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Plc Uutechnic Group Oyj: BUSINESS REVIEW FROM JANUARY TO SEPTEMBER 2017

PLC UUTECHNIC GROUP OYJ STOCK EXCHANGE RELEASE October 27, 2017 at 8:30 am

UUTECHNIC GROUP’S BUSINESS REVIEW FROM JANUARY TO SEPTEMBER 2017

Uutechnic Group’s key figures and main events in January-September 2017 and the comparison figures 2016 are presented in this business review. The figures are unaudited.

Key figures and Outlook

• Uutechnic Group’s turnover was 22.7 million euros, which is 4.0 % lower compared to 2016 (23.6 million euros).
• The operating loss was -1.2 million euros. (operating profit 1.0 million euros).
• At the end of the first quarter, the order book stood at 14.4 million euros, (18.7 million euros). In the half-year-report the order book was 14.9 million euros.

The third quarter of the fiscal year for Uutechnic Group was clearly lower than expectations for both turnover and operating profit. The company repeats its guidance in connection with the announcement on October 20, 2017, according to which Group’s turnover is expected to be lower than in the previous year and operating profit is expected to be negative.

Additional costs related to quality issues of construction material on one Japrotek Oy Ab’s project that was delivered in the first half of the year and the probable transfer of the compensation to the next fiscal year is impacting substantially on the Group’s poor profit. Japrotek has started legal actions at the lower court of justice in Sweden against the Swedish material supplier.

Business reporting

In the Mixing Technology business, new order intake has progressed well and the order book is at a good level standing almost double compared to previous year. The market still consists mainly of small investments and large orders are postponed. Customer activity is still at high level.

Mixing Technology production plants are well loaded with current sales volume. Investments will be made to development projects aiming to increase sales and production capacity so that bottlenecks that are limiting growth can be cut out. 

The Mixing Technology business turnover and profit is expected to grow compared to last year.

In the Vessel business, market situation is still challenging. Order intake has been lower compared to last year and order book is at a low level. Actions to improve efficiency, made after the co-operation negotiations that ended in the second quarter, will realize phased during the end of the year and wholly during next year.

Additional costs related to quality issues of construction material on one project that was delivered in the first half of the year and the probable transfer of the compensation to the next fiscal year is impacting substantially on the poor profit. Japrotek has started legal actions at the lower court of justice in Sweden against the Swedish material supplier.

In the Roll and Pipe business, order intake in the third quarter has been lower than in the second quarter but the order book is still at a good level and is expected to develop advantageous. Development actions made to production planning have improved efficiency and the profit for 2016 is expected to be at a good level.

The main events in the reporting period

January 2, 2017 Uutechnic Group announced that the Group’s objective is to increase Mixing Technology business and strengthen its importance as a success factor for the Group. The company appointed Jussi Vaarno as a Vice President of Mixing Technology business starting on January 16, 2017.

March 8, 2017 Uutechnic Group announced its new business model and appointments in the top management. The business of Uutechnic Group consists of one business segment, Process Solutions, which will be divided further into two business lines: Mixing Technology and Tanks & Rolls. The target of this change is to strengthen sales and marketing as well as knowhow and financial performance. Mixing Technology business line consists of Stelzer Rührtechnik Int. GmbH and Uutechnic Oy. Tanks & Rolls business line consists of Japrotek Oy Ab and AP-Tela Oy. Uutechnic Group’s business is still reported under one segment, Process Solutions.

At the same time Uutechnic Group announced that Jouko Peräaho has been appointed as the CEO of Plc Uutechnic Group Oyj. The current CEO of Uutechnic Group Martti Heikkilä will start as the Vice President of Tanks & Rolls business line. Jussi Vaarno will continue as the Vice President of Mixing Technology business line.

March 30, 2017 In the Annual General Meeting of Plc Uutechnic Group Oyj, it was resolved as follows:

It was resolved to adopt the financial statements and the consolidated financial statements for the period 1 January 2016 – 31 December 2016 and to discharge the members of the Board of Directors and the Chief Executive Officer from liability for the fiscal year 2016.

It was resolved that in accordance with the proposal of the Board of Directors no dividend shall be paid.

 It was resolved to elect Sami Alatalo, Hannu Kottonen, Kristiina Lagerstedt and Jouko Peräaho to continue as the members of the Board of Directors. Hannu Kottonen and Kristiina Lagerstedt are independent from the Company and the notable shareholders of the Company.

It was resolved, to authorize the Board to decide on an issue of new shares as well as other special rights entitling to shares referred to in Chapter 10 Section 1 of the Finnish Companies Act in one or several lots. The number of new shares issued would be no more than 10 000 000, including shares to be issued based on the special rights. The authorization entitles the Board to decide about all terms of the share and special rights offerings, including the right to deviate from the right of pre-emption of shareholders. The authorization shall last until the next Annual General Meeting, unless the General Meeting decides to change or cancel the authorization prior to this date. This authorization revokes all the other unused share issue authorizations that have been given prior to this.

It was resolved that the right to the shares incorporated in the book-entry system and the rights that the shares carry have been forfeited with regard to the 3 480 shares being on the joint book-entry account in the name of the company and opened on the behalf of the shareholders whose rights have not been declared for registration during the registration period. The provisions on treasury shares shall be applied to the forfeited shares. The total amount of treasury shares of the company after the resolution is 3 480 shares.

May 29, 2017 Japrotek Oy Ab, a subsidiary of Uutechnic Group, started co-determination negotiations according to co-operation act of Finland. The negotiations were based on the restructuring of operations and on the financial and productive reasons of the company. Negotiations ended 12^th July and it was decided that the number of personnel will be adjusted in accordance with the company’s financial situation and order backlog. Terminations of employment contracts will concern 11 persons maximum and temporarily lay-offs may last more than 90 days.

June 29, 2017 Member of Plc Uutechnic Group Oyj’s management team, Deputy CEO Ismo Haaparanta resigned from Uutechnic to continue his career outside of the company.

July 21, 2017 Uutechnic Group revised its guidance for 2017 where was expected that revenue will be lower than in 2016 and the operating profit to remain at the last year’s level.

October 20, 2017 Uutechnic Group expected its revenue to be lower than in 2016 and the operating profit to be negative. The revision of the outlook is resulting from Japrotek Oy Ab’s ongoing compensation process related to quality issues of construction material on one project that was delivered in the first half of the year. The company expects that the compensation shall most probably be paid after the end of current fiscal period. Furthermore the order backlog of Japrotek has remained on a low level. Japrotek has started legal actions at the lower court of justice in Sweden against the Swedish material supplier.

In Uusikaupunki October 27, 2017

PLC UUTECHNIC GROUP OYJ

Board of Directors

Further information:

Jouko Peräaho, CEO Plc Uutechnic Group Oyj, +358 500 740 808

www.uutechnic.fi

Uutechnic Group is focused on improving the competitiveness of its customers by providing them advanced equipment technology and unique service concept worldwide. The product range includes agitators, different types of pressure vessels, process- and storage tanks, reactors and heat exchangers. Additionally different types of long welded and machined axially symmetrical parts as rolls, cylinders, tubes and cones.

The main industries are hydrometallurgy, mining-, pulp and paper-, food-, fertilizer-, other chemical industries and environmental technology.

Uutechnic Group’s business consists of one segment, Process Solutions, which is divided into two business lines: Mixing Technology and Tanks & Rolls. Mixing Technology business line consists of Stelzer Rührtechnik Int. GmbH and Uutechnic Oy. Tanks & Rolls business line consists of Japrotek Oy Ab and AP-Tela Oy.