Exel Interim Report for 1 January - 30 September 2005

EXEL OYJ  STOCK EXCHANGE RELEASE          3.11.2005 at 11.00   1 (10)

EXEL INTERIM REPORT FOR 1 JANUARY – 30 SEPTEMBER 2005

First nine months in brief

Group
- Net sales rose to EUR 69.3 million for the first nine months, up 8.2 per cent
on the previous year’s EUR 64.1 million
- Net sales were EUR 22.4 (20.4) million in the third quarter
- Operating profit for the first nine months remained on a good level and was
EUR 10.2 (10.4) million
- Operating profit in the third quarter was EUR 3.0 (3.3) million or 13.4 (16.2)
per cent of net sales
- Earnings per share were EUR 0.17(0.19) based on the diluted number of shares
at the end of the reporting period

Divisions
- Demand for industrial profiles remained strong in the third quarter
- Industry Division posted strong growth in operating profit in the first nine
months, up 37.2 per cent to EUR 7.6 (5.5) million
- Sport Division sales remained on last year’s level
- Strong focus on opening Nordic Walking markets hampered profitability in the
Sport Division, posting an operating profit of EUR 0.5 (1.3) million in the
third quarter

KEY FINANCIAL FIGURES
(unaudited)



                      1.7.-  1.7.- Change, %   1.1.-  1.1.- Change, %     1.1.-
                      30.9.  30.9.            30.9.  30.9.             31.12.
                       2005   2004              2005   2004                2004
EUR million                                                               
                                                                          
Net sales              22.4   20.4     9.9%    69.3   64.1     8.2%      83.9
Operating profit        3.0    3.3    -8.9%    10.2   10.4    -1.6%      13.7
% of net sales        13.4%  16.2%   -17.1%   14.7%  16.2%    -9.1%     16.3%
Profit for the          2.1    2.2    -5.4%     7.2    6.9     4.5%       9.1
period
                                                                             
Equity                 24.4   17.3    40.6%    24.4   17.3    40.6%      20.7
Net interest-          10.9   12.8   -14.7%    10.9   12.8   -14.7%       7.4
bearing liabilities
Invested capital       40.9   33.5    22.2%    40.9   33.5    22.2%      33.3
Return on equity, %   35.9%  49.8%   -27.9%   42.5%  52.6%   -19.2%     47.8%
Return on             29.4%  37.6%   -21.8%   37.2%  45.5%   -18.2%     45.2%
investment, %
Solvency ratio, %     43.1%  37.7%    14.3%   43.1%  37.7%    14.3%     44.9%
Net gearing, %        44.7%  73.6%   -39.3%   44.7%  73.6%   -39.3%     36.0%
                                                                             
Earnings per share,    0.18    0.2   -10.0%    0.64   0.64     0.0%      0.84
EUR
Earnings per share,    0.17   0.19    -9.7%    0.62   0.61     1.8%      0.80
EUR, diluted
Equity per share,      2.15   1.61    33.5%    2.15   1.61    33.5%      1.84
EUR
IFRS REPORTING

Exel has applied IFRS reporting since the beginning of 2005, and this interim
report has been prepared in accordance with the recognition and measurement
principles of IFRS. The reconciliation statement for the opening IFRS balance
sheet for 2004 was presented in the financial statements bulletin released on 24
February 2005. The effects of IFRS transition on 2004 financial statements on a
quarterly basis were explained in more detail in a stock exchange release
published on 3 May 2005. In the present interim report, the figures published on
that occasion have been used as comparative information.

NET SALES

Exel’s consolidated net sales for January-September grew this year by 8.2 per
cent over the previous year’s to EUR 69.3 (64.1) million. In Q3, net sales grew
by 9.9 per cent to EUR 22.4 (20.4) million. The net sales for April-September
include the operations of the Austrian company Faserprofil GmbH, which was
acquired on 1 April 2005. The company now operates as Exel’s subsidiary under
the name Exel Composites GmbH. Of the growth in net sales the majority, EUR 3.2
million, represented organic growth. The acquisition of Faserprofil accounted
for EUR 2.0 million of the net sales in the first nine months.

PROFIT PERFORMANCE

Exel’s operating profit for the first nine months remained close to last year’s
level at EUR 10.2 (10.4) million. Operating profit as a percentage of net sales
was 14.7 (16.2) per cent. The Industry Division’s operating profit improved due
to increased sales and improved cost efficiency. The Sport Division’s operating
profit was charged by ongoing investments in expanding the Nordic Walking
market.

The Group’s net financial expenses were EUR 229 (335) thousand. The Group’s pre-
tax profit was EUR 10.0 (10.1) million, and profit for the reporting period
totalled EUR 7.2 (6.9) million.

BALANCE SHEET AND FINANCIAL POSITION

The consolidated balance sheet total at the end of the reporting period stood at
EUR 56.6 (46.1) million. One-third of the increase was due to the Austrian
acquisition and the rest to an increase in working capital arising from
increased sales volumes, especially in Exel’s main markets, and increased liquid
assets.

At the end of the reporting period, equity stood at EUR 24.4 (17.3) million, and
the solvency ratio was 43.1 (37.7) per cent. Interest-bearing liabilities were
EUR 16.5 (16.1) million, of which short-term liabilities accounted for EUR 6.3
(6.7) million. Net interest-bearing liabilities were EUR 10.9 (12.8) million,
and net gearing amounted to 44.7 (73.6) per cent.

The development of cash flow from business operations remained clearly positive
in the third quarter and was EUR +5.4 (+11.0) million for the first nine months.
The lower cash flow compared to last year was due to the exceptionally low level
of working capital at the turn of the year resulting mostly from accounts
receivable. In addition, owing to the good results posted in 2004, EUR 1.5
million in taxes for last year was paid in H1. Operative capital expenditure was
financed with cash flow from business operations. Despite the acquisition, the
amount of interest-bearing liabilities remains at the same level as last year.
At the end of the reporting period, the Group’s liquid assets stood at EUR 5.6
million, compared with EUR 5.1 million at the end of 2004.

CAPITAL EXPENDITURE

The Group’s capital expenditure totalled EUR 3.2 million, containing some EUR
1.6 million operative investments and some EUR 1.5 million in the purchase price
of the fixed assets of Faserprofil GmbH. Capital expenditure for the third
quarter was EUR 0.6 million, consisting mainly of investments in a new
production line and maintenance and productivity-enhancing investments.

PERSONNEL

The number of people employed by the Exel Group on 30 September 2005 was 471
(438). Of these 321 (300) worked in Finland and 150 (138) abroad. The number of
employees during the reporting period averaged 467 (443). The increase from last
year is mainly due to the acquisition of the Austrian unit and the beginning of
operations of Exel’s subsidiary in the USA.

BUSINESS SEGMENTS

The Group’s operations are divided into two main segments: the Industry Division
and the Sport Division.

INDUSTRY DIVISION

The Industry Division’s key financial figures for the reporting period were as
follows:

                    1.7.-   1.7.- Change,    1.1.-   1.1.- Change,    1.1.-
                                 %                        %
                                 
                    30.9.   30.9.            30.9.   30.9.           31.12.
EUR thousands        2005    2004             2005    2004             2004
                                                                        
Net sales            13.8    11.5   19.4%    41.7    36.7   13.8%    48.3
Operating profit      2.5     2.0   21.7%     7.6     5.5   37.2%     7.8
% of net sales      18.1%  17.7 %     1.9%   18.2%   15.1%   20.6%   16.2%
Average personnel     257     237    8.4%     234     226    3.5%     224


The Industry Division’s net sales grew by 13.8 per cent on those posted a year
earlier. Of the increase, EUR 2.0 million arose from the acquisition of
Faserprofil, while the remaining two-thirds represented organic growth. Demand
in the profiles market has continued to be strong in the third quarter and
research and development in new applications is currently very active. In the
beginning of the year, new customer mould projects numbered some 40, which
reflects the increase in demand. The production utilisation rate was high at
most production plants. One new production line was opened in the third quarter
at the Voerde plant in Germany.

Profitability remained at a good level despite a considerable increase in raw
material prices. Some of this price pressure has been systematically passed on
within the production chain. Operating profit grew by 37.2 per cent to EUR 7.6
million from EUR 5.5 million the previous year. The improvement in profitability
is due to higher sales volumes and productivity gains at the main production
plants. Tight cost management has also reinforced profitability.

Carbon fibre raw materials were in short supply throughout the reporting period,
a situation that is expected to continue throughout the year. This is due to
massive new projects, the most significant of which are the Airbus A380
programme, defence projects in the USA, and the development of China’s
infrastructure. The situation has remained essentially unchanged in the third
quarter. Exel has for the most part ensured adequate fibre supplies for this
year’s projects. The main carbon fibre suppliers have announced investments to
increase capacity. The new capacity will enter the markets in stages during the
second half of 2006.

Business licenses needed for a new production plant in China have been granted,
and negotiations for constructing the plant are in their final stages. According
to plans, the factory will be in full operation by the second half of 2006.
Establishing the factory will incur costs also in 2005, but the most significant
increases in costs will be encountered in 2006.

Sport Division

The Sport Division’s key financial figures for the reporting period were as
follows:

                    1.7.-   1.7.- Change,    1.1.-   1.1.- Change,    1.1.-
                                 %                        %
                    30.9.   30.9.            30.9.   30.9.           31.12.
EUR thousands        2005    2004             2005    2004             2004
                                                                        
Net sales             8.6     8.9   -2.4%    27.6    27.4    0.7%    35.5
Operating profit      0.5     1.3  -58.4%     2.6     4.9  -45.7%     5.9
% of net sales       6.1%   14.2%  -57.4%    9.6%   17.8%  -46.1%   16.5%
Average personnel     241     219   10.0%     233     217    7.4%     217


The Sport Division’s net sales remained at last year’s level. The Nordic Walking
market continues to grow steadily in the German-speaking market, although
competition is increasing. Exel is investing heavily in opening new markets,
especially in North America, China and Japan. Floorball operations have
developed strongly due to new models and branding. Exel has signed an agreement
to become the main sponsor of the Floorball World Championships in 2006.

The Sport Division’s operating profit fell from last year’s EUR 4.9 million to
EUR 2.6 million. The strong focus on opening new Nordic Walking markets, the
strengthening of the Exel Sports Oy organisation, and the introduction of the
Exel concept continued. Marketing investments are expected to reduce the
division’s operating profit also in the fourth quarter.

Significant efforts are being made to open new markets in North America, where
the new subsidiary Exel USA, Inc. is investing in spreading the sport, and in
China, where joint marketing with our partner CISS is progressing. Although the
sale of Nordic Walking poles momentarily shows stagnation, the Nordic Walking
product category is expected to experience strong future growth, being one of
the few growing sporting goods segments.

In the OEM product group (surfing masts and laminate components) the market is
stable. The downward trend in surfing mast deliveries has stopped, and volumes
are expected to remain at the present level. Laminate sales have increased over
the previous year, and several new industrial applications are being developed.

SHARES

During the reporting period, on 9 September 2005, an increase in the share
capital of EUR 19,944 due to a subscription of shares under the warrant
programme was registered in the Finnish Trade Register. A total of 110,800
shares were subscribed. As a result of the increase, the share capital of Exel
Oyj is now EUR 2,041,344 and the total number of shares is 11,340,800, each with
a counter-value of EUR 0.18.

The highest share quotation during the reporting period was EUR 14.14 (11.97)
and the lowest EUR 11.35 (5.87). The share price closed at EUR 14.10 (11.90).
The average share price during the reporting period was EUR 12.61 (10.93).

During the reporting period 3,381,524 (5,235,416) shares were traded, accounting
for 30.0 (48.6) per cent of the average number of outstanding shares. Based on
the closing price in the reporting period, market capitalisation totalled EUR
159.8 (128.1) million.

OUTLOOK

Competition in existing Nordic Walking markets has become more fierce.
Intensified work is being done in consumer-oriented product development and in
sales and distribution to reinforce the competitive position of Exel. A strong
focus is being kept on opening up new Nordic Walking markets. These activities
will continue to hamper profitability.

Exel’s main core is the industrial operations, which is well positioned for
profitable growth through further acquisitions and organic growth. The
acquisition of Faserprofil GmbH strengthened Exel’s leading position in the
Central European pultrusion markets. Demand of industrial profiles remains
strong. The raw material markets have stabilised. In the short term, however,
carbon fibre prices continue to face inflationary pressures and the supply of
carbon fibre will restrain growth in the Industry Division.

The Group’s net sales for 2005 are expected to substantially exceed last year’s
level, whilst profit after financial items is expected to be slightly below last
year’s level.


Mäntyharju, 3 November 2005


EXEL OYJ            Ari Jokelainen
Board of Directors   President


Further information:
Ari Jokelainen, President & CEO, tel. +358 50 590 6750
Ilkka Silvanto, CFO, tel. +358 50 598 9553


CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


CONDENSED CONSOLIDATED INCOME STATEMENT, EUR thousands

                      1.7.-  1.7.- Change, %    1.1.-     1.1.- Change,  1.1.-
                      30.9.  30.9.             30.9.     30.9.         31.12.
                                                                     %
                       2005   2004              2005      2004           2004
                                                                            
Net sales            22,402 20,386     9.9%   69,343    64,081    8.2% 83,857
                                                                             
Other operating          17    -42   140.5%      220        78  182.1%    111
income
Operating expenses  -18,477 -16,304   -13.3%  -56,775   -51,547 -10.1 % -67,085
Depreciation and       -933   -736   -26.8%   -2,569    -2,223  -15.6% -3,181
impairment
                                                                             
Operating profit      3,009  3,304    -8.9%   10,219    10,389   -1.6% 13,702
                                                                             
Net financial items     -60   -137   56,2 %     -229      -335  31,6 %   -467
                                                                             
Profit before tax     2,949  3,166    -6.9%    9,989    10,053   -0.6% 13,236
                                                                             
Income taxes           -878   -976    10.0%   -2,812    -3,188   11.8% -4,110
                                                                             
Profit for the        2,071  2,190    -5.4%    7,177     6,865    4.5%  9,126
period
                                                                             
Earnings per share,    0.18   0.20   -10.0%     0.64      0.64    0.0%   0.84
EUR
Earnings per share,    0.17   0.19    -9.7%     0.62      0.61    1.8%   0.80
EUR, diluted


CONDENSED CONSOLIDATED BALANCE SHEET, EUR thousands

                                       30.9.   30.9.  Change  31.12.
                                        2005    2005            2004
                                                               
ASSETS                                                          
Non-current assets                                             
Intangible assets                        855     471     384     926
Goodwill                               3,717   3,188     529   3,188
Tangible assets                       15,725  14,266   1,459  13,742
Deferred tax assets                      994     209     785     310
Other non-currents assets                102      99       3     100
Non-current assets total              21,393  18,233   3,160  18,266
                                                                
Current assets                                                 
Inventories                           15,458  12,734   2,724  13,269
Trade and other receivables           14,135  11,808   2,327   9,568
Cash and cash equivalents              5,637   3,369   2,268   5,150
Current assets total                  35,230  27,911   7,319  27,987
                                                                    
Total assets                          56,623  46,144  10,479  46,253
                                                                
EQUITY AND LIABILITIES                                        
Shareholders’ equity                                           
Share capital                          2,041   1,884     157   1,932
Share issue                                        4      -4     817
Share premium reserve                  4,542   3,149   1,393   3,390
Retained earnings                     10,614   5,431   5,183   5,427
Profit for the period                  7,177   6,865     312   9,126
Total equity                          24,374  17,333   7,041  20,692
                                                                    
Non-current liabilities                                        
Interest-bearing liabilities          10,236   9,437     799   8,456
Deferred tax liabilities                 375     139     236     297
                                                                    
Current liabilities                                            
Interest-bearing liabilities           6,288   6,696    -408   4,141
Trade and other non-current           15,350  12,539   2,811  12,666
liabilities
                                                                    
Total liabilities                     32,249  28,811   3,438  25,560
                                                                
Total equity and liabilities          56,623  46,144  10,479  46,253


STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY, EUR thousands

                     Share    Share    Share    Retained Total
                    Capital  Issue    Premium  Earnings 
                                    Reserve          
                                                         
Balance on 1.1.2004    1,870     135   3,028  12,429  17,462
Share issue               14    -131     121                4
Exchange rate                                        0       0
differences
Dividend                                        -6,998  -6,998
Profit for the                                   6,865   6,865
period
                                                         
Balance on 30.9.2004   1,884       4   3,149  12,296  17,333
                                                         
Balance on 1.1.2005    1,932     817   3,390  14,553  20,692
Share issue              109    -817   1,152              444
Exchange rate                                       -8      -8
differences
Dividend                                        -3,931  -3,931
Profit for the period                            7,177   7,177
                                                         
Balance on 30.9.2005   2,041       0   4,542  17,791  24,374

CONDENSED CONSOLIDATED CASH FLOW STATEMENT, EUR thousands


                                            1.1.–30. 1.1.–30.  Change   1.1.-
                                                 9.      9.          31.12.
                                               2005    2004             2004
                                                                      
Cash flow from operations                                            
Profit for the period                         7,177   6,865     312   9,126
Adjustments                                   5,653   5,861    -200   7,623
Change in working capital                    -3,880     -93  -3,787   1,657
Cash flow generated by                                               
operations                                    8,950  12,633  -3,683  18,406
Net financial items                            -262    -324      62    -359
Income taxes paid                            -3,272  -1,333  -1,939  -2,136
Net cash flow                                                        
from operations                               5,416  10,976  -5,560  15,911
                                                                       
Cash flow from investing activities                                  
Acquisitions                                 -2,056  -7,181   5,125  -7,181
Capital                                                              
expenditure                                  -1,452  -2,000     548  -3,187
Proceeds from sale of fixed assets                                         44
Other cash flow from investing activities                            
Cash flow form investing activities          -3,508  -9,181   5,673 -10,324
                                                                       
Cash flow from financing                                             
Share issue                                     443       4     439   1,102
Change in long-term loans                       401   2,798  -2,397 
Change in short-term loans                    1,666   3,011  -1,345   2,700
Dividends paid                               -3,931  -6,998   3,067  -6,998
Net cash flow from financing                 -1,421  -1,177    -244  -3,196
                                                                       
Change in liquid funds                          487     610    -123   2,391
                                                                       
Liquid funds at the beginning of the period   5,150   2,759   2,391   2,759
Change in liquid funds                          487     610    -123   2,391
Liquid funds at the end of the period         5,637   3,369   2,268   5,150


KEY FINANCIAL FIGURES BY QUARTER, EUR thousands


                                                                               
                        III/    II/      I/    IV/    III/    II/      I/  I-IV/
                       2005   2005    2005   2004    2004   2004    2004   2004
                                                                                
                                                                                 
Net sales                                                                      
by segment
Industry              13,755 15,459  12,509 11,689  11,523 13,408  11,730 48,349
Sport                  8 647  9,744   9,229  8,087   8,864  9,773   8,784 35,308
Net sales,           22,402 25,203  21,738 19,776  20,387 23,181  20,514 83,857
total
                                                                                 
Operating profit                                                               
by segment
Industry               2,484  3,271   1,818  2,327   2,041  2,512     965  7,845
Sport                    525  1,735     386    987   1,263  2,653     955  5,858
Operating profit,     3,009  5,006   2,204  3,314   3,304  5,165   1,920 13,702
total
                                                                                 
                                                                                 
Net financial           -60   -112     -58   -131    -138    -91    -107   -466
items
Profit before         2,949  4,894   2,146  3,182   3,167  5,074   1,813 13,236
taxes
Income                 -878 -1,332    -602   -922    -976 -1,613    -598 -4,110
taxes
Profit for            2,071  3,562   1,544  2,260   2,190  3,461   1,215  9,126
the period
Earnings per share,     0.18   0.32    0.14   0.21    0.20   0.32    0.11   0.84
EUR
Earnings per share,    0.17   0.31    0.13   0.19    0.19   0.31    0.11   0.80
EUR, diluted
Average number                                                                 
of shares
undiluted,           11,302 11,230  11,230 10,998  10,768 10,766  10,766 10,826
1000 shares
Average number                                                                 
of shares
diluted, 1000 shares 11,574 11,393  11,524 11,464  11,268 11,162  11,136 11,464
Average number          498    485     417    424     456    453     406    441
of personnel


COMMITMENTS AND CONTINGENCIES, EUR thousands

                         30.9.2005  30.9.2004  31.12.2004 
                                                         
                                                             
On own behalf                                               
Mortgages                    2,954      2,954       2,954 
Corporate mortgages         12,500     12,500      12,500 
                                                             
Lease liabilities                                           
                                                          
- in next 12 months            440        216         223 
- in next 1-5 years          1,743        972       1,563 
                                                             
Other commitments              262        222          67 


DERIVATIVE FINANCIAL INSTRUMENTS, NOMINAL VALUES, EUR thousands

                                 30.9.     30.9.   31.12. 
                                  2005      2004     2004
                                                             
On own behalf                                               
Mortgages                        2,954     2,954    2,954 
Corporate mortgages             12,500    12,500   12,500 
                                                          
Lease                                                       
- in next 12 months                440       216      223 
- in next 1-5 years              1,743       972    1,563 
                                                             
Other commitments                  262       222       67 

CONSOLIDATED KEY FIGURES, EUR thousands
                                                                   
                                   1.1.-30.9.  1.1.-30.9.  Change, % 1.1.-31.12.
                                         2005       2004                  2004
                                                                     
Net sales                              69,343     64,081     8.2%      83,857
Operating profit                       10,219     10,389    -1.6%      13,702
% of net sales                          14.7%      16.2%    -9.1%       16.3%
Profit before tax                       9,989     10,053    -0.6%      13,236
% of net sales                          14.4%      15.7%    -8.2%       15.8%
Profit for the period                   7,177      6,865     4.5%       9,126
% of net sales                          10.3%      10.7%    -3.4%       10.9%
                                                                     
Shareholders’ equity                   24,374     17,333    40.6%      20,692
Interest-bearing liabilities           16,524     16,133     2.4%      12,597
Cash and cash equivalents               5,637      3,369    67.3%       5,150
Net interest-bearing liabilities       10,887     12,764   -14.7%       7,447
Capital employed                       40,898     33,466    22.2%      33,290
Return on equity, %                     42.5%      52.6%   -19.2%       47.8%
Return on capital employed, %           37.2%      45.5%   -18.2%       45.2%
Equity ratio, %                         43.1%      37.7%    14.3%       44.9%
Net gearing, %                          44.7%      73.6%   -39.3%       36.0%
                                                                     
Capital expenditure                     3,249      4,923   -34.0%       5,803
% of net sales                           4.7%       7.7%   -39.0%        6,9%
R&D costs                               1,766      1,471    20.1%       1,956
% of net sales                           2.5%       2.3%    10.9%        2.3%
                                                                     
Earnings per share, EUR                  0.64       0.64     0.0%        0.84
Earnings per share, EUR, diluted         0.62       0.61     1.8%        0.80
Equity per share, EUR                    2.15       1.61    33.5%        1.84
                                                                     
Average number of shares, 1,000                                    
- cumulative                           11,254     10,766     4.5%      10,826
- cumulative, diluted                  11,574     11,162     3.7%      11,464
                                                                     
Average number of employees               467        443     5.4%         441