Exel Group's financial statement for 2004

EXEL OYJ STOCK EXCHANGE RELEASE 24 February 2005 AT 1.00 p.m.  1 (10)



- Net sales for the financial year increased by 46% to EUR 83.9 (57.3)
- Operating profit grew to EUR 12.5 (5.3) million, up 134%
- Profit after financial items soared by 147% to EUR 12.1 (4.9)
- Earnings per share were EUR 1.54 (0.64), up 141%, diluted EUR 1.45
- Proposed dividend EUR 0.70 (1.30 including the bonus dividends) per
- Bright prospects for the beginning of the year in Nordic Walking and


Performance October-December 2004

Net sales for Q4 2004 amounted to EUR 19.8 (16.5) million, almost 20%
higher year-on-year, while operating profit increased by 73 per cent
to EUR 2.6 (1.5) million and profit after financial items totalled EUR
2.4 (1.4) million, an increase by 75%.
Performance during the financial year
Consolidated net sales totalled EUR 83.9 (57.3) million, and
consolidated operating profit more than doubled to EUR 12.5 (5.3)

Financial expenses remained almost equal to those of the previous
year, coming to EUR 0.4 (0.4) million, despite the financing of the
Belgian acquisition and the bonus dividends. As a result of strong
operative cash flow, interest-bearing net liabilities increased only
slightly. Profit after financial items amounted to EUR 12.1 (4.9)


Net sales for Exel’s Industry division grew by 67% to EUR 48.3 (28.9)
million due to the integration of the new Belgian factory with the
Group (approx. EUR 8.9 million) and intensive growth in the special
profile market arising chiefly from new customer applications.

The Industry division’s operating profit amounted to EUR 7.5 (3.5)
million. Increasing sales volume, enhanced production efficiency and
high capacity utilisation rates boosted profitability.

                                                      2 (10)

Sales of lattice masts broke records in 2004, due to the frangibility
requirements of the International Civil Aviation Organization taking
effect on 1 January 2005, requiring airport approach lighting masts to
break upon possible impact without harming the aircraft.
The Sport division’s net sales increased by 25% year-on-year to EUR
35.5 (28.4) million as the growth of the Nordic Fitness SportsTM
concept (NFS), and the Nordic Walking Market in German-speaking
Central Europe in particular, continued.

The Sport division’s operating profit also improved year-on-year,
amounting to EUR 5.0 (1.8) million. This resulted mainly from
increased volumes in Nordic Walking products and the further
enhancement of production efficiency.

In order to enhance in-house operations, Exel decided to incorporate
the sales, marketing, logistics, product range development and
procurement activities into a separate company. It is anticipated that
the new Exel Sport Oy will begin operations during the first third of
2005, while all production remains within the parent company, Exel
The Group’s financial position remained solid throughout the year and
strengthened further during the last few months, when the realisation
of large deliveries in the Sport division contributed to cash flow.
The Group’s cash flow after investments came to EUR 5.4 (3.9) million.

In 2004 an exceptionally large dividend was distributed in two
instalments totalling EUR 7,0 million. The Group’s net interest
bearing liabilities increased slightly year-on-year, but still
amounted to only EUR 5.6 (5.2) million at the end of the year. The
solvency ratio remained strong at 46.1% (51.7%), while gearing
decreased slightly to 28% (29%).
Capital expenditure was higher than previously, amounting to EUR 5.8
million, the most important item being the acquisition of the Belgian
unit’s fixed assets for EUR 2.6 million and investments in capacity
increases within Industry, at EUR 0.5 million. To ensure future
competitiveness, Exel also made large investments in automated
manufacturing and assembly of poles. These investments will be
completed in spring 2005 and total EUR 2 million. They are excluded
from the abovementioned capital expenditure because they were financed
through finance leasing.

R&D expenses amounted to EUR 2.0 (1.7) million or 2.3% (3.0%) of net
sales. The key R&D projects related to the development of new customer
                                                      3 (10)

applications and testing of new resins and reinforcement materials to
improve production efficiency.
At the end of 2004, staff numbered 419 (355), while the average number
of staff during the period was 441 (355). This increase was due to the
integration of the Belgian unit with the Group, contributing with 44
employees and an increase in production volume.
Exel’s share capital totals EUR 1,932,280 and consists of 5,520,800
shares, each of which is nominally valued at EUR 0.35. The President &
CEO and the members of the Board of Directors own 1.7% of the total
share capital.

In 2004, the highest share price quoted was EUR 24.00 and the lowest
EUR 11.75. At the end of the year, the share price was EUR 23.00
(11.90). A total of 3.96 million shares were traded during the year,
totalling 73% of all shares.

During the financial year the average share price was EUR 18.04,
whereas in 2003 it was EUR 8.40. On 31 December 2004, Exel’s market
capitalisation was EUR 127.0 (63.6) million.

Exel had two options programmes running during the year under review.
Subscriptions for the first part (A) of the 1998 warrant programme for
key staff commenced on 1 October 2000, and those for the second part
(B) on 1 October 2002. Staff had the right to subscribe for a total of
137,800 company shares alongside the remaining unused option rights. A
total of 137,500 subscriptions were made in 2004, and the right to
subscribe for shares based on this options programme ended on 31
October 2004.

The subscription for the first part (A) of the 2001 warrant programme
for key staff commenced on 1 June 2002, and 48,000 subscriptions were
made in 2004. Staff has the right to subscribe for a total of 123,500
company shares alongside the remaining unused option rights at the end
of 2004. The subscription for the second part (B) of the warrant
programme commenced on 1 October 2003, resulting in 46,300
subscriptions in 2004. Staff has the right to subscribe for a total of
102,700 company shares alongside the remaining unused option rights at
the end of 2004. The subscription period for all option rights ends on
30 April 2006.

According to a new share-based incentive system for 2004-2007 that
Exel’s Board of Directors decided to launch in 2004, the Board decides
every year to pay out a certain sum to key staff on the basis of
targets set and met. The rewarded employee is obliged to buy Exel Oyj
shares with the incentive bonus plus a 20% contribution from him or
herself, and retain ownership for a minimum period of two years.

                                                      4 (10)

As of 31 December 2004, Exel had the following principal shareholders:

Shareholder                Total             Percentage of shares
of shares         and votes

Nordstjernan AB            1,748,253         31.7
Ilmarinen Mutual Pension
Insurance Company          419,700            7.6
Varma Mutual Pension
Insurance Company          256,800            4.7
Berling Capital Oy         189,500            3.4
Veikko Laine Oy            183,300            3.3
Suutarinen Matti           147,200            2.7
Eläke-Fennia Mutual
Insurance Company          145,000            2.6
Placeringsfonden Aktia
Secura                     117,600            2.1
Renkkeli Oy                100,000            1.8
Ulkomarkkinat               90,300            1.6
Nominee registration        79,238            1.4
Other                      2,043,909         37.1
TOTAL                      5,520,800         100.0
Exel Oyj’s distributable funds are EUR 13,521 thousand and the Group’s
distributable funds EUR 13,821 thousand. Exel Oyj’s Board of Directors
will propose to the Annual General Meeting that a dividend of EUR 0.70
(EUR 1.30, including additional dividend) per share be paid for the
year 2004, i.e. EUR 3,931 thousand or 47.2 per cent of the Group’s
annual profit. The remainder, EUR 4,391 thousand, will be retained and
carried forward. The record date for the dividend payment is 19 April
2005 and the payment date 26 April 2005.
Exel Oyj will publish its first IFRS-compliant (International
Financial Reporting Standards) financial statements for the financial
year 2005, including interim reports. We have attached a preliminary
IFRS opening balance sheet and preliminary reconciliation statement of
shareholders’ equity to this bulletin. The IFRS comparative data for
consolidated income statement and balance sheet for each quarter and
for the year will be given in the interim report for the quarter in

The purpose of this IFRS summary is to give an overview of the impact
of the transition and to describe the effects of those IFRS accounting
principles and rules that will have a material impact on the
consolidated income statement and certain key ratios. The IFRS
financial information presented in this summary may require
adjustments before its inclusion as comparative information in Exel’s
first set of IFRS financial statements for the year ended December 31,
                                                      5 (10)

2005 due to the ongoing changes in IFRS which might have an effect on
the accounts of the companies applying IFRS from 2005.

The most important impacts on the opening balance sheet and
shareholders’ equity are due to the measurement principles of
inventories, treatment of finance leases and disability pension

Previously, only variable costs were included in Exel’s inventories
valuation, but not the related fixed production costs. The cost of
inventories in the opening IFRS balance sheet is determined by using
weighted average cost formula and the cost for produced finished goods
and work in process represents the purchase price of materials, direct
labor, other direct costs and related production overheads.
Capitalised fixed costs increase the balance sheet total and
shareholders’ equity by EUR 540 thousand.

According to IAS 17, assets acquired through a finance lease must be
recognised in the balance sheet and, correspondingly, lease
liabilities under interest-bearing liabilities. Exel has acquired one
property based on a finance lease, increasing the balance sheet total
in the opening balance sheet by EUR 1,677 thousand and decreasing
shareholders’ equity by EUR 90 thousand.

In compliance with IAS 19, Exel recognises future disability pension
liabilities related to the Finnish employees’ pension act system
(TEL). The liability related to the future disability pensions within
the TEL system is treated on a defined benefit basis in the opening
balance sheet for 2004, decreasing shareholders’ equity by EUR 513
thousand. In addition, Exel applies defined benefit plans in other
countries, for which the resulting liability is recognised in full,
decreasing shareholders’ equity at the time of IFRS adoption. The
total impact of pension liabilities amounts to EUR 556 thousand.

According to previous GAAP the consolidated financial statements
excluded dormant company Pro Stick Oy. The company is consolidated
from 1 January 2004 in the financial statements prepared under IFRS
resulting in an effect of EUR 3 thousand in the opening balance sheet

Exel Oyj recognises financial instruments at fair value in the IFRS
consolidated financial statements. Changes in the fair values of
financial instruments are recognised in the income statement. The
effect of the change in the valuation method in the opening balance
sheet equity is EUR -8 thousand.

The recognition of deferred tax assets and liabilities in compliance
with IAS 12 increases Exel’s deferred tax assets.

Exel has tested the FAS goodwill items included in the opening balance
sheet for impairment. Based on these calculations, the discounted cash
flows exceeded the carrying values of the cash generating units i.e.,
there is no need to write down goodwill.
                                                      6 (10)
The Board of Directors has further refined the Group’s corporate
governance policies, observing the new recommendations issued in
December 2003 for the corporate governance of listed companies, which
were implemented within Exel as of 1 July 2004. The Board of Directors
has also begun self-auditing procedures, with the first audit
performed in December 2004. On the basis of this, certain risk
management related elements will be enhanced in the coming year.
The Group will issue quarterly interim reports on 3 May 2005, 26 July
2005 and 3 November 2005.
The short-term market outlook is stable within the Group’s key product
ranges. New profile applications will be launched. Nordic Walking is
expected to enjoy further growth, mainly in new market areas. However,
opening up new markets requires additional marketing and sales effort.
Raw material prices have increased over the previous year which cannot
be wholly passed on to the customers through product price increases.
The availability of carbon fibre will be critical to the development
of certain market segments. Due to rising raw material prices
purchases are being directed more and more to the Far East. Major
investments in entering new markets will be put in place especially in
China and the US. Hence, we forecast that net sales will increase and
the profit after financial items will remain at least on the same
level as in 2004.

Mäntyharju, 24 February 2005


Board of Directors         Ari Jokelainen
                           President & CEO

Further information:
Mr. Ari Jokelainen, President & CEO, Exel Oyj, tel. 050 590 6750
Mr. Ilkka Silvanto, Senior Vice President, CFO and Administrative
Director, Exel Oyj, tel. 050 598 9553


(EUR 1,000)                                2004   2003    Change %

                                                          7 (10)

Net sales                                  83,857 57,281  46%
Operating profit                           12,531 5,345   134%
Financial income and expenses              -402   -436    -8%
Profit after financial items               12,129 4,910   147%
Profit before income taxes                 12,129 4,910   147%
Taxes                                      -3,807 -1,537  -148%
Profit for the year                        8,322  3,373   147%

BALANCE SHEET (EUR 1,000)                  2004   2003    Change %

Intangible assets                          3,501  3,126   12%
Consolidated goodwill                      258    330     -22%
Tangible assets                            12,224 10,470  17%
Investments                                95     95      0%
Inventories                                12,397 8,747   42%
Receivables                                9,841  8,626   14%
Marketable securities                      2,197  762     188%
Money in hand and at bank                  2,943  1,991   48%
Share capital                              1,932  1,870   3%
Other shareholders’ equity                 18,030 15,666  15%
Non-current liabilities                    6,787  4,091   66%
Current liabilities                        16,707 12,521  33%
Balance sheet total                        43,457 34,147  27%

FUNDS STATEMENT                            2004   2003

Cash flow from business operations         15,752 6,409
Acquisitions                               -7,181
Investments in tangible and intangible
assets                                     -3,187 -2,599
Income from surrender of tangible and
intangible assets                             44      79
Rights issue                               1,102     282
Withdrawals of non-current loans           5,100      53
Repayments of non-current loans            -2,588 -2,192
Withdrawals of/repayments of
current loans                                345    -747
Dividend paid                              -6,998 -1,060
Other                                      -2     4
Change in liquid funds                     2,387  229                          

INDICATORS                                 2004   2003

Earnings per share, EUR                    1.54   0.64
Earnings per share, EUR (diluted)          1.45   0.62
Equity per share, EUR                      3.56   3.26
Dividend per share, EUR                    0.70 x)        1.30
Return on equity (ROE), %                  44.4   20.8
Return on investment (ROI), %              44.9   20.8
Solvency ratio, %                          46.1   51.7
Gearing, %                                 28.2   29.4
Gross investment (EUR 1,000)               5,803  2,519
% of net sales                             6.9%   4.4%
                                                          8 (10)
                                                                               6 (6)
Personnel at year end                      419    355     18%
Average personnel                          441    355     24%
Order book as of Dec. 31, 2004 (EUR 1,000) 13,798 11,449  21%

x) Board of Directors’ proposal for 2004


Derivatives are used for hedging purposes only.

Interest rate risk

The company’s long-term debt is subject to interest rate risk, which
is why it has fixed the rate of interest on some of its borrowings
through swap agreements that extend to the years 2007-2009.

Currency risk

The company’s US dollar-denominated raw materials purchases are
partially hedged against currency risk through 12-month foreign
exchange forwards and foreign exchange options.

Interest rate derivatives           Face value    Fair market value

   Interest swaps                   2 636         -27

Currency derivatives
   Forward contracts                877           -27
   Purchased currency options       750            10
   Sold currency options            371           -18

CONTINGENT LIABILITIES                     2004   2003
Liabilities for which a corporate
mortgage and real estate mortgages
have been provided as collateral

   Financial institution loans             10,602 7,611

Mortgages given on land and buildings      2,954  2,954
Corporate mortgage given                   12,500 12,500
Other liabilities                          3,396  2,390

NET SALES BY MARKET AREA                   2004   2003    Change %

Finland                                    13,884 12,446  12%
Other Nordic countries                     7,240   5,820  24%
Rest of Europe                             49,935 36,010  39%
North America                              1,694   2,332  -27%
Other countries                            11,104    674  1,548%
Total                                      83,857 57,281   46%

                                                        9 (10)


EUR Thousand

Shareholders´ equity 31.12.2003FAS       17,536

IAS 2 Inventories                           540
IAS 17Financial leasing                     -90
IAS 19Employee benefits                   - 556
IAS 27Consolidated financial statements       3
IAS 39Financial instruments                 - 8
IAS 12Deferred tax assets                 ___36
Shareholders´ equity 1.1.2004  IFRS       17,462


EUR Thousand                   IFRS      IFRS-          FAS
                               1.1.04    adjustments    31.12.03


Intangible assets              475                      475
Goodwill                       2,980                    2,980
Tangible assets                          12,147  1,677         10,470
Available for sale investments 99        4              95
Deferred tax assets            121       121
Non-current assets, total      15,822    1,802          14,021

Inventories                    9,287     540            8,747
Current receivables            8,541     -85            8,626
Cash and cash equivalents      2,759     6              2,753
Current assets, total          20,587    461            20,126

ASSETS                         36,409    2,262          34,147


 Share capital                 1,870                    1,870
 Share issue                   135                      135
 Share premium account         3,028                    3,028
 Retained earnings             12,429    -74            12,503
Total equity                   17,462    -74            17,536

Non-current liabilities
 Financial liabilities         5,687     1,610          4,077
 Deferred tax liabilities      14                       14
 Other non-current liabilities 556       556
                                                        10 (10)

Non-current liabilities, total 6,257     2,166          4,091
Current liabilities
 Financial liabilities         3,987     157            3,830
 Trade and other payables      8,704     14             8,690
Current liabilities, total     12,691    170            12,520
Liabilities                    18,948    2,336          16,611

LIABILITIES                    36,409    2,262          34,147