2007 ANNUAL REPORT COMPLETED IN 2007: Change to energy and environmental technology FOCUS FOR 2008: Growth in energy and environmental technology

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2007 ANNUAL REPORT

COMPLETED IN 2007:

Change to energy and environmental technology FOCUS FOR 2008:

Growth in energy and

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Opcon, the energy and

environmental technol-

ogy Group, develops

technology for more

efficient use of energy.

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Opcon is playing a proactive role in build- ing a society that is not dependent on oil.

With high-technology

products and services,

Opcon is contributing

to global development

of an eco-friendly soci-

ety that uses energy

more efficiently.

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➤ Sales amounted to SEK 336.1 million (371.0 m)

➤ Operating profit (EBIT) of SEK 17.7 million (55.4 m)

➤ Profit before tax (EBT) of SEK 13.3 million (51.3 m)

➤ Profit after tax was SEK 10.6 million (52.3 m)

➤ Earnings per share after tax were SEK 0.68 (3.65)

➤ Transformation into energy and environmental technology business

➤ Acquisition of three companies active in energy and environmental technology

➤ Renewable Energy develops to become Opcon’s largest business area

➤ Engine Efficiency business area selected as partner by Scania-Cummins

(Sales and earnings reported for remaining businesses. Lysholm Technologies AB will be sold.)

Important events after the end of 2007

➤ Renewable Energy launches energy-efficient bioenergy system for heating greenhouses

➤ First Opcon Powerbox in operation at combined heat and power station in Eskilstuna

➤ Breakthrough for Opcon Powerbox’s new business strategy – Stora Enso is first customer

Opcon in 2007 in brief

The Annual General Meeting will be held on Thursday 24 April 2008 at 4 p.m. at Ingenjörshuset, Citykonferensen, Polhem, Malmskillnadsga- tan 46, Stockholm, Sweden. The premises will be open for registration at 3 p.m. Registration must be completed by 4 p.m. for shareholders to be included in the share register.

ParticiPation

Shareholders wishing to take part in the AGM should: a) be registered in the Shareholders’ Register held by VPC AB (the Swedish Central Se- curities Depository) by Friday 18 April 2008; b) notify the Board of their intention to attend via the following address:

Opcon AB, Box 15085, 104 65 Stockholm, Sweden, telefax +46 8 716 76 61, telephone +46 8 466 45 00, or email dh@rotor.se, by 12 noon on Tuesday 22 April 2008 at the latest. The notification shall include name, personal code number/organisation number and day-time telephone number.

nominee shareholders

Shareholders owning shares registered with a nominee must re-register

the shares in their own name, before 18 April, in order to participate at the meeting.

rePresentative

Shareholder rights at the AGM may be exercised by a representative.

Opcon provides an authorisation form on it website, www.opcon.se for shareholders who wish to send a representative to the meeting.

This form shall be submitted in good time to the company before the meeting. A person representing a legal entity shall submit a copy of the registration certificate indicating names of people authorised to sign on behalf of the company.

annual rePort

The annual report and auditors’ report along with the complete pro- posals of the Board concerning points 14-16 will be made available at the company’s office from 10 April 2008. Copies of documents will be sent to shareholders who request them and provide a postal address.

They will also be made available on Opcon’s website at www.opcon.

2008 ANNUAL GENERAL MEETING

• The Annual General Meeting will be held on Thursday 24 April 2008 at 4 p.m. at Citykonferensen, Malmskillnadsgatan 46, Stockholm, Sweden

• The Q1 report will be published on 24 April 2008

• The Q2 report will be published on 21 August 2008

• The Q3 report will be published on 23 October 2008

Financial information about Opcon AB is provided in Swedish and Eng- lish. Reports can be obtained from the company’s website, www.opcon.

se or by ordering them via telefax +46 532 120 19, or email info@opcon.

se Distribution will be via email. The annual report can also be ordered from Opcon AB, Box 30, S-662 21 Åmål, Sweden.

FINANCIAL INFORMATION

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ROLF hASSELSTRöM’S STATEMENT

in 2007 we focused major resources

on building a sus- tainable platform for future growth. This work has affected all of the Group and has required a major transformation both of the existing organisation and in the way we think and work going forward. During the year, the creation of a durable growth plat- form took priority ahead of short–term maximisation of profits.

A new Group organisation was set up, complementary acquisi- tions were performed, and organisational change was the main focus for our new business area, Renewable Energy.

The major strategic transformation into an energy and envi- ronmental technology business that was started in 2006 means that we have now completed the second phase of the turna- round started back in 2005. In 2008 our challenge will be to implement in practise the large investments made in new tech- nology and win new customer orders so that we can achieve our sales target of SEK 1 billion per year by the end of 2009.

Greater Pressure on efficient enerGy use

The global environment we work in was fundamentally affected in 2007 by growing awareness of global warming and the debate about its effects. Rising energy prices are putting pressure on efficient use of energy, and the effects of political decisions con- cerning emissions targets will add to this pressure. The main ele- ments of a new Kyoto protocol will be set in 2009 and the result

will be tougher requirements for nations and indi- vidual industries to reduce their emis- sions of greenhouse gases. The costs for emissions rights and other systems added to rules for reporting costs of CO

₂

will dramatically change eco- nomic conditions for operating industrial activities.

Demands for improved energy efficiency and eco-adaptation of businesses will increase significantly in developed countries where the emphasis will be on leading by example. The EU’s

The platform is in place for the future growth of the Group

initiatives promoting renewable energy sources will create new opportunities for growth.

an efficient develoPment Project

Our efforts to develop Opcon’s activities within our Renewable Energy business area shall be viewed against the above back- ground. Our focus on electricity generation from waste heat and on improving the efficiency of energy use in the bioenergy sector will provide strong engines of growth for a long time going forward. We are active on a global market with global products and systems. There are growth opportunities in several industrial branches and on many geographic markets. Opcon’s challenge is to build a global energy and environmental technol- ogy business.

The efforts we have made to develop products and systems, based on our strong competence in screw compressors, for gen- erating electricity from surplus heat – Opcon Powerbox – have resulted in one of the most effective development projects ever managed by the Group. A completed Opcon Powerbox is now in operation at the combined heat and power station in Eskilstuna and is producing electricity from surplus heat at the plant.

Work on development, system construction and installation has been carried out by several of our subsidiaries within renew- able Energy and we have successfully managed to industrialise a complex system. Using this project as a reference we are now intensifying our marketing, and customer are becoming more and more interested.

BreakthrouGh for new Business strateGy

As part of the commercialisation of Opcon Powerbox and tech- nology for generating electricity from waste heat, Opcon has also designed a new business strategy whereby the Group will sign long-term contracts with companies in the process industry to supply electricity based on surplus heat produced by the com- pany. This strategy will mean that Opcon and its shareholders will receive a large portion of the economic value in the compa- ny’s technology as a significant part of the added value in elec- tricity often comes in the production and trading stages. This

“Rising energy prices

are putting pressure

on efficient use of

energy.”

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Rolf Hasselström President and CEO

approach also speeds up the market launch of Opcon Powerbox.

The first agreement was signed in March 2008 with Stora Enso.

Waste heat from Stora Enso’s Skutskär pulp mill will be used to produce electricity via Opcon Powerbox. An assessment of other Stora Enso plants to identify similar opportunities is cur- rently taking place. Stora Enso is the second major corporation to sign a framework agreement with Opcon.

new markets for sre

Opcon’s acquisition of Svensk Rökgasenergi (SRE) has been very successful. With its high level of technical sophistication and strict product-based strategy, the company has created strong opportunities for profitable growth inside and outside Sweden. Significant penetration of the Baltic markets and the rest of Europe is paving the way for continued high growth. The new product areas of biomass drying and flue gas condensation systems for greenhouses are creating new markets for SRE and opening up new growth opportunities. Customer and market synergies between SRE and Opcon Powerbox will be noted in the current year and will create significant added value.

major vote of confidence in oPcon

Other areas where Opcon’s advanced technical skills and focus on energy and environmental technology are creating new busi- ness include solenoid development within our Engine Efficiency business area. The assignment to further develop and produce

“There are growth oppor- tunities in several indus- trial branches and on many geographic markets.”

stators, a key component of Scania-Cummins new XPI fuel injection system, confirms our reputation for advanced compe- tence and is a vote of confidence in Opcon’s ability to develop and produce complex products.

The strategic transformation of Opcon in 2007 has created a strong platform for future growth. Population increases, rising consumption levels and increased environmental concerns are conspiring to put pressure on demand for more efficient use of energy that also benefits the environment. We are facing major global challenges and those businesses that position themselves intelligently will be able to grow strongly by providing products and systems that improve the efficient use of energy.

I am convinced that Opcon has the right strategy and posi-

tion, and that the opportunities for growth can be realised in

order to reach the sales targets we have set. Opcon is a growth

company and our challenge now is to have the right organisa-

tion and financial base to be able to fully industrialise and com-

mercialise our advanced technological skills.

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ThIS IS OPCON

oPcon’s Business concePt

Opcon is an energy and environmental technology Group that develops, produces and markets products and systems for effi- cient and environment-friendly energy consumption for cus- tomers in the process, power, engineering and auto industries.

oPcon’s oBjectives

The Group will generate good and sustainable profitability and aim for growth in order to create long-term growth in value for shareholders, create value for customers and offer a stimulating workplace for staff.

oPcon’s vision

Opcon will be actively involved in building a society no longer dependent on oil. With high tech products and services Opcon will contribute to global development towards a more energy- efficient and eco-friendly society.

GuidinG criteria for the oPcon GrouP

– Profitability, with the target that all subsidiaries report good profitability, EBIT > 10 % over time.

– Growth, organic growth and growth via acquisitions. The target is sales turnover for the Group to reach at least SEK 1 billion by 2009.

– Predictability.

orGanisation

The Opcon Group is organized in three business areas that operate as independent units with responsibility for their own profitability. The Group comprises the parent company, Opcon AB and ten subsidiaries, plus Lysholm Technologies, which is being sold. Activities within Opcon Inc. were closed down in 2007.

At the end of 2007 the Opcon Group had around 370 (400) employees.

technoloGy with Both short and lonG histories

The Opcon Group rests upon two industrial bases, each of which has a history stretching back over nearly a century.

Up until the acquisition of Svenska Rotor Maskiner and Lysholm Technologies in 2003, the core of the Opcon Group was built around 93 years of experience producing ignition sys- tems, transformers and electro-magnets. The foundations were laid in connection with the First World War when imports of ignition devices for boats and cars came to a halt. Production of these devices was started in Åmål in 1915 by Aktiebolaget Svenska Elektromagneter (SEM). Today SEM is a leader in the development and production of advanced ignition systems.

Svenska Rotor Maskiner (SRM), which is the Group’s devel- opment centre for compressor technology, will celebrate its 100- year anniversary in 2008. SRM is based upon AB Ljungströms Ångturbin (ALÅ), formed in 1908 to develop the twin-rotating steam turbine invented by Birger Ljungström.

SRM’s compressor technology is the base for Opcon Energy Systems, Lysholm and Opcon Autorotor.

Svensk Rökgasenergi (SRE), REF Technology (REF Tech) and Mitec Instrument, all of which were acquired in 2007, are relatively new businesses with strong market positions and tech- nologies that are central to Opcon’s focus on energy and envi- ronmental technology.

renewaBle enerGy

The Renewable Energy business area focuses on eco-friendly technology that contributes to low-resource and efficient energy

Products and systems for more efficient use of energy

The activities of the Opcon Group rest upon a number of industrial bases and, in several cases, world-leading technologies. These core technologies, all relating to energy solutions, drive the development of the Group’s subsidiaries and its future projects.

Svenska Rotor Maskiner AB, SRM, celebrates its 100th anniversary in 2008.

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lection and wireless internet-based operational surveillance of complicated products and industrial systems.

enGine efficiency

The Engine Efficiency business area focuses on components that efficiently initiate, generate and convert power.

The products and systems in this business area are primarily used in the automotive industry. In addition to traditional fuels, development focuses on alternative fuels such as ethanol, biogas, natural gas and hydrogen.

Growth will be organic, complemented by acquisitions.

SEM is the Opcon Group’s technology centre for ignition sys- tems. SEM develops ignition systems for combustion engines for vehicles and stationary engines, and small ignition systems for combustion engines for hand-held equipment, such as chain- saws and trimmers. Ignition systems for vehicles and stationary engines include those powered by petrol, diesel, ethanol, natural gas, hydrogen and biogas. Production of larger ignition systems is carried out in Åmål, Sweden, while smaller ignition systems are produced by Opcon Technology Suzhou, China.

SEM develops and produces solenoids and sensors, primarily for customers in the heavy vehicle sector.

Laminova produces intercoolers and heat exchangers for the auto industry.

Lysholm produces superchargers for combustion engines at its site in Nacka, near Stockholm.

moBility Products

The Mobility Products business area focuses on technology for positioning, movement and regulation.

The business specialises in the development and production of products and systems for electric vehicle platforms, rang- ing from electric wheelchairs and other advanced equipment for the disabled to components for electric vehicles, including the American electric sports car, Tesla Roadster, and specialist applications.

usage. A major focus is on the development and commercialisa- tion of technology for utilising surplus heat that would other- wise go to waste and which can be used cost-efficiently.

The use of waste heat is the basis for the Group’s investment in Opcon Powerbox, which generates electricity from waste heat. The use of waste heat from the combustion of biomass is also the basis for Svensk Rökgasenergi’s bioenergy products for flue gas treatment, flue gas condensation and drying of bio- mass.

Other key activities in this business area include compressor solutions and air systems for fuel cells and natural gas systems, and energy efficiency improvements and optimization of cool- ing plants.

Growth will primarily be organic based on proprietary tech- nologies and products, as well as through complementary acquisitions.

Svenska Rotor Maskiner (SRM) is the Opcon Group’s tech- nology centre for screw compressors, and is a world leader in its field. SRM develops proprietary systems, develops applications in close co-operation with OES and Opcon Autorotor and also works globally with licensing of technology.

In co-operation with other Opcon companies, OES develops Opcon Powerbox, a system for generating electricity from sur- plus heat in the power, process and marine industries.

Opcon Autorotor develops air supply systems for fuel cells used in the auto industry and for fuel cell engine makers.

SRE develops and manufactures equipment for flue gas con- densation, particle separation and drying processes. Customers include district heating plants, sawmills and pellets manufactur- ers.

REF Tech supplies cooling and heat pump products, systems and consulting services to the process, energy and other indus- tries. The company has an international product and contract- ing business that works with energy-efficient solutions.

Mitec develops and produces products and systems for meas- urement, measurement, control, regulation, mobile data col-

renewable energy engine efficiency mobility Products

subsidiaries in the business area:

– srm (svenska rotor maskiner) – oes (opcon energy systems) – opcon autorotor

– sre (svensk rökgasenergi) – ref tech

– mitec instrument

subsidiaries in the business area:

– reac subsidiaries in the business area:

– sem

– opcon tech (opcon technology suzhou) – laminova Production

– lysholm technologies (skall avyttras)

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2007 saw the further develoPment

and commercialisa- tion of Opcon’s major investment in proprietary technology for generating electricity from surplus heat, Opcon Powerbox. In December the first full-scale Opcon Powerbox was delivered to the combined heating and power plant in Eskilsutuna, where it was started up in 2008 and now acts as a reference plant.

Opcon Powerbox is a proprietary product that generates elec- tricity from waste heat. The product is commercially viable at temperatures as low as 55°C and it produces electricity with- out any emissions whatsoever. The investment cost per kWh of produced electricity is half of that for wind power. Opcon Powerbox supplies up to 650 KWh of electricity net, and in continuous operation at an industrial plant with an average output of 400 KW generate 3,400 MWh of electricity per year.

That corresponds to a saving of 3,100 tons of CO2 emissions.

Opcon is currently alone in having developed technology that can generate electricity a such low temperatures. Opcon Power- box costs between SEK 7-10 million.

The potential for Opcon Powerbox is global and in Sweden alone the theoretical market is worth several billion Swed- ish kronor. Waste heat is present in large amounts in several industries such as the process industry and energy sector. It is estimated that the process industry in Europe creates around 300 TWh of surplus heat which goes to waste. Today In many cases, companies are forced to use electricity to cool down hot process water before it can be released into nearby rivers. If all of this potential energy within European industry was converted into electricity using Opcon Powerbox, it would require around 9,000 Opcon Powerboxes and generate around 30 TWh of electricity, equivalent to around half of the current amount of electricity generated by Swedish hydropower plants. In Sweden, hydropower accounts for around half of all electricity.

In 2007 an agreement was signed with a major Swedish indus- trial group for delivery of Opcon Powerbox and a survey of the power requirements of all of the group’s plants. A completely new organisation and management team was set up during the year for OES, which is responsible for commercialisa- tion of Opcon Powerbox. A number of purchases were also completed to strengthen business offers.

A decision has been made to enable a significant increase in production of the heart of Opcon Powerbox, the twin-screw turbine developed and produced by Opcon’s subsidiary, Sven- ska Rotor Maskiner, SRM. Meanwhile, the acquisition of REF Tech has given Opcon the installation, project management and calculation expertise required to support customer projects associated with Opcon Powerbox. At the end of the year work began on integrating Mitec’s systems for measurement, control, regulation, mobile data collection and internet-based surveil- lance into Opcon Powerbox.

Integration of advanced systems for measurement and sur-

The first full-scale Opcon Powerbox is in operation at the combined heat- ing and power plant in Eskilstuna, where it is supplying electricity into the national grid and acting as a reference plant. The market poten- tial for Opcon Powerbox is very large and the investment cost per kWh of produced electricity is less than half of the cost of wind power.

Around 300 TWh of surplus heat are produced each year in Europe, and only a small fraction is put to use. 9,000 Opcon Powerboxes could produce 30 TWh of electricity from this large amount of waste energy.

OPCON POWERbOx

Unique technology for generation of electricity from waste heat at temperatures from ° C

300 TWh

Waste Heat Europe

District heating

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Pre-measurement equipment on Opocon Powerbox. The plant is delivered in a container weighing 20 tons and which can be connected simply to the process from which it will gener- ate electricity.

OPCON POWERbOx

veillance opens up opportunities for a more flexible sales strat- egy for Opcon Powerbox. REF Tech’s competence within inter- net-based operational surveillance will also form a base for the development of profitable aftermarket business.

inteGration of technoloGies

The acquisition of SRE has produced synergies on the market side between SRE and Opcon Powerbox that are expected to increase in future. SRE already has good contacts in the power sector, which will be very useful for Opcon Powerbox, and a number of partners in Europe, which will ensure swift international expansion. The acquisition will also provide considerable energy and environmental benefits as technologies are further integrated, which will improve the overall commercial offering to customers. The temperature of the water that SRE’s flue gas condensers produce is normally higher than the temperature Opcon Powerbox is working with at the reference plant in Eskilstuna.

Different business models are being assessed and tested with customers. Special focus is being placed on models in which contracts are signed for delivering electricity from waste heat.

This model is especially attractive as it enables Opcon and its shareholders to gain a larger portion of the value in the technol- ogy, while it can also increase the market introduction of Opcon Powerbox. For some customers this can be an attractive solution as they avoid making large investments and can instead focus on their core business.

The first contract was signed in March 2008 with Stora Enso.

Opcon Powerbox will be used to generate electricity at Stora Ensos pulpmill in Skutskär. An assessment is being made to see if similar solutions can be installed at other Stora Enso mills.

Stora Enso is the second large industrial group to sign an agree- ment with Opcon.

electricity Production onBoard shiPs

Perhaps the most interesting application in terms of environ- mental benefits is the use of Opcon Powerbox onboard large ships to improve energy efficiency and utilise surplus heat. Large vessels could save between 5 and 10% of their fuel consump- tion, with obvious environmental and economic benefits.

The first contract

concerning electricity

supplies was signed

in March 2008.

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ref tech Builds oPcon PowerBox

REF Tech, specialists in cooling, was one of three companies acquired by Opcon in 2007 to build up resources for Opcon Powerbox.

REF Tech is an advanced, comprehensive supplier of eco- friendly and energy-efficient cooling and heating pump plants, systems and consulting services for, among others, the food, process and chemicals industries, and energy companies. REF Tech’s principal products are complete liquid cooling plants and compressor units that can be included in larger cooling plants.

Opcon Powerbox will be supplied as a ready-made system to customers, and REF Tech will play a key role in project manage- ment, installation and calculations. The company builds Opcon Powerbox, starts up operation at the customer’s site and also has responsibility for an important part of the service organisation being established around Opcon Powerbox.

REF Tech has its own strong product and contracting busi- ness that will be further developed within Opcon, in parallel with work on Opcon Powerbox. The company has performed several prestigious assignments and has won large orders during 2007 and the first quarter of 2008.

One of these projects includes a completely new, energy-effi- cient cooling plant based on screw compressor technology and equipped with improved energy recycling and an eco-adapted cooling agent. The amount of cooling agent will be reduced by 85 % and energy efficiency is expected to increase by around 20 %.

reduced enerGy consumPtion

Another project features an energy-efficient plant for condensa- tion of sulphur dioxide (SO

₂

) at Boliden’s smelting works in Harjavalta, Finland. This plant recovers sulphur during copper extraction. The new plant boosts performance and reduces the negative effects on the environment while significantly cutting energy use. The system is similar to one delivered previously by REF Tech to a copper smelting plant in China.

One example of how oil can be replaced by environment- friendly solutions is REF Tech’s delivery and installation of a large screw compressor heating pump to a large Swedish food producer. Condensation heat from the existing cooling plant was used in REF Tech’s heating pump to produce heat energy equivalent to around 6,000 MWh per year (6 GWh). Oil was previously burnt to produce the same amount of energy.

Another highly prestigious assignment for REF Tech was the engineering design for a cooling plant at CERN’s large labo- ratory for particle physics in Switzerland, where the so-called Atlas brake has to be maintained at –233° C. CERN is one of the world’s largest and most respected research institutes.

REF Tech operates from premises in Nacka and Norrköping, Sweden.

Systems for measurement, monitoring and remote control made by Opcon subsidiary, Mitec, are fitted onto Opcon Powerbox.

Opcon Powerbox is in operation and supplying electricity as planned. Per Hedebäck (left), President of Opcon Energy Systems (OES), and Rolf Hasselström, President of Opcon, on site at the combined heating and power plant in Eskilstuna.

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TREATMENT AND ENERGy-EFFICIENCy IMPROvEMENT OF bIOENERGy PLANT

in july 2007, oPcon acquired

the successful bioenergy com- pany, SRE, Svensk Rökgasenergi. SRE is the leading supplier of complete systems for flue gas condensation and dust parti- cle separation in the Nordic and Baltic region. In addition to municipal heating plants, the customer base includes leading multinational energy companies such as Fortum, Vattenfall, Eon, Rindi Energi and the French Dalkia Group. The product

range is adapted for outputs of 1.5 MW and above.

SRE today works almost exclusively with systems in which biomass is burnt. This is the result of a strategic deci- sion taken in the late 1990s along with product development with patent applications. The first bioenergy system was sold in 1999, and between 2002 and 2005 sales increased tenfold.

There are now over 70 installations in Sweden, Norway, Esto- nia, Latvia, Lithuania, the Netherlands and Germany. New orders have been received from Canada.

The product range, sold under the Renergi brand, includes technology for flue gas condensation, whereby the energy con- tent in the hot flue gases is recovered as hot water used for heat- ing, and technology for treatment of flue gases and water. The systems enable considerable energy savings and a better envi- ronment. For example, an SRE flue gas condensation plant nor- mally improves the efficiency of a system by 25-30%. A treat- ment plant can reduce emissions of particles from 250 mg/nm

³

to under 5 mg/nm

³

.

renerGi

SRE’s Renergi system has mainly been marketed in the district heating sector, but also in general industry. Growth has been driven by the transition from fossil fuel to biomass but the main boost to sales is expected from exports. In 2007 SRE acquired new partners and agents in Finland, Germany and Poland. SRE already has partners in Estonia, Latvia, Lithua- nia, the Netherlands, Switzerland, Austria, the Ukraine and Belarus.

new dryinG system for Biomass

In 2007 SRE invested strongly to launch a completely new and unique low-temperature drying system for biomass. Higher energy costs and a focus on renewable energy such as biomass have meant that the value of biomass, by-products from for- estry operations, has increased significantly. The main applica- tions for the new drying system are for drying sawdust etc for production of pellets, drying forest waste to raise the energy content and thus the economic value, or drying bark for use as fuel.

In Europe alone there were 440 pellets factories in 2007.

SRE’s drying system can be added to existing drying systems and use energy from flue gases recovered in the condenser. The drying system therefore creates opportunities for system sales of the entire product range to sawmills and pellets manufac- turers.

SRE’s drying system facilitates the integration of pellets production at sawmills, a trend that is being driven by prof- its, access to raw materials and the environmental benefits of reduced transport.

Energy efficiency improvements created by SRE’s drying system means that in many cases, customers can double pro- duction of dried material without needing to use more fuel. The system also enables production of higher quality of pellets with low ash content. This quality is suitable for the consumer pellets segment, and gives producers a higher profit margin.

SRE has received orders for five systems, and there is great interest from other customers in Sweden and abroad.

To safeguard production capacity in future, operations have been moved to Spånga, Stockholm, where the pace of produc- tion can be doubled. Meanwhile sales and management staff have moved in with production and development staff.

The acquisition has already led to market synergies between SRE and Opcon Powerbox, and more synergies should be possi- ble. In addition to short-term benefits there will also be consid-

Integration of technologies yields major energy and

environmental benefits

SRE’s proprietary systems for flue gas condensation and drying of bio-

mass reduce energy usage and improves the environment. SRE also has

a strong platform for the fast-growing European bioenergy market.

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erable energy and environmental benefits in future integration of technologies that will lead to improved complete solutions for customers.

fast-GrowinG BioenerGy

With the acquisition of SRE, Opcon has gained a strong plat- form for growth in the expanding bioenergy market. Before 2002 annual growth for electricity generated from bioenergy in Europe was around 7% per year, rising to 13% in 2003 and 23& in 2005. With the EU setting a target of 20% renewable energy by 2020, the assessment is that bioenergy will continue its strong growth.

imProved climate efficiency in Greenhouses

According to a UN report, 18% of emissions associated with global warming come from cattle rearing. It is obvious that the environmental effects of what we eat and how we produce food are not limited to the transportation of food. A report from the Swedish Environmental Protection Agency in the summer of 2007 identified the tomato as a threat to the climate. The reason is that greenhouses are heated almost exclusively by oil or gas, which means that a tomato grown naturally in a field in Spain,

for example, is considerably better for the environment, despite lengthy transportation, than a tomato grown in a Swedish or Dutch greenhouse. Of all the global warming gases generated from growing and transporting tomatoes in the Netherlands, 97% come from cultivation and just 3% from transport.

At the end of 2007, SRE and its partner in the Netherlands started a project to redesign the heating of greenhouses used for growing peppers in Beetgum, the Netherlands. The green- houses, covering 8 hectares, were previously heated by natural gas. The new heating system is based on bioenergy and features flue gas treatment and condensation supplied by SRE.

SRE’s Renergi system with condenser and wet electrostatic precipitator improve energy efficiency by 25-30%. The unique feature of the project is that SRE’s treatment of flue gases, together with other parts of the project, means that the CO2 which is created can be recycled immediately and returned to the greenhouse where it is consumed in photosynthesis of the pepper plants.

At the start of 2008 another SRE plant has been installed at one of the largest tomato growers in Sweden, and SRE has received its first order from a greenhouse operator in Canada.

SRE and its partner, HoST B.V. have started a project to improve heating efficiency in greenhouses used for growing peppers in Beet- gum, the Netherlands. Heating of the greenhouses has been switched from natural gas to bioenergy, with flue gas treatment and condensation based on SRE technology. Energy efficiency has improved by 25-30% and the carbon dioxide produced an be recycled immediately and returned to the greenhouse where it is consumed in photosynthesis of the pepper plants. This project has earned a lot of media attention in the Netherlands.

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SCANIA-CUMMINS xPI SySTEM

sem, oPcon’s iGnition system sPecialists,

has been pro- ducing ignition systems since 1915. The company has a proud history at its site in Åmål, which is still a centre of ignition system development in Sweden. SEM has taken a further major step forward in advanced technology for eco-friendly vehicles.

The company is responsible for further development of stators for Scania-Cummins XPI fuel injection system, used in Scania’s new diesel engines for trucks. SEM is one of two companies

producing the stator.

The EU is tightening up environmental requirements for auto producers. Reducing emissions from autos is one of the key measures for improving air quality, especially in

urban areas. Heavy vehicles are under the spotlight and restric- tions are increasing in the busier parts of Europe.

Within the EU, emission limits are regulated in Euro 5 leg- islation. The next phase, Euro 5, comes into force in October 2009, when emission levels for nitric oxides will be halved com- pared with Euro 4. Euro 6, enforceable from 2014, will be even stricter.

matches new emission tarGets

The XPI system will play a key role in cutting emissions from Scania-Cummins diesel engines. Using SEM’s technology, Scania’s trucks will meet Euro 5 norms. This will mean that emissions of hazardous substances – particles and NOx – will be a fraction of what they were in the early 1990s.

EU emissions legislation sets major challenges for producers of heavy vehicles. Companies have selected different strategies for cutting emissions.

Scania’s proprietary solu- tion, including the XPI system, in partnership with Cummins, the US engine manufacturer, means that fuel additives, filters and catalysts are no longer required, while engine performance is very good.

Higher pressure at fuel injection means that the size of the fuel droplets can be reduced and par- ticle emissions are cut

back. The method places high requirements on the dosage of fuel, which is controlled by SEM’s stator.

The stator has components for which production tolerances are tiny, so the production process has to be extremely accurate.

SEM is building a completely new production line at its factory

The Energy Efficiency business area develops and produces SEM stators for Scania Cummins XPI fuel injection system. The new diesel engines meet the EU’s new, stricter requirements concerning emissions.

Development of systems to meet stricter

environmental requirements

SEM’s stator for Scania-Cummins XPI system is a valve where the opening movement is calibrated to hundredths of a millimetre . The pro- duction process is highly advanced.

Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 0,4

0,3

0,2

0,1

0

g/kWh

PM

The EU’s emission limits for nitric oxides (NOx) and par- ticles (PM) for vehicles. Euro 5, which has even stricter rules, comes into force in 2009.

Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 10

8

6 4

2

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in Åmål and volume production will start in 2009.

Alongside the Scania-Cummins project SEM is carrying pout intensive development of new ignition systems for various applications. Of special interest is the development of systems

for engines powered by alternative fuels such as ethanol, natural gas, hydrogen and biogas. In addition to car and truck engines, SEM’s systems are used in various types of electricity generators powered by gas engines.

Busier roads are a growing problem throughout the developed world. Within the EU, laws governing emissions from cars and trucks will get tougher and tougher.

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RENEWAbLE ENERGy – ACTIvITIES IN 2007

Acquisitions and major projects

at the start of 2007

Opcon reorganised its activities into three new business areas as part of the Group’s strategic focus on energy and environmental technology. The Renewable Energy business area works on technical solutions that contribute to resource-efficient and effective use of energy.

In 2007 the main focus was on building the business area.

New managers were recruited and three companies (SRE; REF Tech and Mitec) were acquired. All the acquisitions are part of Opcon’s strategic focus on growing within renewable energy and creating a comprehensive product offer for customers based on Opcon Powerbox, including systems, installation and opera- tional monitoring. The decisive factor has been the develop- ment and commercialisation of Opcon Powerbox, which gen- erates electricity from waste heat, and SRE’s low-temperature Renergi LTK, which was developed for the market very rapidly and at low cost. Five Renergi LTK drying systems were ordered in 2007.

An agreement to deliver Opcon Powerbox has been signed with a major Swedish industrial group, to be followed by an extensive survey of all of this customer’s installations.

In December the first full-scale installation of Opcon Power- box took place at a power station in Eskilstuna, where testing is now taking place. This plant was started up in early 2008 and will act as a reference plant.

larGest Business area

Sales and earnings grew steadily quarter by quarter in 2007 and by the end of the year the Renewable Energy business area had become the largest business area in the Group. Growth will come from newly acquired companies and from existing busi- nesses. Despite major investment in new products, systems and markets, plus costs for integration, relocation, acquisition and organisation build-up, profitability remains in line with Opcon’s financial target of an EBIT margin of 10% or higher.

An important part of the positive development is the fact that sales of SRE’s established product range to district heating plants progressed well while sales were started in a new segment, greenhouses. In line with the objective of growing internation- ally, new partnership agreements were signed in Finland, Ger- many and Poland.

During the year newly acquired REF Tech received the compa- ny’s largest-ever business deal – the order for an energy-efficient plant for condensation of sulphur dioxide (SO2). The customer is Boliden smelting plant in Harjavalta, Finland. This new plant will enhance performance and reduce the negative effects on the environment while significantly cutting energy use.

New acquisition Mitec also performed well. During the year Mitec received a major order concerning a large research project into Sweden’s homes. This order confirms the company’s posi- tion as a leading supplier of professional measurement equip- ment for energy and climate installations.

Svenska Rotor Maskiner (SRM) improved both sales and profitability strongly, especially in Q4 as the company received a number of important development project orders within energy and environmental technology.

first steP in the russian market

One example of these projects is the project in Russia whereby SRM together with REF Tech will develop a plant that will uti- lise gas previously wasted through flaring, and thus having sig- nificant environmental impact. The end-user is Russia’s largest oil company and this order represents an important first step in the Russian market with great potential for the future.

Another development project concerns an assignment from one of the largest carmakers, and involves producing a proto- type for a completely new and unique component for fuel cells, a compressor that recirculates hydrogen in the fuel cell in order to further increase the power generated in the process.

During the year increased interest in fuel cell technology was noted from the car sector, especially from China. However, the assessment continues to be that it will be a number of years before fuel cell vehicles are produced in significant volumes.

Opcon Autorotor has a continued strong order book but is still experiencing problems with deliveries from suppliers. The situa- tion is improving thanks to measures implemented earlier.

Sales for the January-December period for the Renewable Energy business area amounted to SEK 122.7 million (48.1 m).

The operating profit for the same period was SEK 13.1 million (loss: 2.3 m).

60 50 40 30 20 10 0 -10

MSEK

Renewable Energy 2007

Q1 Q2 Q3 Q4

Revenue EBIT

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Development of eco-smarter engines

in 2007 sales within

the Engine Efficiency business area decreased as planned due to the winding up of the exchange programme for ignition cassettes delivered to Saab. Certain factors meant that development was worse than expected. The falling US dollar affected all the companies in the business area and Saab’s orders for ignition cassettes for new cars were lower than expected for most of the year. Together with the effects of the end of the exchange programme for ignition cassettes with Saab this led to lower productivity and overmanning. A number of measures was implemented, including redundan- cies, and this will continue to some extent into 2008. Overall the workforce at SEM and REAC in Åmål was reduced by 67 people in 2007.

Opcon’s operations in China gained full effect in 2007 and things are running smoothly with a low amount of rejects and high quality. During the year a decision was taken to move addi- tional production from Åmål to China, including production of solenoids for a customer in the heavy truck sector. This reloca- tion should be completed by the final quarter of 2008.

Sales of ignition systems for small engines largely proceeded according to plan, while ignition systems for biogas and natural gas engines progressed well.

The same applies for sales of sensors to the vehicle industry, where continued strong demand for trucks has favoured SEM’s sensor programme and will mean a gradual increase in pro- duction in 2008. Meanwhile, there are signs of an increase in inquiries from new customers who see new opportunities with production at the Chinese factory.

During the year, Opcon closed down its business in the US, Opcon Inc. Laminova succeeded in delivering results above Opcon’s financial target even though earnings were affected by non-recurring expenses for depreciation within Opcon Inc, amounting to SEK 0.9 million.

Laminova has initiated strategic work aimed at identifying more customers within other auto applications apart from tra- ditional carmakers and increased focus on sales, which has led to a number of serious enquiries.

BriGht future

The most important event for the business area was SEM being selected by Scania-Cummins as a partner for production and further development of stators, a core component in Scania- Cummins XPI injection system for diesel engines. This is an important deal that signals recognition for Opcon’s technical knowledge and competence.

Scania-Cummins’s XPI injection system is an environmen- tal project which, partly through significantly higher injection pressure, enables a reduction in emissions so that engines can

meet the strict emission requirements of Euro 5, both in terms of particles and NOx.

Further development of the stator started in 2007. Volume production for Scania-Cummins will start in 2009.

Measures have been implemented to prepare Lysholm for sale in 2008.

As the operations of this business area remain limited, it con- tinues to report its results within the Engine Efficiency business area. During the year production of solenoids has been gradu- ally transferred from REAC to SEM in order to further refine the business.

REAC is continually broadening its product range and is cur- rently developing in collaboration with sister company SEM a new portfolio of digital position sensors for which the market potential is judged to be very large.

During the final quarter REAC’s order situation improved significantly mainly because actuators for new applications were ordered by REAC’s

largest customer, wheelchair manu- facturer, Permo- bil, which thereby increased its fore- cast sales. Profit- ability, improving month by month

in the final quarter as sales rose and costs were cut, headed towards the Group’s target.

Specialist development aimed at producing a more modern range of actuators with a series of unique features continues according to plan and a pre-study focused on more advanced control electronics was completed before Christmas. Meanwhile, collaboration with Volvo Penta Sweden concerning applications for marine engines is developing well. Increased interest from electrical car producers was also noted.

Even though it is expanding, REAC’s business remains too small. The business area is currently evaluating a number of major company acquisitions that would significantly expand the product range and provide a much stronger market position for new products and systems. If this strategy fails there will be a new strategic assessment.

Sales for the Engine Efficiency business area in the final quar- ter amounted to SEK 43.7 million (90.7 m) and the operat- ing profit was SEK 0.4 million (13.2 m). Sales in the full year amounted to SEK 224.4 million (378.9 m). The operating profit was SEK 16.3 million (62.2 m).

ENGINE EFFICIENCy – ACTIvITIES IN 2007

Sales of ignition sys-

tems for biogas and

natural gas engines

progressed well.

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OPCON IN 2008 AND bEyOND

Focus on growth in all business areas

in 2006 the GrouP took

the strategic decision to concentrate business on energy and environmental technology. This entails focusing on products and systems for efficient use of energy and eco-friendly, resource-light solutions in a number of markets in which Opcon’s subsidiaries have considerable competence with technology that is world-leading in several areas. In 2007 Opcon launched a completely new business area structure in order to implement its strategic focus on energy and environ- mental technology. The Group began transforming itself in a way that has resulted in Renewable Energy becoming Opcon’s largest business area.

hiGher enerGy Prices

Most of the Group’s business comprises development and production of products and systems that contribute to more efficient use of energy and a reduced environmental burden.

Within these areas development is mostly driven by prices for oil, coal and electricity. Prices for coal and oil continued to rise strongly during 2007 and the start of 2008.

For example, WTI oil climbed in price during 2007 from around USD 60 per barrel to almost USD 100 per barrel, and in early 2008 the price reached USD 110 per barrel. It is also

increasingly obvious that political forces globally are taking threats to the climate seriously and are seeking to promote more efficient use of energy and alternative energy sources. This has also resulted in political intervention to reduce consumption of fossil fuels.

In the long term Opcon expects rising prices for energy and raw materials will lead to increased demand for energy and envi- ronmental technology. The basis for this assessment rests on fun- damental factors such as population increase and rising living standards globally which are driving consumption. In the middle of the 20

^th

century there were 2 billion people on the plant. By 1999 this figure was 6 billion and by 2050 it is expected to reach 9 billion. We are seeing growing prosperity in China and India.

According to the World Bank, by 2030 a global middle class will number 1.2 billion people, with consumption patterns to match.

This will add to the environmental burden and raise demand for technology that can reduce emissions.

This is the basic analysis of world trends that, coupled with the Group’s technical competence, has led to the strategic deci- sions that have been taken.

100 years of enerGy efficiency

An important part of Opcon’s technical competence in energy and environmental technology resides within SRM and the company’s 100-year history of development and application of technology. SRM is based upon AB Ljungströms Ångturbin (ALÅ), formed in 1908 to develop the twin-rotating steam tur- bine invented by Birger Ljungström.

Perhaps the company’s most important invention in terms of the environment was an air pre-heater developed in 1920 which to this day is still in operation in large-scale coal power stations, boosting energy efficiency by up to 30 %. It is estimated that around 20,000 Ljungström pre-heaters are working around the

2007

2002 2003 2004 2005 2006 2007

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500%

300%

100%

Oil (WTI) USD per barrel

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2008

globe and saving up to 3,000 TWh annually.

SRM and its compres- sor technology also lies behind the revolution- ary technology used by Opcon Powerbox to generate electricity from surplus heat and which has been started up in 2008, 100 years after the formation of the business.

renewaBle enerGy

During 2007 the organisation was further developed and in 2008 the organisation will be refined additionally. The Group’s new role within the field of energy and environmental tech- nology continues to require reinforcement of competence. A number of recruitments have been made and several more are on the way. Several of the Group’s companies are building up their organisations and developing products and systems. The acquired companies are being integrated. The changes in the product and organisation structure now taking place are com- prehensive for Opcon, and a major focus is now being placed on creating new customer relations and on building market and project management competence while also planning for increased volumes of more complex products and systems. A platform for a profitable aftermarket business is being created within the Renewable Energy business area.

The main focus is on waste heat and bioenergy. The start of 2008 saw a decisive market breakthrough that will feed future growth. Both Opcon Powerbox, which generates electricity

from waste heat, and SRE’s low-temperature dryer, Renergi LTK, which dries biomass, have been installed for the first time.

These two products are expected to make a strong contribution to the growth of the business area from the second half of 2008 and have full impact in 2009.

In 2008 marketing of Opcon Powerbox has intensified with the installation of a reference plant in Eskilstuna. The potential in the commercial discussions now taking place with a number of customers is estimated at several hundred million Swedish krona. This activity is expected to result in a number of orders and deliveries in 2008.

As part of the commercialization of Opcon Powerbox and tech- nology for generating electricity from waste heat, Opcon has developed a new business strategy whereby Opcon will sign long-term agreements with process companies to deliver elec- tricity generated from their waste heat. This strategy will enable Opcon and its

shareholders to gain more of the value in the technology.

Meanwhile the market launch of Opcon Powerbox is being speeded up.

The first agreement

was signed in March 2008 with Stora Enso, with waste heat from the Skutskär mill being used to generate electricity via Opcon Powerbox. Stora Enso is the second major group to sign a framework agreement with Opcon, which includes a review of other mills operated by Stora Enso to see if Opcon Powerbox can be installed at them too.

Sales within the Renew- able Energy business area are expected to double in 2008.

A greenhouse in the Netherlands for growing peppers is heated with bio- fuel using technology from SRE.

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OPCON IN 2008 AND bEyOND

200 In order to significantly scale up pro- duction of the heart of Opcon Powerbox during 2009, a decision has been taken to invest in a new, more advanced machine for production of rotors and associated grinding machinery. This investment is also being made to ensure that SRM, the

Group’s centre for screw-compressor technology, can manage additional production and development on top of the exciting projects that the company has begun recently.

Customer interest in SRE’s new drying system is judged to be considerable. SRE is now expanding its international marketing of proven bio-energy systems and is launching into a new seg- ment, heating of greenhouses. In 2008 around 40% of SRE’s sales are expected to occur outside Sweden. As part of the strat- egy for international growth, SRE signed agreements with part- ners and distributors in Finland, Germany and Poland. SRE’s goal in 2008 is to find more partners so that it can enter even more markets with its proven systems. An agreement has already been signed in 2008 with a partner in Canada and an order has been received for the greenhouse seg- ment, and efforts are being focused on other markets.

In 2008 an agree- ment has been signed with a cus- tomer in Canada, where an order has also been received from the greenhouse segment, and work is continuing on marketing in Central and Eastern Europe, among other regions.

Outstanding tender volumes and orders received by the busi-

ness area indicate that growth should remain high coupled with good profitability, especially from the second half of 2008 onward.

Sales for the business area are expected to double in 2008, with profitability in line with Opcon’s financial target of an EBIT margin of 10% or more.

enGine efficiency

For Engine Efficiency 2008 is expected to be an average year with the focus on adapting the business for higher sales in 2009. In Q4 2008 SEM began further development of stators, a compo- nent in Scania-Cummins XPI injection system. In 2008 a large investment will be made at the Åmål factory concerning series production for Scania-Cummins starting in 2009 and continu- ing up to 2013. Future volumes will depend on Scania-Cum- mins sales. One stator is required for each cylinder in the engine.

Forecast volumes are larger than current production in Åmål.

Work has now intensified aimed at filling the Chinese fac- tory with additional production. New customers have begun verification of the Chinese factory, which should lead to large volume increases from 2009. As part of the refining process and the focus on energy and environmental technology, a decision has been taken in 2008 to sell of Lysholm.

Overall, the assessment is that the cost adjustments being achieved within Engine Efficiency, together with higher vol- umes in China, are building a strong platform for the future.

The business area will, however, continue to be affected by the weakness of the US dollar and remaining costs during the first half of 2008.

As the population of the Western world grow older and wish to stay mobile, and people in Asia become more prosperous, there

Forecast volumes for SEM are expected to be larger than current production at Åmål.

An ignition system for alternative fuel, developed and produced by SEM AB.

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is growing demand for advanced wheelchairs and other simple electrical vehicles.

This means that the market for positioning, movement and regulation, which is where REAC is active, is expected to con- tinue growing strongly. Together with REAC’s focus on more advanced and unique control electronics, interest from cus- tomers for REAC’s product range is growing and orders from REAC’s largest customer, Permobil are increasing, which will boost growth from 2008 and onward.

Even though it is expanding, REAC’s business remains too small. The business area is currently evaluating a number of major company acquisitions that would significantly expand the product range and provide a much stronger market position for new products and systems. If this strategy fails there will be a new strategic assessment.

financial tarGets

In 2007 Opcon made the assessment that sales by the end of 2009 would reach SEK 1,000 million annually. Despite delays and the sale of Lysholm the Board is sticking with this assess- ment. Since making the forecast, SEM for example has been selected as a partner by Scania-Cummins for development and production from 2009 and onwards. In addition the new busi- ness structure for Opcon Powerbox is expected to make a very strong contribution and speed up the market launch.

On top of these factors come new political decisions con- cerning a higher share of renewable energy in the EU, which will benefit demand for Opcon’s systems, not least concerning bioenergy.

Considering the major transformation the Group is experi- encing the Board has decided to give priority to the construc- tion of a platform for long-term, high and profitable growth ahead of short term profit targets. The focus will be placed on creating growth in energy and environmental technology in all business areas. This work will continue in 2008.

In 2008 the Group expects to increase sales by around 30 % and then even more in 2009. This is expected to be driven by a doubling of sales within the Renewable Energy business area, with profits in line with Opcon’s financial targets or above them. The pace of profitability, the order situation and normal seasonal factors relating to SRE’s established systems mean that increases in both sales and profits will be delayed significantly until the second half of the year.

At the same time, the Engine Efficiency business area is being affected by costs for redundancies, which are expected to affect sales and earnings mainly in the first quarter but also in the second quarter. Meanwhile, EBIT for the full year 2008 is expected to improve considerably although not enough to reach Opcon’s financial target of 10 % or more.

An example of how Opcon Powerbox is marketed in Sweden. The headline says: “Generating electricity from waste heat at tempera- tures as low as 55° C”.

Utvinner el ur spillvärme redan från 55°C

Opcon Energy Systems ABLTel: 08-466 45 00 e-post: ph@rotor.seLmanuel.sward@opcon.se www.opcon.se

2010

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FIvE-yEAR SUMMARy OF ThE GROUP

(For definitions, see page 70)

Profit and loss statement (sek ’000) 2007* 2006* 2005** 2004** 2003**

Net sales 336,146 370,976 343,843 312,168 246,979

Other operating income 0 0 3,700 0 0

Operating profit before depreciation 34,246 71,197 17,695 –12,167 –1,301

Depreciation of tangible fixed assets –13,319 –11,925 –16,598 –18,152 –16,155

Depreciation of intangible fixed assets –3,225 –3,882 –7,977 –9,705 –6,038

Operating profit/loss 17,702 55,390 –6,880 –40,024 –23,494

Financial items –4,412 –4,090 –5,650 –4,468 –2,758

Profit/loss after financial items 13,290 51,300 –12,530 –44,492 –26,252

Tax –2,666 1,003 –154 674 7,310

Minority shares 0 0 0 0 0

Profit/loss for the year 10,624 52,303 –12,684 –43,818 –18,942

earnings from the business before divestment –4,200 –5,311 – – –

Balance sheet (sek ’000) 2007 2006 2005 2004 2003

Intangible assets 155,044 47,149 44,899 46,286 41,863

Tangible assets 53,944 42,815 44,262 60,987 72,893

Financial assets 33,178 24,126 21,107 21,782 22,162

total fixed assets 242,166 114,090 110,268 129,055 136,918

Inventories 96,687 71,562 66,432 55,632 58,357

Accounts receivable – trade 76,669 76,330 75,063 49,793 51,036

Other current assets 28,251 15,853 16,360 18,518 14,176

Liquid funds/short-term investments 4,880 4,158 1,886 3,756 19,666

total current assets 206,487 167,903 159,741 127,699 143,235

total assets 448,653 281,993 270,009 256,754 280,153

Shareholders’ equity 244,136 143,790 92,422 74,991 119,535

Minority shares 0 0 0 0 0

Interest-bearing liabilities 107,484 75,681 94,337 87,382 78,981

Deferred tax 5,964 278 746 1,244 2,100

Current non-interest-bearing liabilities 91,069 62,244 82,504 93,137 79,537

total liabilities and equity 448,653 281,993 270,009 256,754 280,153

key indicators 2007* 2006* 2005** 2004** 2003**

Date per share

Profit/loss per share, for remaining business*, SEK 0.68 3.65 –1.11 –5.11 –2.66

Equity per share, SEK 14.95 9.65 6.46 8.74 13.93

Dividend per share, SEK 0 0 0 0 0

Average no. of shares (’000) 15,630 14,298 11,439 8,579 7,129

Total no. of shares at year end 16,326 14,898 14,298 8,579 8,579

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shareholders’ equity and ratios (sek ’000) 2007* 2006* 2005** 2004** 2003**

Shareholders’ equity 244,136 143,790 92,422 74,991 119,535

Net financial debt 102,604 71,523 92,451 83,626 59,315

Operating capital 346,740 215,313 184,873 158,617 178,850

Return on equity, % 5.5 44.3 –15.2 –45.1 –16.2

Return on operating capital, % 6.3 27.7 –4.0 –23.0 –14.4

Return on total capital, % 5.0 20.1 –2.6 –15.3 –9.1

Gross margin, % 10.2 19.2 5.1 –3.9 –0.5

Operating margin, % 5.3 14.9 –2.0 –12.8 –9.5

Profit margin, % 4.0 13.8 –3.6 –14.3 –10.6

Equity/assets ratio, % 54.4 51.0 34.2 29.2 42.7

Proportion of risk-bearing capital, % 55.7 51.1 34.5 29.7 43.4

Interest cover, x 3.75 13.36 –1.19 –8.27 –6.91

Debt gearing, % 44.0 52.6 102.1 116.5 66.1

R&D costs 27,607 16,043 30,281 35,968 24,575

of which capitalised 12,466 4,675 6,235 11,687 4,746

cash flow (sek ’000) 2007* 2006* 2005** 2004** 2003**

Cash flow from current activities 26,802 62,060 9,070 –20,459 –3,283

Change in working capital –6,207 –26,342 –45,155 5,763 12,003

Cash flow from investment activities –41,392 –20,985 –4,073 –17,613 –50,429

Cash flow from financing activities 21,519 –12,461 38,288 23,399 30,891

cash flow, net 722 2,272 –1,870 –8,910 –10,818

data Per emPloyee (sek ’000) 2007* 2006* 2005** 2004** 2003**

Average number of employees 368 415 378 276 239

Sales per employee 913 894 910 1,131 1,033

Operating profit per employee 48 133 –18 –145 –98

*Figures for 2007 and 2006 are stated excluding businesses to be sold with regard to earnings.

** Figures for 2005, 2004 and 2003 are not adjusted for businesses to be sold.

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2007 ANNUAL REPORT COMPLETED IN 2007: Change to energy and environmental technology FOCUS FOR 2008: Growth in energy and environmental technology