INTERIM REPORT OBDUCAT AB (PUBL.) JANUARY – JUNE 2006

Industrial breakthrough for Obducat

· Sales increased to SEK 20.4 million (15.9)

· Pre-tax profits were SEK –18.5 million (-21.8) and earnings per share before dilution were SEK -0.07 (-0.10)

· Initial order received for Obducat’s NIL technology for use in high volume production

· Agreement signed with Canon Marketing Japan concerning marketing of Obducat’s products in Japan

· Collaboration agreement with Thomson regarding development of a new optical media format

· Initial order received for CamScan’s new product platform Apollo

· Six new patents granted internationally up to publication of the Q2 report

Sales/Market (All amounts below in SEK 000 unless otherwise stated)

Sales for the first six months of 2006 were 20.374 (15.893), primarily as a result of a highly eventful first quarter with strong order intake.

Backlog at the close of the quarter amounted to SEK 7.005 million. The order intake during Q2 totalled SEK 5.402 million.

A product mix containing a comparatively high portion of NIL (nano imprint lithography) machines impacted the gross margin positively in the second quarter. Sales of nano imprint lithography related products have more than doubled in comparison with the corresponding period last year. The Obducat CamScan Ltd. subsidiary, focusing mainly on development and production of SEM (scanning electron microscopes) as well as additional application areas for electron beam technology, recently introduced a new product platform for SEM. In connection with this introduction, Obducat received an initial order for the new product called Apollo from Imperial College in London. The official product launch was held in June at the Microscience trade show in London.

The breakthrough order at the beginning of the year for a NIL machine for industrial high volume manufacturing purposes has resulted in Obducat taking a big leap forward into the commercial production phase almost a year earlier than estimated. Obducat’s NIL technology is already being utilised to produce optical components.

After having had 4-5 industrial customer projects two years ago, Obducat now has some 20 projects at various stages of the decision-making and buying processes, where the customers aim to start industrial mass production of various types of components. Obducat estimates the Company’s market potential as well as development potential to remain unchanged.

Obducat continues to create long-term customer connections, which has resulted in two new collaborations during the past six months. The latest order from Thomson is the first step on the road to a collaboration programme focusing on Obducat’s EBR (electron beam recorder) and NIL technology. The co-operation contemplated involves production of test stampers for use in the development of a new optical media format.

The second collaboration refers to an agreement with Canon Marketing Japan (Canon MJ), a subsidiary of Japan-based Canon Inc., to introduce Obducat’s products into the Japanese market. Canon MJ handles the marketing and sales of all Canon products in Japan, both commercial and industrial. Canon is the market leader in UV lithography with more than 60 percent of the Japanese market. This also means that Canon MJ has a strong service and support function present in Japan. All in all this creates good opportunities for strong market penetration into the Japanese market.

Research and Development

Research and development are one of the foundation stones of Obducat. The Company has therefore chosen to collaborate with partners in order to further develop systems, processes and products in nanotechnology. The purpose of increased external collaboration is to enable Obducat to pursue more cost effective development, minimise risks and reduce time. This involves continuous contacts and cooperation with research teams at various universities and with industrial partners worldwide. Such work is increasingly being focused on projects conducted together with both present and potential customers. Particular emphasis has been put on process development, as this particular part is estimated to constitute a possible determining competitive factor.

Research and development costs for the period totalled 9.564 (9.523), (excluding depreciation according to plan relating to R&D). Investments in the form of capitalised development expenditure and patents amount to 6.223 (5.034), an increase of 24 percent (102) compared with the corresponding period the previous year. Total R&D work increased by 8 percent (33) compared with the corresponding period last year, mirroring Obducat’s planned and increased focus on research and development in close cooperation with potential customers.

Patents

During the first six months of the year Obducat was granted a total of six patents. The year began with Obducat receiving patents in Europe and China covering the Soft Press™ function, a most significant part of the Company’s NIL technology. The unique function offers distinct performance advantages and thus cost efficiency benefits compared with competing technologies.

The European patent authority granted a patent for an essential invention concerning anti-stick technology. This technology forms a vital part of the Obducat solution for high volume manufacturing based on NIL. The anti-stick coating on stampers ensures a speedy separation process while at the same time creating a surface that eliminates particles. This is a key function enabling the high-quality result provided by Obducat’s mass production solution.

The US patent authority issued a total of three patens during spring, one of which refers to Obducat’s stamper production. The second one focuses on process steps in nano imprint lithography, so-called multi layer resist, resulting in a production process that allows for a higher tolerance level when producing small structures. The process enhances the overall competitive advantage offered by NIL in comparison with alternative technologies. The third patent concerns Obducat’s unique Soft Press™ function, a vital part of the Company’s NIL technology.

Subsequent to the end of the period, Obducat has been notified by the Japanese patent authority of its intention to issue a patent for an invention called parallelisation. The parallelisation technology facilitates high-resolution results from the NIL process in which patterns are transferred from a stamper to a substrate. The function allows pressure to be evenly distributed over large areas, resulting in improved imprint results, and from a production point of view this in turn leads to higher cost efficiency.

Obducat’s patent portfolio comprises a total of 163 active patent applications pertaining to 43 inventions. At the end of the reporting period 58 patents had been granted for 30 inventions.

Sales and Result

Group sales for the first six months of the year amounted to 20.374 (15.893) and generated a gross profit of 12.494 (6.594), corresponding to a gross margin of 61 percent (41).

Operating loss for the period amounted to –16.102 (–19.423) and was charged with depreciation according to plan of 7.420 (6.604).

Second quarter income after taxes was – 10.991 (–13.741).

Cash flow from operating activities during the period amounted to –14.265 (–10.580).

Net investments for the period were 17.093 (7.880), of which 36 percent (79) refer to intangible fixed assets in the form of capitalised development expenditure and patents.

Administration costs for the period amounted to 8.122 (6.760), which include currency exchange loss of 265 compared with the currency exchange gain of 579 the previous year.

Financing and Liquidity

At the end of the period shareholders’ equity stood at 34.530 compared with 52.249 at the beginning of the year.

During the period under review the shares issued during the second quarter 2006 as well as those subscribed for by staff in accordance with the employee options programme 2003/2006 were registered as a consequence of the required conversion of the debenture loan 04/07 and, finally, the required new subscription for shares supported by options during the same period. In this respect a total of 1.592.388 new series B shares were issued.

Liquid assets at the end of the reporting period amounted to 25.270 compared with 48.485 at the beginning of the year. Equity/assets ratio on 30 June was 29 percent compared with 43 percent at the start of the year.

At the end of the reporting period the required conversion and new subscription for shares supported by options led to the issuance of a further 985.498 new series B shares, and the subscription for new shares supported by options respecting warrants issued to United Brokers in Stockholm AB lead to a further 25.000.000 new series B shares being issued, which were registered after the close of the period under review.

At the annual general meeting on 21 June 2006 it was unanimously resolved to authorise the Board of Directors to, during the time prior to the AGM 2007, decide to issue a total of 80 million new series B shares.

Investments

The Group’s net investments amounted to 17.093 (7.880) of which 10.502 pertain to the short-term acquisition of a property where Obducat CamScan Ltd. operates. Investments in addition to the acquisition of property amounted to 6.591, of which 94 percent (79) refer to investments in intangible assets in the form of capitalised development expenditure – balanced in accordance with IAS 38 (International Accounting Standards) – and patents.

Organisation

At the end of the period the Group had a total of 45 (47) employees, of which 5 (6) women.

External Factors

The Company believes that currency and interest fluctuations will continue to have marginal impact on the business. The price of certain NIL related products have during the period indicated a downward trend in the university/institutional market segment.

Parent Company

No external sales were generated in the Parent Company during the period. Income before taxes was –12.257 (–11.581). The Parent Company’s net investments totalled 1.803 (822), comprising to a considerable extent patents and development costs carried forward in accordance with IAS 38.

Accounting Principles

Effective January 1, 2005 Obducat reports financial results in compliance with the International Financial Reporting Standards (IFRS) in its consolidated financial statements. The transition to IFRS meant that goodwill write-downs ceased, and this was the only effect of equity.

This report has been prepared in accordance with IAS 34, Segment Accounting. The accounting principles comply with the annual report for 2005. With regard to accounting by segments – which is governed by IAS 14 – the Company has, as previously reported, determined that Obducat’s business is considered to encompass one business segment only, namely systems solutions for the production of advanced micro and nanostructures. Therefore no further reporting according to IAS 14 is submitted, reference is instead made to the income statements and balance sheets for the business segment as the primary segment.

The Obducat share and Ownership Structure

On 30 June 2006 Obducat had 16.137 shareholders. On the same date the total number of shares amounted to 265.994.637, of which 5.370.288 series A shares (each representing ten votes), and the remainder series B shares (each representing one vote). On 30 June 2006, as previously foretold, the required but then not registered conversion and new subscription for shares supported by options corresponded to a total of 25.985.498 new series B shares. 985.498 of these have been included in the summary below. During the period a total of approximately 253.9 million series B shares were traded, equivalent to an average volume per trading day of a little more than 2.08 million.

All employees chose to exercise the subscription rights covered by the employee options programme of 2003.

(For complete report se attached file).