FINANCIAL STATEMENTS OF OKMETIC OYJ FOR 1 JANUARY-31 DECEMBER 2014: STRONG AND PROFITABLE GROWTH IN CORE BUSINESS

OKMETIC OYJ   FINANCIAL STATEMENTS RELEASE    13 FEBRUARY 2015    AT 8.00 A.M.                                                                                                  

FINANCIAL STATEMENTS OF Okmetic OYJ FOR 1 JANUARY-31 DECEMBER 2014: STRONG AND PROFITABLE GROWTH IN CORE BUSINESS

OCTOBER-DECEMBER IN BRIEF:

• Net sales amounted to 18.7 (16.8) million euro, up 10.9%.
• Silicon wafer deliveries amounted to 17.6 (16.2) million euro, up 8.7%.
• Operating profit was 1.6 (0.3) million euro corresponding to 8.5% (1.6%) of net sales.
• Profit for the period was 1.1 (0.4) million euro.
• Basic earnings per share was 0.06 (0.03) euro.
• Net cash flow from operations amounted to 6.3 (4.9) million euro.

             
JANUARY-DECEMBER IN BRIEF:

• Net sales amounted to 74.1 (68.5) million euro, up 8.2%.
• Silicon wafer delieveries amounted to 70.5 (66.4) million euro, up 6.2%.
• Operating profit was 6.4 (5.0) million euro corresponding to 8.6% (7.3%) of net sales.
• Profit for the period was 4.8 (3.8) million euro.
• Basic earnings per share was 0.29 (0.23) euro.
• Net cash flow from operations amounted to 12.5 (9.7) million euro.
• The board of directors proposes to the annual general meeting that a dividend of 0.15 euro per share will be paid for the financial year 2014, in addition to the dividend of 0.30 euro per share already paid in January 2015. 

             

The financial statement figures presented in this report are derived from the unaudited financial statements of the company. Unless otherwise stated, figures in parenthesis refer to the corresponding period in the previous year.

SHORT-TERM OUTLOOK

The demand for semiconductors is expected to remain on a growth track in 2015, although most market forecasts suggest a slower growth rate than that seen in 2014. The silicon wafer market is anticipated to remain at the previous year's level in terms of value, with a further decline in average prices likely to be compensated by volume growth.

Demand for Okmetic's sensor and special wafers is expected to maintain sustained growth in 2015. The demand and price level for these wafers seem to be more stable than those for semiconductor wafers, which are traditionally more sensitive to economic fluctuations and also come under greater price pressure. According to the normal seasonal fluctuation, the demand for semiconductor wafers is anticipated to be strongest in the second and third quarters.

FINANCIAL GUIDANCE FOR 2015

In 2015, net sales and operating profit are estimated to exceed the level of 2014.

PRESIDENT KAI SEIKKU:

"Okmetic's results for 2014 were on target. Net sales (74.1 million euro) grew by 8.2 percent, clearly outperforming the industry as a whole (growth 1.2%). Okmetic was able to increase the average prices of its delivered silicon wafers by approximately six percent, despite a drop of slightly over 10 percent in the average price level in the silicon wafer market. This rise in company's average prices can be attributed to a carefully managed shift in the product mix to higher value-added wafers and to a larger wafer size. This development is based on Okmetic's long-term strategy, which is supported by investments made in 2010-2014 and those still in the pipeline.

Operating expenses grew at a slower rate than net sales. This improved the company's sales margin, operating profit before depreciation (EBITDA), and operating profit both in absolute and relative terms. Operating profit grew by 27 percent to 6.4 million euro, accounting for 8.6 percent of net sales. This falls slightly short of the long-term operating profit target of 10 percent, but the company is moving in the right direction. The solar business, a very profitable part of Okmetic's business in 2007-2012, saw a steep decline in volume in late 2012. The current upward trend in Okmetic's profitability is being driven by the core business of silicon wafer manufacture and sales. Considering silicon wafer business, profitability is now at its highest level in more than a decade.

Meanwhile, return on equity was burdened by relatively high working capital. This is largely due to surplus polysilicon from long-term binding polysilicon purchasing contracts. Growing of solar crystals from own raw material ended in 2012 in order to adjust to changes in the market. Okmetic is now into the final period of its polysilicon contract, with the last shipment of surplus polysilicon scheduled for spring 2016. A gradual release of the extra polysilicon inventory would reduce the current level of working capital (approximately 27 million euro) by approximately one-third.

Demand in the last quarter was, to some extent, stronger than expected by the market or by Okmetic. This can be attributed to the strong performance of some of the players in the mobile phone market at the end of the year. This positive development in the market was reflected in Okmetic's result development towards year-end, and net cash flow from operating activities, in particular.

The value of deliveries in sensor wafers and other high value-added products in this category surged by 13.5 percent. This brought their share in the total value of deliveries to 63 percent in 2014. The healthiest growth was seen in Europe and, in particular, Asia. Okmetic gained significant new customers in 2014, which will hopefully contribute to growth already in 2015. The long-term growth prospects for the sensor industry are very promising. The company is working to leverage these growth opportunities through looking closely at its strategic product development and technology choices.

Okmetic stands to benefit from the strengthening of the US dollar. While it is difficult to anticipate the effects of exchange rate fluctuations and the volatile macroeconomic environment, Okmetic seems well placed to reach its long-term objectives in 2015."

KEY FIGURES

1,000 euro	1 Oct- 31 Dec, 2014	1 Oct- 31 Dec, 2013	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013	1 Jan- 31 Dec, 2012
Net sales	18,679	16,837	74,104	68,516	83,074
Operating profit before depreciation (EBITDA)	3,240	1,881	12,985	10,905	13,864
Operating profit	1,579	263	6,401	5,031	8,018
% of net sales	8.5	1.6	8.6	7.3	9.7
Profit for the period	1,083	447	4,832	3,842	5,089
Basic earnings per share, euro	0.06	0.03	0.29	0.23	0.31
Net cash flow from operating activities	6,270	4,915	12,478	9,726	9,425
Net interest- bearing liabilities	-1,110	6,530	-1,110	6,530	-1,688
Equity ratio, %	70.5	68.2	70,5	68.2	72.2
Average number of personnel during the period	365	355	370	363	368

MARKETS

Customer industries sensor and semiconductor industries

Sensor industry

According to different estimates, the sales value of sensor industry increased by 6-12 percent in 2014 compared to the previous year. Sensor sales growth has been accelerated especially by the increasing use of mobile applications. In 2015, the sales value of sensor industry is estimated to grow by 6-11 percent, and annual growth of 7-13 percent is forecasted for the next few years. In terms of volume, sensor shipments are likely to clearly rise to a new record in 2015. (IHS, Yole)

Certain silicon-based microelectromechanical (MEMS) products within the sensor segment have higher sales growth than the others. The increasing amount of sensors in mobile devices has significantly accelerated the demand of e.g. pressure sensors and microphones. Silicon-on-insulator (SOI) technology is increasingly used in the manufacture of these products, among others. Okmetic is a pioneering supplier of SOI wafers for the sensor industry.

Semiconductor industry

In the last quarter of 2014, semiconductor industry's sales in US dollars continued to grow exceeding the level of corresponding period in 2013 by nine percent (SIA). Annual sales in 2014 reached a new record. The estimates settle between 339-353 billion US dollars, corresponding to an annual growth of 6-7 percent (WSTS, SIA, IHS).

The semiconductor market is forecasted to grow 3-8 percent in 2015, and the growth is anticipated to continue in 2016 (WSTS, Gartner, IHS, IC Insights).

Silicon wafer market

According to the estimate published by SMG, the group of silicon wafer suppliers in SEMI (a global umbrella organisation for semiconductor materials and equipment industry), the surface area of silicon wafer shipments grew 11 percent in 2014 and reached a record-high level. In the fourth quarter, shipments were 2 percent lower than in the third quarter, but almost 15 percent higher than in the fourth quarter of 2013 (in surface area). In years 2015-2017, surface area is estimated to grow around 3-5 percent annually (Infiniti Research, SEMI). The long decrease in total value of the silicon wafer market in US dollars ended, and the market grew by 1.2 percent.  

The key customer areas for Okmetic in the silicon wafer market

In line with its strategy, Okmetic seeks niches in the silicon wafer market, where growth exceeds market average and in which the company has special expertise. Okmetic supplies primarily 150mm and 200mm wafers. The sensor/MEMS industry is a key growth area for Okmetic. MEMS market grows as portable consumer products, automotive electronics, and industrial process control increase.

In the semiconductor market, Okmetic's growth areas include wafers for production of discrete and power semiconductors. In these wafer markets, areas for growth include, among others, components used in the production of renewable energy, increasing automotive electronics, electric cars, portable consumer products, as well as different solutions related to power supply and efficiency improvement.

SALES

In 2014, Okmetic's net sales increased by 8.2 percent (down 17.5 %) from the previous year amounting to 74.1 (68.5) million euro. Value of sensor wafer deliveries grew by 13.5 percent, while value of semiconductor wafer deliveries decreased by 5.2 percent. Value of Other business deliveries amounted to 2.6 (2.4) million euro in 2014.

Value of deliveries per customer area

	1 Oct- 31 Dec, 2014	1 Oct- 31 Dec, 2013	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013	1 Jan- 31 Dec, 2012
Sensor wafers	65%	60%	63%	59%	47%
Semiconductor wafers	31%	35%	33%	37%	38%
Other business	4%	5%	4%	4%	15%

The demand for sensor wafers was strong in 2014 and grew compared to 2013. The strong growth in production and delivery volumes of the strategically important SOI wafers compared to the corresponding period a year ago was particularly positive. The use of sensors and their requirement level are expected to continue growing. Sensor applications are increasing in the automotive industry and in portable devices like smart phones, cameras, game consoles, and wearable electronics, such as smart watches.

Value of deliveries of Okmetic's semiconductor wafers decreased in 2014. The third quarter was the best in terms of delivery value, which is typical of the industry.

Other business sales were at the previous year's level in 2014. The declined price level in the solar cell industry did not enable profitable growing of solar crystals.

Value of deliveries per market area

	1 Oct- 31 Dec, 2014	1 Oct- 31 Dec, 2013	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013	1 Jan- 31 Dec, 2012
North America	39%	44%	38%	42%	37%
Europe	39%	42%	40%	40%	27%
Asia	22%	14%	22%	18%	35%

Okmetic's value of deliveries grew strongly also in Asia, which is Okmetic's smallest market region. Also in Europe, Okmetic's value of deliveries saw strong growth in 2014, thanks to good demand for sensor wafers, although the European share of total value of deliveries stayed at the previous year's level. On the other hand, North American sales somewhat decreased.

The demand for sensor wafers grew in all market areas in 2014. Value of deliveries rose especially in Asia, but significantly also in Europe. The demand for semiconductor wafers grew in Asia from the comparison period a year ago, but decreased in Europe and North America.

PROFITABILITY

October-December

In October-December, Okmetic's operating profit was 1.6 (0.3) million euro and accounted for 8.5 (1.6) percent of net sales. Profit for the period was 1.1 (0.4) million euro. Basic earnings per share was 0.06 (0.03) euro. Diluted earnings per share was 0.06 (0.03) euro.

January-December
In January-December, Okmetic's operating profit was 6.4 (5.0) million euro and accounted for 8.6 (7.3) percent of net sales. Improvement in operating profit was due to strong growth in sales as well as successful management of fixed costs, which grew clearly at a slower rate than sales. Operating profit improved by 1.4 million euro from the comparison period, although depreciations were 0.7 million euro higher. Profit for the period was 4.8 (3.8) million euro.
Basic earnings per share was 0.29 (0.23) euro. Diluted earnings per share was 0.29 (0.22) euro.

FINANCING

The company's financial situation is solid. In 2014, net cash flow from operations amounted to 12.5 (9.7) million euro. Especially in the fourth quarter the net cash generated from operating activities was good, totalling 6.3 (4.9) million euro.

On 31 December 2014, the company's interest-bearing liabilities amounted to 13.3 (11.7) million euro.
Okmetic is one of the issuer companies in a multi-issuer bond totalling 70 million euro and guaranteed by Garantia Insurance Company Ltd. Okmetic's allocated amount of the bond is five million euro.
The maturity of this guaranteed, fixed rate (coupon at 1.85%), bullet multi-issuer bond is five years. Bond was issued on 18 June 2014. In December, the company paid back its one-million-euro credit facility, which had a maturity of three years.

At the end of 2014, cash and cash equivalents amounted to 14.4 (5.2) million euro. On 31 December 2014, the company's net interest-bearing liabilities amounted to -1.1 (6.5) million euro. The group has ensured liquidity with committed credit facilities of 6.0 million euro. On 31 December 2014, the committed credit facilities were unused.

Return on equity amounted to 8.0 (6.4) percent. At the end of the year, the company's equity ratio was 70.5 (68.2) percent. Equity per share was 3.77 (3.43) euro.

INVESTMENTS

In 2014, Okmetic's capital expenditure amounted to 3.6 (7.6) million euro. The investments were directed mainly to the performance and capacity increases for SOI and 200mm wafers. In addition to this, investments were made in debottlenecking, automatisation and equipment renewal in wafer production.

PRODUCT DEVELOPMENT

In 2014, the company expensed 2.5 (2.8) million euro in product development projects. Product development costs accounted for 3.3 (4.1) percent of net sales and were not capitalised.

During 2014, Okmetic continued to increase its production capacity and performance in 200mm wafers. Development work with High Voltage SOI wafers and with the incorporation of Through Silicon Vias (TSV) in C-SOI wafers continued. Another major focus of Okmetic's development efforts in 2014 was a new, highly advanced SOI process. In 2014, significant advances were also made in the development of silicon for radio frequency (RF) applications, with improvements in both crystal growing and wafer manufacture.

In 2014, Okmetic continued its long-term research of silicon material with universities and research institutions in Finland and abroad, and participated also in several national and EU-funded technology projects. Successful collaboration, among others, with VTT Technical Research Centre of Finland, Aalto University, Institute of Microelectronics in Singapore and, and different units of the Fraunhofer Institute in Germany continued in 2014. Okmetic also participated actively in member events of sensor and semiconductor associations. In Finland, Okmetic continued its involvement in the MemsCat cluster, of which the company is a founding member.

CORPORATE SOCIAL RESPONSIBILITY

Okmetic has voluntarily adopted The Electronic Industry Citizenship Coalition (EICC®) Code of Conduct. Okmetic's corporate social responsibility policy is formulated based on this guidance.

Okmetic encourages its subcontractors to social responsibility and requires them to agree with the principles of corporate social responsibility policy.

Okmetic's suppliers are informed about the principles and requirements of the corporate social responsibility policy. With suppliers and customers, Okmetic operates in accordance with the ethical principles of the corporate social responsibility policy. 

Okmetic's corporate social responsibility policy covers human resources, occupational health and safety, the environment, business ethics, and management system.

PERSONNEL

Competent, motivated and content personnel is a prerequisite for Okmetic's growth and success. This is described in the company values as well as in the human resources and quality policies of the company.

On average, Okmetic employed 370 (363) people in 2014. At the end of the year, Okmetic employed 367 (355) people of which 321 worked in Finland, 40 in the US, five in Japan, and one in Hong Kong.

Women accounted for 27 (26) percent and men 73 (74) percent of the personnel. White-collar employees accounted for 37 (38) percent and blue-collar employees for 63 (62) percent of the personnel. The average age of Okmetic's employees was 44 (44) years and the average length of employment was 11.7 (11.6) years.

Throughout the organization, salaries and bonuses are based on the level of skills required in each position. In 2014, salaries and bonuses amounted to 21.7 (20.3) million euro including 0.3 (0.2) million euro expenses of the share reward schemes. The group's parent company complies with the collective labour agreements of the Technology Industries of Finland.

All employee groups at Okmetic are eligible for an incentive scheme. The possible production bonuses for blue-collar employees are paid monthly according to the achievement of set targets. White-collar employees are subject to a profit-sharing scheme, which is based on annual targets set by the board of directors relating to the group's profitability, financial situation, and operative performance. In 2014, Okmetic arranged on average 2.2 (1.9) training days per employee.

HEALTH AND SAFETY

In 2014, the number of accidents at work dropped by 11 percent (grew by 36%) from the previous year. Workplace-related injury frequency in 2014 was 7.2 (5.5). Workplace-related injury frequency is measured as the number of accidents resulting in three or more days of absence, divided by the number of hours worked (in millions).

The number of sickness absences was down from the previous year. The number of working days lost due to sickness or injury in 2014 amounted to 3.2 (3.5) percent of total hours worked. Okmetic's disability pension contribution category in 2014 was 4 (4). In 2015, the category is 1.

ENVIRONMENTAL ISSUES

Okmetic recognises the environmental risks associated with its operations. The company devises both a universal risk management plan and plans for individual processes. Ecologically sustainable operations support Okmetic's competitiveness and profitability.

Measures devised for eliminating environmental risks are integrated to Okmetic's operational processes. Environmental considerations are factored into the development of products and operations in line with continuous improvement principles. Planning of preventive measures is a fundamental part of environmental risk management.

Okmetic's environmental programme had three objectives in 2014: to save silicon material through the use of a new wire saw, to make more efficient use of polysilicon in crystal growing, and to enhance communication about Okmetic's performance in corporate responsibility. Results in the first two areas have been promising, and the work is set to continue in the 2015 environmental programme. The third objective was achieved according to plan.

Okmetic follows the chemical regulations of the European Union (REACH) and all Okmetic's products meet the requirements set in the RoHS-directive.

Okmetic has ISO 9001:2008, TS 16949:2009, and ISO 14001:2004 certified quality and environmental systems both at Vantaa and Allen plants. Okmetic expects its most important subcontractors and suppliers to comply with the ISO 9001 and ISO 14001 certifications.

Okmetic had no major environmental non-conformities in 2014. Okmetic's environmental management methods were found to match the high requirement level of international customer companies. The company is not subject to emissions trading regulations.

The company has assessed its consumption of energy, use of polysilicon, amount of acid waste as well as consumption of water and chemicals to have a significant environmental impact. The development of these factors is monitored regularly.

The key figures related to environmental protection at the Vantaa plant in 2014 are as follows:

	2014	2013
Energy consumption (GWh)
Electricity	30.5	28.5
District heating	4.7	5.1
Water consumption (tm3)
Water	575	590
Waste water	486	496
Waste volumes (tn)
Hazardous waste	265	254
Ordinary waste	371	368

All waste can be recycled. No landfill waste is produced.

BUSINESS RISKS

There have been no significant changes in the company's near future business risks and uncertainties. However, the picture of macro economy, which has become more unclear, may indirectly have an influence also on Okmetic's business.

Okmetic's business is confronted by risks, which may arise from the company's operations or changes in its operating environment. Risks that, if materialized, can have an adverse effect on the company's operations and valuation are described below.

Okmetic's silicon wafer sales are targeted at the sensor and semiconductor producers in the electronics industry. The demand for semiconductor wafers is sensitive to economic fluctuations, and changes in the market situation can be sudden and dramatic. The demand for sensor wafers is more stable. The proliferation of sensors in consumer electronics applications may, however, increase the susceptibility of this market too to economic fluctuations. Other business sales have in the previous years mainly consisted of selling solar materials to the solar cell industry. Okmetic has existing polysilicon purchasing obligations partly until 2016. Since the price level of the solar cell market has dropped, the validity of long-term polysilicon purchase contracts typical of the industry may cause a price risk.

Okmetic's share of the global silicon wafer market is around one percent, and the market prices have a notable effect on the price development of Okmetic's products. The company has considerable pricing power only in its own special products. The pricing of other wafers is largely based on global market price.

Okmetic operates globally, and therefore the company's business is affected by risks due to exchange rate fluctuations, consisting of cash flows from purchases and sales. A significant part of sales is conducted in US dollars. Despite hedging of the forecasted open currency position, the company remains exposed to exchange rate fluctuations.

Substantial amounts of electricity are used in Okmetic's production. Despite hedging, the company is exposed to fluctuations in the price of electricity.

SHARES AND SHAREHOLDERS

On 31 December 2014, Okmetic Oyj's paid-up share capital, as entered in the Finnish Trade Register, was 11,821,250.00 euro. The number of shares was 17,287,500. The shares have no nominal value attached. Each share entitles to one vote at general meetings. The company has one class of shares. The company's shares are included in the Finnish book-entry system.

Major shareholders
on 31 December 2014

	Shares, pcs	Share, %
Ilmarinen Mutual Pension Insurance Company	1,004,985	5.8
Oy Ingman Finance Ab	900,000	5.2
Mandatum Life Insurance Company Limited	800,000	4.6
The State Pension Fund	600,000	3.5
Nordea Nordic Small Cap Fund	528,810	3.1
Varma Mutual Pension Insurance Company	477,175	2.8
Okmetic Oyj *)	416,763	2.4
Etra-Invest Oy Ab	400,000	2.3
Investment Fund Taaleritehdas Arvo Markka Osake	300,100	1.7
Taaleritehdas Mikro Markka	230,000	1.3
Foreign investors and nominee accounts held by custodian banks	2,836,589	16.4
Other	8,793,078	50.9
Total	17,287,500	100.0

Shareholders by group on 31 Dec 2014
	Shares, pcs	Share,  %
Corporations	3,373,168	19.5
Financial and insurance institutions	1,942,960	11.2
Public organisations	2,085,368	12.1
Non-profit organisations	221,449	1.3
Households	6,827,966	39.5
Foreign investors and nominee accounts held by custodian banks	2,836,589	16.4
Total	17,287,500	100.0

Distribution of shareholdings on 31 Dec 2014
	Number of shareholders	% of shareholders	Shares, pcs	% of share capital
Shares, pcs
1-100	1,403	17.4	98,907	0.6
101-500	3,695	45.7	1,084,664	6.3
501-1,000	1,513	18.7	1,243,136	7.2
1,001-5,000	1,258	15.6	2,612,129	15.1
5,001-10,000	109	1.3	777,599	4.5
10,001-50,000	87	1.1	1,969,989	11.4
50,001-100,000	5	0.1	349,520	2.0
100,001-500,000	9	0.1	2,553,208	14.8
500,001-	6	0.1	6,598,348	38.2
Total	8,085	100.0	17,287,500	100.0

SHARE PRICE DEVELOPMENT AND TRADING

A total of 3.8 (3.4) million shares were traded between 1 January and 31 December 2014, representing 21.9 (19.6) percent of the weighted average of share total of 17.3 (17.3) million during the period. The lowest quotation of the reporting period was 4.28 (4.25) euro, and the highest 5.25 (5.66) euro, with the average being 4.68 (4.92) euro. The closing quotation for the period was 4.83 (4.82) euro. At the end of the period, market capitalisation amounted to 83.5 (83.3) million euro.

Okmetic is listed on the Small Cap list of Nasdaq Helsinki under the trading code OKM1V. According to the International Classification Benchmark (ICB) of the exchange, Okmetic Oyj is listed under the Technology Industry.

DIVIDENDS PAID

During 2014, there were no dividend payments.

In April 2013, the company distributed a dividend of 4.3 million euro for the year 2012 (including dividends distributed to Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.25 euro per share.

In December 2013, the company distributed an additional dividend of 3.2 million euro (including dividends distributed to Okmetic Management Oy, a total of 0.1 million euro). The dividend was 0.19 euro per share.

AUTHORISATION OF THE BOARD OF DIRECTORS TO DECIDE ON THE REPURCHASE AND/OR ACCEPTANCE AS PLEDGE OF THE COMPANY'S OWN SHARES

On 9 April 2014, the annual general meeting authorised the board of directors to decide on the repurchase and/or acceptance as pledge of the company's own shares in one or more tranches as follows:

The aggregate number of shares repurchased and/or accepted as pledge shall not exceed 1,728,750 shares, which represents approximately 10 percent of all the shares of the company. The company and its subsidiaries together cannot at any time own and/or hold as pledge more than 10 percent of all the company's registered shares.

Only unrestricted equity can be used to repurchase the company's own shares under the authorisation. Own shares can be repurchased at a price determined by public trading on the day of repurchase or at another market-based price.

The board of directors decides on the method of repurchasing and/or accepting as pledge of the company's own shares as well as the other terms and conditions. Shares can be repurchased otherwise than in the shareholders' proportional holding of shares (directed repurchase). The authorisation cancels the authorisation given by the annual general meeting on 10 April 2013 to the board of directors to decide on the repurchase and/or acceptance as a pledge of the company's own shares. The authorisation is effective until the next annual general meeting, however, no longer than until 9 October 2015.

AUTHORISATION OF THE BOARD OF DIRECTORS TO DECIDE ON THE ISSUANCE OF SHARES, THE TRANSFER OF THE COMPANY'S OWN SHARES AS WELL AS THE ISSUANCE OF SPECIAL RIGHTS ENTITLING TO SHARES

On 9 April 2014, the annual general meeting authorised the board of directors to decide on the issuance of shares, the transfer of the company's own shares, and the issuance of special rights entitling to shares according to Chapter 10, Section 1 of the Finnish Companies Act in one or more tranches as follows:

The aggregate number of shares issued or transferred on the basis of the authorisation may not exceed 2,593,125 shares.

The board of directors decides on all the terms and conditions of the issuance of shares, the transfer of the company's own shares, and the issuance of special rights entitling to shares according to Chapter 10, Section 1 of the Finnish Companies Act. The authorisation concerns both the issuance of new shares as well as the transfer of the company's own shares. The issuance of shares, the transfer of the company's own shares, and the issuance of special rights entitling to shares according to Chapter 10, Section 1 of the Finnish Companies Act may be carried out in deviation from the shareholders' pre-emptive rights (directed issue).

The authorisation cancels the authorisation given by the annual general meeting on 10 April 2013 to the board of directors to decide on the issuance of shares, the transfer of the company's own shares as well as the issuance of special rights entitling to shares. The authorisation is effective until the next annual general meeting, however, no longer than until 9 October 2015. 

OWN SHARES AND DIRECTED SHARE ISSUES

On 15 January 2014, the board of directors decided to dissolve the ownership arrangement of Okmetic Management Oy, owned by President Kai Seikku and Deputy to the President of that time, Mikko Montonen, with an arrangement in which Okmetic Oyj acquired the entire share capital of Okmetic Management Oy. Also 400,000 shares of Okmetic Oyj were transferred to the group via Okmetic Management Oy, as well as a loan receivable of Okmetic Oyj from Okmetic Management Oy. There were no shareholders of Okmetic Management Oy in the board of directors of Okmetic Oyj. The value of the arrangement for the part of shares owned by Okmetic Management Oy was determined using the average trading price weighted by trading volume of the company's share in Nasdaq Helsinki on 16 January 2014, 4.9969 euro.

On 16 January 2014, Okmetic Oyj transferred in total 150,000 own shares held by the company to President Kai Seikku (140,000 shares) and then Deputy to the President Mikko Montonen (10,000 shares). Subscription price per share was determined using the average trading price of the company's share weighted by trading volume in Nasdaq Helsinki on 16 January 2014, which was 4.9969 euro. Total value of the deal was 749,535 euro. The decision to transfer company's own shares is based on existing authorization of the board of directors given by the Annual General Meeting on 10 April 2013.

On 13 February 2014, Okmetic Oyj's board of directors announced of its decision to transfer a total of 11,919 own shares held by the company as a part of the company's share-based incentive scheme for the executive management group, of which the company gave a stock exchange release on 12 February 2013. All the shares were issued to the members of the executive management group in deviation from the shareholders' pre-emptive rights (directed share issue). The rewards of the share reward programme were paid in Okmetic shares and in a monetary amount covering taxes.

According to the decision of the annual general meeting, Okmetic Oyj transferred a total of 15,441 shares to the board members as payment of the annual remuneration on 9 May 2014.

At the end of the year, the company held a total of 416,763 (194,123) own shares, which is approximately 2.4 (1.1) percent of Okmetic's all shares and votes.

OTHER EVENTS DURING THE FINANCIAL YEAR

Mikko Montonen, Executive Vice President, Customers and Markets, Deputy to the President, resigned from Okmetic on 26 February 2014 to assume a new position with another company. Mr. Montonen's management responsibilities at Okmetic ended on 6 April 2014.

Anna-Riikka Vuorikari-Antikainen, earlier Senior Vice President, Products, was appointed Senior Vice President, Customers and Markets from 7 April 2014. Ms. Vuorikari-Antikainen is also responsible for customer support.

Atte Haapalinna, earlier Senior Vice President, Customer Support, was appointed Senior Vice President, Products from 7 April 2014.

In connection with its Capital Markets Day on 26 September 2014, Okmetic modified its long-term targets slightly as:
- Organic growth of sensor wafer business at 10 percent per annum or more
- Operating profit to account for 10 percent of net sales or more

This implies no explicit growth target for sales of other type of wafers.

Okmetic Management Oy and Okmetic Invest Oy were merged in parent company on 30 November 2014.

EVENTS AFTER THE END OF THE FINANCIAL YEAR

The extraordinary general meeting of Okmetic Oyj was held on 12 January 2015. The general meeting decided, in accordance with the proposal of the board of directors, to distribute a dividend of 0.30 euro per share (in total 5,061,221.10 euro). The dividend was paid to shareholders who were registered in the shareholders' register maintained by Euroclear Finland Ltd. on the dividend record date, 14 January 2015. The dividend payment took place on 21 January 2015.
As of 1 January 2015, Other business sales is reported as part of semiconductor sales due to the significantly diminished role of Other business.

NOTIFICATION OF CHANGES IN HOLDINGS

The company did not receive notifications of changes in holdings during 2014.

STOCK OPTION PLANS

Based on the authorisation given by the Annual General Meeting on 10 April 2013, Okmetic's board of directors decided on 17 December 2013 to grant stock options to the key managers of Okmetic.

As a precondition for being eligible to receive the stock options, the key managers are required to invest in Okmetic shares. According to the investment requirement, the key managers are required to hold in the aggregate 262,600 Okmetic shares to be eligible to receive all of the stock options.

The stock options shall, in deviation from the shareholders' pre-emptive subscription right, be offered to the key managers of Okmetic. The maximum total number of stock options offered is 870,000, which entitle participants to subscribe for a maximum number of 870,000 Okmetic shares (4.8% of the company's shares on a fully diluted basis). Each stock option entitles participants to subscribe for one share. The shares subscribed with the stock options may either be new shares issued by the company or existing shares held by the company. Of the stock options, 320,000 shall be marked with the symbol 2013 A and 550,000 with the symbol 2013 B. The stock options shall be issued free of charge.

The share subscription price for the stock options 2013 A shall be euro 5.75 and for the stock options 2013 B euro 6.00. Future dividends and capital repayments from the invested unrestricted equity reserve distributed before the share subscription shall be deducted from the share subscription price.

The share subscription period for 25 percent of the stock options 2013 A and 2013 B will commence on or about 1 February 2016 and for 75 percent of the stock options 2013 A and 2013 B on or about 1 February 2017. The share subscription period for all the stock options ends on 31 March 2018.

There is, for the company and in the interest of all the company's shareholders, a substantial financial ground to grant the stock options in deviation from the shareholders' pre-emptive subscription right, since the stock options are intended to align the interests of the shareholders and the key managers and to form a part of the incentive and commitment program of the key managers. The purpose of the arrangement is to encourage the key managers to invest in the company's shares and to work on a long-term basis to increase the company's share value.

Should an award holder's employment in a group company terminate prior to the share subscription period, his or her stock option awards will be forfeited. A failure to fulfil the investment requirements set forth by the board of directors will result in the forfeiture of stock option awards.

By 31 December 2014, the total number of stock options issued to the key managers at Okmetic was 604,250. In keeping with the investment requirement, members of the key management personnel hold in the aggregate 192,900 Okmetic shares pursuant to the Stock Option Plan.

MANAGEMENT AND AUDITOR

In 2014, Okmetic's board of directors comprised Henri Österlund as the chairman, Jan Lång as the vice chairman as of 9 April, Tapani Järvinen as the vice chairman until 9 April, and members of the board Hannu Martola, Mervi Paulasto-Kröckel and Mikko Puolakka.

Okmetic Oyj's president is Kai Seikku. In addition to the president, the group's executive management group includes: Atte Haapalinna, Senior Vice President, Products (as of 7 April, during 1 January - 6 April Mr. Haapalinna was responsible for technical customer support); Juha Jaatinen, Senior Vice President, Finance, IT and Communications; Jaakko Montonen, Senior Vice President, Supply Chain; Markus Virtanen, Senior Vice President, Human Resources, Quality and Environment; and Anna-Riikka Vuorikari-Antikainen, Senior Vice President, Customers and Markets (as of 7 April, during 1 January - 6 April Ms. Vuorikari-Antikainen was responsible for Products). Ms. Vuorikari-Antikainen is also responsible for technical customer support.

During 2014, members of the executive management group included also Mikko Montonen, Executive Vice President, Customers and Markets and Deputy to the President until 6 April and Petri Antola, Senior Vice President, Technology Projects and Solar Materials until 18 December.

The company's auditor is PricewaterhouseCoopers Oy, Authorised Public Accountants, with Mikko Nieminen, Authorised Public Accountant, acting as the principal auditor.

THE BOARD OF DIRECTORS' PROPOSAL REGARDING THE USE OF DISTRIBUTABLE FUNDS

According to the financial statements dated on 31 December 2014, the parent company's distributable earnings amount to 18,455,636.07 euro. No significant changes have taken place in the company's financial position after the end of the financial year.

The board of directors of Okmetic Oyj proposes to the annual general meeting that the company will distribute a dividend of 0.15 euro per share (in total 2.5 million euro) for the financial year 2014 in addition to the dividend of 0.30 euro per share already paid in January 2015. The board of directors' view is that the company's strong balance sheet enables dividend distribution of 0.45 euro per share (in total 7.6 million euro) during the beginning of 2015.

CONDENSED FINANCIAL STATEMENTS AND TABLES 1 JANUARY - 31 DECEMBER 2014 (unaudited)

ACCOUNTING POLICIES

This financial statements release has been prepared in accordance with IAS 34, Interim Financial Reporting.

In preparing this financial statements release, Okmetic has followed the same accounting policies as in the financial statements for 2013 except for the effect of changes required by the adoption of the new or revised IFRS standards and IFRIC interpretations as of 1 January 2014, which have been described in financial statements 2013. The adoption of the aforementioned standards and interpretations has not had an effect on the figures presented from the reporting period.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

1,000 euro	1 Oct- 31 Dec, 2014	1 Oct- 31 Dec, 2013	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013
Net sales	18,679	16,837	74,104	68,516
Cost of sales	-14,811	-14,382	-58,909	-54,918
Gross profit	3,868	2,455	15,195	13,598
Other income and expenses	-2,289	-2,191	-8,794	-8,567
Operating profit	1,579	263	6,401	5,031
Financial income and expenses	-322	-231	-350	-630
Profit before tax	1,257	32	6,051	4,401
Income tax	-174	415	-1,219	-559
Profit for the period	1,083	447	4,832	3,842
Other comprehensive income:
Items that may be reclassified to profit or loss in subsequent periods Cash flow hedges	-28	-41	-11	-58
Translation differences	325	-33	891	-60
Other comprehensive income for the period, net of tax	296	-74	880	-118
Total comprehensive income for the period	1,379	373	5,712	3,724
Profit for the period attributable to:
Equity holders of the parent company	1,083	447	4,832	3,842
Total comprehensive income attributable to:
Equity holders of the parent company	1,379	373	5,712	3,724
Basic earnings per share, euro	0.06	0.03	0.29	0.23
Diluted earnings per share, euro	0.06	0.03	0.29	0.22

CONDENSED CONSOLIDATED BALANCE SHEET

1,000 euro	31 Dec, 2014	31 Dec, 2013
Assets
Non-current assets
Property, plant and equipment	42,538	45,295
Intangible assets	657	897
Other receivables	794	1,419
Total non-current assets	43,990	47,611
Current assets
Inventories	17,890	16,634
Receivables	14,347	14,572
Cash and cash equivalents	14,436	5,214
Total current assets	46,672	36,420
Total assets	90,662	84,031
Equity and liabilities
Equity
Equity attributable to equity holders of the parent company
Share capital	11,821	11,821
Other equity	51,805	45,451
Total equity	63,627	57,273
Liabilities
Non-current liabilities	13,561	10,533
Current liabilities	13,475	16,226
Total liabilities	27,036	26,759
Total equity and liabilities	90,662	84,031

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

1,000 euro	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013
Cash flows from operating activities:
Profit before tax	6,051	4,401
Adjustments	6,494	6,566
Change in working capital	352	-2,091
Financial items	-486	-126
Tax paid	67	976
Net cash from operating activities	12,478	9,726
Cash flows from investing activities:
Purchases of property, plant and equipment	-4,345	-9,089
Proceeds from sale of property, plant and equipment	710	-
Net cash used in investing activities	-3,635	-9,089
Cash flows from financing activities:
Proceeds from long-term borrowings	5,000	10,000
Proceeds from short- term borrowings	4,000	1,024
Payments of long-term borrowings	-3,000	-1,000
Payments of short-term borrowings	-4,024	-4,043
Payments of finance lease liabilities	-595	-478
Other items	36	10
Dividends paid	-578	-6,763
Capital repayment	-	-1,169
Share issue	750	-
Acquisition of Okmetic Management Oy's share capital	-1,539	-
Net cash used in financing activities	50	-2,419
Increase (+) / decrease (-) in cash and cash equivalents	8,893	-1,782
Exchange rate changes	329	-292
Cash and cash equivalents at the beginning of the period	5,214	7,288
Cash and cash equivalents at the end of the period	14,436	5,214

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Equity attributable to equity holders of parent company
1,000 euro	Share capital	Share pre- mium	Reserve for in- vested unre- stricted equity	Other re- serves  1)	Retained earnings	Total
Balance at 31 Dec, 2013	11,821	20,045	3	1,756	23,647	57,273
Profit for the period					4,832	4,832
Other com- prehensive income, net of tax:
Cash flow hedges				-11		-11
Translation differences				891		891
Total com- prehensive income for the period				880	4,832	5,712
Share issue			750			750
Share-based payments					249	249
Acquisition of non-controlling interest					-357	-357
Balance at 31 Dec, 2014	11,821	20,045	753	2,636	28,372	63,627
Balance at 31 Dec, 2012	11,821	20,045	1,200	1,874	26,919	61,860
Profit for the period					3,842	3,842
Other com- prehensive income, net of tax:
Cash flow hedges				-58		-58
Translation differences				-60		-60
Total com- prehensive income for the period				-118	3,842	3,724
Share-based payments					199	199
Dividend distribution					-7,341	-7,341
Capital repayment			-1,197		28	-1,169
Balance at 31 Dec, 2013	11,821	20,045	3	1,756	23,647	57,273

1)"Other reserves" contains hedge reserve and translation differences.

Acquisition of shares of Okmetic Management Oy is treated as acquisition of non-controlling interest. Okmetic Management Oy was merged in parent company on 30 November 2014.

CHANGES IN PROPERTY, PLANT AND EQUIPMENT

1,000 euro	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013
Carrying amount at the beginning of the period	45,295	43,433
Additions	3,627	7,648
Disposals	-520	-9
Depreciation	-6,257	-5,623
Exchange differences	393	-154
Carrying amount at the end of the period	42,538	45,295

COMMITMENTS AND CONTINGENCIES

1,000 euro	31 Dec, 2014	31 Dec, 2013
Loans, secured with collaterals	7,000	10,000
Collaterals	15,110	17,128
Off-balance sheet lease commitments	308	395
Capital commitments	2,689	1,910
Nominal values of derivative contracts
Currency forward agreements	1,193	948
Currency options, call	-	182
Currency options, put	3,979	1,144
Electricity derivatives	1,076	1,847
Fair values of derivative contracts
Currency forward agreements	6	12
Currency options, call	-	-1
Currency options, put	-85	20
Electricity derivatives	-244	-350

The contract price of the derivatives has been used as the nominal value of the underlying asset.

HIERARCHY LEVELS OF DERIVATIVE CONTRACTS MEASURED AT FAIR VALUE

1,000 euro	31 Dec 2014				31 Dec 2013
	Level  1	Level  2	Level  3		Level  1	Level  2	Level  3
Financial assets
Derivative financial instruments	-	6	-		91	31	-
Financial liabilities
Derivative financial instruments	244	85	-		441	-	-

Fair value estimation

The group's financial instruments that are measured at fair value comprise derivatives used for hedging and held for trading.

Fair values of level 1 instruments are based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Fair values of level 2 instruments are based on other data than quoted prices in active markets, but on the data from which the asset is observable, either directly (i.e. price) or indirectly (i.e. derived from the prices).

Electricity derivatives are classified as level 1, currency derivatives as level 2.

Fair value determination

The fair value of electricity derivatives is based on quoted market prices. The fair value of currency forwards and options is determined on the basis of market and contract prices of the agreements at the reporting date by applying commonly used valuation techniques.

RELATED PARTY TRANSACTIONS

In January-December, the key management compensation of the executive management group and board of directors amounted to 1,877,931 (1,730,787) euro. The compensation includes share-based payments and the board of directors' remuneration paid as shares, 450,120 (310,559) euro.

KEY FIGURES SHOWING FINANCIAL PERFORMANCE

1,000 euro	1 Jan- 31 Dec, 2014	1 Jan- 31 Dec, 2013
Net sales	74,104	68,516
Change in net sales compared to the previous year's period, %	8.2	-17.5
Export and foreign operations share of net sales, %	90.7	91.8
Operating profit before depreciation (EBITDA)	12,985	10,905
% of net sales	17.5	15.9
Operating profit	6,401	5,031
% of net sales	8.6	7.3
Profit before tax	6,051	4,401
% of net sales	8.2	6.4
Return on equity, %	8.0	6.4
Return on investment, %	8.7	6.7
Non-interest-bearing liabilities	13,710	15,014
Net interest-bearing liabilities	-1,110	6,530
Net gearing ratio, %	-1.7	11.4
Equity ratio, %	70.5	68.2
Capital expenditure	3,627	7,648
% of net sales	4.9	11.2
Depreciation	6,584	5,874
Research and development expenditure	2,472	2,779
% of net sales	3.3	4.1
Average number of personnel during the period	370	363
Personnel at the end of the period	367	355

KEY FIGURES PER SHARE

When calculating equity per share, Okmetic's own shares and the Okmetic shares owned by Okmetic Management Oy are deducted from the total number of shares. Okmetic Management Oy was merged in parent company on 30 November 2014.

Euro	31 Dec, 2014	31 Dec, 2013
Basic earnings per share	0.29	0.23
Diluted earnings per share	0.29	0.22
Equity per share	3.77	3.43
Capital repayment per share	-	0.07
Dividend per share	0.45 1)	-
Dividends/earnings, %	155.2	-
Effective dividend yield, %	9.3	-
Price/earnings(P/E)	16.8	20.9
Share performance (1 Jan-)
Average trading price	4.68	4.92
Lowest trading price	4.28	4.25
Highest trading price	5.25	5.66
Trading price at the end of the period	4.83	4.82
Market capitalisation at the end of the period, 1,000 euro	83,499	83,326
Trading volume (1 Jan-)
Trading volume, transactions, 1,000 pcs	3,778	3,382
In relation to weighted average number of shares, %	21.9	19.6
Trading volume, 1,000 euro	17,704	16,647
The weighted average number of shares during the period under review adjusted by the share issue, 1,000 pcs	17,288	17,288
The number of shares at the end of the period adjusted by the share issue, 1,000 pcs	17,288	17,288

1) The figure for 2014 contains the dividend distributed in January 2015, 0.30 euro per share as well as the board of directors' proposition, 0.15 euro per share.

QUARTERLY KEY FIGURES

1,000 euro	10-12/ 2014	7-9/ 2014	4-6/ 2014	1-3/ 2014
Net sales	18,679	19,320	18,700	17,405
Compared to previous   quarter %	-3.3	3.3	7.4	3.4
Compared to corresponding   period last year, %	10.9	5.9	9.8	6.1
Operating profit	1,579	2,757	1,137	928
% of net sales	8.5	14.3	6.1	5.3
Profit before tax	1,257	2,806	1,096	892
% of net sales	6.7	14.5	5.9	5.1
Net cash flow generated from: Operating activities	6,270	3,644	1,932	632
Investing activities	-996	261	-1,263	-1,637
Financing activities	-1,180	-3,157	4,859	-472
Increase/decrease in cash and cash equivalents	4,093	748	5,528	-1,477
Personnel at the end of the period	367	363	393	354

1,000 euro	10-12/ 2013	7-9/ 2013	4-6/ 2013	1-3/ 2013
Net sales	16,837	18,242	17,035	16,403
Compared to previous   quarter, %	-7.7	7.1	3.9	-20.7
Compared to corresponding   period last year, %	-18.6	-13.2	-24.2	-13.2
Operating profit	263	1,423	1,971	1,373
% of net sales	1.6	7.8	11.6	8.4
Profit before tax	32	1,280	1,812	1,277
% of net sales	0.2	7.0	10.6	7.8
Net cash flow generated from: Operating activities	4,915	3,481	519	811
Investing activities	-1,304	-1,687	-1,966	-4,131
Financing activities	-3,892	-1,155	-7,276	9,904
Increase/decrease in cash and cash equivalents	-281	639	-8,724	6,585
Personnel at the end of the period	355	356	379	354

DEFINITIONS OF KEY FINANCIAL FIGURES

Operating profit before depreciation (EBITDA)	=	Operating profit + depreciation
Return on equity (ROE), %	=	Profit/loss for the period x 100/
		Equity(average for the period)
Return on investment (ROI), %	=	(Profit/loss before tax + interest and other financial expenses) x 100/
		Balance sheet total - non-interest bearing liabilities(average for the period)
Equity ratio, %	=	Equity x 100/
		Balance sheet total - advances received
Net interest-bearing liabilities	=	Interest-bearing liabilities - cash and cash equivalents
Net gearing ratio, %	=	(Interest-bearing liabilities - cash and cash equivalents) x 100/
		Equity
Earnings per share	=	Profit/loss for the period attributable to  equity holders of the parent company/
		Adjusted weighted average number of shares in issue during the period
Equity per share	=	Equity attributable to equity holders of the parent company/
		Adjusted number of shares at the end of the period
Dividend per share	=	Dividend for the period/
		Adjusted number of shares at the end of the period
Effective dividend yield, %	=	Dividend per share x 100/
		Trading price at the end of the period
Price/earnings ratio (P/E)	=	Last adjusted trading price at the end of the period/
		Earnings per share
Average trading price	=	Total traded amount in euro/
		Adjusted number of shares traded during the period
Market capitalisation at the end of the period	=	Number of shares at the end of the period x trading price at the end of the period
Trading volume	=	Number of shares traded during the period/
		Weighted average number of shares during the period

All figures of the financial tables are rounded, and consequently the sum of individual figures can deviate from the presented sum figure.

The future estimates and forecasts in this financial statements release are based on the company management's current knowledge. Actual events and results may differ from the estimates presented here.

NEWS CONFERENCE

A briefing for analysts, investors and media will take place on Friday, 13 February 2015 at 8.15 a.m. Finnish time in Helsinki Stock Exchange building, Fabianinkatu 14, Helsinki, (entrance via Nasdaq Helsinki's reception, 2nd floor). In the event, Okmetic's President Kai Seikku will present the group's performance in 2014 and prospects for 2015.

FINANCIAL REPORTING IN 2015

Okmetic will publish the financial statements, board of directors' report and auditor's report for 2014 as well as a separate corporate governance statement on its website www.okmetic.com at latest on 24 March 2015.

Interim report 1-3/2015 (Q1) 29 April 2015
Interim report 1-6/2015 (Q2) 23 July 2015
Interim report 1-9/2015 (Q3) 22 October 2015

Annual general meeting will tentatively be held on 14 April 2015.

OKMETIC OYJ

Board of directors

For further information, please contact:

President Kai Seikku, Okmetic Oyj,
tel. +358 9 5028 0232, email: kai.seikku@okmetic.com

Senior Vice President, Finance, IT and Communications
Juha Jaatinen, Okmetic Oyj, tel. +358 9 5028 0286,
email: juha.jaatinen@okmetic.com

Okmetic is a technology company which supplies tailor-made silicon wafers for sensor and semiconductor industries. Okmetic provides its customers with solutions that boost their competitiveness and profitability.

Okmetic's silicon wafers are part of a further processing chain that produces end products that improve human interaction and quality of life. Okmetic's products are based on high-tech expertise that generates added value for customers, innovative product development and an extremely efficient production process. 

Okmetic has a global customer base and sales network, production plants in Finland and the US and contract manufacturers in Japan and China. Okmetic's shares are listed on Nasdaq Helsinki under the code OKM1V. For more information on the company, please visit our website at www.okmetic.com.

---