Preliminary Results

4 May 2011

POWERFLUTE OYJ

Preliminary announcement

for the year ended 31 December 2010

Powerflute Oyj (“Powerflute” or the “Group”), the packaging and paper group with positions in Nordic semi-chemical fluting and coated woodfree papers, today announces its preliminary results for the year ended 31 December 2010. Powerflute is quoted on the AIM market of the London Stock Exchange (Ticker: POWR) and on the First North list, the alternative market of the OMX Nordic Exchange Stockholm AB (Ticker POW1V).

Disposal of Graphic Papers businesses in May 2011
Disposal of Scheufelen announced on 3 May 2011 for consideration of €38.5m, comprising cash consideration of €32.5m and €6.0m of debt assumed by the purchaser
Cash consideration delivers a significant return on Powerflute’s original cash investment and transforms capital structure from indebtedness to a net cash position
Demonstrates Powerflute’s ability to transform underperforming assets and deliver substantial value for shareholders
Financial Highlights
Revenue increased 22% to €310.6m (2009: €253.7m)
Underlying operating profit increased to €0.9m (2009: underlying operating profit €0.1m)
Underlying loss before tax reduced to €3.2m (2009: underlying loss before tax of €5.0m)
Net cash inflow from operating activities increased to €16.3m (2009: €10.5m)
Net debt reduced by €23.0m to €29.1m (2009: €52.1m)
Dividend of 1.0 cents per share to be proposed at the AGM (approx. 6% yield)
Underlying figures exclude non-cash gains and impairments related to Graphic Papers businesses
Operating Highlights
The Group faced considerable challenges as markets recovered from the low activity and pricing levels which prevailed during the economic slowdown
Volumes improved in both business areas and prices increased in Packaging Papers, but the benefits were offset by significant raw material cost inflation in Graphic Papers
Packaging Papers performed well as strong demand and a favourable pricing environment resulted in greatly improved margins and cash generation
The benefit from improved volumes in Graphic Papers was offset by higher pulp costs, leading to pressure on operating margins and a significant reduction in EBITDA
Rights issue and placing successfully in November 2010 raising net proceeds of €18.3m for investment in capital projects, debt reduction and general working capital purposes

Powerflute Chairman, Dermot Smurfit commented:

“Powerflute faced considerable challenges during the last year. These were well managed and we started 2011 as a more resilient and focused organisation with improving performance trends in both business areas.

We are pleased to announce the disposal of the Graphic Papers businesses and believe this represents a successful outcome for both the customers and employees of Scheufelen and for Powerflute’s shareholders. Scheufelen will benefit as part of an integrated pulp and paper group and will continue to prosper under new ownership. On completion of the disposal, the Group will be debt free on a net basis and will have significant cash resources available to enable it to pursue its strategy of organic and acquisitive growth.

We are delighted to announce that subject to completion of the disposal of Graphic Papers, the Board has decided to recommend the payment of a dividend of 1.0 cents per share, representing a yield of approximately 6% based on the Group’s share price on 2 May 2011.

We expect market conditions to remain broadly favourable for Packaging Papers for the remainder of the year, supporting good volumes and attractive pricing levels. We have made a strong start to the year and currently expect that 2011 will be a much better year for the Group.”

For further information, please contact:

Powerflute Oyj Dermot Smurfit (Chairman) Marco Casiraghi (Chief Executive Officer) David Walton (Chief Financial Officer)	c/o Billy Clegg, Financial Dynamics +44 20 7269 7157
Collins Stewart (Europe) Limited Piers Coombs Mark Dickenson Ileana Antypas	+44 20 7523 8350
E.Őhman J: or Fondkommission AB Ms Arja Väyrynen	+358 9 8866 6029
Financial Dynamics Billy Clegg Oliver Winters	+44 20 7831 3113
FD K Capital Source Mark Kenny Jonathan Neilan	+353 1 631 5500

About Powerflute

Powerflute Oyj ("the Company" or "Powerflute") is a packaging group with established positions in Nordic semi-chemical fluting. Through its subsidiary Savon Sellu Oy, the Group operates a paper mill in Kuopio, Finland which produces a specialised form of semi-chemical fluting made from locally sourced birch. Corrugated boxes manufactured using Nordic semi-chemical fluting demonstrate strength and moisture resistance and are used for transportation of fruit and vegetables, high-value industrial goods such as electrical appliances and automotive components. The Kuopio mill has the capacity to produce up to 300,000 tonnes per annum and is one of three suppliers of Nordic semi-chemical fluting in Europe.

Preliminary Results

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