Interim report 1 January – 31 December 2007

1 January–31 December 2007
•Consolidated net sales for the full year reached SEK 307.7 million (177.3).
•Operating profit for the full year was SEK –71.7 million (14.6). Profit after tax was SEK
–62.3 (10.2), equal to earnings per share of SEK –3.86 (0.77).
•Profit for the full year was burdened with goodwill impairments and provisions for warranties and accounts receivable amounting to approximately SEK 20 million, as well as costs of around SEK 7 million for the consolidation of acquired companies.
•Inadequate coordination and cost control in sales and marketing activities and costs for freight, logistics and inventory management, together with quality problems in the sales processes and installations, led to charges of around SEK 42 million against profit.
•Costs arising from the action program launched in the fourth quarter were charged to profit in an amount of approximately SEK 2 million.

1 October–31 December 2007
•Consolidated net sales for the fourth quarter amounted to SEK 105.7 million (70.4).
•Operating profit for the fourth quarter was SEK –25.0 million (8.2). Profit after tax was SEK
–26.6 million (5.3), equal to earnings per share of SEK –1.57 (0.34).
•Profit for the period was burdened with goodwill impairments of SEK 7.3 million and provisions for warranties and accounts receivable of around SEK 5 million.
•Inadequate coordination/cost control and quality problems in installations led to charges of around SEK 14 million, and costs from the action program to charges of around SEK 2 million, against profit for the period. The program is aimed mainly at achieving major cost reductions and is expected to have effect starting in the first quarter of 2008.

Subsequent events
• A corporate reconstruction was initiated on 24 January 2007.
• On 30 January the Board of Directors called an extraordinary general meeting to obtain authorization for a new share issue.
• On 1 February Hagge Rilegård and Lars Byström left their seats on the Board of Directors.

Comments from the CEO:

Due to the combined effects of overly ambitious growth targets, particularly for sales in the consumer market, and inadequate cost and quality control, VKG has recorded a loss of SEK 71.7 million for the full year 2007.

This negative trend also led to a highly strained liquidity situation, and on 24 January the company applied for and was granted permission for a corporate reconstruction. During the reconstruction our operations will continue on the conditions set out on the Corporate Reconstruction Act, at the same time that we are intensifying the ongoing action program that was initiated last autumn.

Parallel to these efforts to improve cost efficiency and quality throughout our operations, we are in negotiations with potential financiers. It is my hope that these will be successful. The market served by VKG – energy saving solutions for homes and commercial properties – has enormous potential and the products and solutions we offer will play an increasingly vital role in the future.

For more information about the interim report, contact:

Tom Ekevall Larsen
President & CEO
Mobile +46 (0)761-35 21 25


Tomas Thorsbrink
CFO
Mobile +46 (0)76-826 66 15