Nordkalk Corporation STOCK EXCHANGE RELEASE 26 January 2007 at 2 PM NORDKALK'S NET SALES INCREASED STRONGLY FINANCIAL STATEMENTS FOR THE YEAR 2006 . net sales amounted to EUR 303.8 (2005: 269.6) million (+13%) . profit before taxes and minority interests grew to EUR 24.5 (13.9) million (+75%) . construction of a lime kiln was started in Norway . positive development in Poland and the Baltic countries . paper mill shutdowns in Finland . high energy and freight costs Nordkalk´s total sales during 2006 increased strongly in comparison with year 2005. This is partly due to the fact that year 2005 was burdened by the labour dispute in the Finnish paper industry. The positive development during the year, above all concerning profitability, can also be contributed to cost efficiency and high utilisation of capacity. The economic boom in the industry led to strong demand for limestone-based products, especially in the building materials and steel industries. INDUSTRY Shutdowns of paper mills in Finland led to decreased sales of the paper pigment GCC as well as the sales of quicklime used for the manufacture of the paper pigment PCC. The loss of sales, however, could be partly compensated with increased sales to the Swedish paper industry. Sales to the pulp mills in Finland were good. The steelworks continued to operate at a high production rate. In Poland and Germany sales to the steel industry have increased strongly and also in Finland and Sweden an increase in sales can be noted. There was a boom in construction last year, which led to a strong increase in sales of products to the building materials industry in all our market areas. The mild weather at the end of the year extended the season, which had a positive effect on sales. The same applies to products for soil and road construction. In Poland especially there was a strong increase in sales of these products. Sales to the chemical industry increased compared with year 2005. AGRICULTURE Total sales to agriculture were slightly better than in 2005. At the beginning of the year liming conditions were good but the rainy autumn made it impossible to lime at the end of the season. The farmers' willingness to lime, especially in Finland and Sweden, is also affected by the official debate on farming subsidies granted by the EU. Sales to the fodder industry decreased slightly. ENVIRONMENTAL CARE Total sales of products for environmental care grew in comparison with 2005. In Finland and Sweden the use of flue-gas cleaning products increased strongly, because the long dry season raised the operation of coal-fired power plants. Sales of water treatment products decreased slightly. THE FOURTH QUARTER SOMEWHAT BETTER THAN IN 2005 Sales of the fourth quarter grew somewhat and were EUR 80.7 (73.0) million. Operating profit increased to EUR 8.8 (6.6) million. The economic boom within industry had a positive effect on the fourth quarter, as had the mild late autumn, which extended the building season. However, the period was burdened by the unrealised liming season in agriculture. FINANCIAL RESULT FOR YEAR 2006 Consolidated net sales totalled EUR 303.8 (269.6) million. Sales increased practically in all customer segments. Consolidated operating profit increased 34 per cent and was EUR 36.8 (27.5) million, which corresponds to 12.1 (10.2) per cent of net sales. The quarter was burdened by the high energy costs as well as by production problems in Sweden, which enabled Nordkalk to sell emission rights for EUR 2.4 (1.0) million during the year. Depreciation according to plan was EUR 25.8 (26.9) million. Net financial expenses decreased EUR 1.2 million in comparison with year 2005 and were EUR 12.3 million. Profit before extraordinary items was EUR 24.5 (13.9) million, representing 8.1 (5.2) per cent of net sales. The cash flow from operating activities remained on a good level. Return on capital employed was EUR 13.8 (10.2) per cent. Total assets were EUR 345.8 (31.12.2005: 330.9) million. The equity/total assets ratio fell to 15.2 (26.1) per cent. INVESTMENTS Total investments during the period amounted to EUR 22.0 (14.1) million and were financed from Nordkalk´s own cash flow. In April a decision was made that the Norwegian NorFraKalk AS, which is owned half each by the Nordkalk Corporation and Franzefoss Minerals AS, will build a lime kiln in Norway. The yearly capacity of the new kiln will be 200 000 tons of quicklime and the estimated start-up will take place in autumn 2007. In Slawno, Poland, the grinding facility was rebuilt and a new production line installed. The investment programme at the lime company Alekseevka in Russia proceeded according to plan providing new opportunities to increase capacity and expand product range. During the third quarter the rebuilding of the lime kiln in Luleå, Sweden was completed and the kiln was brought on stream in September. Likewise the rebuilding of the lime kiln was finished in Köping, Sweden. FINANCING Nordkalk´s financing was renegotiated in 2006. All the capital loans, total of EUR 49.1 million, were paid off. Nordkalk aims to reduce its financial costs by replacing capital loans with bank loans. Financing extends to 2010-2013 under current credit agreements. The financing is bound to a number of key figures and their development will affect financing costs. OWNERS Nordkalk is owned by a Finnish investor group comprising Ahlström Capital Oy (30.5 %), the Rettig Group Ltd (21.0%), a group of mainly institutional investors (45.0 %) and the management of the company (3.5 %). The ownership structure was changed when the funds managed by CapMan sold all their shares in Nordkalk on 28 December 2006. Ahlström Capital's ownership increased from 25.7% to 30.5% and Rettig's ownership from 1.9% to 21.0%. The ownership of Stiftelsen för Åbo Akademi increased to 8.7%, Svenska litteratursällskapet i Finland's to 7.0% and Furuvik Invest's to 7.3%. PERSONNEL The total number of employees in the Nordkalk Group at year-end was 1,304 (1,347). The average number of employees was 1,353 (1,316). The increase is due to the purchase of the Russian lime company Alekseevka in autumn 2005. In Finland Nordkalk has participated in the creation of a further qualification for the mining industry and the first six miners completed their training in September 2006. At the same time 2-year training for foremen was started. The 3-year long process "zero tolerance for occupational accidents" in Lappeenranta, Finland, was accomplished with excellent results. Seventeen occupational accidents occurred in 2003 and in 2006 the number of accidents fell to 3. The number of sick-leave days fell from 254 to 11. Based on this experience, the efforts to decrease accidents will be intensified in the whole of Nordkalk. RESEARCH AND DEVELOPMENT Total R&D expenditure was EUR 3.3 (3.2) million, which represents 1.1 (1.2) per cent of net sales. The development activities are aimed to raise the utilisation rate of quarried raw materials and to create new product concepts and market applications for lime- based products. In the field of geology, the focus is on ensuring the raw material base in the long run and on using Nordkalk's existing limestone reserves in the most efficient way, based on good knowledge of the geological characteristics of each deposit. ENVIRONMENT AND QUALITY All production plants in Finland and Poland and all operations in Sweden have been certified according to the ISO 14001 environmental standard. In Estonia and Poland environmental audits are performed on a regular basis. At all locations, Nordkalk continues its efforts to minimise the environmental impact of its operations, such as noise, vibration and dust. In 2006 the total amount invested in environmental projects was EUR 1.2 (1.1) million. All operations in Sweden have been certified according to the ISO 9001:2000 quality standard, as well as parts of the production in Finland. In Poland all production facilities and sales were certified in 2006. Training in quality and environmental management systems is offered continuously. RISKS A risk analysis was carried out in Nordkalk in 2006. The most significant factors that can affect the company's activities and economic development in a negative way are access to raw material, energy prices, environmental requirements, financial risks, damage to the production facilities and availability of skilled workforce. BOARD OF DIRECTORS, PRESIDENT AND AUDITORS Members of the Board of Directors: Björn Mattsson chairman Morten Ahlström member Jan Inborr member Jukka Järvelä member until 28 Dec. 2006 Bjarne Mitts member since 18 Jan. 2007 Orvo Siimestö member until 28 Dec. 2006 Christoffer Taxell member Orvo Siimestö and Jukka Järvelä resigned from the Board of Directors when the funds managed by CapMan sold their shares in Nordkalk on 28 December 2006. Bjarne Mitts, President & CEO of the Rettig Group Ltd, was elected as a new member of the Board of Directors on 18 January 2007. President of the company is Bertel Karlstedt. The auditor was KPMG Oy Ab, Authorised Public Accountants, with Sixten Nyman, APA, as the main responsible auditor. BOARD'S PROPOSAL FOR THE DISTRIBUTION OF PROFITS Distributable funds for the Nordkalk parent company amount to EUR 31.9 million. The Board proposes that no dividend be paid and that the annual profit be posted to retained earnings in the balance sheet. PROSPECTS FOR THE YEAR 2007 Nordkalk's net sales and result are expected to increase somewhat during 2007. Growth is expected especially in Poland and the Baltic countries. Pargas, 26 January 2007 Nordkalk Corporation Björn Mattsson Morten Ahlström Jan Inborr Bjarne Mitts Christoffer Taxell Bertel Karlstedt, President Audited FURTHER INFORMATION: Bertel Karlstedt, President, tel +358-204 55 6406 or +358-40 553 3859 Kim Nordell, Director, Business Control, tel +358-204 55 6337 or +358-400 823 392 Nordkalk is the leading producer of high quality limestone-based products in Northern Europe. The products are used mainly in the paper, steel and building materials industries as well as in environmental care and agriculture. The product brand is Nordkalk. www.nordkalk.com INCOME STATEMENT MEUR 10-12/ 10-12/ 1-12/ 1-12/ 2006 2005 2006 2005 Net sales 80.7 73.0 303.8 269.6 Cost of goods sold, selling and administrative expenses -71.9 -66.3 -267.0 -242.1 Operating profit 8.8 6.6 36.8 27.5 % 10.9 % 9.1 % 12.1 % 10.2 % Financial income and expenses -3.2 -3.0 -12.3 -13.5 Profit before extraordinary 5.6 3.6 24.5 13.9 items % 7.0 % 4.9 % 8.1 % 5.2 % Profit before taxes and 5.6 3.6 24.5 13.9 minority interest Taxes -1.6 -1.7 -7.6 -4.6 Minority interest -0.7 -0.9 -3.1 -2.7 Net profit for the period 3.3 1.0 13.7 6.7 BALANCE SHEET MEUR 31 Dec. 31 Dec. 2006 2005 Fixed assets Intangible assets 9.4 8.9 Tangible assets 248.2 237.4 Investments 1.4 1.9 Fixed assets and long-term 259.0 248.3 investments, total Current assets Inventories 34.0 34.5 Receivables 42.4 38.7 Cash and bank balances 10.4 9.4 Current assets, total 86.8 82.6 Assets total 345.8 330.9 Shareholders' equity Shareholders' equity 39.1 24.5 Capital loan 0.0 49.1 Shareholders' equity, total 39.1 73.6 Minority interest 13.5 12.8 Provisions 1.1 1.0 Liabilities Long-term liabilities 237.0 190.6 Short-term liabilities 55.1 52.8 Liabilities total 292.1 243.4 Shareholders' equity and 345.8 330.9 liabilities, total FINANCIAL ANALYSIS MEUR 1-12/ 1-12/ 2006 2005 Cash flow from operating activities 43.9 32.4 Cash used in investing activities -20.8 -14.6 Change in interest-bearing debt 26.8 -12.3 Change in capital loan -49.1 -5.7 Translation differences and other 0.2 -0.1 changes Change in cash and bank 1.1 -0.2 Cash and bank at the beginning of 9.4 9.6 period Cash and bank at the end of period 10.4 9.4 KEY FIGURES 31 Dec. 31 Dec. 2006 2005 Capital employed Meur 266.5 271.4 Interest-bearing liabilities Meur 213.9 185.0 Net Interest-bearing liabilities Meur 203.5 175.6 Return on equity (ROE) % 24.3 10.9 Return on capital employed (ROC) % 13.8 10.2 Equity/total assets ratio % 15.2 26.1 Gearing % 386.9 203.2 * Gross capital expenditure Meur 22.0 14.1 Gross capital expenditure as % of % 7.2 5.2 net sales Depreciation Meur 25.8 26.9 Personnel on average 1 353 1 316 Personnel at the end of period 1 304 1 347 * Capital loan included in equity PLEDGED ASSETS AND CONTINGENT LIABILITIES MEUR 31 Dec. 31 Dec. 2006 2005 Real estate mortgages and other pledges for own debts 412.0 322.6 Contingent liabilities Guarantees 9.6 1.2 Pension fund liability 0.0 0.0 Other contingent liabilities 0.0 0.0 Total 421.6 323.9 NOMINAL VALUES OF DERIVATIVE INSTRUMENTS MEUR 31 Dec. 31 Dec. 2006 2005 Nominal value Foreign exchange forward 77.7 64.6 contracts of which closed contracts 1.7 0.5 Forward contracts of electricity 13.4 13.0 of which closed contracts 0.0 0.0 Interest rate swap 125.0 76.5 of which closed contracts 0.0 0.0 Market value Foreign exchange forward -0.5 -1.4 contracts Forward contracts of electricity 0.8 2.4 Interest rate swap 1.3 -0.5 The principle observed in calculating market value: Foreign exchange forward contracts, forward contract of electricity and interest rate swap are valued at market values on the balance sheet date. Derivative instruments are used to reduce currency, purchase and interest risk of the Group. EXCHANGE RATES Rates at end of period Average rates 31 Dec. 31 Dec. 1-12/ 1-12/ 2006 2005 2006 2005 Euro 1.00000 1.00000 1.00000 1.00000 SEK (Sweden) 9.04040 9.38850 9.25332 9.27964 EEK (Estonia) 15.64660 15.64660 15.64660 15.64660 PLN (Poland) 3.83100 3.86000 3.89513 4.02259 NOK (Norway) 8.23800 7.98500 8.04628 8.01287 RUR (Russia) 34.68000 33.92000 34.11158 35.20359