
Leasing commitments, total	251	374

Leasing agreements are three to six years in duration and do not include redemption clauses.

30.2. Group as lessor

The Group has leased commercial spaces and offices from its own properties under cancellable operating leases.

Minimum lease payment under non-cancellable operating leases
Not later than 1 year	34	32
Later than 1 year and not later than 5 years	8	8
Later than 5 years	20	22
Total	62	62

EUR 1 000	2018
31. Commitments
Loans with related mortgages and pledges
Loans from financial institutions and loan guarantees	15 378
Real estate mortgages given	15 780
Company mortgages given	19 996
Total given mortgages and pledges	35 776
Other own liabilities for which guarantees have been given
Real estate mortgages given	534
Pledges given	3
Total given guarantees on behalf of other own liabilities	537
Obligation to repay VAT deductions made in earlier periods	66

The Group is obligated to check the value added tax deductions made on property investments. The last annual check is in the year 2027.

32. Other contingent liabilities

Environmental obligations

Tulikivi group has landscaping obligations based on the Mining Act and other environmental legislation, which must be met during operations and when the quarries are shut down in the future.

Actions demanded by the environmental obligations are continuously performed besides normal production processes. Handling of water, arrangements for soil and rock material stacking areas, vibration and noise measurement, dust prevention and the monitoring the measurement result belong to these tasks. The costs relating to these activities are mainly recognised in the income statement as expense. Transport of soil material to stacking areas by opening new quarries is capitalised to other long-term expenses and depreciated during the useful life of the quarry. Lining work of stacking areas is based on long-term quarrying plans, according to which surface material of new opened quarries will be used in lining work. However, the lining work cannot be done until the point when there are finished sectors in the stacking area. The landscaping is not estimated to increase the costs of normal quarrying work.

After a factory or a quarry is shut down, the final lining work of the stacking areas, water arrangements, establishing of check points, bringing to safety condition and planting and seeding the vegetation will take place. For that part of these costs which are estimable, a provision is recognised.

Based on the environmental authorisations, the Group has given quarantees to the effect of EUR 630 thousand in total. For other environmental obligations.

EUR 1 000
33. Indicators relating to environmental obligation	2018	2017	2016
Use of energy, electricity MWh	13 320	8 621	8 477
Use of oil, m3	147	125	146
District and wood chips heating, MWh	660	787	1 274
Liquid gas, tonne	105	102	91
Fuel for vehicles, tonne.	100	178	146
Exsplosives, tonne	20	27	21
Stone material extracted in quarrying, 1 000 fixed-m3	130	160	112
Quarrying of soap stone, 1 000 fixed-m3 gross	80	90	65
Stacked soil material, 1 000 net-m3	0	0	1
The lubricant used for saw chains, for soap stone extraction sawing, is rapeseed oil which binds permanently with fine soap stone powder.	43	63	45
The amount of soapstone used is affected by factory-specific capacity as well as yield of stone in the quarry and the factory in a given time.

Acquired natural stone, 1 000 tonne	1	1
-------------------------------------	---	---	--

Leftover clippings from production are partly used as filling for earthwork sites, the rest is stacked in stacking areas or is transferred to a waste disposal site. The natural stone is purchased from external suppliers.

The ceramic fireplace production uses mainly recycled porcelain fracture, feldspar and various kinds of cements as raw material for concrete products. The amount of ceramic materials used annually is approximately 2 250 tonnes. The amount of surface tiles used in coating of ceramic fireplaces supplied annually is approximately 53 tonnes and waste from cutting of ceramic tile slabs is directed to the sedimentation basin. Normal washing wa- ter and waste from the ceramic and concrete production is directed to the sedimentation basin on the factory area from which the solids are carried to the dumping ground.

In 2018, 7 075 cubic meter new process water was taken in Group's production processes. Soapstone manufacturing uses a closed process water cycle. In the Espoo plant part of process waters is recyclable, in the Heinä- vesi production plant process waters are treated in sedimentation basins. In Heinävesi process waters are led through sedimentation basins to the water system as overflow to drainage network or they absorb into ground. Quarry waters are led to the water system through sedimentation basins. Domestic waste water is led to the municipal waste water system or in absence of such a system, in filted fields.

34. Related-party transactions

Group's related parties comprise the parent company, subsidiaries, associates, Board members, Managing Director and the Management Group as well as the managing directors of the foreign subsidiaries. In addition Finnish Stone Research Foundation is included in the relate parties.

34.1 The Group's parent company and subsidiaries have the following relation:	Ownership interest (%)			Share of voting right (%)
Tulikivi Corporation, Juuka, parent company, factory
Tulikivi U.S. Inc., USA, marketing company	100			100
OOO Tulikivi, Russia, marketing company	100			100
Tulikivi GmbH, Germany, marketing company	100			100
The New Alberene Stone Company Inc., USA	100			100

34.2. Related party transactions:	Sales	Purchases	Receivables	Liabilities
Transactions with key management		2018		2017
Sales to related parties	2	0		2

The Group companies had no receivables from the key management personnel at the end of the current or the previous financial year.

Transactions with other related parties

Tulikivi Corporation is a founder member of Finnish Stone Research Foundation.

In addition, the company has leased offices and storages from the property owned by the foundation and North Karelian Educational Federation of Municipalities. The rent paid for these facilities was EUR 17 (36) thousand. The rent corresponds to the market level of rents. The service charges by Tulikivi Corporation where EUR 2 (4) thousand in 2018 and no rent charges on land (EUR 2 thousand in 2017). The Foundation did not charge any services from Tulikivi Corporation. The Company had 11 thousand receivables (no receivables in 2017) from Foundation at the reporting date.

EUR 1 000
34.3. Key management compensation	2018	2017
Salaries and other short-term employee benefits of the Board of Directors and the Managing Director.	375	374
Post-employment benefits (pension benefits)
Contributions to statutory pension plan	36	33
Share-based payments	5	5
Total	416	412
Managing Director
Salaries and fees
Vauhkonen Heikki
Salaries	185	183
Post-employment benefits (pension benefits)
Contributions to statutory pension plan	36	33
Share-based payments	5	5
Total	226	221

EUR 1 000	2018	2017
Members of the Board of Directors
Members of the Board of Directors
Aspara Jaakko	19	19
Rönkkö Markku	38	38
Salastir Paula	19	19
Svanborg Reijo	20	20
Tähtinen Jyrki	73	74
Vauhkonen Heikki	21	21

EUR 1 000	2018	2017
Members of the Board of Directors
Members of the Board of Directors
Aspara Jaakko	19	19
Rönkkö Markku	38	38
Salastir Paula	19	19
Svanborg Reijo	20	20
Tähtinen Jyrki	73	74
Vauhkonen Heikki	21	21
Total	190	191

Key management personnel comprises the members of the Management Group as well as the managing directors of the foreign subsidiaries.

The Managing Director is a member of the Management Group.

Key management personnel compensation
Salaries and fees	778	782
Post-employment benefits (pension benefits)
Contributions to statutory pension plan	116	136
Share-based payments	20	20
Total	914	938

78	782

116	136
20	20
14	938

Anything that may prevent or hinder the Group from achieving its objectives is designated as a risk. Risks may constitute threats, uncertainties or lost opportunities related to current or future operations. The Group's risks are divided into strategic and operational risks, damage, casualty and financial risks and loss risks. In the

assessment of risks, their probability and impact are taken into account.

Strategic Risks

Strategic risks are related to the nature of business operations and concern, but are not limited to, the changes in Group's business environment, financial markets, market situation and market position as well as consumer habits and demand factors, allocation of resources, raw material reserves, changes in legislation and regulations, business operations as a whole, reputation of the company and the raw materials, and large investments.

Unfavourable changes in operating environment, market situation and market position

An abrupt fall in consumer confidence may result in a quick, unexpected fall in demand. The recession and related uncertainty of consumers leads to decline in housing construction and in renovation which decreases the demand for products and thereby profitability. Recession may also affect consumers' choices by making price the dominant factor instead of product features. Changing competitive environment and substitute products entering the market and changes in consumer habits may adversely affect the demand for Group's products. Operations in several market areas, active monitoring of industry development and flexibility of capacity and cost structure even out the sales risks arising

from economic fluctuation. The downturn may also have a negative impact on customers' solvency and subcontractors' operations. Keeping the product cost structure competitive is a prerequisite for maintaining demand and growth.

In Tulikivi's market areas, the fireplace cultures vary from areas with conventional heat-preserving ovens to countries where stoves have strong traditions. As markets become more uniform, also fireplace cultures change in the target countries. When the market becomes uniform changes in consumer habits may affect the demand for certain products or production materials and thereby impact on profitability. Tulikivi focuses on understanding the needs of customers and meets them by, for instance, continuously developing products for new customer segments. Following trend and standard changes enhance the ability to forecast customer demand. Right customer groups are reached by correctly targeted communication. Unsound price competition decrease demand for the products and thereby weaken profitability. Disturbance may arise in connection with renewal of distribution channels or owing to

reasons relating to entrepreneurs which are part of the distribution channel or competing products entering the same distribution channel. Distribution network and product range are developed so that the distribution of the Group's products remains profitable and interesting for the entrepreneurs.

Volume of the fireplace market is partly dependent on the coldness of the winter season, thus, exceptionally warm winter may reduce demand for fireplaces. In addition, public authority regulation may affect the demand for fireplaces.

Risks related to managing soapstone raw materials

Soapstone is a natural material whose integrity, texture and yield percentage vary by quarry. The quality of the raw materials affects manufacturing costs. Tulikivi seeks to determine the quality of the materials on a quarry-specific basis by taking core samples and through test excavations before opening the quarry. Risks are also posed by potential competitors in raw materials on a global scale and soapstone deposits held by parties other than Tulikivi. Tulikivi's strategic objective is to further increase the reserves of soapstone. We continuously seek and explore new deposits.

The adequacy of the stone is increased by using the raw material as precisely as possible and by accounting for the special requirements of the stone in product development. Tulikivi Group manages the competition risks of its raw materials with continuous product development, a strong total concept and the Tulikivi brand, as well as with long-term stone reserve and excavation planning.

Changes in legislation and environmental issues

About half of the fireplaces manufactured by Tulikivi are exported, primarily to continental Europe, Russia and the United States. Exceptional changes in the product approval process in these countries, sudden changes in product approval, such as in the case of

particulate emission limits or restrictions on use, might affect the sales potential of Tulikivi products and restrict their use. Other legislative risks are the tightening of the requirements of environmental permits for quarrying and the lengthening of permit processes. Environmental legislation and regulations may cause the company to incur costs that will affect sales margins and the earnings trend.

Tulikivi keeps abreast of the development and preparation of regulations and exercise an influence on them both directly and through regional fireplace associations. The burning technology of the products is constantly developed and product development takes a long-term approach to ensuring that Tulikivi products measure up to local regulations. We secure product approval for our products in all our business countries. Group's products have long life cycles and carbon emissions of fireplace production are extremely low.

Business Risks

Business risks are related to products, distribution channels, personnel, operations and processes.

Product liability risks

Tulikivi Group reduces potential product liability risks by developing the products for optimal user safety. We ensure that the product and service chain spanning from Tulikivi to the customer is hitch-free and knowledgeable by providing training for retailers and installers as well as ensuring that the terms and conditions of sale are precise. We also seek to protect ourselves against product liability risks by taking out product and business liability insurance policies.

Operational and process risks

Operational risks are related to the consequences of human activities, failures in internal company processes or external events. The operational risks of factory operations are minimized by means such as compliance with the company's operating manual, by developing occupational safety consistently and with systematic development efforts. Manufacturing and introduction of new products involve risks. Careful planning and training of personnel are used as protection against these risks.

Dependence on key goods supplies might increase the Group's material costs or the costs of machinery or their spare parts or affect production. Failures in the distribution network can affect the Group's ability to deliver products timely to its customers. Energy procurements from external suppliers might influence the Group's energy costs or energy supply. On the other hand, the high price of energy supports demand for products. Changes in distribution channels and logistics systems might also disturb operations. Contractual risks are part of operational risks.

The Group's business relies on functional and reliable information systems. The utilization of the ERP system involves risks if new practices are not adopted in business processes and the potential provided by the new system utilized promptly. The Group aims to manage the risks related to data applicability by duplicating the critical information systems, among other things. Steps taken to manage their risks include setting up backups for critical information systems and telecom connections, selecting cooperation partners carefully and standardizing the workstation configurations and software used in the Group as well as consistent information security practices. The company has also conducted analyses of the current state of personal data processing and data security practices and taken measures

to develop them to ensure that they comply with the EU's General Data Protection Regulation or GDPR.

In line with the nature of the Group's business, trade receivables and inventories are major balance sheet items. The credit loss risk of trade receivables is managed by means of a consistent credit granting policy, insuring receivables and effective collection.

The Group's core expertise involves its core business processes, including sales, product development, quarrying, manufacture, procurements and logistics, as well as the necessary support functions, which include information administration, finance, HR and communications. An unforeseen drain in the core expertise or decrease in personnel's development ability or disadvantageous development in population structure in current operation locations would pose risks. Core competence conservation and availability are

secured with planning the need of personnel and knowledge and engaging personnel to constant change and growth. The Group continuously seeks to step up the core expertise and other significant competence of its personnel by offering opportunities for on-the-job learning and training and to complete the expertise needed for strategy implementation in those areas where it has not existed before. Sufficient core competencies can be partly secured through networking. Boosting operational efficiency, controlled change and effective internal communications serve as means of managing operational and process risks.

Financial Risks

The Group's business exposes it to a variety of financial risks. Risk management seeks to minimize the potential adverse effects of changes in the financial markets on the Group's result. The main financial risks are liquidity risk, capital management risk, interest rate risk and foreign exchange risk. Financial risks and their management are presented in greater detail in Note 28 to the consolidated financial statements.

Any major downturn that might be caused by the euro area crisis could decrease the demand for the company´s products and the company's profitability and equity. The company's balance sheet assets include goodwill, the value of which is based on the management's estimates. If these estimates fail to materialise, it is possible that impairment losses would have to be recognised in connection with the impairment testing processes. Weakened profitability and a drop in equity could lead to deterioration in the company´s financial position. In order to meet the covenant requirements contained in the Group's bank borrowings the company's profitability should improve.

Damage, Casualty and Loss Risks

Most of the Group's production is capital-intensive and a large share of the Group's capital is committed to its production plants. A fire or serious machinery break¬down, for instance, could therefore cause major damage to assets or loss of profits as well as other indirect adverse impacts on the Group's operations. The Group seeks to protect itself against such risks by evaluating its production plants and processes from the perspective of risk management. Damage, casualty and loss risks also include occupational health and protection risks, environmental risks and accident risks. The Group regularly reviews its insurance coverage as part of overall risk management. Insurance policies are taken out

to cover the risks that it is prudent to insure for business or other reasons.

There are no pending legal proceedings and the Board of Directors is not aware of any other legal risks involved in the company's operations that would have a significant effect on its result of operations.

Development of the Group by Quartal and Business Area

MEUR
	Q4/2018	Q3/2018	Q2/2018	Q1/2018	Q4/2017	Q3/2017	Q2/2017	Q1/2017
Sales	-8.7	6.4	7.4	6.1	8.6	7.0	7.8	5.9
Operating result	-0.5	-0.3	0.4	-0.6	0.0	0.3	0.3	-0.9

Key Figures Describing Financial Development and Earnings per Share

EUR 1 000
Income statement	2014	2015	2016	2017	2018
Sales	39 293	31 951	30 485	29 281	28 583
Change, %	-10.1	-18,7	-4,6	-3.9	-2.4
Operating result	-2 439	-2 931	-1 361	-367	-1025
% of turnover	-6.2	-9.2	-4.5	-1.3	-3.6
Finance incomes and expenses and share of loss of associated companies	-837	-950	-756	-800	-734
Result before income tax	-3 276	-3 881	-2 132	-1 167	-1759
% of turnover	-8.3	-12,1	-7,0	-3.9	-6.2
Income taxes	671	0	-14	-74	-38
Result for the year	-2 643	-3 783	-2 037	-1 252	-1 805
Balance sheet
Assets
Non current assets	29 282	26 875	25 582	25 089	23 491
Inventories	10 119	8 666	7 863	8 122	6 925
Cash and cash equivalents	3 665	1 429	894	567	798
Other current assets	4 121	2 426	3 083	2 852	3 376
Equity and liabilities
Equity	18 160	14 409	12 397	11 160	9 310
Interest bearing liabilities	19 981	17 766	13 008	15 666	15 378
Non-interest bearing liabilities	5 060	5 530	7 208	8 762	8 977
Balance sheet total	47 187	39 396	37 422	36 630	34 590

Financial Ratios 2014 - 2018

	2014	2015	2016	2017	2018
Return on equity, %	-13.5	-23.8	-15.9	-10.5	-17.6
Return on investments, %	-5.4	-7.7	-4.3	-1.2	-3.8
Solvency ratio, %	39.0	36.9	33.4	30.7	27.4
Net indebtness ratio, %	89.8	113.4	125	135.3	156.6
Current ratio	1.6	1.7	1.1	0.5	0.5
Gross investments, EUR 1 000	2 382	1 149	1 282	1 502	1 135
% of turnover	6.1	3.6	4.2	5.1	4.0
Research and development costs, EUR 1 000	1 380	985	484	497	516
% of turnover	3.5	3.1	1.6	3.6	3.1
Development costs (net), capitalised, EUR 1 000	232	272	538	536	383
Order book, EUR million	4.2	3.9	3.2	2.9	3.0
Average personnel	281	219	209	208	200
Key indicators per share
Earnings per share, EUR	-0.04	-0.06	-0.03	-0.02	-0.03
Equity per share, EUR	0.30	0.25	0.21	0.19	0.16
Dividends
Nominal dividend per share, EUR
A share	-	-	-	-	-
K share	-	-	-	-	-
Dividend per earnings, %	-	-	-	-	-
Effective dividend yield, %/A shares	-	-	-	-	-
Price/earnings ratio, EUR	-4.5	-2.7	-6.2	-9.3	-3.2
Highest share price, EUR	0.36	0.3	0.29	0.26	0.21
Lowest share price, EUR	0.19	0.12	0.15	0.18	0.08
Average share price, EUR	0.28	0.18	0.2	0.22	0.16
Closing price, December 31, EUR	0.20	0.17	0.21	0.19	0.10
Market capitalization, EUR 1 000	11 949	10 157	12 547	11 591	5 795
(supposing that the market price of the K share is the same as that of the A share) Number of shares traded, (1 000 pcs)	7 933	27 900	13 847	28 244	10 528
% of the total amount	15.3	53.9	26.7	54.5	20.3
The average issue-adjusted number of shares for the financial year (1 000 pcs)	59 747	59 747	59 747	59 747	59 747
The issue-adjusted number of outstanding shares at December 31 (1 000 pcs)	59 747	59 747	59 747	59 747	59 747

Calculations of Key Ratios

Key figures describing financial development
Return on equity (ROE), % =	100 x	Result for the year
		Average shareholders' equity during the year
Return on investments (ROI), % =	100 x	Result before income tax + interest and other finance expenses
		Shareholders' equity + financial loans with interest, average during the year
Solvency ratio, % =	100 x	Shareholders' equity
		Balance sheet total - advance payments
Net indebtness ratio, % =	100 x	Net interest-bearing financial liabilities
		Shareholders' equity
Current ratio=		Current assets
		Current liabilities
Key figures per share
		Profit/loss attributable to owners of the parent company
Earnings per share =		Average issue-adjusted number of shares for the financial year *)
Equity per share =		Shareholders' equity
		Issue-adjusted number of shares at balance sheet date *)
Dividend per share =		Dividend paid for the year
		Issue-adjusted number of shares at balance sheet date *)
Dividend per earnings, % =	100 x	Dividend per share
		Earnings per share
Effective dividend yield, % =	100 x	Issue-adjusted dividend per share
		The closing price of A- share at balance sheet date
Price/ Earnings ratio (P/E)=		The closing price of A-share at balance sheet date
		Earnings per share
*) own shares held by the company excluded

Parent Company Financial Statements, FAS Income Statement

EUR 1 000	Note	Jan. 1 - Dec. 31, 2018	Jan. 1 - Dec. 31, 2017
Net Sales	1.1.	27 109	27 656
Increase (+) / decrease (-) in inventories
in finished goods and in work in progress		-995	198
Production for own use		500	740
Other operating income	1.2.	386	487
Materials and services
Purchases during the fiscal year		-6 476	-6 709
Change in inventories, increase (-) / decrease (+)		-256	27
External charges		-3 412	-4 015
Materials and services, total		-10 144	-10 697
Personnel expenses
Salaries and wages		-8 244	-8 720
Pension expenses		-1 371	-1 143
Other social security expenses		-284	-351
Personnel expenses, total	1.3.	-9 899	-10 214
Depreciation, amortisation and value adjustments	1.4.	-2 183	-2 317
Other operating expenses	1.5.	-5 682	-6 723
Operating result		-908	-870
Financial income and expenses	1.6	-740	-612
Result before untaxed reserves and income taxes		-1 648	-1 482
Untaxed reserves
Change in accelerated depreciation		0	0
Untaxed reserves, total	1.7.	0	0
Income taxes		-2	-17
Income taxes in total		-2	-17
Result for the year		-1 650	-1 499

Balance Sheet

EUR 1 000	Note	Dec. 31, 2018	Dec. 31, 2017
Assets
Fixed asset and other non-current investments
Intangible assets
Capitalised development expenditure		946	947
Intangible rights		17	27
Goodwill		583	875
Other long term expenditures		7 473	7 370
Intangible assets, total	2.1.	9 019	9 219
Tangible assets
Land		870	887
Buildings and constructions		3 414	3 859
Machinery and equipment		1 677	2 177
Other tangible assets		38	38
Advance payments		20	45
Tangible assets, total	2.2.	6 019	7 006
Investments
Shares in group companies	2.3.	15	15
Group receivables	2.4.	50	40
Other investments	2.5.	26	26
Investments, total		91	81
Fixed assets and other non-current investments, total		15 129	16 306

Continues on next page.

Balance Sheet

EUR 1 000	Note	Dec. 31, 2018	Dec. 31, 2017
Current assets
Inventories
Raw material and consumables		3 048	3 304
Work in progress		1 692	2 097
Finished products/goods		1 871	2 461
Inventories, total	2.6.	6 611	7 862
Non-current receivables
Accrued incomes		77	174
Non-current receivables, total		77	174
Current receivables
Trade receivables		2 553	2 120
Receivables form group companies		37	0
Other receivables		19	115
Prepayments and accrued income		541	347
Current receivables, total	2.9.	3 150	2 582
Cash in hand and at banks		449	334
Total current assets		10 287	10 952
Total assets		25 416	27 258

Balance Sheet

EUR 1 000	Note	Dec. 31, 2018	Dec. 31, 2017
Liabilities and shareholders' equity
Shareholders' equity
Capital stock		6 314	6 314
Reserve for invested unrestricted equity		14 834	14 834
Revaluation reserve		0	-6
Treasury shares		-108	-108
Retained earnings		-18 617	-17 118
Result for the year		-1 650	-1 499
Total shareholders' equity	2.10.	773	2 417
Untaxed reserves
Accelerated depreciation		80	80
Provisions	2.13.	257	281
Liabilities
Non-current liabilities
Libilities to group companies		44	42
Other liabilities		0	65
Non-current liabilities, total	2.14.	44	107
Current liabilities
Bank borrowings		12 221	12 448
Pension loans		3 157	3 218
Advances received		321	84
Trade payable		4 052	3 674
Liabilities to associates		257	325
Other liabilities		543	470
Accrued expenses		3 711	4 154
Current liabilities, total	2.15.	24 262	24 373
Total liabilities		24 306	24 480
Total liabilities and shareholders' equity		25 416	27 258

Cash Flow Statement

EUR 1 000	Jan. 1 - Dec. 31, 2018	Jan. 1 - Dec. 31, 2017
Cash flow from operating activities
Reuslt before extraordinary items	-1 648	-1 482
Adjustments for:
Depreciation	2 183	2 317
Unrealised exchange rate gains and losses	29	-39
Other non-payment-related expenses	-24	-378
Financial income and expenses	739	612
Other adjustments	-47	52
Cash flow before working capital changes	1 232	1 082
Change in net working capital:
Increase (-) / decrease (+) in current non-interest bearing receivables	-343	322
Increase (-) / decrease (+) in inventories	1 252	-225
Increase (+) / decrease (-) in current non-interest bearing liabilities	124	1 361
Cash generated from operations before financial items and income taxes	2 265	2 540
Interest paid and payments on other financial expenses from operations	-777	-801
Dividends received	2	161
Interest received	6	10
Income tax paid	-2	-17
Cash flow before extraordinary items	1 494	1 893
Net cash flow from operating activities	1 494	1 893
Cash flow used in investing activities
Investments in tangible and intangible assets, gross	-1 101	-1 486
Proceeds from sale of tangible and intangible assets	49	15
Loans granted to subsidiaries	-10	0
Other investments	-30	-47
Interest received	2	4
Net cash used in investing activities	-1 090	-1 514
Long-term borrowing	0	41
Repayment of long-term loans	-288	-727
Net cash flow from financing activities	-288	-686
Net increase (+) / decrease (-) in cash and cash equivalents	116	-307
Cash and cash equivalents at the beginning of the financial year	334	643
Effect of changes in exchange rates	0	-2
Cash and cash equivalents at the end of the financial year	450	334

Notes to the Financial Statements of the Parent Company

Accounting Policy

The financial statements have been prepared in accordance with the Finnish accounting law.

Valuation of Fixed Assets

Fixed assets have been disclosed in the balance sheet at acquisition cost net of received investment grants and depreciation according to plan. Depreciation according to plan have been calculated on straight-line method based on the economic life time of the assets as follows:

	Depreciation period
Intangible rights and other long-term expenditure	5 to 10 years
Quarring areas and basins	unit of production method
Goodwill	13 years
Buildings	25 to 30 years
Constructions	5 years
Process machinery	3 to 15 years
Motor vehicles	5 to 8 years
IT equipment	3 to 10 years
Development expenditure	5 years

The acquisition cost of equipment is depreciated applying the maximum depreciation rates allowed by the corporate tax law, starting from the time of acquisition.

Quarrying areas, including the opening costs of quarries, basins and quarry land areas are depreciated using the unit of production method based on the amount of rock used and filling time of damping areas. Depreciation of quarry lands and basins and other auxiliary structures is commenced when the quarry is ready for production use.

Valuation of Inventories

Inventories have been presented in accordance with the average cost principle or the net realisable value, whichever is lower. The cost value of inventories includes direct costs and their proportion of indirect manufacturing and ac- quisition costs.

Revenue Recognition

Net sales represents sales after the deduction of discounts, indirect taxes and exchange gains/losses on trade receivables. Revenue has been recognized at the time of the delivery of the goods. Revenue from installing and services is recognised in the period when the service is rendered.

Research and Development Cost

Research cost has been recorded as annual costs when incurred. Costs incurred from drilling exploration in quarry areas have been capitalised for their main part and they are depreciated over their useful lives. However, drilling exp- loration costs are expensed when there is significant uncertainty involved in the commercial utilization of the soapstone reserves in question.

Development costs related to sauna-product group, the renewal of enterprise resource planning system, the productisation of new ceramic collection and the design of new soapstone interiors have been activated.

Retirement Costs

Employee pension schemes have been arranged with external pension insurance companies. Pension costs are expensed for the year when incurred. Pension schemes for personnel outside Finland follow the local practices.

Untaxed Reserves

According to the Finnish corporate tax law untaxed reserves, such as accelerated depreciation, are tax deductible only if recorded in financial statements.

Income Taxes

Income taxes include taxes corresponding to the Group companies' results for the financial period as well as the change in deferred tax asset. Deferred tax assets have been provided on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements, using the tax rate enacted at the balance sheet date for the following years.

Dividends

The Board will propose to the Annual General Meeting that no dividend be paid.

Share-based payments and option rights

The expense determined at the grant date of the stock options is based on the theoretical market value of the stock option which is calculated using the Black & Scholes stock option pricing model. The theoretical market value of the stock options has not been adjusted downward for the probability of not fulfilling the targets set for the vesting criteria. The stock options have been granted for the first time in 2013 and they can be used to subscribe shares earliest in 2016 if the vesting criteria are met.

The Group had no share-based incentive plans in 2018 or 2017.

Comparability of the result

Disclosures in the reporting period and the corresponding figures for the previous period are comparable over time.

Foreign Currency Items

Foreign currency balance sheet items have been valued at the average exchange rate prevailing on the balance sheet date as indicated by the European Central Bank.

Notes to the Income Statement

EUR 1 000	2018	2017
1.1. Net sales
1.1.1. Net sales per geographical area
Finland	12 910	13 538
Rest of Europe	13 724	13 401
USA	475	717
Total net sales per geographical area	27 109	27 656
1.1.2. Net sales per goods and services
Sales of goods	25 521	25 738
Rendering of services	1 588	1 918
Total net sales per goods and services	27 109	27 656
1.2. Other operating income
Rental income	80	101
Charges for intergroup services	123	211
Proceeds from sale of fixed and other non-current investments	47	5
Other income	136	170
Total other operating income	386	487
1.3. Salaries and fees paid to Directors and number of employees
1.3.1. Salaries and fees paid to Directors
Salaries and other short-term employee benefits of the Board of Directors and the Managing Directors	375	374
Post-employment benefits (pension benefits)
Contributions to statutory pension plan	36	33
Share-based payments	5	5
Total	416	412

EUR 1 000	2018	2017
Managing Director
Salaries and fees
Vauhkonen Heikki
Salaries	185	183
Post-employment benefits (pension benefits)
Contributions to statutory pension plan	36	33
Share-based payments	5	5
Total	226	221
Members of Board
Jaakko Aspara	19	19
Rönkkö Markku	37	38
Salastie Paula	19	19
Svanborg Reijo	21	20
Tähtinen Jyrki	73	74
Vauhkonen Heikki	21	21
Total	190	191

Key management personnel comprises the members of the Management Group.

The Managing Director is a member of the Management Group.
Key management personnel compensation
Salaries and fees	682	669
Termination benefit paid
Post-employment benefits (pension benefits)
Post-employment benefits	116	117
Share-based payments	19	19
Total	817	805

EUR 1 000	2018	2017
1.3.2. Average number of empoyees durung the fiscal year
Clerical employees	62	62
Workers	126	144
Total number of employees	188	206
1.4. Depreciation according to plan
Development expenditure	381	381
Intangible rights	10	12
Other long-term expenditure	233	263
Amortisation on quarries based on the unit of production method *)	146	156
Buildings and constructions	445	447
Machinery and equipment	659	749
Other tangible assets	0	0
Depreciation on land areas based on unit of production method	17	17
Goodwill	292	292
Depreciation according to plan in total	2 183	2 317

EUR 1 000 2018 2017 1.5. Other operating expenses Rental expenses 1 041 1 041 Maintenance of real estates 264 299 Marketing expenses 1 029 1 317 Other variable costs 1 921 2 094 Other expenses 1 427 1 972 Total 5 682 6 723 1.5.1. Auditors' fees KPMG Oy Ab Audit fees 54 65 Other fees 6 9 Audit fees, total 60 74

Tulikivi Group's statutory auditor KPMG Oy Ab has not provided any non-audit services which are prohibited under the EU 537/2014 regulation.

1.6. Financial income and expenses
Dividend received from Group	0	158
Income from non-current investments
Dividends received from others	2	2
Other financial income
Interest income from Group companies	2	29
Interest income from others	5	10
Financial income, total	9	199
Reduction in value of investments held as non-current assets
Interest expenses and other financial expenses to Group companies	-2	-1
Interest expenses to others	-582	-621
Other finalcial expenses to others	-165	-189
Interest expenses and other financial expenses, total	-749	-811
Financial income and expenses, total	-740	-612

*) The Group applies unit of production method based on the usage of stone in calculating the amortisation according to plan for quarries and mining rights. Land areas are depreciated on a unit-of-use basis based on the consumption of the rock material or stacking area filling time.

Notes to the Balance Sheet

EUR 1 000	2018	2017
2.1. Intangible assets
2.1.1. Capitalised development expenditure
Capitalised development expenditure January 1	2 680	2 144
Additions	379	536
Acquisition cost December 31	3 059	2 680
Accumulated depreciation according to plan January 1	-1 733	-1 352
Depreciation for the financial year	-380	-381
Accumulated depreciation December 31	-2 113	-1 733
Balance sheet value of capitalised development expenditure December 31	946	947
2.1.2. Intangible rights
Acquisition cost January 1	486	484
Additions	0	2
Acquisition cost December 31	486	486
Accumulated depreciation according to plan January 1	-459	-447
Depreciation for the financial year	-10	-12
Accumulated depreciation December 31	-469	-459
Balance sheet value of intangible rights, December 31	17	27
2.1.3. Goodwill
Acquisition cost January 1 and December 31	8 713	8 713
Accumulated depreciation according to plan January 1	-7 838	-7 546
Depreciation for the financial year	-292	-292
Accumulated depreciation December 31	-8 130	-7 838
Balance sheet value of goodwill, December 31	583	875
The parent company's goodwill comprises merger losses.

EUR 1 000	2018	2017
2.1.4. Other long term expenditures
Acquisition cost January 1	13 885	13 390
Additions	482	495
Acquisition cost December 31	14 367	13 885
Accumulated depreciation according to plan January 1	-6 515	-6 096
Accumulated depreciation on disposals	-379	-419
Accumulated depreciation December 31	-6 894	-6 515
Balance sheet value of long term expenditure, December 31	7 473	7 370

The balance sheet value of other long term expenditure includes EUR 4 879 (4 829) million for stone research and costs relating to the opening of new soapstone quarries and of quarries not yet taken into production use.

Decreases in other non-current expenditures and accumulated amortization on decreases in other non-cur- rent expenditures did not include disposals in 2017 and 2018.

Total intangible assets	9 019	9 219

EUR 1 000	2018	2017
2.2. Tangible assets
2.2.1. Land
Acquisition cost January 1	1 377	1 381
Disposals	0	-4
Acquisition cost December 31	1 377	1 377
Accumulated depreciation January 1	-490	-473
Depreciation based on the unit of production method for the financial year	-17	-17
Accumulated depreciation December 31	-507	-490
Balance sheet value of land, December 31	870	887
2.2.2. Buildings and constructions
Acquisition cost January 1	15 111	15 103
Additions	0	8
Acquisition cost December 31	15 111	15 111
Accumulated depreciation according to plan January 1	-11 757	-11 310
Depreciation for the financial year	-445	-447
Accumulated depreciation December 31	-12 202	-11 757
Revaluation	505	505
Balance sheet value of buildings and constructions, December 31	3 414	3 859

EUR 1 000	2018	2017
2.2.3. Machinery and equipment
Acquisition cost January 1	18 283	17 882
Additions	159	572
Disposals	-454	-171
Acquisition cost December 31	17 988	18 283
Accumulated depreciation according to plan January 1	-16 106	-15 474
Accumulated depreciation on disposals	-659	-750
Depreciation for the financial year	454	118
Accumulated depreciation December 31	-16 311	-16 106
Balance sheet value of machinery and equipment, December 31	1 677	2 177

Disposals of Machinery and equipment / Accumulated depreciation on disposals don't include thoudsand scrapped items in 2018 (EUR 53 thousand in 2017).

Amount of machinery and equipment included in balance sheet value	1 630	2 052
2.2.4.Other tangible assets
Acquisition cost January 1 and December 31	38	38
Balance sheet value of other tangible assets, December 31	38	38
2.2.5. Advance payments
Acquisition cost January 1	28	28
Accumulated depreciation December 31	-28	-28
Total tangible assets	0	0
2.2.6. Advance payments
Advance payments 1.1.	45	160
Additions	0	45
Disposals	-25	-160
Advance payments, total	20	45
Total tangible assets	6 019	7 006

The Group has started a new fixed asset register software in 2018.

There were no constructions under Machinery and equipment in 2018 (56 thousand in 2017).

EUR 1 000	2018	2017
2.3. Shares in Group Companies	%	%
Tulikivi U.S. Inc., USA	100	100
OOO Tulikivi, Russia	100	100
Tulikivi GmbH, Saksa	100	100
The New Alberene Stone Company Inc., USA	100	100
2.4. Receivables from Group companies
Capital loan, Tulikivi GmbH	50	40
Receivables from Group companies, total	50	40
2.5. Other investments
Other	26	26
Total other investments	26	26
2.6. Inventories
Raw material and consumables	3 048	3 304
Work in grogress	1 692	2 097
Finished products/goods	1 871	2 461
Total inventories	6 611	7 862
2.7. Non-current receivables
Trade receivables
Accrued incomes	77	174
Total non-current receivables	77	174

OK?

EUR 1 000	2018	2017
2.8. Current receivables
Receivables form group companies
Trade receivables	37	0
Receivables form group companies, total	37	0
Receivables from others
Trade receivables	2 553	2 120
Other receivables	19	115
Accrued income
Other accrued income	389	130
Prepayments	145	217
Interest receivables	7	0
Accrued income, total	541	347
Receivables from other, total	3 113	2 582
Total current receivables	3 150	2 582
2.9. Shareholders' equity
Capital stock January 1 and December 31	6 314	6 314
Revaluation reserve January 1	6	-99
Change	-6	93
Revaluation reserve Decenber 31	0	-6
Treasury shares	-108	-108
Restricted equity	6 206	6 200
The invested unrestricted equity fund January 1 and December 31	14 834	14 834
Retained earnings January 1	-17 118	-15 608
Retained earnings December 31	-18 617	-17 118
Result for the year	-1 650	-1 499
Eguity	-5 433	-3 783
Total shareholders' equity	773	2 417
2.10. Statement of distributable earnings December 31
Profit for the previous years	-18 617	-17 118
The invested unrestricted equity fund	14 834	14 834
Result for the year	-1 650	-1 499
Capitalised development costs	-946	-947
Total distributable earnings	-6 379	-4 730

The invested unrestricted equity fund may not be distributed as dividend.

Parent company's equity has decreased to half of the share capital because of the unprofitable result. Parent company's equity is EUR 0,8 million (Group 9,3 million euros) and sharecapital 6,3 million euros (Group 6,3 million euros) in the financial statements. Based on these numbers, the company's board has begun to follow actions of Companies Act 23 § 1st moment.Financial statements based on the Companies Act. are presented from the period January - December, 2018. Shareholders' meeting required by Companies Act. is held 24th April, 2019. In this meeting the board of directors will propose that the company will continue the actions al- ready in place as well as seeking other possible actions to strengthen the financial position fo the company.

Share-based payments

Stock options for management and key personnel

Terms of share-based payments / Option rights

Option rights are used to encourage the key employees to work on a long-term basis to increase shareholder value. The option rights also aim at commiting the key employees to the employer. The option program is targeted to approximately 14 key employees, including the members of the Management Group. The Board of Directors decides on the distribution of the option rights annually. For all key employees, the prerequisite for receiving stock options is share ownership in the company.

The management of Tulikivi Group and the key employees are entitled to subscribe the company shares if the separately established vesting criteria are met, as follows:

The theoretical market value of one stock option has been calculated through the use of Black & Scholes stock option pricing model with the following input factors:

options 2013A, theoretical market value EUR 0.10: share price EUR 0.32, share subscription price EUR 0.33, risk free interest rate 0.89 per cent, validity of stock options approximately 4.5 years and volatility 37 per cent. - options 2013B, theoretical market value EUR 0.03: share price EUR 0.21, share subscription price EUR 0.33, risk free interest rate 0.13 per cent, validity of stock options approximately 4.5 years and volatility 33 per cent. - options 2013C, theoretical market value EUR 0.04: share price EUR 0.22, share subscription price EUR 0.33, risk free interest rate 0.24 per cent, validity of stock options approximately 4.2 years and volatility 38 per cent.

The theoretical market value of the stock options has not been adjusted downward for the probability of not fulfilling the targets established for the vesting criterion.

2.11. Treasury shares

Treasury shares include the cost of own shares held by the Group. It is presented as a deduction from equity. During the financial year 2018 (2017), Tulikivi Oyj has neither acquired nor disposed any own shares. At the reporting date, the company held 124 200 (124 200) own A shares, which represents 0.2 % of the share capital and 0.1 % of the voting rights. The acquisition price is EUR 0.87/share on average. The acquisition of own shares has not had any significant effect on the distribution of ownership or voting rights of the company.

Should the company not meet its financial targets or its covenants under financing agreements and should it not be able to successfully restructure its short- or long-term financing or the sell talc reserves, it may run out of working capital, its financing agreements may be terminated and it may face difficulty in continuing its business operations.

EUR 1 000	2018	2017
2.12. Provisions
Warranty provision	75	75
Environmental provision (Present value)	176	179
Environmental provision, current	6	6
Restructuring provision, current	0	21
Total	257	281

The undiscounted amount of environmental provision was EUR 399 (417) thousand. The discount rate used in determining the present value is 4.0 (4.0) per cent.

2.13. Non-current liabilities
Liabilities to Group companies
Other long-term liabilities	44	42
Liabilities from others
Other non-current liabilities	0	65
Non-current liabilities to others	0	65
Total non-current liabilities	44	107
2.14. Current liabilities
Liabilities to Group companies
Trade payables	257	325
Liabilities to associates
Liabilities to others
Loans from credit institutions	12 221	12 448
Pension loans	3 157	3 218
Advances received	321	84
Trade payables	4 052	3 674
Other current liabilities	543	470
Accrued liabilities
Salaries, wages and social costs	3 381	3 444
Discounts and marketing expenses	227	239
External charges	11	293
Interest liabilities	3	33
Other accrued liabilities	89	145
Accrued liabilities, total	3 711	4 154
Liabilities to others, total	24 005	24 048
Total current liabilities	24 262	24 373

EUR 1 000	2018	2017
2.15 Given guarantees, contingent liabilities and other commitments
Loans and credit limit accounts with related mortgages and pledges
Loans from financial institutions and loan guarantees	15 378	16 393
Real estate mortgages given	15 780	15 780
Company mortgages given	19 996	19 996
Given mortgages and pledges, total	35 776	35 776
Other own liabilities for which guarantees have been given Guarantees	500	500
Other commitments	3	3
Other own liabilities for which guarantees have been given, total	503	503
Other commitments
Rental commitments due
Rental obligations payable not later than 1 year	250	385
Rental obligations payable later	15	87
Rental commitments due, total	265	472
Leasing commitments
Due not later than 1 year	161	185
Due later	90	189
Leasing commitments, total	251	374
Leasing agreements are three to six years in duration and do not include redemption clauses.

Derivatives
Interest rate swaps , nominal value	0	1 936
Interest rate swaps , fair value	0	-6
Obligation to repay VAT deductions made in earlier periods	66	77

The company is obligated to check the value added tax deductions made on property investments. The last annual check is in the year 2027.

2.16. Other contingent liabilities Environmental obligations

Tulikivi Corporation's environmental obligations, their management and recognition of environmental costs

Tulikivi group has landscaping obligations based on the Mining Act and other environmental legislation, which must be met during operations and when the quarries are shut down in the future.

Actions demanded by the environmental obligations are continuously performed besides normal production processes. Handling of water, arrangements for soil and rock material stacking areas, vibration and noise measurement, dust prevention and the monitoring the measurement result belong to these tasks. The costs relating to these activities are mainly recognised in the income statement as expense. Transport of soil material to stacking areas by opening new quarries is capitalised to other long-term expenses and depreciated during the useful life of the quarry. Lining work of stacking areas is based on long-term quarrying plans, according to which surface material of new opened quarries will be used in lining work. However, the lining work cannot be done until the point when there are finished sectors in the stacking area. No provision is recognised for the lining work, because it is not estimated to increase the costs of normal quarrying work.

Based on the environmental authorisations, the Company has given guarantees to the effect of EUR 630 thousand in total.

Shareholders and Management Ownership December 31, 2018

10 Major shareholders according to number of shares Shares registered in the name of a nominee are not included.	K shares	A shares	Proportion, %
1. Vauhkonen Heikki	5 809 500	1 064 339	11.48
2. Elo Mutual Pension Insurance Company		4 545 454	7.59
3. Ilmarinen Mutual Pension Insurance Company		3 720 562	6.21
4. Elo Eliisa	477 500	2 631 036	5.19
5. Toivanen Jouko	100 000	2 431 259	4.23
6. Finnish Cultural Foundation	100 000	2 158 181	3.77
7. Skandinaviska Enskilda Banken Ab (Publ) Helsinki Branch		1 856 314	3.10
8. Mutanen Susanna	846 300	797 500	2.75
9. Danske Bank A/S Helsinki Branch		1 621 748	2.71
10. Fennia Mutual Insurance Company		1 515 151	2.53

10 Major shareholders according to number of votes Shares registered in the name of a nominee are not included.	Votes/K shares	Votes/A shares	Proportion, %
1. Vauhkonen Heikki	58 095 000	1 064 339	45.86
2. Mutanen Susanna	7 975 000	846 300	6.84
3. Elo Eliisa	4 775 000	2 631 036	5.74
4. Elo Mutual Pension Insurance Company		4 545 454	3.52
5.Vauhkonen Mikko	3 975 000	343 810	3.35
6. Ilmarinen Mutual Pension Insurance Company		3 720 562	2.88
7. Toivanen Jouko	1 000 000	2 431 259	2.66
8. Finnish Cultural Foundation	1 000 000	2 158 181	2.45
9. Skandinaviska Enskilda Banken Ab (Publ) Helsinki Branch		1 515 151	1.44

The members of the Board and Managing Director control 5 810 000 K shares and 1 557 056 A shares representing 46.26 % of votes.

Breakdown of share ownership of December 31, 2018 Number of shares	Shareholders pcs	Proportion %	Shares pcs	Proportion %
1 - 100	623	12.87	36 524	0.06
101 - 1000	2 029	41.92	1 133 044	1.89
1001 - 5000	1 362	28.14	3 626 082	6.05
5001 - 10000	368	7.61	2 853 953	4.77
10001 - 100000	409	8.45	10 918 228	18.24
100001 -	49	1.01	41 303 412	68.99
Total	4 840	100.00	59 871 243	100.00
The Company's shareholders were broken down by sector as follows Sector	Holding %	Votes %
Enterprises	4.64	2.15
Financial and insurance institutions	2.98	4.64
Public organisations	13.81	6.41
Non-profit organisations	4.43	2.75
Households	66.63	83.82
Foreign	7.51	0.23
Total	100.00	100.00

Nominee-registered shares, 4 380 421 in total (7.316 per cent of the capital stock, 3.395 per cent of votes), are entered under financial and insurance institutions. Treasury shares owned by Tulikivi Corporation, in total 124 200 Series A shares, are included in section dealing with shareholding information.

Signatures to Board of Directors' Report and Financial Statements

Helsinki February13, 2019

Jyrki Tähtinen Markku Rönkkö Jaakko Aspara

Paula Salastie Reijo Svanborg Heikki Vauhjonen Managing Director

Auditors' Report THE KEY AUDIT MATTER

Sufficiency of Group's funding (Refer to notes 1, 21, 25 and 27 to the consolidated financial statements)

The Group's financial position has declined during the financial year.

The company concluded new financing agreement with creditors October 31, 2018. The Group's financing agreement includes, among others, covenants related to EBITDA, equity ratio and the ratio between the interest-bearing debt and EBITDA. The creditors issued a waiver on the covenants related to EBITDA and the ratio between the interestbearing debt and EBITDA on December 21, 2018. Company's estimated financial performance, according to management's budget approved by the Board of Directors for the year 2019, will lead to the breach of accelerated basis covenant terms based on the current financing agreements in March and June, 2019. Therefore financial liabilities are classified as short-term liabilities in the financial statements 2018.

According to the management's view creditors will issue a waiver and will not accelerate loans. The company has launched preparations for the sale of the talc deposit.

Valuation of goodwill and trademark (Refer to notes 1, 15 and 16 to the consolidated financial statements)

The carrying value of goodwill and trademark totaled EUR 6.4 million in the consolidated financial statements representing 68 % of the consolidated equity.

Goodwill and trademark are not amortized, but they are tested for impairment at least annually. As a result of impairment testing conducted in conjunction with the preparation of the financial statements, a EUR 0.5 million impairment loss on goodwill was recognized.

Determining the key assumptions

for cash flow forecasts underlying impairment testing requires management judgement in respect of sales growth rate, profitability and discount rate. Valuation of goodwill and trademark is considered a key audit matter due to the significance of the carrying amounts and high level of management judgement involved.

Valuation of deferred tax assets

(Refer to notes 1 and 18 to the consolidated financial statements)

At December 31, 2018, the carrying value of deferred tax assets, EUR 3.1 million, represents 33 % of the consolidated equity.

The Group's deferred tax assets arise from parent company's tax losses carry forward and tax credits. Valuation of deferred tax assets is based on management's estimate of the future taxable profits We tested the financial forecast process and the related control environment.

In order to evaluate the sufficiency of funding, we analyzed, among others, cash flow forecasts and sensitivity calculations prepared by the company, as well as the reliability of the data underlying the forecast.

We evaluated the sensitivity calculations prepared by the management to test the headroom, especially in relation to the covenant terms. We have also familiarized ourselves with the plans related to the sale of the talc deposit.

In addition, we have evaluated the appropriateness of the classification of the financial liabilities as well as the regularity and adequacy of the disclosures concerning financial position.

We challenged judgments made by the management and considered key inputs in the calculations by reference to the budgets approved by the Board of Directors, data external to the Group and our own views. We assessed the historical accuracy of forecasts prepared by management by comparing the actual results for the year with the original forecasts.

We involved our own valuation specialists when assessing the technical accuracy of the calculations and comparing the assumptions used to market and industry information.

Furthermore, we assessed the appropriateness of the Group's disclosures in respect of goodwill, trademark and impairment testing in accordance with IFRS.

To the Annual General Meeting of Tulikivi Corporation

We have audited the financial statements of Tulikivi Corporation (business identity code 0350080-1) for the year ended December 31, 2018. The financial statements comprise the consolidated balance sheet, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company's balance sheet, income statement, statement of cash flows and notes.

In our opinion

• the consolidated financial statements give a true and fair view of the group's financial position, financial performance and cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU

• the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements.

Our opinion is consistent with the additional report submitted to the Audit Committee and Board of Directors.

Basis for Opinion

We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

In our best knowledge and understanding, the non-audit services that we have provided to the parent company and group companies are in compliance with laws and regulations applicable in Finland regarding these services, and we have not provided any prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services that we have provided have been disclosed in note 7.2 to the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Materiality

The scope of our audit was influenced by our application of materiality. The materiality is determined based on our professional judgement and is used to determine the nature, timing and extent of our audit procedures and to evaluate the effect of identified misstatements on the financial statements as a whole. The level of materiality we set is based on our assessment of the magnitude of misstatements that, individually or in aggregate, could reasonably be expected to have influence on the economic decisions of the users of the financial statements. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for qualitative reasons for the users of the financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The significant risks of material misstatement referred to in the EU Regulation No 537/2014 point (c) of Article 10(2) are included in the description of key audit matters below.

We have also addressed the risk of management override of internal controls. This includes consideration of whether there was evidence of management bias that represented a risk of material misstatement due to fraud.

We tested the forecasting process and the related control environment. In addition, we assessed the historical accuracy of forecasts by comparing the actual results with the original forecasts. We analyzed estimates of future taxable profits

made by management and evaluated the underlying assumptions in the calculations supporting carwhich will be generated before the unused tax losses expire.

Valuation of deferred tax assets is considered a key audit matter due to the high level of management judgement involved in preparation of forecasts of future taxable profits and the significant carrying amounts recognized.

rying amounts of deferred tax assets, taking into account the parent company's historical performance and future projections. In addition, we considered the appropriateness of the disclosures relating to deferred tax assets in accordance with IFRS.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements

The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, and of financial statements that give a true and fair view in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company's and the group's ability to continue as going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting. The financial statements are prepared using the going concern basis of accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of Financial Statements

Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with good auditing practice will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company's or the group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of the Board of Directors' and the Managing Director's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the parent company's or the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the parent company or the group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events so that the financial statements give a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Reporting Requirements Information on our audit engagement

We were first appointed as auditors by the Annual General Meeting on 13.4.2007, and our appointment represents a total period of uninterrupted engagement of 12 years.

Other Information

The Board of Directors and the Managing Director are responsible for the other information. The other information comprises the report of the Board of Directors and the information included in the Annual Report, but does not include the financial statements and our auditor's report thereon. We have obtained the report of the Board of Directors prior to the date of this auditor's report, and the Annual Report is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to the report of the Board of Directors, our responsibility also includes considering whether the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.

In our opinion, the information in the report of the Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Helsinki, March 29, 2019

KPMG OY AB

KIRSI JANTUNEN Authorized Public Accountant, KHT

Contact Information

PLANTS AND OFFICES

Head Office and Factories

FI-83900 Juuka Tel. +358 403 063 100 www.tulikivi.com [email protected] [email protected]

Suomussalmi Plant Saarikyläntie 26 FI-89920 Ruhtinansalmi Tel. +358 403 063 100

Heinävesi Plant Rasiahontie 3 FI-79700 Heinävesi Tel. +358 403 063 100

Espoo Office and Factory

Lautamiehentie 1 FI-02770 Espoo Tel. +358 403 063 100

Sales Displays in Finland

Find your nearest dealer at www.tulikivi.com

Subsidiaries

Tulikivi Germany GmbH FI-83900 Juuka, Finland Tel. +358 403 063 100

Tulikivi U.S., inc. 172 South Pantops Dr, Suite B VA 22911 Charlottesville Tel. +1-800-843 3473

OOO Tulikivi

ul.Krasnyh Partizan -14 127229 St.Petersburg Russian Federation Tel. +7 495 799 3362

Tulikivi Abroad

Benelux Dutry & Co. Jagershoek 10 B-8570 Vichte Belgium Tel. +32 56 776 090

Italy

Eurotrias S.R.L. – GMBH Via Max Planck 13 I-39100 Bolzano Tel. +39 0 471 201 616

Austria

Feuer im Stein GmbH & Co KG Gewerbepark 1 A-4861 Schörfling am Attersee Tel. +43 7662 290 61

Latvia

SIA Akmens Kräsnis Pulkveža Brieža 43 LV-1045 Riga Tel. +371 6738 1149

Lithuania

Kad nebūtų šalta, UAB Bangų 22a LT-91250 Klaipėda Tel. +370 46 256 300

Poland

TULIKIVI OYJ FI-83900 Juuka, Finland Tel. +358 403 063 100

France

TULIKIVI OYJ FI-83900 Juuka, Finland Tel. +358 403 063 100

United Kingdom

Tulikivi UK Limited Unit 14 Elliott Road Love Lane Industrial Estate GB - GL7 1YS Cirencester Tel. +44 1285 650 633

Germany

TULIKIVI OYJ FI-83900 Juuka, Finland Tel. +358 403 063 100

Hungary

Magyar-Norveg KFT Nagy Lajos Kiraly ùtja 81 1148 Budapest Tel. +36 1 363 3058

Slovakia

TALC s.r.o. Štiavnička 77 97681 Podbrezova Tel. +421 904 945 888

Slovenia

Feliksbau d.o.o. Celovška cesta 317 1210 Ljubljana – Šentvid Tel. +386 1 421 61 80

Switzerland

Tiba AG Hauptstr. 147 CH-4416 Bubendorf Tel. +41 619 351 710

Czech Republic

Komiexpert s r.o. Českomoravska 2255/12a 190 00 Praha 9 Tel. +420 777 718 722

USA and Canada

Tulikivi U.S., inc. 172 South Pantops Dr, Suite B VA 22911 Charlottesville Tel. +1-800-843 3473

Russia

OOO Tulikivi Bersenevskiy lane 3/10 bld 7 Moscow +7 495 741 00 17

Estonia

BALTIC TK GROUP OÜ Pihlaka 1 a 11216 Tallinn Tel. +372 6555 486

106

AI Terminal

Tulikivi Oyj

3347_10-k_2019-04-01_96b52b42-83c8-43d0-a7e1-34095d3a21f1.pdf

Annual Report 2018

Contents

The year 2018 in brief

Tulikivi in the future

Product groups

Fireplaces

Tulikivi Sauna

Tulikivi Interior

Managing Director's review

Net sales stopped declining towards the end of the year and profitability improved

Intense competition in the Finnish fireplace market

Large soapstone reserves

8.4% Net sales will grow and profitability will improve in 2019

Future outlook for wood heating

Renewable energy could replace a substantial share of the fossil fuels used in Europe to heat low-rise houses

Market pressure or taxation will increase consumer energy prices

Heat-retaining fireplaces are best for low-energy houses

EU defines allowable emission levels for wood burning

Small-scale combustion of wood is the only form of energy independent of other energy forms

Trends

• Increasing net sales by expanding target group

Stone supplies and reserves

Stone supplies used sparingly

Environmental aspects of operations

Environmental and corporate responsibility

Environmental responsibility

Financial responsibility 2.4 2.4 2.5 2.1 2014 2015 2016 2017 2018

Social responsibility

100 75 Formation of Carbon Footprint in Tulikivi Fireplace's Life Cycle

Community spirit

Tulikivi adds Saramo to its Karelia range of fireplaces

An impressively wide view of the flames

Tulikivi Senso - A new smart device application for cleaner burning

Board of Directors

Jyrki Tähtinen (b.1961)

Other key positions of trust: Chairman of the

Primary work experience: Borenius Attorneys

Markku Rönkkö (b. 1951)

Primary work experience: Järvi-Suomen Portti Ltd: Managing Director 2008-2011, Karelia-Upofloor Ltd: Managing Director 2006-2007, Savon Voima Plc: Managing Director 2004- 2006, Olvi Plc: Managing Director 1985 -2004, CFO 1983-1985 , IS-Yhtymä Ltd: CFO 1977-

Reijo Svanborg (b. 1943)

Tulikivi Corporation share ownership: Series A share 216 208 pieces

Heikki Vauhkonen (b.1970)

Tulikivi Corporation share ownership:

Jaakko Aspara (b. 1981)

Primary work experience:

Paula Salastie (b.1978)

Heikki Vauhkonen (b. 1970)

Tulikivi Corporation share ownership:

Saskia Kerkkanen (b. 1975)

Tulikivi Corporation share ownership: No shareholding

Simo Kortelainen (b. 1980)

Markku Prättälä (b. 1967)

Tulikivi Corporation share ownership: Series A shares 15 525 pieces

Martti Purtola (b. 1966)

Tulikivi Corporation share ownership:

Jari Sutinen (b. 1962)

Jouko Toivanen (b. 1967)

Report on the Corporate Governance Statement 2018

Organisation of the Tulikivi Group The Corporate Governance Statement is

Description of the composition and operations of the Board of Directors and the Board committees

Composition of the Board of Directors

Primary duties of the Board of Directors

Board Committees

Managing Director

Management Group

Personal information of the members of the Management Group:

Participation by Board members in the meetings of the Board, Audit Committee and Nomination Committee and Nomination Board.

M.Sc. (Eng.). Tulikivi Corporation's Series A shares 15,000.

1. Description of the control environment

Tulikivi's business idea and values

Environmental Policy

Planning and monitoring processes

FIGURE: Division of responsibilities in internal control and risk management

Control responsibilities

FIGURE: Planning and monitoring process

2. Risk assessment

3. Reporting system, internal control and risk management