Preliminary Results

15 March 2012

POWERFLUTE OYJ

Preliminary Results

For the year ended 31^st December 2011

Powerflute Oyj (“Powerflute” or the “Group”), the packaging and paper group, today announces its preliminary results for the year ended 31 December 2011.  Powerflute is quoted on the AIM market of the London Stock Exchange (Ticker: POWR) and on NASDAQ OMX First North, the alternative market of the NASDAQ OMX Helsinki (Ticker POW1V).

Financial Highlights:

• Revenues from continuing operations increased by 15% to €121.5 million (2010: €105.4 million) and operating profit doubled to €14.3m (2010: €7.1m)
• Disposal of the loss-making Graphic Papers business segment in May 2011 generated cash proceeds of €32.5m
• Financial position improved by €48.2 million during the year to a net cash position of €19.1m (2010: net debt €29.1m), including cash and cash equivalents of €45.6m
• EPS improved to 3.5 cents per share (2010: 13.3 cents loss)
• The directors intend to recommend a dividend for 2011 of 1.3 cents per share (2010: 1.0 cents per share) representing a yield of approximately 5%
• Share repurchase programme of up to 25 million shares representing 8.6% of issued share capital to be initiated, subject to market conditions
• Application to be made to Helsinki Stock Exchange for delisting from First North with effect from 30 June 2012
• Share consolidation on a one for ten basis to be proposed to an Extraordinary General Meeting to be held once delisting from First North is completed

Operational Highlights:

• Significant progress made with delivery of the Group’s strategy of maximising returns through improved market positioning, operational efficiencies and targeted capital investment
• Strong recovery in demand in most markets and attractive pricing levels resulted in robust growth, improved profitability and strong cash generation
• Management action to reposition the Group and its products in more attractive markets, together with returns from capital investment projects, contributed significantly to the improved performance
• Disposal of Graphic Papers has transformed the Group, strengthening its financial position and providing funds for investment in continuing businesses and the pursuit of new opportunities

Commenting on the results, Dermot Smurfit, Chairman of Powerflute said:

“Powerflute enjoyed a profitable and successful year and made considerable progress with the implementation of its business strategy during 2011. Favourable market conditions, operational improvements and returns from capital investment contributed to much improved levels of profitability. The disposal of Graphic Papers in May 2011 made a significant contribution and helped to return the Group to a robust net cash position at the year end. Our intention to return capital to shareholders through an increased dividend and a share repurchase programme reflects the Board’s belief that Powerflute’s current market value does not reflect its true intrinsic business worth.

“The Group has made an encouraging start to the year and while market conditions are expected to remain challenging in 2012, recent announcements of price increases suggest that confidence may be returning, providing grounds for cautious optimism. With significant cash balances available to us we have the financial resources to continue with investment in our remaining businesses where there is still scope for further improvement. We remain focused on our acquisitive growth strategy in the paper and packaging sectors and the Group’s strong financial position will enable us to take advantage of opportunities as they arise.”

- Ends-

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About Powerflute

Powerflute Oyj ("the Company" or "Powerflute") is a paper and packaging group quoted on the AIM market of the London Stock Exchange (Ticker: POWR) and on NASDAQ OMX First North, the alternative market of NASDAQ OMX Helsinki (Ticker POW1V). 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 is one of only three suppliers of Nordic semi-chemical fluting in Europe.