ANNUAL REPORT 2006

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Table of Contents ......................................................................................................3Nordkalk number one in Northern Europe ............................................................4-5From the President .................................................................................................6-7Nordkalk´s products ...............................................................................................8-9Industry ..............................................................................................................10-13Agriculture .........................................................................................................14-15Environmental care ............................................................................................16-17Personnel ............................................................................................................18-19Occupational safety ............................................................................................20-21

Annual Report of the Board of Directors ......................................................22-23Consolidated income statement ...........................................................................24Consolidated balance sheet ..................................................................................25Consolidated financial analysis ............................................................................26Parent Company income statement .....................................................................27Parent Company balance sheet ............................................................................28Parent Company financial analysis ......................................................................29Accounting principles ......................................................................................30-31Notes to the financial statements ....................................................................32-45Calculation of financial ratios .............................................................................45Five-year review .....................................................................................................46Auditors´report......................................................................................................47

Board of Directors and Management Group ......................................................48-49Group structure .......................................................................................................50Addresses ................................................................................................................52

Nordkalk publishes an Environmental Report. It is also available at www.nordkalk.com.

Table of Contents

Nordkalk number one in Northern Europe

Limestone 17 %

Limestonepowder

21 %

Quick and slaked lime 34 %

Paperpigments

20 %

Other 8 %

Products(as a percentage of total sales)

Sales by customer segment(as a percentage of total sales)

Environmental care 8 %Paper 29 %

Pulp 6 %

Steel 18 %Other industries 10 %

Buildingmaterials

23 %

Agriculture 6 %

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Net sales

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Operating profit

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The change between years 2002 and 2003 is affected by the changed owner and capital structure.

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Nordkalk is the leading manufacturer of high quality lime-stone-based products in Northern Europe. Nordkalk operates at 39 different locations in 8 countries. The company’s roots lie in Pargas, Finland where limestone has been extracted con-tinuously for more than a hundred years.

Nordkalk extracts limestone at 20 locations from its own deposits and processes it into crushed and ground limestone, enriched calcite, and quick and slaked lime. Nordkalk’s range of products also includes dolomite and wollastonite.

Nordkalk products are used in the paper, steel and building materials industries and also in environmental care and agri-culture. Nordkalk’s largest group of customers is industry, which accounts for 86 per cent of Nordkalk’s sales. The paper making industry uses crushed limestone and quicklime for filling and coating purposes. The manufacture of steel calls for lime to remove impurities at different stages of the pro-duction process. In the sugar industry lime is used to remove impurities from the beet juice.

Building materials form one of the oldest uses for limestone products, and the building materials industry is today Nord-kalk’s next large customer segment after the paper industry. Lime is also used in the manufacture of glass and paints. Do-lomite is an important raw material for making fertilisers and wollastonite is used to manufacture plastics and ceramics.

In road and ground engineering lime is used to for stabilising the soil. The asphalt used for surfacing roads also contains limestone powder.

Lime appears in all facets of our everyday lives; perhaps most obviously in the countryside, where agricultural liming reduces the acidity of the fields. Lime is also used to neutral-ise the acidity of watercourses and forests. Limestone-based products clean the flue gases from coal-fired power stations and they are also used to regulate the acidity of our drinking water and clean our waste water.

Trust, competence and quality arethe guiding lights of our operations• We rely on ourselves and our companions and we believe that partnership means advantages for both parties. We understand the processes of our customers, which helps us to meet the constantly changing demands.• We are able to deliver the right solution for every situation. We foresee opportunities for making improvements in both our own and our customers’ processes.• The quality of our raw material, our products and our work is reflected in our customers’ products.• We deliver the right product on time.

Nordkalk’s sales increased strongly in 2006Consolidated net sales increased 13 per cent to EUR 303.8 (269.6) million. Sales increased practically in all customer segments. Profit before taxes and minority interests grew 75 per cent to EUR 24.5 (13.9) million. The financial perform-ance of the company was, however, affected negatively by high energy and logistics costs and the changes in Finnish paper industry.

The positive development in Poland and the Baltic countries continued. In Russia modernisation of the Alekseevka lime plant was carried on according to plans. In Norway Nordkalk started to build a lime kiln together with Franzefoss Minerals. The economic boom in the steel and building material indus-tries continued.

The total number of employees in the Nordkalk Group at year-end was 1,304. Nordkalk has prepared in many ways for the future challenges such as the retirement of many employees in the near future. In Finland Nordkalk has participated in the creation of a further qualification for the mining industry and in September 2006 a 2-year training for foremen was started in order to ensure us qualified personnel in the future.

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Key figures 2004 – 2006

2004 2005 2006

Net sales MEUR 270.6 269.6 303.8 change % 4.1 -0.4 2.7Operating profit MEUR 37.9 27.5 36.8 % of net sales % 14.0 10.2 12.1Profit before extraordinary items MEUR 20.4 13.9 24.5Net profit/loss for the period MEUR 12.5 6.7 13.7Balance sheet total MEUR 344.2 330.9 345.8Gross capital expenditure MEUR 22.3 14.1 22.0Capital employed CB MEUR 281.0 271.4 266.5Return on capital employed % 13.7 10.2 13.8Return on equity % 22.0* 10.9* 24.3Gearing % 216.3** 203.2** 386.9Solvency % 9.0 11.3 15.2Personnel at year-end 1288 1347 1304 *) incl. capital loan **) Capital loan included in equity

Gert Wahtera, Production Manager, Pargas quarry, Finland

2004 2005 2006

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The year 2006 was my first year as president of Nordkalk. It has been an interesting, rewarding and challenging year. It has proven to be a good year, a result of the work done both during 2006 and earlier years. It provides us with a good foundation on which to build further.

The result of year 2006 constitutes a milestone in the Corpo-ration’s progress as far as turnover is concerned; it increased for the first time to over EUR 300 million. This was made possible by good growth in all markets compared with the preceding year. Growth was especially encouraging in the Central and Eastern Europe division (CEE) with Poland as the principal driving force. The progress made in Poland also achieved external recognition when Nordkalk was selected as “Best Finnish company in Poland 2006” by the Finnish Trade Guild and Finpro Poland.

Even if the year represents good progress and a good financial result there is still potential to do better in the years to come, especially in Sweden and Russia. Other challenges that we encountered in 2006 were energy prices, particularly during the first three quarters of the year, and also the development in the Finnish paper industry, which meant that both machines and mills were shut down in the course of the year. These dis-continued units were among our customers and consequently we are now faced with new challenges when it comes to the capacity utilization of our production plants. Our strategy focuses on increased growth and improved profitability.

In addition to decisions on investments in growth in the CEE region, Nordkalk also decided to build a lime kiln in Norway. The kiln will be operated by NorFraKalk, which Nordkalk owns jointly together with Franzefoss Minerals AS. This kiln is expected to come on stream during the last quarter of year 2007.

In 2006 we put extra effort into open communication between the company management and the whole organisation. Man-agement’s view of what is needed for Nordkalk to succeed and the organisation’s analysis of Nordkalk’s present situation as well as areas where improvement is possible were processes that gave each and every one of us an opportunity to express our opinions. The outcome was good. Much has already been done and the work of developing the organisation in order to achieve our goals in the years to come will continue in 2007.

The importance and needs of our personnel resources have been taken into consideration in 2006 in the form of our own training and education programmes. In recruiting new employees we have taken into account growth-generated needs and the fact that Nordkalk’s large age classes will retire in the near future.

The strong market continues to provide us with support in 2007. Growth potential in the CEE region is encouraging but in Russia our operations continue to be on a small scale in comparison with the market potential. However, the volatile prices on the energy market as well as developments in the paper industry could turn into challenges for Nordkalk in the future.

Cost-efficient production of high-quality products will enable Nordkalk to continue to grow in its market segments and differ-ent markets in 2007. Improved profitability can be achieved by the right internal measures and correct pricing of the products.

Bertel Karlstedt

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From the President

Bertel Karlstedt, President, Pargas, Finland �

Nordkalk’s main product is limestone. It is sedimentary limestone composed primarily of calcite, calcium carbonate (CaCO

3). Pure limestone contains 95-100 per cent calcium

carbonate. Limestone is one of the most commonly found minerals in the earth’s crust but in the Nordic bedrock it occurs only in limited amounts.

Nordkalk extracts limestone at 20 different sites. Three of the deposits are underground mines. The deposits represent dif-ferent stages of geological evolution and vary in age between 70 and 1900 million years. The different types of limestone differ considerably in both their physical and chemical prop-erties, and they behave in different ways during extraction and processing.

The limestone usually has to be extracted by means of blast-ing but the softest types can be excavated by machine. The extracted stone is transported for rough crushing after which it passes through various crushing and sieving stages. Lime-stone powders are manufactured by grinding the stone in dif-ferent kinds of mills. The limestone or carbonate products are delivered to the customer as crush or powder.

In the refining process the limestone is first ground into a wet slurry and the concentrated calcite is separated from the slurry by flotation. The paper pigment GCC (ground calcium car-bonate) is made by grinding the flotated calcite. Ground calcite products are made of extremely fine particles (1-2µm) and their calcium carbonate content is almost 100 per cent.

Dolomite CaMg(CO3)

2 is a calcium rock just like limestone.

In addition to calcium carbonate it also contains magnesium carbonate, which accounts for 46 per cent of pure dolomite. Nordkalk extracts dolomite from its deposit at Kurevere in Estonia. Limestone with high magnesium content is extracted at many locations in Finland. The extraction and refining process is the same as for limestone.

CaCO3 + heat = Ca + CO2Quicklime is made by heating crushed and sorted limestone in either a rotary or shaft kiln. The limestone (CaCO

3) breaks

down into calcium oxide, i.e. quicklime, (CaO) and carbon

dioxide (CO2). This reaction, termed calcination, requires tem-

peratures of approximately 1100 degrees Celsius. In a rotary kiln the heating process lasts about six hours; in a shaft kiln calcination takes about 24-36 hours. When the quicklime comes out of the kiln it is in lumps, grains and powder. Finn-ish limestone in particular disintegrates during calcination into small grains whereas younger types of limestone retain their form better. The quicklime is sieved into different fractions or ground into powder.

The handling and storage of quicklime requires great care since it is very reactive. If it comes into contact with water, it reacts violently, giving off heat and converting into slaked lime.

The paper pigment PCC is precipitated calcium carbonate, which is made from quicklime. Calcium oxide is slaked with water to form a calcium hydroxide sludge. When used to clean flue gases, which contain CO

2, this turns into calcium carbon-

ate. The process determines the shape and size of the grains. Nordkalk supplies slaked lime for the manufacture of PCC but does not make the product itself.

CaO + H2O = Ca(OH)2 + heat energySlaked lime is produced by adding water to quicklime. Dry slaking a thousand tonnes of lime requires in theory 322 kilo-grammes of water. The calcium oxide reacts with the water and becomes calcium hydroxide (Ca(OH)

2), i.e. slaked lime, which

is a fine dry light-coloured powder.

The slaker consists of three chambers placed one on top of the other, with the water and lime being mixed in the topmost chamber. In the two lower chambers the lime matures as the moisture evaporates. During the process, which lasts about an hour, heat and steam are given off. After slaking the calcium hydroxide is classified mechanically into coarse and fine frac-tions.

Wollastonite is a rare mineral that occurs together with lime-stone. Nordkalk extracts it at its Lappeenranta deposit. The limestone is ground into a wet slurry and refined wollastonite is separated out of the resulting fine-grained slurry by flotation.

Nordkalk´s special products include Nordkalk Limus, which is a limestone powder made especially for the building mate-rials industry. Nordkalk Velox is a limestone-based special product containing oxygen and calcium peroxide. It is used to promote more effective composting and to combat unpleas-ant odours from sludges and waste water, for example. Nord-kalk’s Filtra P filter pulp, which contains slaked lime, facili-tates the treatment of waste water in sparsely populated areas. Nordkalk Filtra A is clean crushed limestone used for regu-lating the alkaline quality of drinking water. The stabilisation products are known as Nordkalk Terra products and they are mixed with quicklime. Nordkalk FlowLime is a mixture con-taining quicklime for metallurgical applications. Nordkalk LKD, a mixture of quicklime and limestone powder, is used for neutralisation.

Surplus stone is extracted together with limestone and it is used as macadam, for example. Flotation sand is the sand left over from the refining process; this is used in ground engi-neering and for covering refuse tips.

As can be seen in the table all limestone-based products have numerous uses in industry, agriculture and environmen-tal care. They are described in more detail on the following pages. Thanks to its versatile raw material Nordkalk is able to offer the right type of lime product for a wide variety of uses − the right stone in the right place.

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Nordkalk products

Limestone powder

Quicklime

Slaked lime

Photos: Rauno Laaksomo

ApplicationCalcite (CaCO3) Dolomite

Slaked lime

Quick-lime

Wollas-tonite

Special Products Secondaryproducts**

Limestone or Carbonate products

Stone

Powder

GCC

FC*

NK Limus Ca Mg(CO3)2 CaO Ca (OH)2 CaSiO3 NK Terra NK Velox NK Filtra

paperi •Paper pigment PCC •Paper pigment GCC •pulp • •steel • • •

Building materials

cement •concrete • •white mortars, levelling compounds • •light bricks • •roofing felt •fibre cement board •glass • •mineral wool • •

Road construction, ground engineering stabilisation • • • •asfalt • •road markings • road treatment, sanding •

Chemical industrycalsium chloride • • •fertilizers • • •calsium phosphate • •calcium carbide •glue • •paint • • •plastics • •rubber •ceramics •glass fibre • •sugar • •

Agriculturesoil improvement • • •garden • •animal feeds • •lime filter drains •

Environment

drinking water treatment • • • •waste water treatment • • • • •industrial waste water treatment • • • • • •sludge treatment • • • • •biowaste treatment • • • •flue gas cleaning • • • •liming of waterways • •noise barriers •covering of landfills •treatment of contaminated soil •production of district heat •

* FC = micro-ground calcite **Secondary materials include surplus stone, flotation sand, electric filter dust and process heat, for example.

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In 2006 Nordkalk’s largest customers were the paper (29%), building materials (23%) and steel (18%) industries. Alto-gether industry accounted for 86 per cent of Nordkalk’s total sales. Industry uses limestone-based products both as a raw material and to remove impurities at different stages of the production process, for example. The economic boom in the industry led to strong demand for limestone-based products, especially in the building materials and steel industries.

PaperThe papermaking industry uses limestone in a refined form for coating purposes and as a filler. Two types of paper pigments are produced from calcium carbonate: GCC (ground calcium carbonate) and PCC (precipitated calcium carbonate), which is made from quicklime. Both are used in fine papers, packag-ing cartons and mechanical paper. Almost a half of high-qual-ity coated newsprint and a fifth of copying paper may, in fact, consist of minerals.

The production of PCC usually takes place in close conjunc-tion with paper mills. It has become well-known as a filler in paper but in recent years is used more for coating purposes. Nordkalk manufactures lime for processing into PCC at its plant at Storugns in Sweden and at Tytyri and Louhi in Fin-land. At Storugns and Tytyri Norwegian limestone provides the raw material. Nordkalk has shares in Verdalskalk AS on the west coast of Norway, from where the limestone is trans-ported by sea to Sweden and Finland.

The Norwegian company NorFraKalk AS, which is owned in half by Nordkalk Corporation and Franzefoss Minerals AS, has made a decision to build a lime kiln in the Verdal harbour, Norway. The harbour offers a good logistics base for sea freights and the raw material comes from the mine company Verdalskalk. The yearly capacity of the new kiln will be 200 000 tons of quicklime and the estimated start-up will take place at the end of 2007.

GCC is produced by Nordkalk’s subsidiary Suomen Karbo-naatti Oy, in which the other owner is Omya Oy. The Omya Group, which is the world’s leading manufacturer of ground calcium carbonate with long experience of developing differ-ent qualities of paper, is responsible for Suomen Karbonaatti’s

product development. Suomen Karbonaatti’s production plant is situated in the middle of the large papermaking complex in Lappeenranta and gets its raw material from Nordkalk’s Iha-lainen mine nearby. From the high-quality marble extracted at Ihalainen Nordkalk produces a pure calcite product for its subsidiary. Deposits at the mine at Ihalainen are sufficient to ensure the high-quality raw material needed for making GCC for the next decades. In addition Nordkalk delivers raw mate-rial from Tytyri.

In Finland Nordkalk is the leading supplier of paper pigments based on limestone. 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.

PulpPaper is made from pulp, cellulose, which is obtained by cooking wood chips in a strong lye solution. Chemicals from the cooking process circulate in the recovery line of the pulp mill where the composition can be chemically adjusted by the addition of quicklime to the causticising process. During the process of making pulp the lime mud, sludge, is slaked in a slaker, after which causticising takes place and the lime car-bonates. The pulp mill then burns the sludge in its own kiln. Since some of the lime mud evaporates in the course of the process, it is replaced with new quicklime so that the reactivity is maintained at as much the same level as possible as that of the sludge lime.

Sales to the pulp industry in Finland grew last year while sales in Sweden decreased slightly.

SteelMost stages in the manufacture of steel use limestone-based products: iron ore pellets contain ground lime, lime is used in the blast furnace processes and ground quicklime is used to remove sulphur from pig iron. In converting processes, when the iron is turned into steel, slabs of quicklime are used to promote the formation of slag. Some fifty kilogrammes of quicklime are needed to produce a tonne of steel although the amount may vary according to the process.

The steelworks operated at a high production rate in 2006. Nordkalk’s total sales to the steel industry rose slightly com-pared with the year 2005 and especially in Poland and Ger-many sales to the steelworks increased strongly.

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Industry

Paper pigments in Sweden

The limestone quarried at Verdal in Norway is especially well suited as a raw material for paper pigment since it is unusually white and very reac-tive. This is one reason why Imerys Mineral AB in Sweden has chosen Nordkalk as a supplier. Imery’s plant has a capacity of 1�0,000 tonnes of pigment and for that it requires �0,000 tonnes of quicklime. The plant where the paper pigment is manufactured is adjacent to M-real’s paper mill at Husum.

Efficient logistics play an important role for the cooperation to be successful. The limestone is first transported by ship to Gotland, where it is burned, then to Nordkalk’s terminal in Örnsköldsvik and finally to Husum. The cooperation is important for Nordkalk also because this is our first step into the Swedish market for PCC.

Recipes for success: Paper pigment

Hazze Borgenvik, Plant Manager, Imerys Mineral AB, Husum, Sweden 11

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Industry

Building materialsOnly a few decades ago limestone was used exclusively as a building material. Today there are many different uses for limestone but it retains its strong position in the building industry. 23% of Nordkalk’s total sales go to the building materials industry.

Limestone powder is the most widely used building material in the world. It is to be found in light-coloured tiles, in mor-tars, levelling compounds, roofing felt and fibre cement board. The main ingredient in cement is limestone and dolomite is used in rock wool. Self-compacting concrete contains not only cement but also limestone. Quicklime is needed as a binding agent in lime sand bricks, and slaked lime in grout, mortar and levelling compounds.

Sales to the building materials industry have grown strongly during the last five years. Nordkalk produces raw material for the building industry at a number of its plants. The product range manufactured at the Parfill plant in Pargas includes white powders that are made from the locally extracted marble-white limestone. Finland’s only cement factories are situated in Pargas and Lappeenranta in the immediate vicinity of Nordkalk’s quarries. Finnsementti is building a new cement plant at Lappeenranta and the start-up will take place in March 2007.

Nordkalk Limus was launched on the Swedish market some years ago. It is a filler made of ground limestone admirably suited for use in self-compacting concrete (SCC). Self-compact-ing concrete is a new generation of concrete that does not require shaking in order to set. The Nordkalk Limus range of products comprises different kinds of limestone powder that have a deci-sive effect on the properties of SCC. Nordkalk Limus can also be used as a filler in ordinary concrete as well as in SCC.

Road and ground engineering Quicklime is an effective product for stabilising clayey soils. Deep stabilisation is used as a method to strengthen founda-tions when building roads and railways and to prevent subsid-ence and improve bearing properties. Surface stabilisation can be improved with the aid of lime to improve the characteristics of the soil.

Sales of stabilisation lime grew strongly last year in Sweden since there are major road building projects under way on the west coast of the country. In 2005 Nordkalk built a mixing station in the region for the production of binding agents for stabilisation. Nordkalk already has a mixing station in Sweden at Köping. Stabilising lime for use in Finland is mixed at the Tytyri plant at Lohja.

Sales of products for road engineering grew markedly in Poland, where the road network is in poor condition and does not meet present-day needs. The same kind of develop-ment can be seen in Estonia, where sales of products for road engineering increased strongly. The lively road building pro-gramme in Poland also had a favourable impact on sales of lime filler for making asphalt. Mixed with bitumen it forms a strong material for surfacing that will withstand all kinds of weathers. Slaked lime can be used as a binding agent in the asphalt used for such demanding purposes as airport run-ways. The white substance used for road markings contains lime powder. In Sweden ground limestone is used as a method to reduce skidding.

Road and ground engineering is an important user of surplus stone. Refining sand is used to cover refuse tips.

Other industryThe sugar manufacturing industry uses lime to purify beet juice. Limestone is supplied by Nordkalk to the sugar refin-eries, which then make their own quicklime. The Miedzanka quarry in Poland supplies a large proportion of the limestone needed by the country’s sugar refining industry. In addition Nordkalk also supplies the sugar refining industry with lime-stone from Storugns in Sweden and Vasalemma in Estonia.

Lime is a key ingredient in the manufacture of glass; almost a third of the glass is calcium carbonate. Nordkalk limestone powder is used as a raw material for building glass, and quick-lime or lime powder is needed in the manufacture of glass fibre.

The chemical industry uses limestone-based materials in the production of plastics, paint and glue, for example. Both car-bonate products and slaked lime are needed in order to manu-

facture the calcium chloride spread on unmetalled roads to reduce dust.

Lime powder is used as raw material in animal feeds. Quick-lime is used in the manufacture of calcium phosphate which is an ingredient in animal feeds. The fertiliser industry uses lime powder and quicklime. Furthermore, dolomite extracted as Nordkalk’s deposit at Kurevere in Estonia is used in ferti-lisers. Investment in logistics in recent years, for example, in improving Nordkalk’s ports, has ensured the efficiency of the transport chain and had a favourable impact on exports from Estonia.

The micro-ground calcite powder produced at Lappeenranta is used for manufacturing paints and glues. The product is made of flotated calcite. Sales of these dry calcite products, known as FC, grew strongly especially on the Finnish market.

Wollastonite, a rare mineral that occurs together with lime-stone, is extracted and refined at Lappeenranta. Wollastonite is produced in significant quantities only at Lappeenranta and in China, India and North America so that most of Lappeenran-ta’s output is exported. Last year Nordkalk sold wollastonite to no fewer than 30 countries.

The ceramics industry is the most important user of wollas-tonite; it is needed for glazing and for tiles, for example. The plastics industry exploits the needle-like characteristics of wollastonite to give many plastics their mechanical proper-ties such as stiffness and strength to make them suitable for the purpose for which they are intended. Plastics that contain wollastonite are much needed in the automobile industry. The wheel covers on a car, for example, contain as much as a third of the mineral.

Sales of wollastonite increased last year due to the construc-tion boom in Europe.

Considerable quantities of limestone products are also needed to neutralise industrial waste water.

New roads in Poland

The boom in the economy in recent years has meant excellent opportunities for Polish roadbuild-ing companies. Nordkalk has taken part in these efforts through its partner Strabag Road Construc-tion.

Strabag is one of the largest road construction com-panies in Europe with 1,�00 employees in Poland alone. In 2006 this Austrian company was involved in many roadbuilding programmes. The lime prod-ucts for the programmes were supplied by Nord-kalk.

Nordkalk began cooperating with Strabag in 200� and this cooperation has expanded all the time. At present Nordkalk is Strabag’s most important sup-plier of lime and lime products.

From Strabag’s point of view Nordkalk has been an excellent alternative in its choice of supplier of lime. Nordkalk attaches great importance not only to the high quality of its products but also to being flexible and keeping its promises. In Poland there is often a shortage of materials for road construction, which means that special significance is attributed to Nord-kalk’s reliability - a good partner helps Strabag in its turn to keep to its timetable.

Recipes for success: Road

Zbigniew Krupa, Director of Bituminous Mass Manufacturing Plant, Strabag Sp. z o. o, Warsaw, Poland 1�

Sales of lime products to the agricultural industry amounted to six per cent of Nordkalk’s total sales. Nonetheless, agricul-ture is the branch where the use of lime is most eye-catching for the general public, and farmers are well aware of the ben-efits of liming acidic fields and gardens.

Nordkalk markets three different kinds of lime for soil improvement: calcite, lime with a high magnesium content, and dolomite. They can be supplied in both crushed and powder form. The finer the fraction, the more swiftly it reacts with the acidic soil. With a coarser lime the reaction time is more long-lasting. In addition to improving the quality of the soil, lime is also added to animal feed.

Soil improvementIt has been known for thousands of years that liming arable land gives a better harvest. The lime regulates the pH value of the soil and raising this helps to liberate important nutrients in the soil. Liming also helps useful bacteria to thrive. Since the soil in the Nordic countries is acidic, liming is necessary and at the same time beneficial environmentally in order to maintain good farming conditions.

Garden limeGardens are limed to counter acidity and to improve the struc-ture of the soil. A good growing bed facilitates good water-ing. Soil with too low a pH value more easily absorbs heavy metals, which are then passed on to man via the food chain.

Feed limeAnimals need lime in order to develop their bone structure and nerve functions. Green fodder contains lime but it is usu-ally not in large enough proportions. Therefore pastures are limed and lime is added to the animals’ feed and feed concen-trate. If hens do not get enough lime, they are unable to form the shell for their eggs.

Increasing prices for grain in EuropeIn Finland the weather in the early part of 2006 was very favourable for agricultural liming and sales reached a sig-nificantly higher level than the previous year. However, the rain put a stop to liming at the end of the year, as a result of

which total sales for the year did not reach the expected level. Although last year’s harvest was not very large its quality was excellent, and this helped to raise the price of grain. However, uncertainty still clouds the future, which means that farmers are putting their liming operations on hold for a few years.

For Swedish farmers 2006 was a very difficult year with poor harvesting conditions because of an extremely rainy autumn. The grain harvest was smaller than usual and of poor quality, which had a negative impact on the sales of agricultural lime. The farmers chose to postpone the cost of liming until the future and the lime already sold was hard to spread because the fields were too wet.

A future development that is much discussed among both Finnish and Swedish farmers is the question of growing energy crops. Arable land is, and will remain, an important natural resource; the use of lime can improve its fertility and consequently its potential yield. A determining factor in such a case is the economic subsidies that might favour growing energy crops. Higher prices for grain also increase the will-ingness to undertake long-term measures such as liming.

Nordkalk is now firmly established on the Polish market for agricultural lime and sales increased strongly during the last year. One reason for the good sales is the information cam-paign carried out by the Nordkalk sales force as well as the development of the distribution net and the increased number of retailers. In Slawno Nordkalk has invested in a new pro-duction line to be able to meet the increasing demand for agricultural lime. Also in Poland the price of grain showed an increasing trend during the last year, which increases the farmer’s willingness to lime their fields.

Nordkalk’s total sales to the animal feed industry decreased slightly during 2006.

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Agriculture

Inge Adamsson (left), liming entrepreneur, Östergötland and Anneli Kihlstrand, Sales Manager at Nordkalk, Malmö, Sweden 1�

Limestone-based products are used to purify water, to lime watercourses and clean flue gases. In 2006 the sales of envi-ronmental care products were 8 per cent of Nordkalk’s total sales. Water treatment accounts for about 60 per cent of sales of environmental products and products for cleaning flue gases about 40 per cent.

Water treatmentCarbonate products, quicklime and slaked lime are all used when purifying drinking water and cleaning waste water. Lime products can regulate the pH value, alkaline quality and hardness of the water so that it does not cause corrosion in distribution networks or the consumers’ equipment. Cleaning waste water with lime products helps to maintain the pH value and alkalinity at levels appropriate for the process. Lime prod-ucts are also used for more effective removal of nitrogen and phosphorus so that the eutrophying effect of wastewater on watercourses is reduced. When wastewater is cleaned, sludges are formed that can be made more hygienic with the aid of slaked lime. Nordkalk’s Velox facilitates the composting of sludges and other wastes and combats unpleasant odours. Nordkalk Velox is also suitable for combating the unpleasant odours associated with wastewater.

Sales of water treatment products in Finland and Sweden remained almost at the same level as in year 2005.

Nordkalk’s Filtra P filter pulp facilitates the treatment of waste water in sparsely populated areas. It removes from the waste water in small water treatment plants and ground filters the phosphorus that leads to the eutrophication of watercourses. A new product in 2005 was Sauna Seppo, which is a filter containing Nordkalk Filtra P to remove phosphorus from the small quantities of waste water produced at summer cottages.

Liming arable fields can also help to prevent eutrophying nutrients from being released into watercourses. The acidity of the soil can be reduced by adding different kinds of lime-stone powders. In this way the amount of nutrients washed from the fields into the watercourses is reduced since crops are more readily able to make use of the nutrients.

A further problem in addition to eutrophication is the acidifi-cation of watercourses. Liming watercourses helps to restore

the quality of the water to what it was before acidification took place. Usually liming is carried out with the help of nature’s own remedy, finely ground limestone. The most common reason why watercourses become acidic is air pollution.

The long term liming project to improve the quality of the water in Lake Alinenjärvi at Nokia has continued since 1998. The project is handled by Nordkalk together with the town of Nokia and the Pirkanmaa Environmental Centre. The aim is to neutralise the acidity of the water in the lake and maintain the quality of the water at as even a level as possible. The pH value and alkalinity are measured every spring and autumn, and the measurements show that liming has had the desired effect. The next action shall take place in 2007.

Cleaning flue gasesWhen fossil fuels are burned to generate energy, flue gases result from the process. These contain sulphur dioxide and other acid compounds which have to be separated from the flue gases. In the atmosphere sulphur dioxide reacts with moisture in the air to form sulphuric acid. The rain that then falls on the ground is acidic and harmful to plant and animal life. In acidic soil plants are unable to make use of the nutrients they need and fish cannot live in lakes that are too acidic. The flue gases from power stations can be effectively cleaned with limestone powder, quicklime or slaked lime before they enter the chim-neys. Emissions of sulphur dioxide can be reduced by even more than 90 per cent. There is more chlorine and fluorine emissions from waste incinerators than sulphur dioxide. Also chlorine and fluorine emissions can be reduced with the aid of limestone-based products. In some plants the emissions are scrubbed with water and the resultant acid water is then neu-tralised with limestone powder and/or slaked lime.

Sales of Nordkalk products for cleaning flue gases in 2006 exceeded clearly those of the previous year in Finland. The rise in Finland was due to the high use of capacity at coal-fired power stations because of the dry and warm weather and low water levels in reservoirs. In Sweden and Poland sales of flue-gas cleaning products were on the same level as in 2005 while in Germany the sales decreased slightly.

16

Environmental care

Clean air in Germany

The increasing need for energy and ever more strin-gent environmental demands form the foundation for the cooperation between Vattenfall and Nord-kalk. Vattenfall has five coal-fired power plants of its own and almost �� per cent of energy in Germany is produced with the help of coal.

To clean flue gases Vattenfall uses primarily Nord-kalk products. The company uses approximately 1.� million tonnes of lime and limestone a year. Of the lime used for flue gas cleaning some �0 per cent can subsequently be recycled as gypsum for use by the building materials industry.

The cooperation between Nordkalk and Vattenfall is of a long-term nature with contracts of up to 1� years. The future looks bright, too, since Vattenfall plans three new power plants in the years to come. In fact, Germany expects a boom in energy produc-tion so there will be a demand for Nordkalk’s high-quality products for cleaning flue gases for many years yet.

Recipes for success: Clean air

Frank Menge, Manager for Supply and Disposal, Vattenfall, Jänschwalde, Germany 1�

At year-end 2006 Nordkalk employed 1304 people (the previ-ous year 1347). Of these 21 per cent were women and 79 per cent men. Hourly-paid workers formed 65 per cent and admin-istrative personnel 35 per cent of the total. More than half (58 per cent) of the personnel in Finland, Sweden and Poland have been in Nordkalk’s employ for more than ten years. This indi-cates not only a high level of commitment on their part but also that Nordkalk has a considerable store of professional know-how as a result of considerable experience.

Industry-specific, long-term trainingSix people apprenticed at Tytyri, Lohja, were the first to com-plete the new programme for miners started in 2004. Com-pletion of their two-year training period was celebrated in June 2006 and all six workers chose to stay on in Nordkalk’s employ. The professional qualification covers basic skills in mining and specialisation, e.g. drilling or charging, accord-ing to each person’s preference. The aim of this training pro-gramme is to reinforce Nordkalk’s access to skilled labour in the future.

Likewise, the purpose of the training course for foremen started in September 2006 is the same. The training covers special professional technological qualifications, an overall leadership course and studies in the English language. Par-ticipating in the programme are twenty current or future fore-men/supervisors from Nordkalk in Finland. The purpose of the course is to help participants develop the operations of the working community and also themselves in their own tasks. The course concentrates on the practical planning of opera-tions, profitability and cost control as well as development of the personnel and the working community.

A professional qualification for the building materials indus-try was drawn up in spring 2006. This qualification covers all aspects of Nordkalk’s operations in the production chain after the mine or quarry. The positive effects of this new building materials qualification will be seen in full in 2007.

The 55+ programme The measures that form part of Nordkalk’s long-term pro-gramme for ageing employees, the 55+ programme, con-centrated this year on recognising and sharing tacit skills. A new mentor programme for employees in leading and expert positions was initiated. Involved in the programme are people from Finland, Sweden, Estonia, Poland, Russia and Germany. An undergraduate study started in summer 2006 is designed to research the existence and sharing of professional tacit skills in Nordkalk’s production activities and to test ways of spreading tacit skills.

International cooperationThe setting up of a body along the lines of a European Works Council was considered at the end of 2005. A special advisory group with a representative from each of the countries where Nordkalk operates decided not to establish such a body for the moment but that cooperation will be furthered country-wise, especially in Poland and Estonia. Consequently, representa-tives of the personnel in Poland visited Finland in 2006 to acquaint themselves with how cooperation works there and representatives from Estonia carried out a similar visit to Sweden.

Personnel experts from Nordkalk from different coun-tries meet regularly to develop the management of human resources. A particular challenge in 2006 was recruitment in Poland, Sweden and Finland. Recruitment of new workers has been successful since Nordkalk’s image as an employer is felt to be very positive. Work continues on improving Nordkalk’s image as a good company to work for.

Personnel

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Personnel by country

Russia6 %

Finland46 %

1�

Simon Engström (left), Process Operator and Jukka Lehtinen, Repairer, Nordkalk’s Parfill factory, Pargas, Finland

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2003 2004 2005 2006

Industrial accidents

Russia is missing from the statistics because Nordkalk`s production did not start there until autumn 2005.

The principal goal of Nordkalk’s health and safety programme is to prevent not only industrial accidents but also occupational disease and illnesses. The aim for accidents and disease is zero tolerance. There was not a single accident resulting in death at any of Nordkalk’s plants in 2006. At Finnish plants there were 20 accidents (26 in 2005). In Sweden the figure was 19 (16), in Poland four (three) in Estonia five (two) and in Russia two. In Finland the figures include only accidents leading to three or more days absence from work.

The number of sick-leave absences at Nordkalk is clearly lower than the average for Finnish industry. The percentage of absences among the 322 hourly-paid workers at Nordkalk plants in Finland, was 2.4 in 2006 (2005 2.7). The percentage due to illness was 2.2 (2.5) and resulting from accidents 0.2 (0.2). The most recent figures for Finnish industry as a whole are from the year 2005; then the total percentage of absences was 6.5, of which illness accounted for 6.2 per cent and acci-dents 0.4 per cent. In Sweden total absences were 6.3 per cent (5.4% in 2005), of which 0.45 per cent were due to accidents. The figure for Sweden covers both workers and administrative personnel.

The “zero tolerance for accidents” project at Lappeenranta, which lasted for three years, was brought to a successful con-clusion. The number of accidents dropped sharply during the course of the project. The year before the project began the number of accidents was 17, the following year 13, then eight and during the last year only three. Sick-leave as a result of accidents was 11 days last year compared with 254 in the year 2003. More close calls were reported during each year of the project, as was the intention, with just over 180 last year (in 2003 30). Nordkalk employees some 200 people at Lappeen-ranta; this figure includes those working at Suomen Karbo-naatti Oy, Nordkalk’s subsidiary.

The three-year project covered different themes and differ-ent kinds of training - attitudes to occupational safety, work counselling, joint work places, internal traffic and risk assess-ment. TUTTAVA training, with the aid of which it is possible to improve organisational routines in order to establish safe and productive work habits, continued throughout the whole duration of the project. Efforts are being made to ensure the

Occupational safety

progress resulting from the project by certifying Nordkalk’s Lappeenranta plant in accordance with the OHSAS 18001 standard in 2008. Nordkalk’s subsidiary, Suomen Karbonaatti Oy, in Lappeenranta was awarded an OHSAS 18001 certificate in 2005.

The successful project in Lappeenranta spurs other Nordkalk plants to start their own occupational safety projects. Parts of the zero tolerance programme, for example, accident monitor-ing tables and an occupational safety card, have already been adopted elsewhere in Nordkalk.

In Poland purposeful efforts have been made to improve occupational safety, and the Nordkalk Sp. z o.o. occupational safety system was awarded an OHSAS 18001 certificate in November 2006. The result of a competition started in June 2006 designed to improve occupational safety resulted in 153 suggestions by the end of the year. Many of them have led to measures that improve safety and, in addition, the competition helped to inspire greater interest among the workers in safety matters.

Nordkalk’s occupational safety and health-care workers and personnel management work together to find new ways to better the workers’ safety, working capacity and well-being. One aim is to improve cooperation between the different instances and to harmonise practices at Nordkalk’s different plants.

20

Kai Sahlström (in front), Industrial Safety Manager, Matti Bergbacka, Industrial Safety Manager,Pertti Saira, Plant Manager and Aki Juuti, General Trustee, Nordkalk, Lappeenranta and Jani Vainikka, Industrial Safety Delegate, Suomen Karbonaatti Oy (Photo: Mika Strandén, Etelä-Saimaa) 21

22

Nordkalk’s net sales increased stronglyNordkalk´s total sales during 2006 increased strongly in com-parison 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 effi-ciency 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.

IndustryShutdowns 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 materi-als 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 construc-tion. In Poland especially there was a strong increase in sales of these products. Sales to the chemical industry increased com-pared with year 2005.

AgricultureTotal 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 farm-ing subsidies granted by the EU. Sales to the fodder industry decreased slightly.

Environmental careTotal sales of products for environmental care grew in compari-son with 2005. In Finland and Sweden the use of flue-gas clean-ing products increased strongly, because the long dry season

raised the operation of coal-fired power plants. Sales of water treatment products decreased slightly.

Financial result for year 2006Consolidated 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 period was burdened by the high energy costs and also by production problems in Sweden, which ena-bled 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 compari-son 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.

For full details reference is made to the Consolidated Income Statement and Balance Sheet and the parent company’s finan-cial statements together with notes, additional details and finan-cial analyses.

InvestmentsTotal 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 quick-

lime 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.

FinancingNordkalk´s financing was renegotiated in 2006. All the capi-tal 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 cur-rent credit agreements. The financing is bound to a number of key figures and their development will affect financing costs.

OwnersNordkalk 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 manage-ment 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 owner-ship of Stiftelsen för Åbo Akademi increased to 8.7%, Furuvik Invest’s to 7.3% and Svenska litteratursällskapet i Finland’s to 7.0%.

Own sharesNordkalk owns 600 of its own shares, each with a nominal value of 1 euro. It represents 0.06% of the entire share capital and votes. The shares were acquired in December 2005 at a price of 1 euro per share.

PersonnelThe 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.

Annual Report of the Board of Directors

2�

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 June 2006. In September a 2-year training for foremen was started. The 3-year long process “zero tolerance for occupational acci-dents” in Lappeenranta, Finland, was accomplished with excel-lent 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.

The programme to support the ageing employees continued and a new mentoring project was started.

Personnel issues are reported in more detail elsewhere in this Annual Report.

Research and DevelopmentTotal R&D expenditure was EUR 3.3 (3.2) million, which rep-resents 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 qualityAll production plants in Finland and Poland and all operations in Sweden have been certified according to the ISO 14001 envi-ronmental 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 produc-tion in Finland. In Poland all production facilities and sales were certified in 2006.Training in quality and environmental man-agement systems is offered continuously.

Nordkalk publishes also an Environmental Report. It is avail-able at www.nordkalk.com.

RisksA 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 chairmanMorten Ahlström member Jan Inborr memberJukka Järvelä member until 28 Dec. 2006Bjarne Mitts member since 18 Jan. 2007Orvo Siimestö member until 28 Dec. 2006Christoffer 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 2007Nordkalk’s net sales and result are expected to increase some-what 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

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2�

Consolidated Income Statement / Nordkalk Group 1 Jan. - 31 Dec. 2006

Note 2006 2005 1000 EUR % 1000 EUR %

Net sales 1 303 769 100.0 269 557 100.0 Cost of goods sold 244 713 221 134

Gross profit 59 056 19.4 48 423 18.0 Selling, marketing and development expenses 11 296 10 068 Administration expenses 17 374 17 475 Other operating income 7 257 7 303 Other operating expenses 851 706 22 264 7.3 20 946 7.8

Operating profit 2,3,4 36 793 12.1 27 477 10.2 Share of results of associated companies 5 -25 -16 Financial income and expenses 7 -12 308 -13 517

Profit before extraordinary items 24 460 8.1 13 944 5.2

Profit before taxes and minority interest 24 460 8.1 13 944 5.2 Direct taxes 8 -7 576 -4 561 Minority interests -3 147 -2 677

Net profit for the period 13 736 4.5 6 706 2.5

2�

Consolidated Balance Sheet / Nordkalk Group 31 Dec. 2006

Note 31 Dec. 2006 31 Dec. 2005 1000 EUR % 1000 EUR %

Shareholders’ equity and liabilities

Shareholders’ equity 12 Share capital 1 000 1 000 Net profit/loss for previous years 24 363 16 811 Net profit for the period 13 736 6 706

Total shareholders’ equity 39 099 11.3 24 517 7.4

Minority interest 13 507 3.9 12 828 3.9

Provisions 14 1 096 0.3 999 0.3

Liabilities

Capital loan 49 091 Deferred tax liabilities 8,13,15 26 797 15 239 Long-term liabilities 8,13,15 210 357 175 368 Short-term liabilities 13,16 54 994 52 833

Total liabilities 292 148 84.5 292 531 88.4

Total shareholders’ equity and liabilities 345 850 100.0 330 875 100.0

Note 31 Dec. 2006 31 Dec. 2005 1000 EUR % 1000 EUR %

Assets

Fixed assets and long-term investments 9 Intangible assets - Goodwill 2 258 2 700 - Other intangible assets 7 105 6 248 Tangible assets - Mineral deposits and land 98 854 87 031 - Buildings and constructions 34 147 34 932 - Machinery and equipment 102 805 106 322 - Other tangible assets 3 644 3 197 - Advance payments and construction in progress 8 778 5 907 Investments 10 - Shares in associated companies 285 788 - Other shares and participations 1 058 1 056 - Long term receivables 66 85

Total fixed assets and long-term investments 259 000 74.9 248 264 75.0

Current assets

Inventories 11 34 026 34 516 Deferred tax assets 8 760 1 379 Short-term receivables 11 41 645 37 361 Cash and bank balances 10 418 9 355

Total current assets 86 849 25.1 82 611 25.0

Total assets 345 850 100.0 330 875 100.0

26

Cash flow statement / Nordkalk Group

1 Jan. - 31 Dec. 2006 1 Jan. - 31 Dec. 2005 1000 EUR 1000 EUR

Net profit/loss for the period 13 736 6 706 Depreciation 25 782 26 884 Profit and loss on sale of fixed assets -72 -164 Share of profit/loss of associated companies 25 16 Minority interest 3 147 2 677 Financial items 12 308 13 517 Taxes 7 576 4 561 Adjustments total 48 767 47 490

Cash flow before change in net working capital 62 503 54 196 Change in net working capital: Change in receivables (increase(-)/decrease(+)) -3 612 -3 682 Change in inventories (increase(-)/decrease(+)) 876 1 889 Change in liabilities (increase(+)/decrease(-)) 5 892 84 Change in net working capital 3 156 -1 709 Cash flow after change in net working capital 65 660 52 487 Change in provisions 64 -666

Cash flow after change innet working capital and provisions 65 724 51 821 Interest paid -14 419 -13 732 Interest received 162 109 Other financial items -1 155 -1 833 Exchange gains/losses (finance) -733 -1 326 Taxes paid -5 674 -2 613

Cash flow from operating activities 43 904 32 428

1 Jan. - 31 Dec. 2006 1 Jan. - 31 Dec. 2005 1000 EUR 1000 EUR

Cash flow from investing activities Acquisition of associated companies 75 Investments of external shares -2 -11 Investments of intangible and tangible assets -22 183 -13 024 Sale of associated companies 385 Sale of fixed assets 970 1 147 Dividends received 81 84 Other changes in fixed assets 243 -3 109 Change in interest-bearing and non interest- bearing long-term receivables/investments 22 -84 Cash flow from investing activities -20 794 -14 612

Cash flow after investing activities 23 110 17 816 Cash flow from financing activities New loans raised 158 179 23 219 Amortization of loans -129 413 -33 285 Acquisition of own shares -1 Dividends paid -2 501 -3 041 Change in convertible subordinated bonds -49 091 -5 664 Change in receivables -3 0 Change in interest-bearing liabilities 548 817 Cash flow from financing activities -22 280 -17 955 Exchange rate difference 233 -64

Cash flow after financing activities 1 063 -203 Cash and cash equivalents at the beginning of the period 9 355 9 558 Cash and cash equivalents at the end of the period 10 418 9 355

2�

Income Statement / Parent Company 1 Jan. - 31 Dec. 2006

Note 2006 2005 1000 EUR % 1000 EUR %

Net sales 1 138 719 100.0 122 876 100.0 Cost of goods sold 102 562 97 276

Gross profit 36 157 26.1 25 600 20.8 Selling, marketing and development expenses 4 283 3 667 Administration expenses 11 322 12 095 Other operating income 4 060 4 133 Other operating expenses 283 189 11 828 8.5 11 818 9.6

Operating profit 2,3,4 24 329 17.5 13 782 11.2 Financial income and expenses 7 -8 177 -9 624

Profit before extraordinary items 16 152 11.6 4 158 3.4

Profit before appropriations and taxes 16 152 11.6 4 158 3.4 Depreciation in excess of plan 6 419 7 100 Direct taxes 8 -6 330 -1 998

Net profit for the period 16 242 11.7 9 260 7.5

2�

Note 31 Dec. 2006 31 Dec. 2005 1000 EUR % 1000 EUR %

Assets

Fixed assets and long-term investments 9 Intangible assets 5 852 4 799 Tangible assets - Mineral deposits and land 40 707 42 092 - Buildings and constructions 11 249 11 805 - Machinery and equipment 34 702 38 129 - Other tangible assets 2 023 1 717 - Advance payments & construction in progress 1 003 1 000 Investments 10 - Shares in subsidiaries 88 775 91 064 - Long-term receivables from subsidiaries 36 398 34 168 - Shares in joint ventures 3 737 - Shares in associated companies 82 682 - Other shares and participations 1 037 1 035

Total fixed assets and long-term investments 225 565 86.5 226 491 85.7

Current assets

Inventories 11 16 224 16 959 Short term receivables 11 17 240 18 860 Cash and bank balances 1 826 1 911

Total current assets 35 290 13.5 37 730 14.3

Total assets 260 855 100.0 264 221 100.0

Note 31 Dec. 2006 31 Dec. 2005 1000 EUR % 1000 EUR %

Shareholders’ equity and liabilities

Shareholders’ equity 12 Share capital 1 000 1 000 Net profit/loss for previous years 15 686 6 426 Net loss/profit for the period 16 242 9 260

Total shareholders’ equity 32 927 12.6 16 686 6.3

Accumulated excess depreciation 4 850 1.9 11 269 4.3

Provisions 14 101 0.0 116 0.0

Liabilities

Capital loan 49 091 Long-term liabilities 13,15 195 068 156 603 Short-term liabilities 13,16 27 909 30 456

Total liabilities 222 977 85.5 236 150 89.4

Total shareholders’ equity and liabilities 260 855 100.0 264 221 100.0

Balance Sheet / Parent Company 31 Dec. 2006

2�

Cash flow statement / Parent company Dec. 31, 2006

1 Jan. - 31 Dec. 2006 1 Jan. - 31 Dec. 2005 1000 EUR 1000 EUR

Net profit/loss for the period 16 242 9 260 Depreciation 10 391 10 538 Profit and loss on sale of fixed assets -75 -96 Financial items 8 177 9 624 Taxes -90 -5 102 Adjustments total 18 404 14 964

Cash flow before change in net working capital 34 645 24 224 Change in net working capital: Change in receivables (increase(-)/decrease(+)) 774 -282 Change in inventories (increase(-)/decrease(+)) 735 2 187 Change in liabilities (increase(+)/decrease(-)) 4 810 1 007 Change in net working capital 6 319 2 912

Cash flow after change in net working capital 40 964 27 136 Change in provisions -15 -35

Cash flow after changes in net workingcapital and provisions 40 949 27 101 Interest paid -13 678 -13 261 Interest received 1 450 1 792 Other financial items -1 088 -1 860 Exchange gains/losses (finance) -721 -1 318 Taxes paid -2 711 -17

Cash flow from operating activities 24 201 12 437

1 Jan. - 31 Dec. 2006 1 Jan. - 31 Dec. 2005 1000 EUR 1000 EUR

Cash flow from investing activities Acquisition of group companies -2 297 Acquisition of associated companies -3 136 Investments of external shares -2 Investments of intangible and tangible assets -6 605 -5 325 Sale of associated companies 385 Sale of fixed assets 296 693 Dividends received 2 730 3 183 Other changes in fixed assets 2 287 484 Change in interest-bearing long-term receivables/investments 2 Cash flow from investing activities -4 430 -2 875

Cash flow after investing activities 19 771 9 562 Cash flow from financing activities New loans raised 158 000 12 500 Amortization of loans -126 500 -25 500 Acquisition of own shares -1 Change in convertible subordinated bonds -49 091 -5 664 Change in receivables -2 230 9 435 Change in liabilities -35 -1 026 Cash flow from financing activities -19 856 -10 256

Cash flow after financing activities -85 -694 Cash and cash equivalents at the beginning of the period 1 911 2 605 Cash and cash equivalents at the end of the period 1 826 1 911

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Accounting principles

The Consolidated Financial Statements of the Nordkalk Corporation are prepared in accordance with current regula-tions in Finland. The year reviewed covers the months Janu-ary-December and the Financial Statements are presented in euros. When preparing financial statements in conformity with applicable regulations and generally accepted account-ing principles, the company’s management makes estimates and assumptions that affect the valuation and allocation of the reported figures. Actual results may deviate from such esti-mates.

Consolidation principlesThe Consolidated Financial Statements cover the parent com-pany, Nordkalk Corporation, and all companies in which the parent company, directly or indirectly, holds more than fifty per cent of the voting rights at the end of the financial year. Companies acquired during the financial year have been included in the Consolidated Income Statement from the date of acquisition and divested companies to the date of disposal. All transactions together with and internal profits and losses between companies within the Group are eliminated as part of the consolidation process. Acquisitions of companies are recorded according to the purchase method of accounting. The difference between the acquisition cost of the shares of a subsidiary and equity at the time of acquisition is allocated to fixed assets by the amount that their current value exceeds their book value. In this calculation, untaxed reserves net of tax are included in the equity. The excess value allocated to fixed assets is written off according to the depreciation plan of the fixed asset item in question. The remaining difference is carried as goodwill on consolidation, which is written off over its expected useful life, 10-15 years. That portion of surplus value assigned to a deposit is written off linearly over a period of 30 years. When calculating goodwill, untaxed reserves together with surplus depreciation after allowing for any latent tax liability are also included under equity. Deferred tax liability on allocated acquired surplus value has been taken into account in the Consolidated Balance Sheet.

Jointly owned companies are those where it has been agreed that the Group exercises common rights of decision. The Group’s interests in jointly owned companies are collated pro-portionately row by row. The Consolidated Financial State-

ments include the Group’s share of the jointly owned compa-ny’s assets, debts, income and costs.

Associated companies are consolidated in accordance with the equity method. The Group’s share of the earnings of asso-ciated companies, less depreciation on the goodwill recorded on acquisition, is presented in the Consolidated Income State-ment. Dividends received from associated companies are eliminated. In the Consolidated Balance Sheet, investment in associated companies and the Group’s equity are adjusted in accordance with the Group’s share in associated companies’ increased net worth following acquisition and goodwill less accumulated depreciation on goodwill.

Minority interests in earnings and shareholders’ equity are presented separately in the Income Statement and Balance Sheet. No minority interests are calculated in the case of jointly owned companies.

Transactions in foreign currenciesForeign currency transactions are recorded at the exchange rates prevailing at the time of transaction. At the end of the accounting period receivables and liabilities are translated at the rates prevailing on the Balance Sheet date. Exchange rate differences relating to sales and purchases are treated as adjustments to the underlying items. Exchangerate gains and losses associated with financing are entered as net amounts under financial income and expenses.

Foreign subsidiaries and jointly owned companiesIn the consolidated accounts all items in the Income State-ments of foreign subsidiaries and jointly owned companies are translated into euros at the average exchange rates for the accounting period and all Balance Sheet items at the rates on the Balance Sheet date. Translation differences arising are treated as an adjustment affecting consolidated equity.

Current assetsInventories are valued at the acquisition value or the lower of the replacement value or net realisable value. The cost of inventories includes a proportionate share of overheads aris-ing from the purchase and production of the goods.

Fixed assetsFixed assets are stated in the Balance Sheet at the historical cost less accumulated depreciation. The estimated useful life of assets used to calculate depreciation and amortisation is as follows:

• Goodwill 10-15 years• Goodwill on deposits 30 years• Other capitalised expenditure 3-10 years• Buildings and constructions 10-40 years• Minor machinery and equipment 3-15 years• Major machinery, process equipment, kilns 15-25 years• Other tangible assets 5-10 years

Depreciation for decrease of substance has been made on some deposits.

Long-term financial assets include investments that are recorded at their historical cost less depreciation of permanent decreases in value. Profits and losses on the disposal of fixed assets are included in other operating income and expenses.

LeasingOperating and financial leasing payments are treated as rent-als. Commodities are not treated as fixed assets. Annual leasing charges on the basis of existing leasing agreements are shown in the notes. For financial leasing the differences between Finnish and international accounting practice are shown in the notes together with their impact on certain key figures.

Emission rightsEmission rights are reported using the net value method. In other words, current values are not included in the Balance Sheet. Emission rights acquired to cover shortfalls and short-falls not covered by acquisition are reported as a cost accord-ing to their value on the last day of the financial year. Gains from the sale of surplus emission rights are included under other operating income.

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Revenue recognitionSales are recorded in accordance with the invoiced value of products or performance of services, net of indirect taxes and discounts. Sales of products and services are recorded at the time each individual transaction takes place.

Research and developmentResearch and development costs are recorded in the financial period during which they are incurred. Research and develop-ment costs and their proportion of net sales are presented in the five-year review.

Pension liabilitiesThe Group companies’ pension obligations are based on local regulations and practices. In the parent company and in Finn-ish subsidiaries pension liabilities are covered by insurance. Costs of pensions are recorded as they are earned. Changes in uncovered pension liabilities are entered in the Income State-ment. Pension liabilities are included in the Balance Sheet.

Income taxesIncome taxes in the Income Statement include taxes of the Group companies for the financial period, calculated in accordance with local regulations, as well as adjustments to prior year taxes and deferred taxes. Deferred tax assets and liabilities are determined for temporary differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. The current tax rate is used

Exchange rates

Country Currency Rates at end of period 31. December Average rates 2006 2005 2006 2005

Finland Euro 1.00000 1.00000 1.00000 1.00000Sweden SEK 9.04040 9.38850 9.25332 9.27964Norway NOK 8.23800 7.98500 8.04628 8.01287Estonia EEK 15.64660 15.64660 15.64660 15.64660Poland PLN 3.83100 3.86000 3.89513 4.02259Russia RUR 34.68000 33.92000 34.11158 35.20359

to calculate deferred tax income. Differences resulting from tax-rate changes are included in the Income Statement. The Balance Sheet includes all deferred tax liabilities and the probable realisable amount of deferred tax assets. No deferred tax liability is recognised for the undistributed earnings of subsidiaries. Deferred tax liability on allocated goodwill has previously been included in the Consolidated Balance Sheet in the case of Storugns, and also, from 2006 onwards, in the case of Miedzianka, Pargas and Lappeenranta.

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Note 1 Net sales by geographical area and product groups

Group Parent company 1000 EUR 2006 2005 2006 2005

Note 2 Personnel expenses

Group Parent company 1000 EUR 2006 2005 2006 2005

Geographical area Finland 185 837 167 466 134 094 119 060 Sweden 55 207 54 023 1 072 444 Poland 30 647 21 537 164 176 Germany 15 513 13 749 616 469 Estonia 6 095 3 632 15 13 Other EU 5 928 5 581 1 798 2 019 Other Europe 4 015 3 221 432 347 Others 528 348 528 348 Total 303 769 269 557 138 719 122 876

Product groups

Limestone & paper pigments 213 730 189 788 Quick and hydrated lime 101 571 91 267 Internal sales -11 532 -11 498 Total 303 769 269 557

Wages and salaries Salaries and payments to Board Members and Managing Directors 1 198 1 016 365 367 To others 34 866 33 051 19 452 18 858 Bonus to Managing Directors 139 121 14 20

Total 36 203 34 188 19 831 19 245

Other personnel expenses Pensions and pension premiums 4 809 4 936 3 207 3 315 Other payroll costs 6 699 6 292 1 987 2 099

Total 11 508 11 227 5 194 5 414

Personnel expenses 47 711 45 415 25 025 24 659

Personnel As an average during the year 1 353 1 316 560 584 At year end 1 304 1 347 534 550 The President of Nordkalk Corporation is entitled to retire at the age of 62.

Notes to the Financial Statements

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Notes to the Financial Statements

Depreciation by function Production 24 277 25 302 9 631 9 638 Sales, marketing and development 204 212 125 133 Administration 903 893 635 767 Other operating expenses, goodwill 399 476

Total 25 783 26 884 10 391 10 538

Depreciation according to category of assets Goodwill 399 322 Intangible assets 1 271 1 421 1 039 1 213 Mineral deposits and land 3 478 3 846 1 351 1 351 Buildings and constructions 3 064 3 169 1 589 1 573 Machinery and equipment 17 028 17 630 6 048 6 086 Other tangible assets 543 496 364 315 Total 25 783 26 884 10 391 10 538

Income Rents 914 937 569 610 Profit on sale of fixed assets 275 225 206 155 Services sold 2 028 2 108 1 780 1 532 Materials sold 385 854 385 367 Emission rights 2 408 999 992 999 Other income 1 247 2 180 128 470 Total 7 257 7 303 4 060 4 133

Expenses Depreciation on goodwill 399 322 Loss on sale of fixed assets 203 61 131 59 Taxes on real estate 180 176 135 130 Other expenses 70 148 17 Total 851 706 283 189

Note 3 Depreciation

Group Parent company 1000 EUR 2006 2005 2006 2005

Note 4 Other operating income and expenses

Group Parent company 1000 EUR 2006 2005 2006 2005

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1000 EUR 2006

Note 6 Investment in joint ventures

Notes to the Financial Statements

Country Shareholding %

NorFraKalk AS Norway 50.0 The amounts representing the Group’s share of the assets and liabilities and sales and results of the joint ventures.

Assets and liabilities Non-current assets 2 379 Current assets 1 541 Non-current liabilities 0 Current liabilities 440

Net assets 3 480

Income and expenses

Sales 0 Expenses 153

Net profit -153

The average number of employees in the joint ventures 0

Note 5 Share of result and equity in associated companies

Country Share- Share Share holding % of result of equity 1000 EUR 2006 2005 2006 2005

Lohjan Energiahuolto Oy Loher Finland 23.1 -40 1 68 108Pargas Hyreshus Ab Finland 34.1 0 0 62 67Saimaan seutujen Opisto-osakeyhtiö Finland 20.0 -1 0 155 Eliminations 16 -4

Total -25 -3 285 175

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Note 8 Direct taxes

Group Parent company 1000 EUR 2006 2005 2006 2005

Note 7 Financial income and expenses

Group Parent company 1000 EUR 2006 2005 2006 2005

Notes to the Financial Statements

Taxes in income statement Direct taxes for the year 8 839 4 192 6 276 1 998 Direct taxes from previous years 76 79 54 Change in deferred tax asset/liability -1 339 290

Total 7 576 4 561 6 330 1 998

Deferred tax assets From valuation and matching differences 760 1 379

Deferred tax assets 760 1 379

Deferred tax liabilities From untaxed reserves 10 371 12 546 From consolidation entries 16 104 2 495 From valuation and matching differences 322 198

Deferred tax liabilities 26 797 15 239

Dividends from Nordkalk companies 2 649 3 099Other dividends 81 84 81 84

Interest income from Nordkalk companies 1 397 1 719Other interest income 203 109 94 73 Interest expenses to Nordkalk companies 5Other interest expenses 12 332 13 891 11 564 13 294 Exchange rate differences -63 -7 -721 -1 318Other financial income external 178 412 17 18Other financial expenses external 374 225 130 Total -12 308 -13 517 -8 177 -9 624

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Note 9 Fixed assets

Notes to the Financial Statements

Group Goodwill Intangible Mineral Buildings and Machinery Other Construction assets deposits constructions and equipment tangible in progress and land assets

Acquisition cost 1 Jan. 2006 5 314 14 220 107 529 68 953 274 741 9 346 5 907Exchange rate differences 51 13 1 251 467 2 814 36 107+ Investments 1 716 542 1 290 9 707 932 7 833+ Other increases 331 14 030 841 3 680 45 - Decreases -99 -3 527 -5 069

Acquisition cost 31 Dec. 2006 5 366 16 279 123 352 71 453 287 415 10 359 8 778 - Accumulated depreciation 1 Jan. 2006 -2 615 -7 972 -20 498 -34 022 -168 420 -6 149 Exchange rate differences -95 12 -502 -248 -1 772 -20 - Depreciation during the year -397 -1 273 -3 516 -3 076 -17 179 -545 - Accumulated depreciation for decreases 59 18 40 2 760

Accumulated depreciation 31 Dec. 2006 -3 107 -9 174 -24 498 -37 306 -184 610 -6 714 Residual value 31 Dec. 2006 2 258 7 105 98 854 34 147 102 805 3 644 8 778

Parent Company Intangible Mineral Buildings and Machinery Other Construction assets deposits constructions and equipment tangible in progress and land assets

Acquisition cost 1 Jan. 2006 12 108 44 810 27 574 110 180 4 891 1 000+ Investments 1 702 54 792 2 581 639 837+ Other increases 331 1 214 171 31 - Decreases -89 -309 -834

Acquisition cost 31 Dec. 2006 14 141 44 776 28 580 112 623 5 561 1 003 - Accumulated depreciation 1 Jan. 2006 -7 309 -2 718 -15 769 -72 051 -3 174 - Depreciation during the year -1 039 -1 351 -1 589 -6 048 -364 + Accumulated depreciation / disposal, sales and transfers 178 +/- Other changes 59 27

Accumulated depreciation 31 Dec. 2006 -8 289 -4 069 -17 331 -77 921 -3 538 Residual value 31 Dec. 2006 5 852 40 707 11 249 34 702 2 023 1 003

1000 EUR 2006

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Note 9 Fixed assets

Notes to the Financial Statements

Shares and participations Group Parent Company

Shares and Shares and Shares and Shares and Shares and Long-term participations, participations, participations, participations, participations, receivable from associated others subsidiaries joint ventures others subsidiaries companies and associated companies

Acquisition cost 1 Jan. 2006 682 1 942 91 064 682 1 921 34 168+ Investments 2 3 136 2 + Other increases 1 2 230- Decreases -600 -2 289

Acquisition cost 31 Dec. 2006 82 1 944 88 775 3 819 1 923 36 398 - Accumulated depreciation 1 Jan. 2006 106 -886 -886 +/- Other changes 97

Accumulated depreciation 31 Dec. 2006 203 -886 -886

Residual value 31 Dec. 2006 285 1 058 88 775 3 819 1 037 36 398

1000 EUR 2006

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Notes to the Financial Statements

Note 10 Shares and participations 31 Dec. 2006

Group holding Book value EUR Number % Currency Nominal Parent Group of shares value Company

2006

Subsidiaries OAO Alekseevsky Limestone Mill, Alekseevsky, Russia 75 465 95.7 RUR 2 263 950 2 289 053Inkoo Shipping Oy Ab, Ingå, Finland 3 000 60.0 EUR 504 564 506 582 506 582Kalkproduktion Storugns AB, Lärbro, Sweden 30 000 66.7 SEK 300 000 365 471NK-East Oy, Pargas, Finland 800 100.0 EUR 8 000 8 000 8 000Nordkalk AB, Lärbro, Sweden 250 000 100.0 SEK 25 000 000 34 238 288 34 238 288Nordkalk AS, Vasalemma, Estonia 15 000 100.0 EEK 15 000 000 4 849 832 4 849 832Nordkalk GmbH, Lübeck, Germany 1 100.0 EUR 50 000 50 000 50 000Nordkalk i Köping AB, Stockholm, Sweden 100 000 100.0 SEK 10 000 000 1 659 219Nordkalk i Luleå AB, Stockholm, Sweden 2 500 100.0 SEK 250 000 27 875Nordkalk Sp. z o.o., Krakow, Poland 74 000 100.0 PLN 54 465 410 45 543 467 45 543 467Suomen Karbonaatti Oy, Lappeenranta, Finland 12 495 51.0 EUR 2 101 508 3 578 740 3 578 740 Total subsidiaries 88 774 909 93 116 527

Joint Ventures NorFraKalk AS, Verdal, Norway 30 000 50.0 NOK 30 000 000 3 736 657 3 736 657 Total Joint Ventures 3 736 657 3 736 657

Associated companies Lohjan Energiahuolto Oy Loher, Lohja, Finland 6 23.1 EUR 50 456 171 67 304Pargas Hyreshus Ab, Pargas, Finland 1 022 34.1 EUR 1 719 82 010 62 369Saimaan seutujen Opisto-osakeyhtiö, Lappeenranta, Finland 2 000 20.0 EUR 336 1 155 426

Total associated companies 82 182 285 099

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Notes to the Financial Statements

Note 10 Shares and participations 31 Dec. 2006 2006

Other companies Archipelagia Golf Ab Oy, Pargas, Finland 10 EUR 1 682 20 523 20 523Köpings Företagarforum AB, Köping, Sweden 1 0.1 SEK 5 000 553Lappeenrannan Kerho Oy, Lappeenranta, Finland 15 EUR 138 138Lappeenrannan Urheilutalo, Lappeenranta, Finland 34 EUR 0 0Lohjan Puhelin Oy, Lohja, Finland 5 EUR 84 135Movab AB, Malmö, Sweden 975 19.5 SEK 97 500 10 785Pargas Idrotts- och ungdomsgård Ab, Pargas, Finland 1 500 EUR 12 614 12 816 12 816Pargas Telefon Ab, Pargas, Finland 4 100 1.2 EUR 2 758 10 061 10 061Päijät-Hämeen Puhelinyhdistys, Lahti, Finland 17 EUR 1 293 1 293AS Rocca al Mare Suurhall, Tallinn, Estonia 4 0.1 EEK 40 9 587Savonlinnan Puhelinyhdistys, Savonlinna, Finland 9 EUR 3 027 3 252 3 252Specialty Minerals Nordic Oy Ab, Kaarina, Finland 11 680 4.7 EUR 330 394 425 598 425 598Suomen ElFi Oy, Helsinki, Finland 1 5.6 EUR 2 000 2 000 2 000Suur-Savon Sähkö Oy, Mikkeli, Finland 250 EUR 420 86 86Vaasan Läänin Puhelin Oy, Ylistaro, Finland 2 EUR 27 342 342Vakka-Suomen Puhelin Oy, Uusikaupunki, Finland 9 EUR 151 1 170 1 170Vasa Telefon Ab, Vaasa, Finland 2 EUR 27 740 740Verdalskalk AS, Verdal, Norway 30 10.0 NOK 3 000 000 456 983 456 983Viljavuuspalvelu Oy, Mikkeli, Finland 6 490 13.0 EUR 109 154 101 779 101 779 Total other companies 1 036 781 1 057 840

Group holding Book value EUR Number % Currency Nominal Parent Group of shares value Company

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Group Parent Company 1000 EUR 2006 2005 2006 2005

Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Inventories Materials and supplies 20 151 19 625 9 014 9 526 Finished goods and work in progress 13 744 14 808 7 210 7 433 Advance payments 131 83

Total 34 026 34 516 16 224 16 959

Short-term receivables

Accounts receivable Nordkalk group 1 922 1 626 Associated companies 40 52 40 52 Others 37 171 32 845 14 532 13 375

Total 37 211 32 897 16 494 15 053 Prepaid expenses and accrued income Nordkalk group 95 2 037 Others 1 887 2 977 612 1 770

Total 1 887 2 977 707 3 807 Other receivables Others 2 548 1 487 39

Total 2 548 1 487 39 Summary Nordkalk group 2 017 3 663 Associated companies 40 52 40 52 Others 41 605 37 309 15 183 15 145

Total 41 645 37 361 17 240 18 860 Specification of prepaid expenses and accrued income, external Financial items 113 41 Tax receivables 576 1 017 887 Others 1 197 1 960 571 883

Total 1 887 2 977 612 1 770

Note 12 Change in shareholders’ equity

Notes to the Financial Statements

Note 11 Currents assets

Share capital 1 Jan. 1 000 1 000 1 000 1 000

Share capital 31 Dec. 1 000 1 000 1 000 1 000 Net profit/loss for previous years 1 Jan. 23 517 16 854 15 686 6 426Acquisition of own shares -1 -1Translation differences 696 -122 Other changes 150 79 1

Net profit/loss for previous years 31 Dec. 24 363 16 811 15 686 6 426 Net profit for the period 13 736 6 706 16 242 9 260 Total shareholders’ equity 39 099 24 517 32 927 16 686

Distributable equity Net profit for previous years 15 686 6 426Net profit for the period 16 242 9 260

Total distributable equity 31 928 15 686

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Note 15 Long-term liabilities Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Note 14 Provisions Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Notes to the Financial Statements

Provision for pension liabilities 37 68 Provision for restructuring 913 815 Provision made for future environmental responsibilties 146 116 101 116 Total 1 096 999 101 116

Capital loan 49 091 49 091Loans from financial institutions 166 899 112 798 155 000 96 500Pension fund loans 2 188 2 107 Deferred tax liabilities (Note 8) 26 797 15 239 Other interest-bearing liabilities 40 000 60 360 40 000 60 000Other non interest-bearing liabilities 1 270 103 68 103 Total 237 154 239 697 195 068 205 694 Long-term interest-bearing liabilities 209 087 224 356 195 000 205 591 Repayments of long-term liabilities Year 2-5 Over 5 Year 2-5 Over 5

Loans from financial institutions 36 759 130 140 25 000 130 000Pension fund loans 2 188 Deferred tax liabilities (Note 8) 81 26 563 Other interest-bearing liabilities 40 000 40 000 Other non interest-bearing liabilities 1 270 68 Total 76 840 160 161 65 000 130 068

Note 13 Financing

Nordkalk renegotiated its financing during 2006. The new financing structure included the repayment of all capital loans, in total EUR 49.1 million. By substituting capital loans with bank loans Nordkalk aims to lower its financing costs. The substitution is also natural from the point view that the new Companies Act in Finland, effective since September 2006, classifies capital loans as non equity. The balance sheet is financed through equity, a debenture loan of EUR 40 million, one amortizing bank loan of EUR 124 mil-lion, two committed credit limits to an aggregate amount of EUR 70 million and a committed investment limit of EUR 40 million. At the end of the year 2006 there was an unused reserve in the credit limits of EUR 39 million. The financing package extends to years 2010-2013 under current financing agreements.

SHAREHOLDERS OF NORDKALK CORPORATION Dec. 31, 2006 Ownership % Quantity Ahlström Capital Oy 30.5 305 000Rettig Group Ltd 21.0 210 000Åbo Akademi University Foundation 8.7 87 397The Alandia Group 7.7 77 398The Veritas Group 7.6 76 513Furuvik Invest Ab 7.3 73 223 Svenska litteratursällskapet i Finland r.f. 7.0 69 899Stiftelsen Eschnerska Frilasarettet 1.9 19 129Sundström Christer 1.2 12 000Stiftelsen Brita Maria Renlunds minne 1.0 9 564William Thurings stiftelse 1.0 9 564K.H. Renlunds stiftelse 1.0 9 564Petter och Margit Forsströms stiftelse till Karl och Olivia Forsströms minne 0.5 4 782Nordkalk´s management 3.5 35 367Nordkalk Corporation 0.1 600

Total 100.0 % 1 000 000 shares

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Note 16 Short-term liabilities Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Notes to the Financial Statements

Short-term interest-bearingliabilities Repayment of long-term liabilities Others 4 633 9 606 7 000 Overdrafts 185

Other interest-bearing liabilities Others 37 86 Total short-term interest-bearing liabilities 4 856 9 692 7 000 Total short-term liabilities 54 994 52 833 27 909 30 456 Specification of accrued expenses and deferred income, external Purchases 1 269 Sales related items 609 425 241 38 Personnel costs 6 241 5 725 3 647 3 353 Taxes 2 806 281 2 734 Financial items 5 319 7 512 5 103 7 281 Others 1 719 2 847 577 679

Total 17 964 16 789 12 302 11 351

Short-term non interest-bearing liabilities Accounts payable Nordkalk group 1 010 927 Others 24 743 18 637 11 195 7 734 Total 24 743 18 637 12 205 8 661 Advances received Others 60 4 Total 60 4

Accrued expenses and deferred income Nordkalk group 1 Others 17 964 16 789 12 302 11 351 Total 17 964 16 789 12 302 11 352 Other non interest-bearing liabilities Others 7 371 7 710 3 401 3 443 Total 7 371 7 710 3 401 3 443 Summary Nordkalk group 1 010 928 Others 50 138 43 141 26 898 22 528 Total short-term non interest-bearing liabilities 50 138 43 141 27 909 23 456

Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

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Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Group Parent Company 1000 EUR 31 Dec. 2006 31 Dec. 2005 31 Dec. 2006 31 Dec. 2005

Notes to the Financial Statements

Note 17 Pledged assets, contingent liabilities and leasing contracts

Pledged assets

Real estate mortgagesas security for own debts Loans from financial institutions 155 000 103 500 155 000 103 500 Mortgages 365 617 199 679 364 659 198 721 Other mortgages Mortgages 553 533

Total mortgages 366 170 200 212 364 659 198 721 Other pledged assets Other pledges 44 835 121 474 43 181 119 721 Total other pledged assets 44 835 121 474 43 181 119 721 Pledged assets for other own liabilities than debts Real estate mortgages 958 958

Total 411 963 322 643 407 840 318 442

Contingent liabilities Guarantees: For subsidiaries 8 387 8 344 For others 1 206 1 172 269 269 Pension fund liability 44 42 Other contingent liabilities 6

Total 9 637 1 220 8 656 8 613

Leasing contracts In accordance with current leasing contracts leasing fees during the next years will amount to: Next 12 months 8 218 6 144 5 566 4 406 Later 36 211 26 324 29 049 17 929 Total 44 429 32 468 34 615 22 335

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The effects of recording financial leasing contracts in the balance sheet as assets and liabilities and the leasing charges as depreciation, repayments and interest expenses. MEUR Operating profit Financial Items Profit before extraordinary items

Income statement 2006 2005 2006 2005 2006 2005

As shown 36.8 27.5 -12.3 -13.5 24.5 14.0in the Income Statement

Adjustment for interest expenses included in leasing charges 1.6 1.4 -1.6 -1.4 0.0 0.0 Adjusted profit 38.4 28.9 -13.9 -14.9 24.5 14.0

Fixed assets Liabilities Balance sheet total

Balance sheet 2006 2005 2006 2005 2006 2005 Balance Sheet values as shown 259.0 248.3 292.1 292.5 345.8 330.9 Residual value of leased assets 39.2 39.9 32.6 34.1 39.2 39.9 Adjusted Balance Sheet 298.2 288.1 324.7 326.6 385.1 370.8

Solvency (%)

According to the Financial Statement 15.2 11.3 After adjustments in the Income Statement and in the Balance Sheet 13.7 10.1

Note 19 Nominal values of derivative instruments

Notes to the Financial Statements

Note 18 Adjustment for financial leasing in Nordkalk Group

Nominal value Foreign exchange forward contracts 77 661 64 648 of which closed contracts 1 727 518

Forward contracts of electricity 13 420 12 984

Interest rate swap 125 000 76 500

Market value Foreign exchange forward contracts -508 -1 396Forward contracts of electricity 834 2 406Interest rate swap 1 258 -539

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.

1000 EUR 31 Dec. 2006 31 Dec. 2005

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Calculation of Financial Ratios

Notes to the Financial Statements, Calculation of Financial Ratios

It is Nordkalk Corporation’s policy to hedge a large part of its equity in foreign currencies. Hedges are used for material exposures. Such exist in Swedish crowns and Polish zlotys. Both currencies may be hedged up to 75% of the exposure.

Forward trading of the different currencies is used for hedging. Hedging is based on Board of Directors’ resolutions. Hedge ratios vary according to what future prospects for the currency rates in question are judged to be. The main prin¬ciple is to avoid risk and act on a long-term basis. Translation differences are entered against equity.

Forward trading is also used to hedge part of the operating net currency exposure. Nordkalk hedges half of its 6 months net currency exposure.

Forward trading is also used to hedge the price of budgeted electricity consumption. Hedging is built on minimum and maximum hedge ratios. The maximum hedge ratio is lower for longer periods. For the near-est 52-week period the maximum hedge ratio is 80%.

Interest-rate swaps are used to manage the interest-rate risk. It is Nordkalk’s policy to hedge at least 50% of its financing costs for at least 3 years by exchanging variable rates for fixed rates.

Market rates for forward trading, forward market prices for electricity and interest-rate swaps are calcu-lated at the time of interim and annual accounts. The result is shown in the notes to interim and annual accounts.

In the beginning of 2005 emission rights were allocated for the period 2005 - 2007. In 2006 emission rights were sold at a price of approximately EUR 2.4 million. The revenue is posted to Other operating income.

Note 21 Emission rights

Return on capital employed (ROC), % Profit before extraordinary items + financial expenses

x 100Balance sheet total - non interest-bearing liabilities, average over the year Return on equity (ROE), % Profit before extraordinary items - taxes in the income statement

x 100Shareholders’ equity + minority interest, average over the year Interest coverage Operating profit + financial income

Interest expenses Valued added Operating profit + personnel costs + depreciation

Personnel on average

Gearing, % Interest bearing liabilities - cash and bank balances - other interest-bearing receivables

x 100Shareholders’ equity + minority interest Solvency ratio, % Shareholders’ equity + minority interest

x 100

Balance sheet total - advances received

Note 20 Financial risk management

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2006 2005 2004 2003 2) 2002 1)

From Income statement Net sales MEUR 303.8 269.6 270.6 259.8 252.0 change % 12.7 -0.4 4.1 3.1 16.7 foreign sales % 38.8 37.9 34.4 35.1 33.7 Operating profit MEUR 36.8 27.5 37.9 34.0 35.2 % of net sales % 12.1 10.2 14.0 13.1 14.0 Profit before extraordinary items MEUR 24.5 13.9 20.4 15.5 20.0 % of net sales % 8.1 5.2 7.6 6.0 7.9 Profit before taxes and minority interest MEUR 24.5 13.9 20.4 15.5 16.4 % of net sales % 8.1 5.2 7.6 6.0 6.5 Net profit/loss for the period MEUR 13.7 6.7 12.5 6.4 8.1

From balance sheet Fixed assets MEUR 259.0 248.3 258.8 259.5 225.2 Inventories MEUR 34.0 34.5 36.8 33.2 29.3 Other current assets MEUR 52.8 48.1 48.6 50.4 46.2 Minority interest MEUR 13.5 12.8 13.2 11.2 11.7 Equity MEUR 39.1 73.6*) 72.6*) 52.6*) 202.0*) Interest-bearing liabilities MEUR 213.9 185.0 195.2 215.7 21.3 Non interest-bearing liabilities MEUR 79.3 59.5 63.2 63.6 65.6 Balance sheet total MEUR 345.8 330.9 344.2 343.1 300.7

Financial ratios Gross capital expenditure MEUR 22.0 14.1 22.3 22.0 29.4 % of net sales % 7.2 5.2 8.2 8.5 11.7 Depreciation MEUR 25.8 26.9 24.5 23.4 22.2 Research and Development costs MEUR 3.3 3.2 3.5 4.5 4.5 % of net sales % 1.1 1.2 1.3 1.7 1.8 Capital employed CB MEUR 266.5 271.4 281.0 279.5 235.1 Return on capital employed % 13.8 10.2 13.7 13.4 15.3 Return on equity % 24.3 10.9*) 22.0*) 10.6*) 13.6*) Gearing % 386.9 203.2**) 216.3**) 318.3**) 4.8**) Interest coverage times 3.0 2.0 2.3 2.1 4.3 Solvency ratio % 15.2 11.3 9.0 4.3 37.9

Per employee Net sales 1000 EUR 225 205 205 195 188 Value added 82 76 81 76 74 Wages and salaries 35 35 34 33 31 Profit before extraordinary items 18 11 16 12 15

Personnel on average 1 353 1 316 1 317 1 330 1 341 Personnel at year-end 1 304 1 347 1 288 1 310 1 311

*) Incl. capital loan **) Capital loan included in equity

1) Old Nordkalk Group2) NK-Holding Group

Five-year review

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To the shareholders of Nordkalk Corporation

We have audited the accounting records, the report of the Board of Directors, the financial statements and the administration of Nordkalk Corporation for the period 1.1. – 31.12.2006. The Board of Directors and the President have prepared the Report of the Board of Directors and the financial statements, which include the consolidated and parent company balance sheets, income statements, cash flow statements and notes to the financial statements. Based on our audit we express an opinion on these financial statements, as well as on the report of the Board of Directors and on administration of the parent company.We have conducted the audit in accordance with Finnish Standards on Audit-ing. Those standards require that we perform the audit to obtain reasonable assurance about whether the report of the Board of Directors and the financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the management as well as evaluating the overall financial statement presentation. The purpose of our audit of administration is to examine that the members of the Board of Directors and the President of the parent company have complied with the rules of the Companies Act.In our opinion the report of the Board of Directors and the financial statements have been prepared in accordance with the Accounting Act and other rules and regulations governing the preparation of financial statements in Finland. The report of the Board of Directors and the financial statements give a true and fair view, as defined in the Accounting Act, of both the consolidated and parent company’s result of operations as well as of the financial position. The report of the Board of Directors is consistent with the financial statements. The financial statements with the consolidated financial statements can be adopted and the members of the Board of Directors and the President of the parent company can be discharged from liability for the period audited by us. The proposal by the Board of Directors regarding the distribution of result is in compliance with the Companies Act.

Helsinki 26 January 2007

KPMG OY AB

Sixten NymanAuthorized Public Accountant

Auditor’s report

Management Group 2006

Bertel Karlstedt, b. 1962 M.Sc. (Eng.)President Employed by the company since 2005

Gunilla Bergmann, b. 1956B.Sc. (Econ.)Communications DirectorEmployed by the company since 1998

Kjell Bärtzner, b. 1943M. Sc. (Econ.)Managing Director, Nordkalk ABEmployed by the company since 1971

Jarmo Ellmén, b.1953M.Sc. (Econ.)Financial DirectorEmployed by the company since 2003

Eelis Eskelinen, b. 1953M.Sc. (Eng.)Director, Paper PigmentsEmployed by the company since 1980

Paavo Nikkari, b. 1947M.Sc. (Agr.)Director, Carbonate FinlandEmployed by the company since 1981

Kim Nordell, b. 1959M.Sc. (Econ.)Director, Business ControlEmployed by the company since 1983

Håkan Pihl, b. 1958 M.Sc. (Geol.)Director, Geology and R&DEmployed by the company since 1988

Marie Stenulv, b.1954 (since 1 June 2006)Silf Certified Executive Supply Chain Manager Director, Purchasing & LogisticsEmployed by the company since 1999

Esa Tikka, b. 1953B.Sc. (Econ.)Director, Central & Eastern EuropeEmployed by the company since 1980

Tarmo Tuominen, b. 1962M.Sc. (Geol.)Director, Industrial LimeEmployed by the company since 1982

Kari Vainio, b. 1955LL.M.Director, Personnel and Legal Affairs Employed by the company since 1993

Board of Directors

Chairman of the BoardBjörn Mattsson, b. 1941Lic. Phil.Honorary CounsellorChairman of the Board, Otimera OyMember of the Board, Hartwall Ltd and Turku Science Park Ltd

Member of the Nordic Advisory Board of DresdnerKleinworthWasserstein Ltd.

Morten Ahlström, b. 1943M.Sc. (Econ.)Chairman of the Board, AhlströmCapital OyChairman of the Board, Quartona Ltd and Å&R Carton ABMember of the Board, Enics AG.

Jan Inborr, b. 1948B.Sc. (Econ.)President and CEO, Ahlström Capital OyChairman of the Board, Enics AG and Vacon PlcDeputy Chairman of the Board, Å&R Carton ABMember of the Board, Ahlstrom Corporation andÅbo Akademi University Foundation.

Järvelä Jukka, b. 1969 (until 28 Dec. 2006)M.Sc. (Econ.)Partner, CapManChairman of the Board, Tokmanni Oy andFinlayson & Co OyMember of the Board, Maintpartner Oy.

Bjarne Mitts, b. 1949 (since 18 Jan. 2007)B.Sc. (Econ.)President & CEO, Rettig Group LtdMember of the Board, Åbo Akademi University Foundation and Technology Industries of Finland.

Siimestö Orvo, b. 1943 (until 28 Dec. 2006)M.Sc. (Econ.)Senior Advisor, CapManChairman of the Board, Moventas, Inc.

Christoffer Taxell, b. 1948LL.M.Chancellor of Åbo Akademi UniversityChairman of the Boards of Finnair Plc, Föreningen Konstsamfundet and Åbo Akademi University FoundationMember of the Board, Sampo Plc, Stockmann Plc, Finnish Business and Policy Forum (EVA), the Research Institute of Finnish Economy (ETLA) and Luvata International OyMember of the Investment committee of the Svenska Litteratursällskapet i Finland r.f.

Board of Directors and Management Group

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Board of DirectorsBjörn Mattsson (in front, left), Jan Inborr, Mårten Ahlström, Christoffer Taxell, Bjarne Mitts ��

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NORDKALK AS Estonia

Vasalemma

100 %

NORDKALKSp. z o.oPolandCracow

100 %

NORDKALK ABSwedenLärbro

KalkproduktionStorugns AB

(KPAB)Gotland

100 %

67 %

NORDKALKGmbH

GermanyLübeck

100 %

NK-EAST OYFinlandPargas

OAO Alekseevskij (OAO AIZ)

Limestone Mill Russia

Alekseevka

100 %

96 %

SuomenKarbonaatti Oy

FinlandLappeenranta

51 %

Inkoo Shipping Oy Ab

FinlandIngå

60 %

NorFraKalk ASNorwayVerdal

50 %

Lohjan Energia-huolto Oy Loher

FinlandLohja

23 %

Verdalskalk ASNorwayVerdal

10 %

Specialty Minerals Nordic Oy Ab

FinlandKaarina

5 %

Group Structure

NORDKALK CORPORATIONFinlandPargas

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www.nordkalk.com

FinlandNordkalk CorporationSkräbbölevägen 18FI-21600 PargasTel. +358 (0)204 55 6999Fax +358 (0)204 55 6038

SwedenNordkalk ABKungsgatan 74, Box 544SE-101 30 StockholmTel. +46 (0)8 677 5300Fax +46 (0)8 10 0145

EstoniaNordkalk ASVasalemmaEE-76101 Harju maakondTel. +372-6713 266Fax +372-6713 148

PolandNordkalk Sp. z o.o.ul. Starowislna 13,15PL-31-038 KrakowTel. +48 (0)12 428 65 80Fax +48 (0)12 429 50 05

GermanyNordkalk GmbHKonrad-Adenauer-Strasse 6DE-23558 LübeckTel. +49 (0)451 30 09 38 0Fax +49 (0)451 30 09 38 44

RussiaNordkalk/AIZBusiness Center SenatorChapaeva Street 15RU-197101 St. PetersburgTel. +7 812 332 4550Fax +7 812 496 73 14