Results January-June 2001

Results January-June 2001 · First high volume CGI production committed by Ford and PSA · SinterCast CGI production to commence at Tupy of Brazil during first half of 2003 · SinterCast's market position strengthened in Japan through collaboration with ABB Market Development Following years of technical collaboration between Ford Motor Company and SinterCast on foundry process control, materials and machining issues, Ford has confirmed that the cylinder block of its new 2.7 litre V6 diesel engine will be produced in Compacted Graphite Iron (CGI) using the SinterCast on-line process control technology. The cylinder block will be produced at the Tupy foundry in Joinville, Brazil. With the start of foundry production scheduled for the first half of 2003, the 2.7 litre V6 will become the first ever high volume application for CGI (which is defined as an order greater than 100,000 engines per year). The engine will be installed in Jaguar, PSA, Land Rover and Ford vehicles. The Ford decision represents an important milestone for SinterCast, CGI and the world foundry and automotive industries. The decision acknowledges SinterCast's value as a technology supplier and simultaneously confirms that CGI can provide value and benefit to modern, clean, high performance diesels that cannot be achieved by conventional materials such as grey iron and aluminium. The Ford decision confirms that the entire CGI manufacturing process, including machining, satisfies high volume production requirements and economics. Beyond the Ford announcement, prototyping with several car and truck manufacturers has continued during the period. This includes casting activities in Europe and Asia, and North and South America. Joint production trials with ABB in pressurised pouring furnaces have also been initiated during the period. Even if expected decisions about additional volume production have not yet been announced, car and truck manufacturers maintain their plans and time schedules for the start of volume production in 2003 with strong year-on-year growth thereafter. SinterCast remains confident about its future and its role to serve the foundry, automotive and marine engine industries. Installations The SinterCast System 2000 installation made at Daros Piston Rings AB in Gothenburg, Sweden, during April 2001 is now fully operational. In addition to the installation at Daros, SinterCast process control systems for CGI production have already been installed at the Halberg foundry in Germany, VDP in Italy, Cifunsa in Mexico, Caterpillar in the USA and Tupy in Brazil. One additional system has been installed at the SKF foundry in Sweden for ductile iron production. SinterCast also has a system for CGI prototyping and development at Isuzu in Japan. Delivery of probes During the period, approximately 3,100 SinterCast sampling probes have been delivered to customers, (2,100 for the same period last year). These probes are being used for prototype castings and production. The SinterCast probe is the most accurate thermal foundry analysis device available for this purpose. Its resolution is critical for the successful volume production of CGI cylinder blocks and heads, which requires a narrow CGI specification to avoid shrinkage defects and to optimise castability and machinability. Customer production Production of CGI engine components at Caterpillar continues. Likewise the Audi 3.3 litre V8 CGI diesel engine cylinder block is successfully in continuous production at Halberg. Production of large piston rings at Daros started during the period. Also, Allen Power Engineering, part of the Rolls-Royce Group, United Kingdom, has produced CGI cylinder heads and engine frames for large stationary diesel engines at the VDP foundry in Italy. Although these SinterCast CGI production activities have so far resulted in only limited volumes, they represent important technical references for the automotive and heavy diesel engine industries. The continued daily operation of the System 2000 for ductile iron production at the SKF Mekan foundry in Sweden provides valuable confirmation of the accuracy and reliability of SinterCast's automated process control system. The SinterCast System 2000 is recognised throughout the industry as a robust and user-friendly state-of-the-art technology, that can reliably support volume production. Patents SinterCast owns 24 patents and patent applications. Two new patent applications are currently being drafted. Competition SinterCast enjoys the highest respect among the world's foundries and automotive companies for its process control technology. SinterCast is accepted as a valuable development partner in the industry. No other technology has proven suitable technically and economically for high volume production of CGI cylinder blocks and heads and similar products. Option Programme 1998-2001 The warrants issued to SinterCast employees in 1998 with an exercise price of SEK 129 per A-share during the period 27 April-30 May 2001 were not exercised since the exercise price was higher than the share price during the exercise period. A new option programme will be proposed this autumn. Operating result, investments and accounting principles The Group's turnover for the period amounted to SEK 2.7 million (SEK 2.0 million for the same period of the previous year). The turnover mainly relates to income from production, demonstrations and installations. The result for the Group, after calculated tax, amounted to SEK -17.1 million, SEK -4 .2 per share excluding outstanding warrants and SEK -3.9 including outstanding warrants (SEK -18.6 million, SEK -4.5 per share excluding outstanding warrants and SEK -4.3 including outstanding warrants). The operating expenses for the Group have been reduced by SEK 1.6 million compared to the same period last year as a result of reorganisation and further consolidation of activities. The financial net is SEK 0.8 million lower than the previous year, primarily due to the Group's results. Other operating income and other operating expenses relate to sub-letting of office space in SinterCast Ltd. Investments by the Group during the period amounted to SEK 0.3 million (SEK 1.1 million). The accounting principles have not been changed during the period. Liquidity The Group's liquidity on 30 June 2001 amounted to SEK 30.7 million (SEK 65.1 million). Although the Company anticipates some initial income to continue during 2001, SinterCast will not generate positive cash flow in 2001. Including the income from existing production the liquidity should see the Company through until mid 2002. In the current and following years SinterCast expects further decisions to be made by automotive manufacturers for volume production of SinterCast CGI components. Based on the Ford announcement regarding high volume production and other anticipated announcements this year, the Board is confident that SinterCast has a sound business case, and therefore during 2001 the Company will be able to find an appropriate financial solution in the form of new equity, debt or a combination of both in order to secure the Company until a positive cash flow is established. For this purpose an Extraordinary General Meeting is planned for this year. High Risk SinterCast has stated that the risk associated with the Company would remain high until large-scale production has been announced and the Company's long-term financing has been resolved. While the risk has now been reduced with the first commitment for large-scale production, the long-term financing remains to be secured. Annual General Meeting At the 2001 Annual General Meeting of SinterCast AB (publ), the Board Members Bo C E Ramfors, Lennart Svantesson, Rod Mansfield, Aage Figenschou and Bertil Hagman were re-elected. Interim Reports and Preliminary Financial Result The Interim Report January-September 2001 will be issued on 21 November 2001. The Preliminary Financial Results for 2001 will be issued on 20 February 2002. Stockholm, 16 August 2001 On behalf of the Board of Directors Bertil Hagman President and CEO SinterCast AB (publ) Tel: +46 8 660 7750 Box 10203 Fax: +46 8 661 7979 SE-100 55 Stockholm e-mail: info@sintercast.com Sweden website: http://www.sintercast.com No audit has been performed of this report of the company auditors. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00010/bit0001.doc http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00010/bit0002.pdf http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00010/bit0003.xls Figures