LEMMINKÄINEN’S FINANCIAL STATEMENT BULLETIN 2006: Significant growth in earnings

LEMMINKÄINEN CORPORATION   STOCK EXCHANGE BULLETIN    15.2.2007 9:00

LEMMINKÄINEN’S FINANCIAL STATEMENT BULLETIN 2006: Significant
growth in earnings


- Net sales were EUR 1 795.9 million (1 601.7), growth 12.1 %
- Operations abroad generated net sales EUR 530.3 million (499.6), growth 6.2 %
- The operating profit was EUR 108.1 million (72.5), growth 49.1 %
- The profit before taxes was EUR 94.2 million (65.9), growth 42.9 %
- The operating margin was 6.0 % (4.5)
- The return on investment was 20.6 % (16.5) and the return on equity 30.2 % (24.5)
- The equity ratio was 31.2 % (31.0) and gearing 105.7 % (102.9)
- The Company’s order book at the end of the accounting 
  period was EUR 1 326.7 million (1 011.3), growth 31.2 %
- Earnings per share were EUR 3.87 (2.57), growth 50.6 %
- The Board of Directors proposes a dividend of EUR 1.50 (1.00)


A SUCCESSFUL YEAR 2006

Lemminkäinen’s result in 2006 was one of the best in the Group’s
history. Both the profit for the accounting period and earnings
per share were up more than 50 % on the previous year.

The biggest improvements in profits were made by Lemminkäinen’s
building contractor, the Palmberg Group, and the Paving and
Mineral Aggregates Division. This favourable trend was influenced
by the healthy state of the construction market, growth of the
Group’s housing production, and the unusually long asphalt paving
season. The Building Materials Division continued with measures
aimed at boosting profitability, and there was a marked
improvements in the Division’s result. Lemcon reinforced its
position as a major rock engineering project contractor.

Operations abroad accounted for almost one third of Lemminkäinen
Group’s total net sales.


FAVOURABLE OUTLOOK FOR 2007

Lemminkäinen’s strong order book and the positive outlook for the
construction market create good prerequisites for the favourable
development of the Company’s business in 2007.

Lemminkäinen derives about a half of its net sales from building
construction, which is expected to remain brisk. In civil
engineering, the state of the rock engineering market in
particular is likely to remain good, which will boost demand for
Lemcon’s services. The Baltic states and Russia are potential
growth areas for asphalt paving. In Finland, however, competition
for asphalt paving contracts is likely to remain intense. Strong
demand for refurbishment contracting and the outsourcing of
property-related functions by companies will fuel demand for
Tekmanni’s technical building and facility services.


ANNUAL GENERAL MEETING, DIVIDEND AND FINANCIAL INFORMATION 2007

Lemminkäinen Corporation’s Annual General Meeting will be held at
3.00 p.m. on Friday, 16 March 2007 at the Hotel Palace, 10th
floor, Eteläranta 10, 00130 Helsinki.

The Board of Directors will propose to the Annual General Meeting
that the Company pay a dividend of EUR 1.50 (1,00) per share for
the 2006 accounting period, i.e. a total of EUR 25,531,875.00
(17,021,250.00). The dividend will be paid to all those included
on the list of shareholders kept by the Finnish Central Securities
Depository on the record date, 21 March 2007. The dividend will be
paid on 28 March 2007.

The Annual Report 2006 will be published in Finnish and English in
week 10/2007. The interim financial reviews will be published on
10 May, 9 August and 8 November 2007.

The stock exchange bulletins by Lemminkäinen Corporation in 2006
can be reviewed on the company’s website at www.lemminkainen.fi.


LEMMINKÄINEN CORPORATION

Juhani Sormaala
Managing Director



Additional information:
Juhani Sormaala, Managing Director, tel. +358 2071 53302
Jukka Ovaska, Finance Director, tel. +358 2071 53334
Katri Sundström, Investor Relations Manager, tel. +358 2071 54813


PRESENTATION OF LEMMINKÄINEN GROUP’S FULL-YEAR FINANCIAL STATEMENTS

Lemminkäinen will present its full-year financial statements to
investors, analysts and members of the press at 1:30 p.m. on 15
February 2007. The venue will be Ravintola Sipuli, Kanavaranta 7,
Helsinki, Finland. Those wishing to attend are cordially invited
to register in advance by phone +358 2071 54813 or e-mail
katri.sundstrom@lemminkainen.fi. The presentation material
concerning the financial statements will be available after the
event on the company’s website at www.lemminkainen.fi.

APPENDICES:
Board of Director’s Report 1.1.–31.12.2006
Tabulated section of the financial statements

Distribution: Helsinki Stock Exchange, key media


BOARD OF DIRECTORS’ REPORT 1.1.– 31.12.2006


CONSTRUCTION MARKET

The Finnish construction market continued to develop favourably in
2006, and the total volume of construction rose by about 4.5 %.
The outlook for the construction sector is still good, although
growth is expected to slow down slightly in 2007. The housing
market remained brisk despite the rise in interest rates, and
about 34 500 new housing starts were made.

Commercial construction remained brisk and there was a marked
recovery in office construction, especially in the Helsinki
metropolitan area. A number of logistics centres were built. The
outlook for civil engineering will continue to be good for some
years thanks to road construction investments. The timing of
paving works in some major road contracts is such that they will
not be carried out until after 2007.

The international markets relevant to Lemminkäinen developed
favourably. Finnish industry’s increased investments in China,
India, Russia and Eastern European countries boosted demand for
Lemminkäinen’s services. The road construction market in the
Baltic states grew with the aid of EU funding. The market area
exhibiting the fastest growth in telecommunications network
construction was South America.


GROUP NET SALES, EARNINGS AND BALANCE SHEET

Lemminkäinen Group’s net sales rose 12.1 % to EUR 1 795.9 million
(1 601.7). The Group generated 70 % of its net sales in Finland,
14 % in other Nordic countries, 6 % in Russia and Eastern Europe,
6 % in the Baltic states, and 4 % in other countries.

The Group’s operating profit rose 49.1 % to EUR 108.1 million
(72.5). The operating margin improved and was 6.0 % (4.5).
Earnings per share were up over 50 % at EUR 3.87 (2.57).

The return on investment was 20.6 % (16.5) and the return on
equity 30.2 % (24.5). The equity ratio was 31.2 % (31.0).

The company’s liquid funds at the end of the accounting period
were EUR 60.6 million (42.4) and interest-bearing liabilities
totalled EUR 343.6 million (264.0). Gearing was 105.7 % (102.9).


Group’s key figures,                  2006       2005      2004
EUR million                                                    
                                                               
Net sales, of which                1 795.9    1 601.7   1 431.3
operations abroad                    530.3      499.6     358.6
Operating profit                     108.1       72.5      63.9
Operating margin, %                    6.0        4.5       4.5
Profit before taxes                   94.2       65.9      55.1
Profit for accounting period          72.9       48.5      40.4
Profit share of parent                                         
company’s shareholders                65.8       43.7      37.4
Earnings per share, EUR               3.87       2.57      2.20
Dividend per share, EUR             1.50(1       1.00      0.60
Return on investment, %               20.6       16.5      14.8
Return on equity, %                   30.2       24.5      21.9
Equity ratio, %                       31.2       31.0      27.5
Gearing, %                           105.7      102.9     132.4
Liquid funds                          60.6       42.4      39.9
Interest-bearing liabilities         343.6      264.0     279.5
1) Board of Directors’ proposal to the AGM


BUSINESS SECTORS

Paving and Mineral Aggregates Division

The net sales of the Paving and Mineral Aggregates Division rose
8.6 % to EUR 559.0 million (514.7). The Division generated 50 % of
its net sales in Finland, 30 % in other Nordic countries, and 20 %
in the Baltic states and Russia.

The Division’s operating profit rose 47.8 % to EUR 30.3 million
(20.5). The order book grew 42.2 % and at the end of the
accounting period it was EUR 185.1 million (130.2), of which
operations abroad accounted for EUR 129.8 million (71.1).


Paving and Mineral                    2006       2005      2004
Aggregates Division,
EUR million                                                    
                                                               
Net sales, of which                  559.0      514.7     430.4
operations abroad                    276.6      239.9     190.6
Operating profit                      30.3       20.5      18.4
Operating margin, %                    5.4        4.0       4.3
Order book at end of period          185.1      130.2     124.7
Personnel (average)                  2 839      2 673     2 553


In Finland the paving season continued until the end of the year
due to the mild winter. The total volume of paving work declined
by about 10 % and it is not expected to rise in 2007. Competition
in Finland will remain intense and profitability in the industry
generally will be quite weak.

In other Nordic countries the volume of paving work will remain
roughly at the 2005 level. Demand remained strong in the Baltic
states, which is one of Lemminkäinen’s most important asphalt
paving markets.

A total of 5.3 (5.5) million tonnes of asphalt was produced, 2.5
(2.8) million tonnes in Finland and 2.8 (2.7) million tonnes
abroad.

In Finland the rise in costs of asphalt paving work was much
slower than in the previous year, which was influenced by the
lower prices of raw materials, especially bitumen. The price level
of asphalt paving contracts in Finland and Sweden is quite low,
but higher in Norway and Denmark.

Brisk building construction and major on-going infrastructure
projects sustained demand for mineral aggregate as a good level.
The net sales of Forssan Betoni, Lemminkäinen’s ready-mix concrete
producer, were also clearly higher than in the previous year.

In spring 2006 the quality of the ready-mix concrete delivered by
Forssan Betoni to the construction site at Olkiluoto nuclear power
plant became a topic of public debate. Subsequent investigations
revealed that the concrete satisfied all the set quality
requirements.


Building Materials Division

The net sales of the Building Materials Division were EUR 104.4
million (100.3). The Division generated 7 % of its net sales
abroad, mainly in Sweden and Eastern Europe. The Division’s
operating profit was much improved at EUR 4.0 million (0.6). The
order book grew 76 %.


Building Materials Division,          2006       2005      2004
EUR million                                                    
                                                               
Net sales, of which                  104.4      100.3      95.7
operations abroad                      7.7        6.4       6.7
Operating profit                       4.0        0.6       3.1
Operating margin, %                    3.9        0.6       3.3
Order book at end of period           23.4       13.3      12.5
Personnel (average)                    609        617       603


There was a marked improvement in the Building Materials
Division’s profitability in 2006 as a result of earlier
interventions. These included product range renewals and the
development of business systems. The pick-up in office
construction increased the Division’s production of precast
concrete staircase units. In roofing contracting the set targets
were achieved even though the price level of roofing materials
remained low. Demand for urban environment contracting remained
good and investments in the new construction and refurbishment of
sports and exercise facilities continued.

On 31 May 2006 Lemminkäinen Betonituote Oy acquired RK-
Betoniporras Oy and the precast concrete staircase operations of
Suonenjoen Sementtituote Oy. The combined net sales of these
acquisitions is about EUR 3.5 million.


Lemcon Ltd

Lemcon’s net sales rose to EUR 344.0 million (328.8). The company
generated 44 % of its net sales in Finland, 27 % in Russia and
Eastern Europe, 10 % in other Nordic countries, 13 % in North and
South America and 6 % in other countries.

The company’s operating profit was EUR 12.5 million (15.3) and the
profit before taxes EUR 11.1 million (16.7). The order book was
EUR 361.9 million (439.5), of which operations abroad accounted
for 48.1 %.


Lemcon Ltd,                           2006       2005      2004
EUR million                                                    
                                                               
Net sales, of which                  344.0      328.8     264.5
operations abroad                    191.6      210.6     139.4
Operating profit                      12.5       15.3      11.1
Operating margin, %                    3.6        4.6       4.2
Profit before taxes                   11.1       16.7      11.3
Order book at end of period          361.9      439.5     239.1
Personnel (average)                    993        893       556


There was significant growth in Lemcon’s infrastructure building
operations in 2006 and the market situation is expected to remain
favourable also in the future. In Sweden the company has firmly
established itself as a major rock engineering project contractor.

Lemcon’s project management operations in Finland remained stable
in commercial and office construction building. Abroad, the main
focus was on industrial construction. In China and Russia Lemcon
strives to participate actively in plant building projects of
Finnish industry. In Tallinn, Estonia, the company acquired
building plots for its own housing production. India, Romania,
Bulgaria and Ukraine are expected to generate new business growth
in the future.

Lemcon Networks’ net sales grew and the company expanded its
operations, especially in South America. The company is further
developing its ability to operate in countries where the number of
mobile phone users is expected to grow.

In spring 2006 IKEA announced that it was terminating the contract
made with Lemcon concerning the construction of the MEGA shopping
centre in St. Petersburg. The contract was worth EUR 92 million.
There are no legal grounds for the contract termination and
proceedings have started at the court of arbitration in Stockholm.


Oy Alfred A. Palmberg Ab

Palmberg had a good year in 2006. The company’s net sales rose by
almost a quarter to EUR 637.5 million (517.3), of which 7 % was
generated in Sweden. Both operating profit and profit before taxes
were up over 80 % on the previous year. Palmberg’s order book at
the end of the accounting period had almost doubled in size
compared with the previous year.


Oy Alfred A. Palmberg Ab,             2006       2005      2004
EUR million                                                    
                                                               
Net sales, of which                  637.5      517.3     486.4
operations abroad                     45.4       30.8      18.6
Operating profit                      52.4       28.3      29.2
Operating margin, %                    8.2        5.5       6.0
Profit before taxes                   46.0       25.2      26.0
Order book at end of period          681.5      366.9     334.3
Personnel (average)                  2 165      1 984     1 890


Building construction continued to grow in 2006 and the trend is
expected to remain unchanged in the future too. The growth is
being sustained by brisk commercial construction and a marked
recovery in office construction. The production of logistics
facilities has also increased. About 34 500 new housing starts
were made in Finland.

Palmberg’s regional subsidiaries increased their housing
production significantly. At the end of the accounting period the
company had 1 698 (1 313) private-sector housing units under
construction. Palmberg’s own housing and commercial developments
account for about a half of the company’s business.

Palmberg’s strong order book and the positive outlook for building
construction create good prerequisites for the company’s
favourable development in 2007. The biggest obstacle to new
building production is the shortage of skilled labour, foremen in
particular. Building plots, especially in larger towns and cities,
are in short supply.


Palmberg’s private-sector              2006       2005      2004
housing production
                                                                
Housing starts                        1 558      1 249     1 010
Housing units sold                    1 156      1 258       997
Unsold completed units                   83         74        89
Completed                             1 173      1 068       948
Under construction at 31.12.2006      1 698      1 313     1 132


At the end of the review period Palmberg owned a total of 749 000
m2 of unused building rights, of which about 483 000 m2 were
residential building rights. The company also has conditional co-
operation and zoning agreements for about 550,000 m2, of which
about 326,000 m2 are residential building rights. Market
conditions permitting, the company has the possibility to increase
its housing production thanks to its good stock of building plots.
At the present rate of production the company owns enough unused
building rights to meet its needs for about four years.


Tekmanni Oy

Tekmanni’s net sales were EUR 191.7 million (191.1), of which 5 %
was generated abroad, mainly in Sweden and Russia. The operating
profit was EUR 6.9 million (6.8) and the profit before taxes EUR
7.8 million (7.4). The company’s order book grew by over a fifth.


Tekmanni Oy,                          2006       2005      2004
EUR million                                                    
                                                               
Net sales, of which                  191.7      191.1     198.3
operations abroad                      9.6       11.8       3.3
Operating profit                       6.9        6.8       2.2
Operating margin, %                    3.6        3.5       1.1
Profit before taxes                    7.8        7.4       2.6
Order book at end of period           74.9       61.5      72.7
Personnel (average)                  1 812      1 745     1 877


Tekmanni’s performance in the first half of the year was adversely
impacted by reduced business volume and increased material costs.
However, the establishment of renewed management and business
systems started to show up positively in the company’s result in
the second half of the year.

In technical building services demand for maintenance, servicing
and repair work remained strong in 2006. The continued outsourcing
of property-related functions by companies fuelled demand for the
services of Tekmanni Service, and growth is expected to continue
in the coming years too.

With growing demand for plumbing modernisation work in apartment
buildings, Tekmanni strengthened its expertise in this area by
acquiring a majority interest in the Oulu-based HVAC firm Oulun
LVI-Ykkönen Oy in September 2006. The operations of Tekmanni’s
technical building service units in Seinäjoki, Vaasa and Kokkola
were transferred to a new subsidiary, Tekmanni Pohjanmaa Oy, in
October 2006.


GROUP’S ORDER BOOK

The Group’s order book grew by almost a third to EUR 1 326.7
million (1 011.3). The market breakdown of the order book was
Finland 75 %, other Nordic countries 12 %, the Baltic states 5 %,
Russia and Eastern Europe 5 %, and other countries 3 %.


Order book by business sector,        2006       2005      2004
EUR million
                                                               
Paving and Mineral Aggregates                                  
Division                             185.1      130.2     124.7
Building Materials Division           23.4       13.3      12.5
Lemcon Ltd                           361.9      439.5     239.1
Oy Alfred A. Palmberg Ab             681.5      366.9     334.3
Tekmanni Oy                           74.9       61.5      72.7
                                                               
Group total, of which              1 326.7    1 011.3     783.4
international orders                 331.8      343.4     244.6


Significant orders received in 2006

Palmberg is building a new office building complex in the
Salmisaari district of Helsinki. Lemminkäinen’s own head office
will be relocated to the site in 2009. The premises will be leased
from the developer, Varma Mutual Pension Insurance Company. The
contract is worth approx. EUR 100 million. (Bulletin 28.4.2006)

Palmberg and Fennia Mutual Insurance Company signed a contract for
the construction of two office buildings in West Pasila. The
contract is worth about EUR 50 million. (Bulletin 11.4.2006)
Oka Oy, a subsidiary of Palmberg, is building a shopping centre in
downtown Lappeenranta. The project also includes office space, a
parking facility and apartments. The total value of the contract
is approx. EUR 41 million.
Oka Oy is also building a logistics centre for Tokmanni Oy in
Mäntsälä. The contract is worth approx. EUR 40 million. (Bulletin
29.11.2006).
Palmberg-Rakennus Oy signed an agreement to build two new Sokos
hotels, one at Levi in the municipality of Kittilä and the other
at Vuokatti in the municipality of Sotkamo. The combined value of
the projects is approx. EUR 27 million. (Bulletin 5.10.2006)
Lemcon Ltd signed a project management contract concerning the
construction of a maritime museum centre in Kotka. The contract is
worth EUR 26.3 million. (Bulletin 9.6.2006)
The Finnish Road Administration’s VUOLI Project and Lemcon Ltd
signed a contract concerning the fitting out of a railway tunnel
at Vuosaari Harbour. The contract is worth approx. EUR 23 million.
Bulletin 26.10.2006)
Lemcon Ltd has signed an agreement with the City of Helsinki
concerning excavation and reinforcement works on the eastern part
of the city centre’s underground service tunnel. The contract is
worth EUR 21.7 million. (Bulletin 13.6.2006)
Lemcon Ltd signed a contract with the Russian subsidiary of Stora
Enso Packaging Oy concerning the construction of corrugated board
mill in Russia. The contract is worth EUR 20.1 million. (Bulletin
14.9.2006)

Significant orders received after the 2006 accounting period

Lemcon Ltd has been awarded a tunnel construction contract worth
EUR 43 million in Sweden. The new railway tunnel will be built for
Banverket Central Region on the Ådalsbana line. (Bulletin
10.1.2007)

Lemcon Oy has signed a project management agreement with Nokia
concerning the construction of a logistics centre in India. The
contract is worth EUR 17 million. (Bulletin 8.1.2007)


FINANCING

According to the source and application of funds statement, the
cash flow from operating activities was EUR –7.2 million (59.5),
the cash flow from investing activities EUR –14.4 million
(-18.3) and the cash flow from financing activities EUR 40.4
million (-39.3). The cash flow for the accounting period includes
dividends totalling EUR 18.5 million (11.1) for 2005.

Interest-bearing liabilities at the end of the accounting period
were EUR 343.6 million (264.0) and liquid funds were EUR 60.6
million (42.4). Interest-bearing net debt was EUR 283.0 million
(221.6). The change in interest-bearing net debt was EUR 61.3
million.

Net financing expenses were EUR 14.9 million (7.7), representing
0.8 % (0.5) of net sales. The equity ratio was 31.2 % (31.0) and
gearing 105.7 % (102.9).

The changes in cash flows and net debt stem from the larger
dividend pay-out, the increase in business volume, as well as
changes in project financing and an increase in the trade
receivables pertaining to them. Receivables from IKEA are a
significant item included in the change in project financing.


SHARES AND SHARE CAPITAL

The listed price of Lemminkäinen Corporation’s share was EUR 36.10
(30.50)at the end of the accounting period. The share’s highest
listed price during 2006 was EUR 39.34 (30.61) and its lowest EUR
28.38 (15.75). The mean share price was EUR 34.00 (21.74). The
market capitalisation at the end of the accounting period was EUR
614.5 million (519.1). Altogether 4 113 868 shares (4 610 443)
worth EUR 139.9 million (100.2) were traded in 2006. At the end of
the year the Company had 3 535 (3 116) shareholders.

Lemminkäinen’s share capital is EUR 34 042 500 and the share’s
nominal value is EUR 2. The company has one share series and the
total number of issued shares is 17 021 250.


INVESTMENTS

Investments in the accounting period amounted to EUR 48.7 million
(37.4). The investments were mainly purchases of paving, crushing
and excavation equipment, production plant for building materials,
and building construction equipment. The investments also include
some fairly small acquisitions of businesses and enterprises.


PERSONNEL

The average number of employees in the Group over the accounting
period was 8 418 (7 912), of whom 73 % worked in Finland, 11 % in
other Nordic countries, 10 % in the Baltic states and 6 % in other
countries.


Personnel(average)                    2006       2005      2004
                                                               
                                                               
Hourly paid workers                  5 480      5 162     5 112
Salaried staff                       2 938      2 750     2 367
                                                               
Total personnel, of whom             8 418      7 912     7 479
working abroad                       2 235      1 965     1 623
                                                               
Personnel at end of period           8 087      7 112     6 783
                                                               
Total wages, salaries and other                                
rewards for the accounting
period, EUR million                  288.0      268.5     250.9


GROUP STRUCTURE

At the beginning of 2006 the roofing and concrete products
businesses of the Building Materials Division were transferred to
two new subsidiaries: Lemminkäinen Katto Oy and Lemminkäinen
Betonituote Oy. The new companies together with Omni-Sica Oy still
constitute the Building Materials Division.

At the end of 2006 Lemminkäinen Corporation sold Tielinja Oy, the
Paving and Mineral Aggregates Division’s specialist road-marking
subsidiary, to Elfving Opasteet Oy. The net sales of Tielinja Oy
were EUR 7.5 million in 2005.


RESEARCH AND DEVELOPMENT

Lemminkäinen’s research and development work focuses on the
company´s development of operational prerequisites and the quality
assurance of products and services. Taking account of safety
issues and environmental effects are important principles of
Lemminkäinen’s development work. Products and services are
developed in long-term collaboration with customers.

The Group’s business units and subsidiaries are responsible for
their own research and development activities. Lemminkäinen’s
Central Laboratory carries out R&D at Group level. In 2006 the
Group’s research and development expenditure represented for 0.4 %
of net sales.


RISK MANAGEMENT

The purpose of Lemminkäinen’s risk management is to identify and
draw attention to business-related risks, and to ensure that risks
are managed and monitored systematically. Effective risk
management helps to ensure business continuity and the achievement
of set goals. Lemminkäinen’s business risks are divided into six
categories: market risks, project risks, financing risks, credit
loss risks, environmental risks, and accidents and damage.
Lemminkäinen has specified the measures necessary to control its
most significant known risks.

The differing cyclical behaviour of Lemminkäinen’s business
sectors represents the strategic cornerstone its group structure.
For example, cyclical sensitivity to domestic new construction – a
typical risk in the construction sector – is counterbalanced by
international operations and refurbishment contracting.
Lemminkäinen’s operations abroad generate one third of net sales,
and refurbishment contracting accounts for about 40 % of the
Group’s business.

Quite small contract sizes are typical of Lemminkainen’s business.
The net sales generated annually from even the biggest of
Lemminkäinen’s contracts will generally not exceed 5 % of the
Group total in any given year. This means that the failure of an
individual contract cannot have a major impact on the Group’s
result.

Lemminkäinen employs derivative contracts to hedge against price
rises of raw materials such as bitumen. Moreover, in the asphalt
paving business, fluctuations in raw material prices are passed on
directly and quite quickly in the final prices of asphalt
pavements.

All significant corporate or business acquisitions are evaluated
critically from the perspectives of their cash flow and impact on
the balance sheet. The maturities of seasonal credit stemming from
the nature of Lemminkäinen’s business are short, while those of
other borrowings are mostly long. Lemminkäinen hedges against
interest rate and foreign exchange risks in the conventional ways.

More detailed information on Lemminkäinen’s risk management can be
found in the Annual Report and on the company’s website.


FCA’s ALLEGATIONS CONCERNING THE ASPHALT PAVING AND BITUMINOUS
ROOFING INDUSTRIES

In March 2004 the Finnish Competition Authority (FCA) proposed to
the Market Court that a sanction of EUR 68 million should be
imposed on Lemminkäinen in connection with the operation of an
alleged cartel in the asphalt paving industry. In its rejoinder
submitted to the Market Court, Lemminkäinen denied the FCA’s
allegations as being unfounded in all respects and called for the
Market Court to dismiss the FCA’s sanction proposal in its
entirety. The Market Court has expected to pronounce its judgement
during the spring of 2007. The parties will have an opportunity to
appeal the Market Court’s decision to the Supreme Administrative
Court.

In March 2006 the FCA sent companies of the bituminous roofing
industry a copy of its draft proposal to the Market Court for
comment. The draft proposal alleges that prohibited exchanges of
information took place on the bituminous roofing market during the
years 1996-2002. The amount of the fine sought by the FCA is not
specified in the document. Having studied the draft proposal,
Lemminkäinen has made it clear in its response to the FCA that the
company’s activities have been in compliance with the competition
regulations.


ENVIRONMENT

Lemminkäinen Group takes account of life cycle and environmental
perspectives when developing its operations, products and
services.

The Group performs risk assessments on the environmental effects
of its activities. The risks relate mainly to oil storage and
handling, waste management and production plant emissions. The
service lives and environmental effects of concrete and concrete-
based products are assessed in studies which clarify the
environmental effects of the products over their entire life
cycles.

More detailed information on Lemminkäinen’s environmental affairs
can be found in the Annual Report and on the company’s website.


DECISIONS OF THE ANNUAL GENERAL MEETING AND CORPORATE GOVERNANCE

The Annual General Meeting of Lemminkäinen Corporation held on 17
March 2006 adopted the 2005 annual financial statements and
granted the Board of Directors and the Managing Director freedom
from responsibility. In accordance with the Board of Directors’
proposal, the Annual General Meeting decided to pay a dividend of
EUR 1.00 per share, i.e. a total dividend of EUR 17 021 250.00.
The record date of the dividend payment was 22 March 2006 and the
date of dividend payment was 29 March 2006.

Messrs. Berndt Brunow, Erkki J. Pentti, Heikki Pentti, Teppo
Taberman and Sakari Tamminen were elected to serve as members of
the Company's Board of Directors. The Board of Directors elected
Heikki Pentti to serve as the Chairman and Teppo Taberman to serve
as the Vice Chairman. PricewaterhouseCoopers Oy, a firm of
authorised public accountants, was elected to serve as the
Company’s auditors, with Mr. Jan Holmberg, A.P.A. acting as the
auditor in charge.

Mr. Erkki J. Pentti, long-serving member of the Board of Directors
and significant shareholder of Lemminkäinen, passed away on 26
December 2006 after a serious illness. Erkki J. Pentti had served
as a member of the Board of Directors since 1975. Lemminkäinen’s
Board of Directors will consist of four members until the next
Annual General Meeting is convened on 16 March 2007.

The Board of Directors has chosen from among its members a
Nominating Committee, an Audit Committee, and a Remuneration and
Appointments Committee. The committees assist the Board of
Directors by preparing pertinent matters for the Board’s
consideration.

The role of the Nominating Committee is to prepare for the Annual
General Meeting a proposal on the number of members of the Board
of Directors as well as the names of the members and the
remuneration that should be paid to them. The Chairman of the
Nominating Committee will be Mr. Berndt Brunow, with Messrs. Teppo
Taberman and Sakari Tamminen serving as committee members.

The role of the Board of Directors’ Audit Committee is to
scrutinise the contents of the full-year financial statements and
interim financial reviews as well as the company’s internal audit
and control systems. The meetings of the Audit Committee shall be
attended by the Company’s Auditor and Internal Auditor as well as
management representatives as and when necessary. The Chairman of
the Audit Committee is Mr. Sakari Tamminen, with Messrs. Berndt
Brunow Teppo Taberman and Heikki Pentti serving as committee
members.

The Remuneration and Appointments Committee deals with matters
relating to the appointment of senior executives as well as their
pay, rewards and benefits. Final decisions are made by the Board
of Directors on the basis of the Committee’s proposals. The
Chairman of the Remuneration and Appointments Committee is Mr.
Heikki Pentti, with Messrs. Berndt Brunow and Teppo Taberman
serving as committee members.

All members of the Board of Directors may take part in the
meetings of the Remuneration and Appointments Committee and the
Audit Committee.

The Managing Director of Lemminkäinen Corporation is Mr. Juhani
Sormaala.


STRATEGY REVISED AFTER THE ACCOUNTING PERIOD

The Group’s business strategy and strategic target levels have
been revised. The strategic objectives are still profitable growth
and the maintenance of good solvency. Good profitability is
regarded as a long-term average return on investment exceeding 18
%, and good solvency as an equity ratio exceeding 35 %.

Additional information on the strategy will be provided in a
separate stock exchange bulletin and on the company’s website.


FAVOURABLE OUTLOOK FOR 2007

Lemminkäinen’s strong order book and the positive outlook for the
construction market create good prerequisites for the favourable
development of the Company’s business in 2007.

Lemminkäinen derives about a half of its net sales from building
construction, which is expected to remain brisk. In civil
engineering, the state of the rock engineering market in
particular is likely to remain good, which will boost demand for
Lemcon’s services. The Baltic states and Russia are potential
growth areas for asphalt paving. In Finland, however, competition
for asphalt paving contracts is likely to remain intense. Strong
demand for refurbishment contracting and the outsourcing of
property-related functions by companies will fuel demand for
Tekmanni’s technical building and facility services.


BOARD OF DIRECTORS’ PROPOSAL FOR THE APPROPRIATION OF RETAINED
EARNINGS

The distributable shareholders’ equity shown on the consolidated
balance sheet amounts to EUR 190 534 248.21. The distributable
shareholders’ equity shown on the balance sheet of the parent
company, Lemminkäinen Corporation, at 31 December 2006 amounts to
EUR 70 959 134.51, consisting of EUR 61 358 513.76 in retained
earnings from previous years and EUR 9 600 620.75 in profit for
the accounting period.

The Board of Directors will propose to the Annual General Meeting
that the Company pay a dividend of EUR 1.50 per share for the 2006
accounting period, i.e. a total of EUR 25,531,875.00, after which
retained earnings would stand at EUR 45,427,259.51.


Helsinki, 14 February 2007

LEMMINKÄINEN CORPORATION
Board of Directors


TABULATED SECTION OF THE FINANCIAL STATEMENTS

ACCOUNTING PRINCIPLES

The financial statements for the 2006 accounting period have been
prepared in accordance with IFRS measurement and recognition
principles.

FINANCIAL STATEMENTS AND OTHER TABULATED INFORMATION

1) Consolidated income statement
2) Consolidated income statement, quarterly
3) Net sales by business sector
4) Net sales by business sector, quarterly
5) Operating profit by business sector
6) Operating profit/loss by business sector, quarterly
7) Consolidated balance sheet
8) Statement of changes in equity
9) Statement of source and application of funds
10) Economic trends and financial indicators
11) Share-specific indicators
12) Guarantees and contingent liabilities


CONSOLIDATED INCOME STATEMENT                                 
                                                              
EUR million                  2006      2005   Change   Change,
                                                             %
Net sales                 1 795.9   1 601.7    194.2      12.1
Operating income                                              
and expenses             -1 652.9  -1 495.3   -157.6     -10.5
Depreciation                -35.0     -34.0     -1.0      -2.9
Operating profit            108.1      72.5     35.6      49.1
Financial expenses          -18.2     -11.5     -6.7     -58.3
Financial income              3.3       3.8     -0.5     -13.2
Share of the                                                  
profits/losses
of affiliated companies       1.1       1.1      0.0       0.0
Profit before taxes          94.2      65.9     28.3      42.9
Income taxes                -21.3     -17.4     -3.9     -22.4
Profit for the                                                
accounting period            72.9      48.5     24.4      50.3
                                                              
Distribution of the profit                  
for the accounting period                   
To shareholders of                                            
the parent company           65.8      43.7     22.1      50.6
To minority                                                   
interests                     7.1       4.7      2.4      51.1
                                                              
EPS calculated from profit/loss attributable
to parent company shareholders, EUR
Earnings per share, EUR      3.87      2.57                   
Earnings per share, EUR,                                      
diluted                      3.87      2.57                   

CONSOLIDATED INCOME STATEMENT, QUARTERLY
                                                                
                4-6/   7-9/  10-12/   1-3/   4-6/   7-9/  10-12/
EUR million     2005   2005    2005   2006   2006   2006    2006
                                                         
Net sales      424.3  516.7   429.5  303.5  427.8  573.9   490.8
Operating income                                                
and expenses  -396.9 -454.4  -406.8 -305.3 -392.8 -505.4  -449.4
Depreciation    -8.9  -12.7    -7.4   -5.0   -9.2  -12.8    -8.0
Operating                                                       
profit/loss     18.5   49.6    15.3   -6.8   25.8   55.7    33.4
Financial                                                       
expenses        -3.5   -2.7    -2.7   -2.7   -5.2   -4.6    -5.7
Financial                                                       
income           1.2    0.9     0.9    0.8    0.0    0.4     2.1
Share of the                                                    
profits/losses
of affiliated                                            
companies        0.3    0.8     0.0   -0.3    0.2    0.8     0.5
Profit/loss                                                     
before taxes    16.4   48.7    13.5   -9.1   20.7   52.3    30.3
Income taxes    -4.2  -13.0    -3.4    1.7   -4.8  -12.1    -6.1
Profit/loss for the                                             
accounting
period          12.2   35.7    10.1   -7.3   15.9   40.1    24.2
                                                         
Distribution of the profit/loss for the                  
accounting period
To the                                                   
shareholders
of the parent
company         11.3   34.1     9.2   -8.3   13.6   38.4    22.1
To minority                                                     
interests        0.9    1.6     0.9    1.0    2.4    1.7     2.1
                                                                
EPS calculated from profit/loss attributable
to parent company shareholders, EUR
Earnings per                                             
share, EUR      0.66   2.00    0.54  -0.49   0.80   2.26    1.30
Earnings per                                                    
share, EUR,                                                     
diluted         0.66   2.00    0.54  -0.49   0.80   2.26    1.30


NET SALES BY BUSINESS SECTOR
                                                            
EUR million                     2006     2005 Change Change,
                                                           %
Lemminkäinen Corporation                                    
Paving and Mineral                                          
Aggregates Division            559.0    514.7   44.3     8.6
Building Materials Division    104.4    100.3    4.1     4.1
Lemcon Ltd                     344.0    328.8   15.2     4.6
Oy Alfred A. Palmberg Ab       637.5    517.3  120.2    23.2
Tekmanni Oy                    191.7    191.1    0.6     0.3
Others                         -40.7    -50.4    9.7    19.2
Group total                  1 795.9  1 601.7  194.2    12.1


NET SALES BY BUSINESS SECTOR, QUARTERLY
                                                                
                4-6/   7-9/  10-12/   1-3/   4-6/   7-9/  10-12/
EUR million     2005   2005    2005   2006   2006   2006    2006
                                                                
Lemminkäinen Corporation                                        
Paving                                                          
and Mineral                                                     
Aggregates                                                      
Division       140.6  223.8   128.8   23.9  147.8  249.6   137.7
Building                                                        
Materials                                                       
Division        28.9   38.7    19.4   11.6   29.8   37.2    25.8
Lemcon Ltd      83.3   82.6    96.9  100.9   71.8   98.8    72.5
Oy Alfred A.                                                    
Palmberg Ab    135.8  140.0   142.2  129.7  141.7  155.2   211.0
Tekmanni Oy     52.5   46.8    51.4   42.9   44.8   47.6    56.3
Others         -16.9  -15.0    -9.2   -5.6   -8.2  -14.5   -12.4
Group total    424.3  516.7   429.5  303.5  427.8  573.9   490.8

OPERATING PROFIT BY BUSINESS SECTOR
                                                            
EUR million                     2006     2005 Change Change,
                                                           %
Lemminkäinen Corporation                                    
Paving and Mineral                                          
Aggregates Division             30.3     20.5    9.8    47.8
Building Materials Division      4.0      0.6    3.4   566.7
Lemcon Ltd                      12.5     15.3   -2.8   -18.3
Oy Alfred A. Palmberg Ab        52.4     28.3   24.1    85.2
Tekmanni Oy                      6.9      6.8    0.1     1.5
Others                           1.8      1.0    0.8    80.0
Group total                    108.1     72.5   35.6    49.1


OPERATING PROFIT/LOSS BY BUSINESS SECTOR, QUARTERLY
                4-6/   7-9/  10-12/   1-3/   4-6/   7-9/  10-12/
EUR million     2005   2005    2005   2006   2006   2006    2006
                                                                
Lemminkäinen                                                    
Corporation
Paving                                                          
and Mineral                                                     
Aggregates                                                      
Division         4.4   28.7     3.7  -20.6    6.1   33.0    11.9
Building                                                        
Materials                                                       
Division         1.8    3.8    -1.6   -2.6    1.9    4.6     0.1
Lemcon Ltd       2.1    5.4     5.2    4.1    3.1    4.3     1.0
Oy Alfred A.                                                    
Palmberg Ab      8.5    9.5     5.7    7.5   14.3   10.8    19.8
Tekmanni Oy      1.6    2.5     1.1    2.2    0.1    3.4     1.1
Others           0.1   -0.2     1.1    2.5    0.2   -0.4    -0.5
Group total     18.5   49.6    15.3   -6.8   25.8   55.7    33.4


CONSOLIDATED BALANCE SHEET                           
                                                     
EUR million                              2006    2005
                                                     
Non-current assets                                   
Tangible assets                         169.4   164.4
Goodwill on consolidation                68.2    63.5
Other intangible assets                   2.5     2.5
Investments                               9.4    10.9
Deferred tax asset                        4.3     4.0
Other non-current receivables             2.2     0.7
Total                                   255.9   245.9
                                                     
Current assets                                       
Inventories                             281.9   223.7
Trade and other receivables             340.7   263.4
Cash funds                               60.6    42.4
Total                                   683.2   529.5
                                                     
Assets, total                           939.2   775.4
                                                     
Shareholders’ equity and                             
liabilities
                                                     
Equity attributable to shareholders                  
of the parent company
Share capital                            34.0    34.0
Share premium account                     5.8     5.8
Revaluation reserve                       0.1     1.5
Translation difference                    0.1     0.4
Retained earnings                       142.2   115.5
Profit for the                                       
accounting period                        65.8    43.7
Shareholders’ equity                                 
before minority interest                248.0   200.9
Minority interest                        19.7    14.6
Shareholders’ equity, total             267.7   215.5
                                                     
Non-current liabilities                              
Deferred tax liabilities                 14.6    19.4
Pension liabilities                       1.1     1.2
Provisions                                1.7     4.9
Interest-bearing liabilities             91.2   103.5
Other liabilities                         1.7     2.5
Total                                   110.3   131.5
                                                     
Current liabilities                                  
Accounts payable and                                 
other liabilities                       303.0   266.5
Provisions                                5.7     1.5
Interest-bearing liabilities            252.5   160.5
Total                                   561.1   428.5
                                                     
Shareholders’ equity and                             
liabilities, total                      939.2   775.4


STATEMENT OF CHANGES IN EQUITY
                       Share Transla     Re-                 Share-
                                tion
               Share premium differe valuati Retaine Minori holders
                                 nce      on       d     ty       ’
EUR million   capita account reserve reserve earning intere  equity
                   l                               s     st
                                                                   
Shareholders’                                               
Equity                                                      
1.1.2005        34.0     5.8    -0.2     1.4   125.7   15.2   181.9
                                                            
Translation                                                        
difference                       0.8                            0.8
Hedging of                                                  
net investment                                              
in foreign                                                  
subsidiary                      -0.2                           -0.2
Transfer from                                               
revaluation reserve                     -0.2                   -0.2
Change in                                                          
fair value                               0.2                    0.2
Reversal of                                                        
dividend liability                               0.0            0.0
Dividend                                                           
distribution                                   -10.2          -10.2
Profit for the                                                     
accounting period                               43.7    4.7    48.5
Change in minority                                                 
interest                                               -5.3    -5.3
                                                            
Shareholders’                                                      
equity
31.12.2005      34.0     5.8     0.4     1.5   159.2   14.6   215.5
                                                                   
Translation                                                        
difference                      -0.5                           -0.5
Hedging of                                                         
net investment                                              
in foreign                                                  
subsidiary                       0.3                            0.3
Change in                                                          
fair value                               0.1                    0.1
Effect of                                                          
sold shares                             -1.5                   -1.5
Reversal of                                                        
dividend liability                               0.0            0.0
Dividend                                                           
distribution                                   -17.0          -17.0
Profit for the                                                     
accounting period                               65.8    7.1    72.9
Change in                                                          
minority interest                                      -2.0    -2.0
                                                            
Shareholders’                                               
equity
31.12.2006      34.0     5.8     0.1     0.1   208.0   19.7   267.7


STATEMENT OF SOURCE AND APPLICATION                  
OF FUNDS
                                                     
EUR million                              2006    2005
                                                     
Profit before extraordinary items        94.2    65.9
Depreciation according to plan           35.0    34.0
Other adjustments                         4.1     4.3
Cash flow before change in                           
working capital                         133.3   104.2
Change in working capital              -109.3   -17.6
Financial items                         -11.9    -7.0
Direct taxes paid                       -19.2   -20.1
Cash flow from operating activities      -7.2    59.5
Cash flow from investing activities     -14.4   -18.3
Change in loans                          58.9   -28.1
Dividends paid                          -18.5   -11.1
Cash flow from financing activities      40.4   -39.3
Change in cash funds                     18.8     1.9
Cash funds at beginning of period        42.4    39.9
Translation difference                               
of cash funds                            -0.6     0.6
Cash funds at end of period              60.6    42.4
                                              
ECONOMIC TRENDS AND                      2006    2005
FINANCIAL INDICATORS
                                                     
Return on equity, %                      30.2    24.5
Return on investment, %                  20.6    16.5
Operating margin, %                       6.0     4.5
Equity ratio, %                          31.2    31.0
Gearing, %                              105.7   102.9
Interest-bearing                                     
net debt, EUR million                   283.0   221.6
Gross investments, EUR million                       
(incl. leasing purchases)                48.7    37.4
Order book, EUR million               1 326.7 1 011.3
- of which foreign                                   
  orders, EUR million                   331.8   343.4
Personnel, average                      8 418   7 912
Personnel at end of period              8 087   7 112
Net sales, EUR million                1 795.9 1 601.7
- of which operations                                
  abroad, EUR million                   530.3   499.6
  % of net sales                         29.5    31.2
                                                     

SHARE-SPECIFIC INDICATORS                2006    2005
                                                     
Earnings per share, EUR                  3.87    2.57
Equity per share, EUR                   14.57   11.80
Dividend per share, EUR 1)               1.50    1.00
Dividend to earnings ratio, %            38.8    38.9
Market capitalisation, EUR mill.        614.5   519.1
Share price at end of period, EUR       36.10   30.50
Trading volume during                                
period, 1 000 shares                    4 114   4 610
Number of issued shares,                             
1,000 shares                           17 021  17 021
                                                     
1) Board of Directors’ proposal to the AGM
                                                     

GUARANTEES AND CONTINGENT            
LIABILITIES
                                                     
EUR million                              2006    2005
                                                     
Securities for own commitments                       
Property mortgages                        2.4     3.3
Business mortgages                      100.1    99.2
Bonds pledged as security                 0.8     0.7
Total                                   103.3   103.3
                                                     
Guarantees                                           
On behalf of affiliated companies         0.8     0.4
On behalf of others                       5.3     5.3
                                                     
Minimum rental payments of irrevocable leasing
agreements
One year or less                          6.0     7.8
Longer than one year but                      
less than five years                     17.9    16.7
Longer than five years                   20.8     3.2
Total                                    44.7    27.7
                                                     
Purchase commitments of investments       2.9        
                                              
Derivative contracts                          
                                                     
Forward foreign exchange contracts            
Nominal value                            11.2    18.1
Fair value                                0.1    -0.2
                                                     
Currency options, calls purchased             
Nominal value                             0.0     1.7
Fair value                                0.0     0.0
                                                     
Currency options, puts written                
Nominal value                             0.0     1.7
Fair value                                0.0    -0.2
                                                     
Interest rate options, calls                  
purchased
Nominal value                            34.5    36.4
Fair value                                0.0     0.0
                                                     
Interest rate options, puts written           
Nominal value                             5.0     6.9
Fair value                               -0.1    -0.4
                                                     
Interest rate swap contracts                  
Nominal value                            30.2    12.1
Fair value                               -2.0    -0.1
                                                     
The fair value of contracts is the gain or loss
arising from closure of the contract based on the
market price on the accounting date.

The Auditors have not yet submitted their report on
the financial statements.