Glaston Interim Report 1 January - 30 June 2008

8/14/2008, 1:02 PM (Source: GlobeNewswire)
GLASTON CORPORATION Stock Exchange Release 14 August 2008 02.00
p.m.


Glaston Interim Report 1 January - 30 June 2008

- In January-June, orders received totalled EUR 115.1 (124.9)
million.
- Glaston's order book on 30 June 2008 was EUR 98.9 (116.2) million.
- In January-June, the Group's net sales grew by 10% to EUR 135.7
(123.7) million. In the second quarter, net sales totalled EUR 72.6
(65.6) million.
- Operating profit in January-June excluding non-recurring items was
EUR 5.4 (5.5) million, i.e. 4.0 (4.4)% of net sales. Operating profit
in the second quarter was EUR 3.8 (3.8) million, i.e. 5.2 (5.8)% of
net sales. *)
- Return on capital employed (ROCE) was 8.3 (3.3)%.
- Earnings per share in January-June were EUR 0.05 (0.00).
- Glaston expects net sales and operating profit for the whole year
to be at the previous year's level.

*) 1-6/2007 non-recurring items EUR -7.3 million; 4-6/2007: EUR -7.3
million.

President & CEO Mika Seitovirta:

"The architectural glass segment and the strongly developing solar
energy market form the foundation for our growth. In the first half
of the year, the architectural glass market continued to grow. The
solar energy market also continued to be active, but customers'
decision-making times have lengthened significantly. As a result,
orders received were below the level of the previous year, which was
a record high. Glaston's growth was strongest in the Middle East and
South America. The North American market was the weakest.

Net sales grew in line with long term financial targets and operating
profit including non-recurring items improved in the second quarter
and during the entire review period. During the early part of the
year, the profitability of the Heat Treatment and Software Solutions
business areas was good. Measures to improve the profitability of the
Pre-Processing business area were forcefully continued by the
business area's new management.
The Group's result was again significantly burdened by the strongly
loss-making result of Heat Treatment's Tamglass Glass Processing
Ltd., which operates in Finland. The operating result was EUR -2.9
(0.1) million during the first six months of the year.

We expect Glaston's net sales and operating profit for the whole year
to be at the previous year's level."

Markets
Public construction continued to be strong. Residential construction
developed very unevenly, with big differences between areas.

The downturn in the North American market continued. Demand grew
strongly in South America and the Middle East. The solar energy
market developed positively worldwide.

Demand for Glaston's One-Stop-Partner concept continued to be good.

Pre-Processing
The market situation of the Pre-Processing business area remained
good, but with big regional differences. Demand in North America
weakened significantly as a consequence of the construction industry
crisis. The market for stone processing machines and tools was
particularly weak. The South American and Chinese markets continued
their growth. Sales in the EMEA area (Western, Central and Eastern
Europe, Africa and the Middle East) were at the previous year's
level, with the Italian, Central and Eastern Europe markets being
particularly active.

During the second quarter, a slight fall off was perceptible in the
business area's market, which impacted on orders received. At the end
the first half of the year, orders received totalled EUR 33.8 (37.0)
million. The order book at the end of the review period stood at
EUR 21.9 (25.9) million.

In order to enhance its market position, Pre-Processing's sales
organisation was strengthened. A new sales director for South America
assumed his post at the beginning of the year, and the sales
organisation in the EMEA area was restructured during the second
quarter.

Measures to improve profitability continued in the review period. To
balance increased raw material costs, measures were initiated to
increase production efficiency and reduce production costs. In
addition, special measures were initiated to reduce personnel costs.

In product development, investments were directed to product
integration and particularly to solutions that serve the growing
architectural and solar energy markets. At the industry's leading
fair, Glasstec, to be held in October, the business area will present
for the first time a machine combination in which Pre-Processing's
machines have been integrated and operate together utilising
Albat+Wirsam software.


Heat Treatment
The Heat Treatment business area's market situation remained strong
in the EMEA area and in South America. The market in North America
weakened further. The solar energy market developed positively and
demand was high.

To strengthen Heat Treatment's market position, measures continued to
increase production of its machines in China. Utilising the
technology of machines manufactured in North America in the Group's
other units was accelerated. The Group's global procurement activity
was reorganised and measures were initiated to achieve cost savings.

Profit for the review period was EUR 76.9 (79.3) million. The
profitability of the core business, i.e. safety glass machines, was
good. At the end of the first half of the year, Heat Treatment's
order book was EUR 71.0 (90.3) million. Order book development was
strongly influenced by weaker demand in North America and by
One-Stop-Partner orders booked in the second quarter of the previous
year, which were at a record high. Orders received by the Heat
Treatment business area stood at EUR 75.8 (87.9) million on 30 June
2008. Most of the orders came from the EMEA area.

The focus of product development was on projects producing solar
energy. During the review period, a machine line for producing solar
energy glass, CSP (Concentrated Solar Power), was completed.
Operation of the new line has more than exceeded the production
targets set for it. Products based on PV (photovoltaic) technology
have also been developed and they will be presented at industry trade
fairs during autumn 2008.

Software Solutions
The Software Solutions business area developed positively during the
first half of the year. The good development of sales that began in
2007 continued and new orders booked in the second quarter exceeded
set targets. Significant orders have been received in both the glass
and window sectors. In addition to these, Software Solutions will
contribute its software to One-Stop-Partner projects initiated in the
Middle East during the review period.

The Software Solutions business area's net sales during the period
under review were EUR 13.7 million (consolidated in Glaston Group as
of 1 June 2007; 7-12/2007: EUR 14.7 million) and in the second
quarter EUR 6.4 million. The order book on 30 June 2008 was EUR 6.0
million (31.12.2007: EUR 6.2 million).

Service Solutions
The service market continued to be active and the net sales of
Service operations totalled EUR 27.7 (21.4) million.

A new maintenance contract concept, Glaston Care Plus, was launched
at the beginning of the year and the first agreement was signed in
Finland during the second quarter. The first ever global
modernisation agreement for pre-processing machines was signed at the
beginning of the year. Since May, Service Solutions has been actively
involved in Glaston's One-Stop-Partner offering.

To increase sales and cooperation, the service organisation was
restructured and strengthened. The unit's earnings are included in
the officially reported segments.

One-Stop-Partner
In order to develop Glaston's comprehensive deliveries and to
accelerate product integration, the One-Stop-Partner unit was divided
into two in January 2008: the OSP Offering unit and the OSP
Deliveries unit.
Utilising the available technology and long glass processing
experience, a new concept for the glass needs of solar energy
customers was finalised during the period under review. Demand in the
solar energy market was active during the first half of the year and
a number of negotiations advanced to the offer stage.
Most of the One-Stop-Partner orders came from Eastern Europe,
Southeast Europe and the Middle East. In these areas new factories
are being built, whereas in the mature Central European and North
American markets investments are directed at modernisation of
machines and equipment and at the expansion of operations.

The global economic uncertainty has lengthened customers'
decision-making times. Total sales for One-Stop-Partner joint
deliveries were EUR 14.3 (47.8) million during the second quarter.
The unit's earnings are included in the officially reported segments.

Orders received
Glaston's order intake during the financial period reached EUR 115.1
(124.9) million. Of the orders received, Heat Treatment accounted for
65.8%, Pre-Processing 29.4% and Software Solutions 4.8%.

Orders received during the second quarter totalled EUR 54.0 million.


Geographical distribution of orders received, EUR million

+-------------------------------------------+
| | 1-6/2008 | 1-6/2007 | Change, % |
|---------+----------+----------+-----------|
| EMEA | 76.4 | 76.0 | 0.5 |
|---------+----------+----------+-----------|
| America | 19.7 | 26.4 | -34.0 |
|---------+----------+----------+-----------|
| Asia | 19.0 | 22.5 | -18.4 |
|---------+----------+----------+-----------|
| Total | 115.1 | 124.9 | -8.5 |
+-------------------------------------------+





Order book
Glaston's order book on 30 June 2008 was EUR 98.9 (116.2) million.
The Heat Treatment business area accounted for EUR 71.0 million of
the order book, Pre-Processing for EUR 21.9 million and Software
Solutions for EUR 6.0 million.



+-------------------------------------------------+
| Order book, EUR million | 30.6.2008 | 30.6.2007 |
|-------------------------+-----------+-----------|
| Pre-Processing | 21.9 | 25.9 |
|-------------------------+-----------+-----------|
| Heat Treatment | 71.0 | 90.3 |
|-------------------------+-----------+-----------|
| Software Solutions | 6.0 | - |
|-------------------------+-----------+-----------|
| Total | 98.9 | 116.2 |
+-------------------------------------------------+



Net sales and operating profit

Glaston's net sales during the financial period were EUR 135.7
(123.7) million. Pre-Processing's net sales in January-June were
EUR 46.1 (45.0) million, Heat Treatment's net sales EUR 76.9 (79.3)
million and Software Solution's net sales EUR 13.7 million.

Second-quarter net sales were EUR 72.6 (65.6) million.
Pre-Processing's net sales were EUR 23.2 (23.4) million, Heat
Treatment's net sales EUR 44.0 (42.7) million and Software Solution's
net sales EUR 6.4 million.



+----------------------------------------------------------+
| Net sales, EUR million | 1-6/2008 | 1-6/2007 | 1-12/2007 |
|------------------------+----------+----------+-----------|
| Pre-Processing | 46.1 | 45.0 | 94.1 |
|------------------------+----------+----------+-----------|
| Heat Treatment | 76.9 | 79.3 | 162.3 |
|------------------------+----------+----------+-----------|
| Software Solutions | 13.7 | - | 14.7 |
|------------------------+----------+----------+-----------|
| Parent company, elim. | -1.0 | -0.6 | -1.3 |
|------------------------+----------+----------+-----------|
| Total | 135.7 | 123.7 | 269.8 |
+----------------------------------------------------------+


Operating profit in January-June excluding non-recurring items was
EUR 5.4 (5.5) million, i.e. 4.0 (4.4) per cent of net sales.
Operating profit after non-recurring items was EUR 5.4 (-1.9)
million, i.e. 4.0 (-1.5) per cent of net sales. Second-quarter
operating profit excluding non-recurring items was EUR 3.8 (3.8)
million and after non-recurring items EUR 3.8 (-3.5) million.

Pre-Processing's operating profit excluding non-recurring items was
EUR -0.1 (0.9) million in the review period and EUR -0.7 (-0.2)
million in the second quarter. The reason for the weak profit
development was a standstill in demand for tools in the North
American market and the unfavourable development of the US dollar
exchange rate.

Heat Treatment's operating profit excluding non-recurring items was
EUR 7.1 (8.7) million in the period under review and EUR 5.3 (5.7)
million in the second quarter. Tamglass Glass Processing's
loss-making performance continued during the second quarter,
significantly burdening the result of the Heat Treatment business
area and Glaston as a whole. The restructuring of Tamglass Glass
Processing's operations will be forcefully continued in the latter
part of the year.

Software Solution's operating profit was EUR 2.2 million in the
review period and EUR 1.2 million in the second quarter, both
according to plan.



+-------------------------------------------------------------------+
| Operating profit, EUR million | 1-6/2008 | 1-6/2007 | 1-12/2007 |
|---------------------------------+----------+----------+-----------|
| Pre-Processing | -0.1 | 0.9 | 1.4 |
|---------------------------------+----------+----------+-----------|
| Heat Treatment | 7.1 | 8.7 | 19.6 |
|---------------------------------+----------+----------+-----------|
| Software Solutions | 2.2 | - | 2.6 |
|---------------------------------+----------+----------+-----------|
| Parent company, elim. | -3.8 | -4.2 | -7.0 |
|---------------------------------+----------+----------+-----------|
| Total | 5.4 | 5.5 | 16.6 |
|---------------------------------+----------+----------+-----------|
| Non-recurring items | - | -7.3 | -4.6 |
|---------------------------------+----------+----------+-----------|
| Operating profit after | 5.4 | -1.9 | 12.0 |
| non-recurring items | | | |
+-------------------------------------------------------------------+


Profit for the review period was EUR 3.7 (0.2) million. Return on
capital employed (ROCE) improved and was 8.3 (3.3) %. Earnings per
share in January-June were EUR 0.05 (0.00). Earnings per share in the
second quarter were EUR 0.04 (-0.03).

Financing
The Group's financial position was good. The equity ratio on 30 June
2008 was 51.1 (52.0) %. Glaston Continuing Operations' cash flow from
business operations was EUR -7.9 (0.5) million and cash flow from
investments was EUR -7.1 (-24.9) million.

Cash flow from financing in January-June was EUR 15.1 (20.5) million,
including dividends paid during the review period of EUR 7.8 (7.1)
million.

The Group's liquid funds on 30 June 2008 totalled EUR 11.0 (10.8)
million. Interest-bearing net debt totalled EUR 31.9 (29.6) million
and net gearing was 23.7 (22.9) %.

Capital expenditure
Capital expenditure in the review period totalled EUR 7.0 (6.2)
million. The figure in the comparison period does not include the
advance payment (EUR 20.6 million) paid for shares in Albat+Wirsam.
The most significant capital expenditure items were again the global
ERP project, product development and production machine acquisitions.

Organisation and personnel
In January Henrik Reims was appointed SVP, OSP deliveries. Timo
Nieminen was appointed SVP, Service Solutions as of 5 May 2008. Both
are members of Glaston's Executive Management Group. Timo Rautarinta
was appointed Managing Director of Glaston's glass processing unit
Tamglass Glass Processing as of 3 March 2008.

The substantial international Value Up management training programme,
initiated in January, came to a conclusion at the beginning of June.
During the spring, 120 of the Group's key personnel participated in
the training, which will help roll out Glaston's strategy and
standardise operating practices.

To streamline Finnish operations, Glaston Service Oy's business
operations were transferred on 1 January 2008 to Glaston Finland Oy.
The transfer has no impact on the number of personnel.

On 30 June 2008, Glaston Group had a total of 1,529 (1,223)
employees, of whom 31% were in Finland and 47% elsewhere in Europe,
mainly in Germany and Italy. The proportion of Group employees
working in Asia was 9% and in the Americas 13%. The average number of
employees was 1,492 (1,192).

Shares and share prices
Glaston Corporation's paid and registered share capital on 30 June
2008 was EUR 12.7 million and the number of issued shares totalled
79,350,000. The company has one series of shares. At the end of the
first half of the year, the company held 809,793 of the company's own
shares, corresponding to 1% of the total number of issued shares and
votes.
The counter book value of the treasury shares held by the company is
EUR 129,567. Each share that the company does not hold itself
entitles to one vote at the Annual General Meeting. The share has no
nominal value. The counter book value of each share is EUR 0.16.

During the first six months of the year, a total of 1,512,473 of the
company's shares were traded, representing 1.9% of the total number
of shares. The lowest price paid for a share was EUR 2.70 and the
highest price EUR 3.33. The average price during the period was
EUR 3.09 and the closing price EUR 3.10.

The equity attributable to owners of the parent per share was
EUR 1.72 (1.65).

Decisions of the Annual General Meeting
The company's Annual General Meeting was held on 11 March 2008. The
meeting approved the financial statements for 2007 and released the
Board of Directors and the President & CEO from liability for the
financial year.
The meeting also approved the Board of Directors' proposal to pay a
dividend of EUR 0.10 per share, a total of EUR 7.8 million.

Annual General Meeting confirmed that the following persons continue
on the Board of Directors for a year-long term of office: Claus von
Bonsdorff, Klaus Cawén, Carl-Johan Rosenbröjer, Christer Sumelius and
Andreas Tallberg. Uponor Oyj's President & CEO Jan Lång and Cargotec
Oyj's President & CEO Mikael Mäkinen were elected new members of the
Board of Directors. The 2008 Annual General Meeting re-elected as
auditor the authorised public accounting firm KPMG Oy Ab, with the
responsible auditor being Sixten Nyman, APA.



Acquisition and disposal of own shares
The 2007 Annual General Meeting authorised the Board of Directors to
acquire the company's own shares up to a maximum of 7,605,096 shares.
The authorisation is valid until the end of the 2009 Annual General
Meeting and remains unexercised in respect of 7,021,500 shares.
During the first half of the year, the company did not acquire its
own shares.
The Annual General Meeting also decided to authorise the Board of
Directors to decide on the disposal of own shares in the company's
possession. On 23 April 2008, the company transferred 103,707 of the
own shares in its possession to personnel included in the Group's
share-based compensation scheme. The book counter value of the
transferred shares was EUR 16,593.

Events after the review period
On 16 July 2008 Glaston announced that it was lowering its 2008 net
sales and operating profit forecasts. Net sales and operating profit
are expected to be at the previous year's level. According to the
previous estimate, announced on 23 April 2008, Glaston Group forecast
that net sales and operating profit would clearly increase compared
with 2007.

As part of its restructuring programme, the Glaston subsidiary
Tamglass Glass Processing Oy announced on 30 July 2008 that it was
discontinuing its working machine and special automotive glass
operations. The operations to be wound up employ around 30 people.
Statutory employer-employee negotiations were initiated on 6 August
2008.

From the beginning of August, Glaston strengthened its operations in
North Asia, particularly in China. Frank Zhang has been appointed
Managing Director for the North Asia and China market area as of
1 August 2008.

Uncertainties in the near future
The Group considers that the most significant uncertainty factors are
connected with the development of the global economy and particularly
with the market downturn in the United States and the development of
the US dollar exchange rate. The risk of this development extending
also to the Group's other markets has grown. It is already evident
that the global economic uncertainty is influencing the Group's large
comprehensive deliveries, significantly lengthening customers'
decision-making times.
The price development and availability of raw materials and
components, mainly in Finland, also constitutes a significant
uncertainty factor. Large OSP orders received by Glaston increase the
challenges relating to the production and delivery process.

Outlook
Glaston's outlook for 2008 for the core business remains reasonable
positive, with the exception of North America. Due to the
geographical distribution of the Group's operations, the economic
cycles of Europe, Asia and America balance each other out.
Demand for OSP comprehensive deliveries is expected to continue to
grow due to customers' increasing efficiency and productivity
requirements.
Glaston expects net sales and operating profit for the whole year to
be at the previous year's level. Quarterly net sales and operating
profit are expected to develop as in 2007, with the first quarter
being the weakest and the fourth quarter being the strongest.

Publication of the January-September interim report
The publication of the January-September interim report has been
brought forward. The new date is 24 October 2008 at 9 p.m.


Helsinki, 14 August 2008
Glaston Corporation
Board of Directors


Sender:
Glaston Corporation
Kimmo Lautanen
Chief Financial Officer
Tel. +358 10 500 500


Agneta Selroos
IR and Communications Manager
Tel. +358 10 500 520



Further information:
President & CEO Mika Seitovirta, tel: +358 10 500 500
Chief Financial Officer Kimmo Lautanen, +358 10 500 500



Glaston Corporation

Glaston Corporation is a growing, international glass technology
company. Glaston is the global market leader in glass processing
machines, and a comprehensive One-Stop-Partner supplier to its
customers. Its product range and service network are the widest in
the industry. Glaston's well-known brands are Bavelloni in
pre-processing machines and tools, Tamglass and Uniglass in safety
glass machines, and Albat+Wirsam Software in glass industry software.

Glaston's own glass processing unit, Tamglass Glass Processing, is a
local Finnish manufacturer of high quality safety glass products.

Glaston's share (GLA1V) is listed on the OMX Nordic Exchange Helsinki
Mid Cap List.
www.glaston.net


Distribution:
OMX
Main media
www.glaston.net




GLASTON CORPORATION

CONDENSED INTERIM FINANCIAL STATEMENTS AND NOTES 1 JANUARY - 30 JUNE
2008

These condensed interim financial statements are not audited. As a
result of rounding differences, the figures presented in the tables
may not add up to the total.


CONDENSED INCOME STATEMENT
4-6/ 4-6/ 1-6/ 1-6/ 1-12/
EUR million 2008 2007 2008 2007 2007

Net sales 72.6 65.6 135.7 123.7 269.8
Other operating income 0.3 0.2 0.4 0.4 0.6
Expenses -67.0 -60.6 -126.6 -115.9 -246.6
Share of joint ventures' result 0.0 - 0.0 - -
Depreciation, amortization and
impairment -2.1 -1.4 -4.1 -2.8 -7.2
Non-recurring items - -7.3 - -7.3 -4.6
Operating profit / loss 3.8 -3.5 5.4 -1.9 12.0
Operating profit / loss, excluding
non-recurring items 3.8 3.8 5.4 5.5 16.6
Gain from sale of assets held for
sale 0.1 - 0.1 - -
Other net financial items 1.8 0.1 1.2 0.4 0.0
Result before income taxes 5.6 -3.4 6.7 -1.5 12.0
Income taxes -2.5 0.0 -3.0 -1.3 -5.2
Net result, continuing operations 3.1 -3.4 3.7 -2.8 6.9
Net result, discontinued operations - 1.5 - 3.0 3.8
Profit / loss for the period 3.1 -1.9 3.7 0.2 10.6
Attributable to:
Non-controlling interests 0.0 0.0 0.0 0.0 0.0
Owners of the parent 3.1 -1.9 3.7 0.2 10.6
Total 3.1 -1.9 3.7 0.2 10.6

Earnings per share, EUR, continuing
operations 0.04 -0.05 0.05 -0.04 0.09
Earnings per share, EUR,
discontinued operations - 0.02 - 0.04 0.05
Earnings per share, EUR, total 0.04 -0.03 0.05 0.00 0.14

Operating profit / loss, as % of net
sales 5.2 -5.4 4.0 -1.5 4.5
Operating profit / loss,
non-recurring items excluded, as %
of net sales 5.2 5.8 4.0 4.4 6.2
Profit / loss for the period, as %
of net sales 4.2 -2.9 2.7 0.2 3.9




CONDENSED BALANCE SHEET
EUR million 30.6.2008 30.6.2007 31.12.2007

Assets
Non-current assets
Property, plant and equipment 34.4 31.4 32.5
Goodwill 67.6 53.2 67.4
Other intangible assets 20.3 12.3 19.6
Advance payments for shares in
subsidiaries - 20.6 -
Joint ventures 0.8 - 0.8
Available-for-sale assets 0.1 0.1 0.3
Other non-current assets 12.5 3.4 13.0
Deferred tax assets 3.6 5.3 4.4
Total non-current assets 139.3 126.2 138.0
Current assets
Inventories 57.0 47.3 46.2
Receivables
Trade and other receivables 76.9 72.1 78.3
Income tax receivables 2.4 4.3 1.7
Total receivables 79.3 76.4 80.0
Cash equivalents 11.0 10.8 11.4
Assets held for sale 0.2 14.9 0.3
Total current assets 147.6 149.4 137.9
Total assets 286.9 275.6 275.9

EUR million 30.6.2008 30.6.2007 31.12.2007
Equity and liabilities
Equity
Share capital 12.7 12.7 12.7
Share premium account 25.3 25.3 25.3
Paid-up unrestricted equity reserve 0.2 - 0.3
Treasury shares -3.5 -4.9 -3.9
Fair value reserve 0.0 - -
Hedging reserve -0.1 0.1 0.1
Retained earnings and translation
differences 96.5 95.9 94.5
Net result attributable to owners of
the parent 3.7 0.2 10.6
Equity attributable to owners of the
parent 134.8 129.2 139.5
Non-controlling interest 0.1 0.0 0.0
Total equity 134.9 129.2 139.6
Non-current liabilities
Non-current interest-bearing
liabilities 4.5 2.0 1.9
Non-current interest-free liabilities
and provisions 9.3 10.7 9.9
Deferred tax liabilities 8.8 7.2 9.2
Total non-current liabilities 22.7 19.9 21.0
Current liabilities
Current interest-bearing liabilities 38.4 39.1 19.4
Current provisions 2.0 1.6 2.6
Trade and other payables 85.6 83.5 89.8
Income tax liabilities 3.3 1.9 3.5
Liabilities held for sale - 0.4 -
Total current liabilities 129.4 126.5 115.3
Total liabilities 152.0 146.3 136.3
Total equity and liabilities 286.9 275.6 275.9





CASH FLOW STATEMENT
EUR million 1-6/2008 1-6/2007 1-12/2007

Cash flows from operating activities,
continuing operations

Cash flow before change in net working
capital 4.6 -10.0 10.3
Change in net working capital -12.5 10.5 -1.6
Net cash flow from operating activities -7.9 0.5 8.7
Cash flow from investing activities,
continuing operations
Acquisition of subsidiaries -0.5 -21.3(* -17.7
Other purchases of non-current assets -7.0 -3.7 -11.3
Proceeds from sale of non-current assets 0.3 0.2 1.7
Net cash used in investing activities -7.1 -24.9 -27.3
Cash flow before financing, continuing
operations -15.0 -24.4 -18.5
Cash flow from financing activities,
continuing operations
Changes in non-current liabilities
(increase + / decrease -) 1.9 0.0 0.0
Changes in non-current loan receivables
(increase - / decrease +) 0.3 - -
Short-term financing, net (increase + /
decrease -) 20.2 31.5 11.3
Dividends paid -7.8 -7.1 -7.1
Acquisition of treasury shares - -3.9 -3.9
Disposal of treasury shares - - 1.3
Other financing 0.5 - -
Net cash used in financing activities,
continuing operations 15.1 20.5 1.5
Discontinued operations
Cash flow from operations - 4.1 7.6
Cash flow from investments - - 10.7
Cash flow from financing activities - - -
Cash flow from discontinued operations - 4.1 18.3

Effect of exchange rate fluctuations -0.5 0.0 -0.3
Net change in cash and cash equivalents -0.4 0.2 0.9
Cash and cash equivalents at the
beginning of period 11.4 10.5 10.5
Cash and cash equivalents at the end of
period 11.0 10.8 11.4
Net change in cash and cash equivalents -0.4 0.2 0.9


(* Includes advance payment for shares in Albat+Wirsam Software AG.

CHANGES IN EQUITY



Paid-up
Share unrestr. Fair
Share premium equity Treasury value Hedging
EUR million capital account reserve shares reserve reserve
Equity at 1 January
2007 12.7 25.3 - -1.0 - -0.2
Cash flow hedges,
net of tax - - - - - 0.2
Other changes - - - - - -
Available-for-sale
shares, change in
fair value - - - - - -
Acquisition of
treasury shares - - - -3.9 - -
Disposal of
treasury shares - - - - - -
Tax effect of net
income recognized
directly in equity - - - - - -
Share-based
incentive plan - - - - - -
Share-based
incentive plan, tax
effect - - - - - -
Recognized income
and expenses for
the period - - - -3.9 - 0.2
Equity at 30 June
2007 12.7 25.3 - -4.9 - 0.1



Paid-up
Share unrestr. Fair
Share premium equity Treasury value Hedging
EUR million capital account reserve shares reserve reserve
Equity at 1 January
2008 12.7 25.3 0.3 -3.9 - 0.1
Cash flow hedges,
net of tax - - - - - -0.1
Other changes - - - - 0.0 -0.1
Available-for-sale
shares, change in
fair value - - - - 0.0 -
Acquisition of
treasury shares - - - - - -
Disposal of
treasury shares - - -0.1 0.4 - -
Tax effect of net
income recognized
directly in equity - - 0.0 - 0.0 -
Share-based
incentive plan - - - - - -
Share-based
incentive plan, tax
effect - - - - - -
Recognized income
and expenses for
the period - - -0.1 - - -0.2
Equity at 30 June
2008 12.7 25.3 0.2 -3.5 0.0 -0.1



Equity
attr.
to
owners
of
Retained Transl. the Non-controlling Total
EUR million earnings differences parent interest equity
Equity at 1
January 2007 102.8 0.4 140.1 0.0 140.1
Cash flow hedges,
net of tax - - 0.2 - 0.2
Exchange rate
differences - -0.3 -0.3 - -0.3
Gains and losses
from hedge of net
investments
in foreign
operations - 0.0 0.0 - 0.0
Other changes - - - - -
Available-for-sale
shares, change in
fair value - - - - -
Acquisition of
treasury shares - - -3.9 - -3.9
Disposal of
treasury shares - - - - -
Tax effect of net
income recognized
directly in equity - 0.0 0.0 - 0.0
Share-based
incentive plan - - - - -
Share-based
incentive plan,
tax effect - - - - -
Net profit for the
period 0.2 - 0.2 0.0 0.2
Recognized income
and expenses for
the period 0.2 -0.2 -3.8 0.0 -3.7
Dividends paid -7.1 0.0 -7.1 0.0 -7.1
Equity at 30 June
2007 95.9 0.2 129.2 0.0 129.2




Equity
attr.
to
owners
Retained Transl. of the Non-controlling Total
EUR million earnings difference parent interest equity
Equity at 1 January
2008 106.4 -1.3 139.5 0.0 139.6
Cash flow hedges,
net of tax - - -0.1 - -0.1
Exchange rate
differences - -0.6 -0.6 0.0 -0.6
Other changes -0.1 0.1 0.0 0.1 0.0
Available-for-sale
shares, change in
fair value - - 0.0 - 0.0
Acquisition of
treasury shares - - - - -
Disposal of
treasury shares - - 0.3 - 0.3
Tax effect of net
income recognized
directly in equity - - 0.0 - 0.0
Share-based
incentive plan -0.2 - -0.2 - -0.2
Share-based
incentive plan, tax
effect 0.0 - 0.0 - 0.0
Net profit for the
period 3.7 - 3.7 0.0 3.7
Recognized income
and expenses for
the period 3.4 -0.5 3.1 0.0 3.1
Dividends paid -7.8 - -7.8 - -7.8
Equity at 30 June
2008 102.0 -1.8 134.8 0.1 134.9




KEY RATIOS
30.6.2008 30.6.2007 31.12.2007
EBITDA, as % of net sales (1 7.0 0.7 7.1
Operating profit / loss (EBIT), as %
of net sales 4.0 -1.5 4.5
Net result, as % of net sales 2.7 0.2 3.9
Gross capital expenditure, EUR million 7.0 6.2(2 34.1
Gross capital expenditure, as % of net
sales (net sales including
discontinued operations) 5.2 4.4 11.9
Equity ratio, % 51.1 52.0 55.4
Gearing, % 31.8 31.8 15.3
Net gearing, % 23.7 22.9 6.9
Net interest-bearing debt, EUR million 31.9 29.6 9.6
Capital employed, end of period, EUR
million 177.8 170.3 160.9
Return on equity, %, annualized 5.3 0.3 7.6
Return on capital employed, continuing
operations, %, annualized 8.3 -1.8 7.9
Return on capital employed, %,
annualized 8.3 3.3 11.2
Number of personnel, average,
continuing operations 1,492 1,192 1,288
Number of personnel, average 1,492 1,215 1,302
Number of personnel, end of period,
continuing operations 1,529 1,223 1,435
Number of personnel, end of period 1,529 1,247 1,435


(1 EBITDA = Operating profit / loss + depreciation, amortization and
impairment.
(2 Does not include the advance payment paid for shares in
Albat+Wirsam.


PER SHARE DATA
30.6.2008 30.6.2007 31.12.2007
Number of shares, end of period,
treasury shares excluded (1,000) 78,540 78,107 78,437
Number of shares, average, treasury
shares excluded (1,000) 78,474 78,934 78,682
EPS, continuing operations, EUR (* 0.05 -0.04 0.09
EPS, discontinued operations, EUR (* - 0.04 0.05
EPS, total, EUR (* 0.05 0.00 0.14
Equity attributable to owners of the
parent per share, EUR 1.72 1.65 1.78
Market capitalization, EUR million 243.5 308.5 217.3
Share turnover, % (number of shares
traded, % of the average number of
shares) 1.9 6.4 10.2
Number of shares traded, (1,000) 1.512 5.020 7.993
Closing price of the share, EUR 3.10 3.95 2.77
Highest quoted price, EUR 3.33 4.53 4.53
Lowest quoted price, EUR 2.70 3.90 2.70
Average quoted price, EUR 3.09 4.07 3.90


(* Glaston Corporation has not issued options or warrants or similar
instruments which would dilute the earnings per share.


DEFINITIONS OF KEY RATIOS

Financial ratios

Operating profit / loss (EBIT) = Profit / loss after depreciation,
amortization and impairment

EBITDA = operating profit / loss + depreciation, amortization and
impairment

Net interest-bearing debt = Interest-bearing liabilities - cash and
cash equivalents

Financial expenses = interest expenses of financial liabilities +
fees of financing arrangements + foreign currency differences of
financial liabilities

Equity = Equity attributable to owners of the parent +
non-controlling interest

Capital employed = Equity + interest-bearing liabilities

Equity ratio, % = Equity x 100 / (Balance sheet total - advance
payments received)

Gearing, % = Interest-bearing liabilities x 100 / Equity

Net gearing, % = Net interest-bearing debt x 100 / Equity

Return on capital employed, % (ROCE) = (Result before taxes +
financial expenses) x 100 / (Equity + interest-bearing liabilities)
(average of 1 January and end of the review period)

Return on equity, % (ROE) = (Profit / loss for the period) x 100 /
Equity (average of 1 January and end of the review period)

Per share data

Earnings per share (EPS) = Profit / loss attributable to owners of
the parent for the review period / Adjusted average number of shares
during the review period

Equity attributable to owners of the parent per share = Equity
attributable to owners of the parent at the end of the review period
/ Non-diluted number of shares at the end of the review period

Share turnover = The proportion of number of shares traded during the
review period to weighted average number of shares

Market capitalization = Number of shares at the end of the review
period x share price at the end of review period

Number of shares at the end of review period = Number of issued
shares - treasury shares


ACCOUNTING POLICIES

These condensed consolidated interim financial statements have been
prepared in accordance with International Financial Reporting
Standard IAS 34 Interim Financial Reporting as approved by the
European Union. They do not include all of the information required
for full annual financial statements.

The accounting principles applied in these condensed interim
consolidated financial statements are the same as those applied by
Glaston in its consolidated financial statements as at and for
the year ended 31 December 2007, with the exception of the following
new or revised or amended standards and interpretations, which have
been applied from 1 January 2008:

- IFRIC 11 IFRS 2 Group and Treasury Share Transactions
- IFRIC 12 Service Concession Arrangements
- IFRIC 14 Interpretation IAS 14 The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction

The new or amended standards or interpretations are not material for
Glaston Group.

Glaston will apply the following new or revised or amended standards
and interpretations from 1 October 2008:

- IFRIC 16 Hedges of a Net Investment in a Foreign Operation

Glaston will apply the following new or revised or amended standards
and interpretations from 1 January 2009:

- IAS 1 (revised) Presentation of Financial Statements
- IAS 23 (revised) Borrowing Costs
- IFRS 8 Operating Segments
- IFRIC 3 Customer Loyalty Programs
- Amendments to IFRS 2 Share-based payments: Vesting Conditions and
Cancellations
- Amendments to IAS 32 Financial Instruments: Presentation and IAS 1
Presentation of Financial Statements - Puttable Financial Instruments
and Obligations Arising on Liquidation
- Improvements to IFRSs
- IFRIC 15 Agreements for the Construction of Real Estate
- Amendment to IAS 39 Financial Instruments: Recognition and
Measurement - Eligible Hedged Items

Applying revised IAS 1 standard will change the presentation of
income statement, balance sheet and statement of changes in equity in
the financial statements.

Glaston estimates that applying IFRS 8 will not have any material
effect on the financial information of Glaston.

Applying revised IAS Borrowing Costs will change Glaston's
accounting principles from 1 January 2009. From that date on the
borrowing costs that are directly attributable to the acquisition,
construction or production of an asset will be capitalized to the
acquisition cost of the asset. The capitalization will apply mainly
to property, plant and equipment.



Other new or amended standards or interpretations are not material
for Glaston Group.

Glaston will apply the following new or revised or amended standards
and interpretations from 1 January 2010:

- IFRS 3 (revised) Business Combinations
- IAS 27 (amended) Consolidated and Separate Financial Statements.

BUSINESS COMBINATIONS

Glaston Corporation acquired on 2 July 2007 all the shares in a
German company Albat+Wirsam Software AG. The recognized acquisition
cost was EUR 21.7 million at the end of 2007 and it was recognized
provisionally. The acquisition cost and goodwill related to the
acquisition can change due to the terms of the share purchase
agreement. The final acquisition cost and goodwill will be recognized
during the third quarter.

SEGMENT INFORMATION

Glaston Group's primary segment is business segment. The
Pre-processing segment includes glass pre-processing machines sold
under the Bavelloni brand, maintenance and service operations, as
well as tool manufacturing. The Heat Treatment segment includes
tempering, bending and laminating machines sold under the Tamglass
and Uniglass brands, maintenance and service operations, as well as
the glass processing operations of Tamglass Glass Processing. The
Software Solutions segment comprises the operations of Albat+Wirsam
Software Group, which has been consolidated to Glaston Group from 1
July 2007.

The Energy business area was divested from Glaston Group in July
2007, and is thus classified as discontinued operations in 2007
figures.

EUR million


1-6/ 1-6/ 1-12/
Net sales 2008 2007 2007
Pre-processing 46.1 45.0 94.1
Heat Treatment 76.9 79.3 162.3
Software Solutions 13.7 - 14.7
Parent company and eliminations -1.0 -0.6 -1.3
Total 135.7 123.7 269.8



Operating profit / loss, excluding non-recurring 1-6/ 1-6/ 1-12/
items 2008 2007 2007
Pre-processing -0.1 0.9 1.4
Heat Treatment 7.1 8.7 19.6
Software Solutions 2.2 - 2.6
Parent company and eliminations -3.8 -4.2 -7.0
Total 5.4 5.5 16.6
Non-recurring items - -7.3 -4.6
Operating profit / loss 5.4 -1.9 12.0
Net financial items 1.3 0.4 0.0
Income taxes -3.0 -1.3 -5.2
Discontinued operations - 3.0 3.8
Net result for the period 3.7 0.2 10.6




Operating profit / loss, excluding non-recurring 1-6/ 1-6/ 1-12/
items, as % of net sales 2008 2007 2007
Pre-processing -0.3% 2.1% 1.5%
Heat Treatment 9.3% 11.0% 12.1%
Software Solutions 16.0% - 17.8%
Total 4.0% 4.4% 6.2%




Assets 30.6.2008 30.6.2007 31.12.2007
Pre-processing 50.2 41.7 39.6
Heat Treatment 68.3 66.1 76.7
Software Solutions 7.5 - 6.8
Parent company and eliminations -0.5 -0.7 -0.6
Total segment assets 125.5 107.1 122.5
Non-current assets 135.6 120.9 133.6
Deferred tax assets 3.6 5.3 4.4
Income tax receivables 2.4 4.3 1.7
Other non-allocated receivables 8.4 12.3 2.0
Cash and cash equivalents 11.0 10.8 11.4
Assets held for sale 0.2 14.9 0.3
Total assets 286.9 275.6 275.9

Liabilities 30.6.2008 30.6.2007 31.12.2007
Pre-processing 19.5 18.5 21.8
Heat Treatment 23.4 22.5 22.7
Software Solutions 2.6 - 1.9
Parent company and eliminations 1.3 0.7 0.4
Total segment liabilities 46.8 41.7 46.8
Deferred tax liabilities 8.8 7.2 9.2
Provisions 11.3 12.2 12.5
Interest-bearing liabilities 42.9 41.1 21.3
Income tax liabilities 3.3 1.9 3.5
Other non-allocated liabilities 38.8 41.8 43.0
Liabilities held for sale - 0.4 -
Total liabilities 152.0 146.3 136.3



1-6/ 1-6/ 1-12/
Depreciation, amortization and impairment 2008 2007 2007
Pre-processing -0.9 -0.8 -1.9
Heat Treatment -1.9 -1.9 -4.0
Software Solutions -0.8 - -1.1
Parent company and eliminations -0.5 -0.1 -0.2
Total -4.1 -2.8 -7.2




1-6/ 1-6/ 1-12/
Orders received 2008 2007 2007
Pre-processing 33.8 37.0 68.7
Heat Treatment 75.8 87.9 141.0
Software Solutions 5.5 - 3.0
Total 115.1 124.9 212.7



Order book 30.6.2008 30.6.2007 31.12.2007
Pre-processing 21.9 25.9 20.9
Heat Treatment 71.0 90.3 59.9
Software Solutions 6.0 - 6.2
Total 98.9 116.2 87.0




Personnel at the end of the period,
continuing operations 30.6.2008 30.6.2007 31.12.2007
Pre-processing 594 582 556
Heat Treatment 653 629 612
Software Solutions 252 - 247
Parent company 30 12 20
Total 1,529 1,223 1,435



1-6/ 1-6/ 1-12/
Personnel, average, continuing operations 2008 2007 2007
Pre-processing 577 581 572
Heat Treatment 641 599 606
Software Solutions 249 - 97
Parent company 25 11 13
Total 1,492 1,192 1,288


EUR million


1-6/ 1-6/ 1-12/
Net sales by market area 2008 2007 2007
EMEA 90.0 64.8 150.5
America 25.9 41.0 75.6
Asia 19.8 18.0 43.7
Total 135.7 123.7 269.8



1-6/ 1-6/ 1-12/
Net sales by market area, % 2008 2007 2007
EMEA 66.3% 52.4% 55.8%
America 19.1% 33.1% 28.0%
Asia 14.6% 14.5% 16.2%
Total 100.0% 100.0% 100.0%




1-6/ 1-6/
Geographical distribution of orders received 2008 2007 change, %
EMEA 76.4 76.0 0.5%
America 19.7 26.4 -34.0%
Asia 19.0 22.5 -18.4%
Total 115.1 124.9 -8.5%




NET SALES, OPERATING PROFIT /LOSS AND ORDER BOOK OF CONTINUING
OPERATIONS BY QUARTER

EUR million


1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
Net sales 2007 2007 2007 2007 2008 2008
Pre-processing 21.7 23.4 20.6 28.5 22.9 23.2
Heat Treatment 36.6 42.7 30.2 52.8 32.9 44.0
Software Solutions - - 6.8 7.9 7.3 6.4
Parent company and
eliminations -0.1 -0.5 -0.3 -0.5 0.0 -1.0
Total 58.2 65.6 57.3 88.8 63.1 72.6



Operating profit / loss excluding 1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
non-recurring items 2007 2007 2007 2007 2008 2008
Pre-processing 1.2 -0.2 0.3 0.2 0.6 -0.7
Operating profit / loss, % 5.3 -0.9 1.3 0.8 2.5 -3.1
Heat Treatment 3.0 5.7 3.2 7.7 1.9 5.3
Operating profit / loss, % 8.1 13.4 10.5 14.6 5.7 12.0
Software Solutions - - 1.6 1.0 1.0 1.2
Operating profit / loss, % - - 23.1 13.2 13.2 19.3
Parent company and eliminations -2.4 -1.7 -1.1 -1.8 -1.8 -2.0
Total 1.7 3.8 4.0 7.1 1.6 3.8
Operating profit / loss, % 2.9 5.8 6.9 8.0 2.6 5.2



1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
Operating profit / loss 2007 2007 2007 2007 2008 2008
Pre-processing 1.2 -1.6 0.3 0.3 0.6 -0.7
Operating profit / loss, % 5.3 -7.0 1.3 0.9 2.5 -3.1
Heat Treatment 3.0 -0.2 3.2 7.7 1.9 5.3
Operating profit / loss, % 8.1 -0.4 10.6 14.6 5.7 12.0
Software Solutions - - 1.6 1.0 1.0 1.2
Operating profit / loss, % - - 23.1 13.2 13.2 19.3
Parent company and eliminations -2.4 -1.7 -1.1 0.9 -1.8 -2.0
Total 1.7 -3.5 4.0 9.9 1.6 3.8
Operating profit / loss, % 2.9 -5.4 6.9 11.2 2.6 5.2




1-3/ 4-6/ 7-9/ 10-12/ 1-3/ 4-6/
Order book 2007 007 2007 2007 2008 2008
Pre-processing 20.2 25.9 24.4 20.9 21.0 21.9
Heat Treatment 72.3 90.3 92.6 59.9 65.0 71.0
Software Solutions - - 8.6 6.2 9.5 6.0
Total 92.5 116.2 125.7 87.0 95.5 98.9



DISCONTINUED OPERATIONS

The Energy business area was divested from Glaston Group in July
2007, and is thus classified as discontinued operations in 2007
figures.

EUR million


1-6/ 1-6/ 1-12/
Result of the Energy Business Area 2008 2007 2007
Income - 16.0 16.0
Expenses - -11.9 -11.9
Profit before taxes - 4.1 4.1
Income taxes - -1.1 -1.1
Profit after taxes - 3.0 3.0
Gains from disposal of discontinued
operations net of tax - - 0.8
Profit for the period, discontinued
operations - 3.0 3.8


Assets held for sale of discontinued
operations 30.6.2008 30.6.2007 31.12.2007

Intangible assets - 0.5 -
Property, plant and equipment - 14.0 -
Inventories - 0.2 -
Total assets - 14.6 -

Liabilities held for sale of
discontinued operations 30.6.2008 30.6.2007 31.12.2007


Accrued expenses - 0.4 -
Total liabilities - 0.4 -



PROPERTY, PLANT AND EQUIPMENT

EUR million


1-6/ 1-6/
Changes in property, plant and equipment 2008 2007
Carrying amount at beginning of the period 32.5 43.3
Additions 4.2 4.8
Disposals 0.0 -0.8
Depreciations, continuing operations -2.3 -1.8
Depreciations, discontinued operations - -0.5
Impairment losses and reversals of impairment losses - -
Reclassification and other changes 0.0 0.3
Transfer to assets held for sale - -13.9
Exchange differences 0.0 0.0
Carrying amount at end of the period 34.4 31.4



Tamglass Lasinjalostus Oy has signed a contract with the town of
Akaa, Finland. The subject of the contract is a hall to be completed
in 2008. The company has committed to redeem the premises from the
town within 12 years. The cost for the project is EUR 3.7 million,
and it will be accounted for as a finance lease.

At the end of June, Glaston Group had no other material commitments
to acquire property, plant and equipment.


CONTINGENT LIABILITIES


EUR million 30.6.2008 30.6.2007 31.12.2007
Mortgages
On own behalf 0,2 0,2 0,2
Guarantees
On own behalf 4,6 6,0 3,1
Lease obligations 12,5 5,1 18,0
Repurchase obligations 1,5 2,4 3,0
Other contingent liabilities
On own behalf - 0,1 -



A customer of the US subsidiary Glaston USA, Inc. has made a claim of
USD 10 million due to a sale of a machine in 2004. On 25 January
2008, the company received a statement that the customer has
increased the claim to USD 22 million. It is Glaston's opinion, that
both the original claim and the increased one are unfounded. The
matter has been referred to arbitration court in the USA and the
court's decision is expected to be received during 2008.

Glaston Group has international operations and can be a defendant or
plaintiff in a number of legal proceedings incidental to those
operations. The Group does not expect the outcome of any unmentioned
legal proceedings currently pending, either individually or in the
aggregate, to have material adverse effect upon the Group's
consolidated financial position or results of operations.

DERIVATIVE INSTRUMENTS


EUR million 30.6.2008 30.6.2007 31.12.2007
Nominal Fair Nominal Fair Nominal Fair
value value value value value value
Currency derivatives
Currency forwards 12.9 0.4 20.1 0.0 12.8 0.1



Derivative instruments are used only for hedging purposes. Nominal
values of derivative instruments do not necessarily correspond with
the actual cash flows between the counterparties and do not therefore
give a fair view of the risk position of the Group. The fair values
are based on market valuation on the date of reporting.


RELATED PARTY TRANSACTIONS

Glaston Group's related parties include the parent company,
subsidiaries and joint ventures. Related parties also include the
members of the Board of Directors and the Group's Management Team,
the CEO and their family members.

Glaston follows the same commercial terms in transactions joint
ventures and other related parties as with third parties.

During the review period Glaston's related party transactions
included sales to joint ventures. In addition, the Group has leased
premises from companies owned by individuals belonging to the
management. The lease payments were in January - June EUR 0.3
million.

During the review period there were no related party transactions
whose terms would differ from the terms in transactions with third
parties.

Share-based incentive plan

Based on the 2007 share-based incentive plan, Glaston Corporation
transferred in April own shares to persons who are considered to be
related parties. The shares were transferred to the CEO (19.740
shares) and other members of the Management Team (in total 32.900
shares).

The expenses arising from the 2007 and 2008 plans were EUR 0.2
million in January - June.

Transactions with joint ventures


1-6/ 1-6/
EUR million 2008 2007
Sales to joint ventures 0.0 -

Receivables
Trade receivables from joint ventures 0.0 -

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