Offering to acquire shares in Systemair AB

Joint Global Co-Ordinators and Joint Bookrunners

This document is, in all material respects, a translation of the Swedish prospectus prepared in accordance with Swedish regu-lations. In the event of any differences between this translation and the Swedish original, the Swedish prospectus shall prevail.

II

SUMMARY OF THE TERMS AND CONDITIONS Offering price The offering price is estimated to be set within the range of SEK 65 – 78 per share. The offering price to individuals will not exceed SEK 78 per share. Brokerage fees will not be charged.

Subscription period for the public1 –10 October 2007

Subscription period for institutional investors 1 – 11 October 2007

Announcement of the offering priceOn or about 12 October 2007

Expected first day of trading on the OMX Nordic Exchange On or about 12 October 2007

OTHER INFORMATION RELATING TO THE STOCK EXCHANGE LISTINGSymbol on the OMX Nordic ExchangeSYSRTrading lot100 sharesISIN CodeSE0002133975

Financial year1 May – 30 April

FINANCIAL INFORMATIONFor the remaining periods of the current financial year, the financial statements are expected to be published according to the following schedule:

Interim report for the period 1 May 2007 – 31 October 200717 December 2007

Interim report for the period 1 May 2007 – 31 January 20087 March 2008

Annual report for the period 1 May – 30 April 200813 June 2008

DEFINITIONSIn this prospectus, “Systemair” or “ the Company” refers to, depending on the context, Systemair AB or that group of which Systemair AB is the parent company. The use of “the Group” refers to the group of which Systemair AB is the parent company.

“Joint Global Co-Ordinators”, “Joint Bookrunners” and “the Issuing Agents” refers to Handelsbanken Capital Markets (“Handelsbanken”) and Nordea Bank AB (“Nordea”) collectively.

References to “the Sellers” refers to Färna Invest AB (“Färna Invest”), ebm-papst AB,1) ebm Industrie Verwaltungs GmbH (“ebm Industrie”) and ten members of Management and other key people employed by Systemair ; Fredrik Andersson, Mats Lund, Kurt Maurer, Svein Nilsen, Glen Nilsson, Peter Olofsson, Glen Thompson, Anders Ulff, Jonas Valentin and Ola Wettergren.

References to “ebm-papst” refers to the German fan motor producer ebm-papst Mulfingen GmbH & Co. KG. ebm-papst is one of Systemair’s main suppliers and parent company in the group consisting of, amongst others, two of Systemair’s larger owners, ebm-papst AB and ebm Industrie. For additional information see section Share capital and ownership in this prospectus.

“The OMX Nordic Exchange” refers to OMX Nordic Exchange Stockholm AB .

1) Former Ziehl-ebm AB

1

Forward-looking statements and market information This prospectus contains forward-looking statements which reflect Systemair’s current perspective of future events and financial and operational growth. These forward-looking statements only concern the time period of when the prospectus is released and Systemair makes no commitments to publish any updating or revisions of forward-looking statements as a result of new informa-tion, subsequent events or the like. Although Systemair considers the expectations which are described in such forward-looking statements to be reasonable, there is no guarantee that these forward-looking statements will be realised in fact or be shown to be correct. In the section Risk Factors, there is a description, not comprehensive however, of the factors which may result in that actual profits or actual growth is different than the forward-looking statements.

The prospectus contains historical market information and industry forecasts, concerning among other things the size of the markets where Systemair is actively engaged. The information has been obtained from external sources, for instance Euroconstruct, BuildEcon and Reed Construction Data. Systemair has the responsibility that such information has been correctly represented. Although Systemair considers these sources to be reliable, no independent verification has been conducted, therefore the correct-ness and completeness of the information cannot be guaranteed. Trade publications in general state that the historical information which it provides has been acquired from sources and via methods which are considered reliable, but that the correctness or com-pleteness of the information is not guaranteed. As far as Systemair is aware and can be ensured via comparison with other informa-tion which been published by third parties, no information has been omitted in a way which would make the information concern-ing market and industry forecasts reproduced here to be incorrect or misleading. The prospectus also contains information about Systemair’s estimates of the size in the ventilation market. Systemair does not know of any extensive public sector or market report which encompasses or directs itself at the market for Systemair’s products. The estimation of the size in the ventilation market has been compiled via division of the construction industry into segments on the basis of assumptions about local conditions in the construction industry and ventilation industry. Unless other stated, all information about the size of the ventilation market refers to the calendar year 2006. An investor should be aware of the financial information, industry information, economic forecasts and sec-tor forecasts and estimates of market information, which are found in the prospectus, do not constitute reliable indications of Systemair’s future profits.

The Offering is not directed to any person whose participation requires an additional prospectus, registration or any other meas-ures than those required by Swedish law. This prospectus may not be distributed in, or to, any country in which such distribution or such offer requires measures as stated in previous sentence, or where it would be in contravention of the legal rules or regulations in such country. The shares which are encompassed by the Offering according to this prospectus have not been registered and will not be registered according to United States Securities Act of 1933 in its current wording, nor in accordance with corresponding laws in Canada, Japan or in any other country than Sweden, and may not be offered, transferred or sold, directly or indirectly, within the United States of America, Canada, Japan or such other country where registration is required or to persons domiciled there.

Swedish law will be applied on the contents of this prospectus. Any disputes arising concerning the Offering according to this prospectus will be decided in accordance with Swedish substantive law and exclusively by Swedish courts.

This prospectus has been approved by and registered at the Swedish Financial Supervisory Authority in accordance with the provisions in the Financial Instruments Trading Act (1991:980), Chapter 2, §§ 25 and 26. Approval and registration at the Swedish Financial Supervisory Authority does not mean any guarantee from the Swedish Financial Supervisory Authority that the sustenta-tive information in this prospectus is correct or complete.

TABLE OF CONTENTS

Summary 2

Risk factors 9

Offering to acquire shares in Systemair AB 13

Background and reasons 14

Terms, conditions and instructions 15

Information regarding market data 17

Market 19

Operations 27

History 54

Condensed financial information 56

Comments on the financial development and prospects for the future 59

Board of Directors, members of Management and the auditors 69

Share capital and ownership 75

Articles of Association and other information 77

Placing agreement 78

Tax considerations in Sweden 79

Interim report for the period 1 May – 31 July 2007 81

Financial statements 90

Auditor’s Report on historical financial information for the years 2004/05 – 2006/07 120

Addresses 121

2

MARKET INFORMATION Systemair develops, manufactures and markets ventilation products which are used in commercial property and residen-tial housing for new construction as well as in RCA projects1). Systemair is actively engaged on the primary markets the Nor-dic countries, Western Europe, Eastern Europe and CIS2) and North America, and Other markets.

Driving forces Demand for ventilation products is to a significant extent related to the develop-ment in the construction industry, par-tially in new construction, and partially with RCA projects. The growth within the construction industry, especially in the market for new construction, is influenced by the general state of the market. The development in the market for RCA projects is not influenced to the same extent by changes in general eco-nomic growth since the market for reno-vations is less cyclical as a consequence of the continual need to repair and main-tain existing buildings.

In addition to the growth in the con-struction industry, the demand for venti-lation products is driven by other forces, which has meant that in recent years the ventilation market has experienced a

higher growth rate than the construction industry in general. This is a result of, among other reasons, an increasing inter-est in greater energy efficiency and the demand for a better indoor environ-ment. The most important trends include an increased understanding for the connection between well-function-ing ventilation and health, as well as between well-functioning ventilation and capacity to perform. The increased standard of living we are experiencing, especially in emerging markets such as in Eastern Europe and in CIS, where higher demands are placed on air quality, both in residential and working environments, has contributed to a fast growing market with an increased need for effective ven-tilation systems as consequence.

The value chain The value chain for Systemair’s products consists of manufacturers which buy input goods from suppliers then develop, manufacture and market ventilation products via their sales companies and sales agents. From these, sales may be directed either directly to installers or via distributors. The installers’ choice of

SUMMARY

The Nordiccountries

31%

North America 11%Other markets 4%

Western Europe 29%

Eastern Europe and CIS 25%

(of which EU members

10%)

SYSTEMAIR’S NET SALES BY PRIMARY MARKET 2006/07

Summary

Input goodsManu-

facturers

Sales companies/Representation offices

Installers End users

Direct selling

Ventilation consultants

Direct selling

Ventilation consultants

Sales agents

Distri-butors

Ventilation consultants

Direct selling

OVERVIEW OF THE VALUE CHAIN FOR VENTILATION PRODUCTS

This summary should be regarded as an introduction to the prospectus. Every decision to invest in Systemair’s shares should be based on an assessment of the prospectus as a whole. In the event any investor files a lawsuit with a court in connection with the inform-ation in the prospectus, they may become obligated to bear the costs for a translation of the prospectus. A person may be made liable for information which is included in or is missing from the summary, or a translation of it, only if the summary or the translation is misleading or incorrect in relationship to the other parts of the prospectus.

1) RCA – Renovations, Conversions and Additions.2) CIS – Commonwealth of Independent States, see section Information regarding market data.

Systemair develops, manufactures and markets ventilation products. In the value chain, Systemair is a manufacturer with own sales companies. Systemair s products are sold through own sales companies, representation offices and sales agents to distributors and installers. Another important participant in the value chain are ventilation consultants that frequently specify products, which the installers normally use.

3

SUMMARY

1) Source: Data related to the construction market in the Nordic counties and Western Europe has been obtained from Euroconstruct. Data related to the construction market in Eastern Europe and CIS has been obtained from Euroconstruct and BuildEcon. Data related to the construction market in North America has been obtained from Reed Construction Data. See section Information regarding market data for more detailed information on the reports and the definition of the countries which are included in the respective primary market.

product is usually governed by ventila-tion consultants, who specify particular products in their ventilation blueprints and calculations. These consultants thereby become an important target group for the sales companies and sales agents. Systemair is a manufacturer of ventilation products and distinguishes itself from many of its competitors by selling through its own sales companies to a larger extent.

Size of the market The ventilation market can be divided into sales to construction of commercial property, residential housing and infra-structure projects. In Europe, the majo-rity of Systemair’s sales are made to the market for construction of commercial property, while the majority of sales in North America are made to the market for construction of residential housing. The Company’s products are also to some extent used in infrastructure projects. Sales to infrastructure projects, mainly larger fans, are assessed to increase after the acquisition of Matthews & Yates in March 2007. The size of the construc-tion market for commercial property and residential housing in the Nordic coun-tries during 2006 is calculated to amount to Euro 78.1 billion, in Western Europe Euro 983 billion, in Eastern Europe and CIS Euro 89.7 billion, and in North America to USD 1,080 billion.1) Systemair estimates the size of the market for its ventilation products for commer-cial property in the Nordic countries to be approximately Euro 700 million, in Western Europe to approximately Euro 3.9 billion and in Eastern Europe and CIS to approximately Euro 630 million. The size of the ventilation market for the Company’s product range in the residen-tial housing market in North America is assessed to approximately USD 340 mil-lion. For a definition of the ventilation market, see section Information regarding market data.

THE BUSINESS OPERATIONS Systemair is a leading manufacturer and supplier of ventilation products with its primary business in Europe and North America. The Company has a well-estab-lished business in areas which have shown a high rate of growth, in particu-lar in Central and Eastern Europe including Russia. The Group’s products are mainly sold under the brand names Systemair, Frico, Fantech and VEAB. The Company represents a standardised range of ventilation products, primarily developed in-house, including fans, air terminal devices, air handling units and heating products such as air curtains, fan heaters radiant heaters and duct batteries.

Systemair has elected to primarily use its own sales organisation with its own sales companies in order to reach its customers and to limit the use of sales agents to smaller markets. The Compa-ny’s experience has shown that the busi-ness model of having one’s own sales companies is more profitable, provides higher growth, and decreases the dependency on individual sales agents.

Systemair provides high-quality ven-tilation products with focus on optimal product availability. A significant propor-tion of the items in the product line are made for warehousing against future cus-tomer orders to be able to deliver them from one of the Company’s centralised or local warehouses with a short delivery time to the customer. In this context, the Company’s business and logistics systems which ensure that an efficient distribu-tion is achieved internally as well as exter-nally are of significant importance. Systemair’s production takes place in ten modern manufacturing plants located in nine countries. The Company’s two main European distribution centres where the largest manufacturing plants are located are in Windischbuch, Germany, and Skinnskatteberg, Sweden. Own distribu-tion centres are also located in Bouctou-che, Canada, and in Sarasota, USA.

Since the establishment of Systemair in 1974, the Company has increased its net sales annually and at the same time showed a positive operating profit. Dur-

ing the last 15 years, the average growth in net sales has amounted to approximately 20 percent per year with an average oper-ating margin of approximately 8 percent.

4

SUMMARY

Country with own sales organisation or other representation

Manufacturing plant

Distribution centre

Eidsvoll Skinnskatteberg

Hässleholm Ukmerge

Maribor

Windischbuch

MariborBratislava

Aarhus

Madrid

Bouctouche

Sarasota

MARKET PRESENCE AND MANUFACTURING

The Nordiccountries

48%

NorthAmerica 14%

Other markets 2%

WesternEurope 23%

EasternEurope and CIS

13%

AVERAGE NUMBER OF EMPLOYEES PER MAIN MARKET 2006/07

The Nordiccountries

31%

North America 11%Other markets 4%

Western Europe 29%

Eastern Europe and CIS 25%

(of which EU members

10%)

SYSTEMAIR’S NET SALES 2006/07 PER MAIN MARKET

The Nordic Countries 43%

NorthAmerica 11%

Other markets 2%

WesternEurope 23%

EasternEuropeand CIS

21%

NUMBER OF EMPLOYEES PERMAIN MARKET 31 JULY 2007

0

200

400

600

800

1,000

2004/05 2005/06 2006/07

SEK million

The NordicCountries

WesternEurope

EasternEurope and CIS

NorthAmerica

Other markets

NET SALES PER MAIN MARKETLAST 3 YEARS

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SUMMARY

BUSINESS CONCEPT, TARGETS AND STRATEGYBusiness conceptSystemair’s business concept is, with simplicity and reliability as core values, to develop, produce and market high-quality ventilation products.

GOALS AND TARGETSOperational targetsSystemair’s overall goal is to be one of the leading ventilation companies in Europe.

Systemair will establish at least two new sales companies per year with the target of having its own sales company in all European countries of significance for the Company. In addition, Systemair will develop its business in selected markets in Asia and the Middle East.

Systemair will also to be the most well-reputed company in terms of reliability of delivery, availability and quality on the markets where the Company is active.

Financial targets Systemair has established a number of targets for the Company’s long-term financial development.■ Average annual net sales growth in the

amount of at least 12 percent over a business cycle, encompassing both organic growth and acquisitions

■ Average operating margin in the amount of at least 10 percent over a business cycle

■ The equity/asset ratio will not be below 30 percent

Dividend policy With regards to the Company’s aspira-tions regarding growth, Systemair’s target for the dividend is around 30 percent of after tax profits.

StrategyIn order to attain the targets as estab-lished, Systemair has established its strategy based on the following central elements.■ Focused market segmentation and

marketing – Continuous targeting of installers, distributors and consultants within the indoor environment sector

■ Standardised high-quality ventilation products – Continued innovative product development and manu-facturing of high-quality ventilation products

■ Own sales organisation – Continued development of the own sales organi-sation

■ International expansion with strong growth in Eastern Europe and CIS – Maintained acquisitions and estab-lishment strategy with significant possibilities to increase the market share in Western Europe and to increase the presence in Eastern Europe, Russia and rest of CIS

STRENGTHS AND COMPETITIVE ADVANTAGESThe management has assessed that Systemair has a number of significant competitive advantages making the Company well positioned to successfully implement its strategy and reach the goals it has established.

Early presence in emerging marketsSystemair has early on established itself in emerging markets and has via a long-time presence strengthened its brand names and created relationships with a broad customer base. Systemair’s long-term presence in Eastern Europe is assessed, along with the existing manu-facturing plants in Lithuania, Slovakia and Slovenia, to constitute a good foun-dation for the Company’s continued growth in these markets.

High level of product availability An important element in Systemair’s customer offer is ready availability and fast delivery of products which is why the Company has built up an effective manufacturing and logistics organisa-tion. Systemair is of the opinion that its high level of product availability and its logistics system have strongly contribut-ed to its growth and to establishing the Company’s reputation as a reliable sup-plier of ventilation products.

Focused product development and broad range of products Systemair produces high-quality ventila-tion products and continuously develops its product range. The Company is of the view that its investments in its product development activities combined with the broad product lines create a signifi-cant added value for the customers and strengthens the Company’s brands.

Extenxive experience from acquisitionsSystemair has expanded via a combina-tion of organic growth and acquisitions. The businesses which have been acquired have been successfully integrated into the Group, and Systemair has attained sig-nificant experience with the identifi-cation, acquisition and integration of companies.

Modern manufacturing plantsSystemair has ten manufacturing plants distributed among Canada, Denmark, Germany, Lithuania, Norway, Slovakia, Slovenia, Spain and Sweden. The plants have over all a high degree of automation and a good manufacturing optimisation for the purpose of maintaining a good efficiency in production. A part of the Company’s more labour intensive manu-facturing has been located to the manu-facturing plants in Lithuania, Slovakia and Slovenia where personnel costs are lower. Systemair’s manufacturing plants are for the most part modern, as a result of investments made in recent years and have the capacity for significant increases in production.

Well-diversified customer base with established relationshipsSystemair has a large customer base with customers of different sizes and business-es in a large number of geographic mar-kets. Systemair assesses that this geo-graphically diverse customer base estab-lishes significant stability for the Compa-ny and means that the Company is less exposed to changes in the economic situation in individual markets as well as to changes in demand from individual customers.

6

SUMMARY

Good relationships with leading suppliersSystemair’s significant expertise within ventilation and its broad exposure to customers in a large number of countries makes the Company an attractive coop-erating partner for leading suppliers of input goods to the products which Systemair produces. Systemair’s close and long-term relationships with leading suppliers are assessed to have substanti-ally contributed to the Company’s growth and to establishing Systemair as a leading supplier of high-quality ventila-tion products.

Strong company culture and experienced management groupSystemair has developed a strong compa-ny culture with common values, which according to the management is well-anchored in all of the Company’s units.

Systemair’s Group management has extensive experience in the industry and significant expertise within ventilation. The members of Management have for the most part been employed at Syste-mair for extended periods of time and many have been engaged with various responsibilities within the Group and in different markets.

RISK FACTORSInvesting in company shares involves the taking of risks. A number of factors influence and will in the future continue to influence Systemair’s business. Inves-tors should carefully take into considera-tion the risks which are connected to Systemair’s industry and business opera-tions, the Company’s shares and the Offering. Examples of such risks include: ■ Systemair is active in markets which

may be characterised as being highly competitive with participants within different segments in the market regarding price range and quality

■ The Company’s products are used within the construction industry which is sensitive to economic fluctuations

■ Risks related to product develop-ment, suppliers, trademarks and brand names, manufacturing and distribution facilities, key personnel, company acquisitions, IT infrastruc-ture, product liability and the inter-national character of the business

■ Financial risks such as currency exchange rate risks, debt and interest rate risks, credit and liquidity risks and risks related to tax losses carried forward

■ Risks in the market price of the share due to possible future sales of the Sellers’ shareholdings and future dividends.

For a more comprehensive description of risks which are of importance for Systemair’s business, reference is made to the section Risk factors.

SUMMARY OF THE OFFERING Systemair’s principle shareholders have decided to implement a diversification of the ownership in the Company. The Board of Directors for Systemair has therefore applied for listing of the Com-pany’s shares on the OMX Nordic Exchange. The diversification of owner-ship occurs via an offering for the acquisition of shares (“the Offering”), in which the Sellers sell a maximum of 18,025,000 shares, corresponding to a maximum of approximately 35 percent of the shares in the Company. The Sellers have in addition committed themselves to, upon request of the Issuing Agents, up until the day which falls 30 days after the first day of trading on the stock exchange, sell an additional maximum of 2,575,000 shares corresponding to approximately 5 percent of the shares in the Company in order to cover any over-

allotment in connection with the Offer-ing (“Overallotment Option”). The Offering is directed to institutional investors in Sweden and abroad, individ-uals in Sweden, and employees of the Company. With full subscription to the Offering and full utilisation of the Over-allotment Option, the Sellers will collec-tively remain as owners of shares repre-senting approximately 60 percent of the number of shares and votes in the Com-pany. For additional information, see section Placing agreement and Terms, conditions and instructions.

SUMMARY OF THE TERMS AND CONDITIONS Offering priceExpected to be set in the range of SEK 65 – 78 per share. The offering price to individuals will not exceed SEK 78 per share. Brokerage fees will not be charged.

Subscription period for the public1 – 10 October 2007

Subscription period for Institutional investors1 – 11 October 2007

Announcement of the offering price On or about 12 October 2007

Expected first day of trading on the OMX Nordic ExchangeOn or about 12 October 2007

Symbol on the OMX Nordic ExchangeSYSR

Trading lot100 shares

ISIN Code SE0002133975

7

SUMMARY

SUMMARY OF THE CONSOLIDATED PROFIT AND LOSS STATEMENTS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRS

May – Apr May – Apr May – Jul

MSEK 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Income 784.7 861.5 1,012.8 1,235.0 1,589.8 1,685.3 1,710.8 1,895.9 – 1,895.9 2,321.2 2,664.2 599.1 693.9Cost of goods sold –515.5 –588.4 –704.9 –867.0 –1,098.1 –1,174.9 –1,157.6 –1,217.2 2.4 –1,214.8 –1,459.4 –1,651.6 –375.4 –441.9

Gross profit/loss 269.1 273.1 307.9 368.0 491.7 510.4 553.2 678.7 2.4 681.1 861.8 1,012.6 223.7 252.0

Other operating income 8.2 13.7 9.2 19.4 18.6 9.4 22.1 19.0 – 19.0 27.0 29.6 4.0 9.9

Selling expenses –137.6 –163.6 –175.1 –199.2 –274.4 –283.0 –349.4 –417.4 10.4 –407.0 –480.6 –531.6 –117.7 –127.6

Administrative costs –54.7 –66.6 –82.4 –99.0 –130.4 –127.1 –128.0 –133.1 – –133.1 –135.0 –147.5 –34.7 –37.6Other operating expenses –5.9 –12.5 –10.2 –7.4 –11.2 –19.3 –24.1 –13.5 – –13.5 –20.2 –33.7 –4.4 –7.7

Operating profit/loss 79.2 44.1 49.5 81.8 94.3 90.3 73.8 133.7 12.9 146.6 253.0 329.4 70.9 89.0

Net financial income/expense –8.2 –14.0 –13.3 –23.1 –30.2 –23.8 –31.7 –12.3 –2.0 –14.3 –11.3 –18.0 –4.4 –7.4

Profit/loss after financialincome/expense 71.0 30.1 36.2 58.7 64.0 66.6 42.1 121.4 10.9 132.3 241.7 311.5 66.5 81.6

Tax on the profit/loss for the year –13.9 –14.5 –16.9 –17.1 –27.6 –28.4 –22.7 –45.0 10.4 –34.6 –71.2 –56.9 19.3 –24.0

Minority shareholders’ share in the profit/loss for the year –0.7 –2.1 0.8 1.5 –1.3 –0.2 –1.1 –0.5 – –0.5 –1.0 –1.4 –0.5 –0.8

Net profit/loss 56.4 13.4 20.0 43.0 35.2 37.9 18.3 75.9 21.3 97.2 169.5 253.2 85.3 56.8

SUMMARY OF THE CONSOLIDATED BALANCE SHEETS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRS

30 Apr 30 Apr 31 Jul

MSEK 1998 1999 2000 2001 2002 2003 2004 2005 2005 2006 2007 2006 2007

Assets

Intangible fixed assets 6.1 25.0 21.0 24.9 62.4 49.0 56.3 44.0 13.0 57.0 63.4 76.5 63 96.1

Tangible fixed assets 178.0 254.7 275.8 373.7 442.9 416.2 432.9 417.9 – 417.9 467.0 617.7 458.4 640.8

Financial fixed assets 4.3 3.8 7.6 8.7 17.0 12.2 50.9 72.7 17.0 89.8 105.8 100.5 139.5 101.1

Total fixed assets 188.4 283.5 304.5 407.3 522.3 477.5 540.1 534.6 30.0 564.7 636.3 794.7 660.9 838.0

Inventories 173.9 194.2 199.5 255.8 328.7 323.5 361.8 376.4 – 376.4 403.8 500.3 420.7 543.0

Short-term receivables 134.1 196.7 206.0 257.8 301.3 333.8 314.5 366.4 0.0 366.4 435.0 538.6 454.8 541.4

Cash and bank deposits 24.4 31.5 25.1 18.9 45.4 15.6 24.1 21.9 – 21.9 32.1 61.5 35.3 77.4

Total current assets 332.4 422.4 430.6 532.5 675.3 672.8 700.4 764.7 0.0 764.7 870.9 1,100.3 910.8 1,161.8

Total assets 520.7 706.0 735.1 939.8 1,197.7 1,150.3 1,240.5 1,299.3 30.0 1,329.4 1,507.2 1,895.0 1,571.7 1,999.8

Shareholders’ equity and liabilities

Shareholders’ equity attributable to Parent Company’s shareholders 212.7 231.0 245.4 301.1 348.5 383.7 394.8 468.8 18.5 87.3 681.9 631.1 751.1 690.8

Minority interest 6.5 6.3 7.2 7.9 5.6 3.6 5.1 5.1 – 5.1 5.9 11.7 5.5 12.0

Shareholders’ equity 219.2 237.3 252.6 309.0 354.1 387.3 399.9 473.9 18.5 492.4 687.8 642.9 756.6 702.8

Provisions 20.1 21.6 19.6 12.0 17.4 5.8 40.7 44.9 11.3 56.2 64.2 75.5 58.5 69.1

Long-term interest-bearing liabilities 71.8 154.5 165.7 243.6 364.0 325.4 273.2 247.9 – 247.9 225.3 251.7 235.4 280.5

Long-term non-interest-bearing liabilities – – – – – – – – – – – – – –

Long-term liabilities 71.8 154.5 165.7 243.6 364.0 325.4 273.2 247.9 – 247.7 225.3 251.7 235.4 280.5

Short-term interest-bearing liabilities 82.3 145.0 149.9 177.7 230.0 195.3 284.1 274.5 – 274.5 223.0 512.8 197.8 529.4

Short-term non-interest-bearing liabilities 127.3 147.6 147.3 197.5 232.2 236.4 242.5 258.1 0.2 258.4 306.9 412.0 323.4 418.0

Short-term liabilities 209.6 292.6 297.2 375.2 462.2 431.7 526.6 532.6 0.2 532.9 529.9 924.8 521.2 947.4

Total shareholder equity and liabilities

520.7 706.0 735.1 939.8 1,197.7 1,150.3 1,240.5 1,299.3 30.0 1,329.4 1,507.2 1,895.0 1,571.7 1,999.8

SUMMARY OF THE FINANCIAL INFORMATION Presented below is a brief summary of the financial information for the period 1997/98 to 2006/07 and the period 1 May – 31 July 2006 and 1 May – 31 July 2007. For comments on this information, refer to sections Comments on the financial development and prospects for the future on pages 59 – 68 and Interim report for the period 1 May – 31 July 2007 on pages 81 – 89.

8

SUMMARY OF THE CONSOLIDATED CASH FLOW STATEMENTS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRSMay – Apr May – Apr May – Jul

MSEK 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Cash flow from current oper-ations before change in work-ing capital 87,1 48,6 63,2 98,3 113,5 102,2 89,8 144,2 –3,5 140,7 255,1 295,1 63.4 85.5

Changes in working capital –28,7 –59,6 –14,9 –60,9 –81,7 –23,2 –12,9 –53,8 –15,6 –69,4 –36,1 –91,6 –27.7 –40.0

Cash flow from current business operations 58,4 –11,0 48,3 37,5 31,8 79,1 76,9 90,4 –19,1 71,3 219,0 203,5 35.7 45.5

Cash flow from investment activities –67,6 –128,7 –61,7 –149,9 –190,0 –21,1 –103,0 –53,9 –2,9 –56,8 –92,6 –216,3 –19.3 –70.8Cash flow from financing activities 21,7 146,9 6,9 106,2 184,7 –0,9 –47,2 –38,6 22,5 –16,1 –116,9 43,6 –12.1 40.9

Increase/decrease in cash and bank deposits 12,5 7,2 –6,4 –6,1 26,4 57,0 –73,3 –2,2 –0,6 –1,6 9,4 30,8 4.3 15.6

Liquid funds opening balance1) 11,9 24,4 31,5 25,1 18,9 –41,4 –124,6 24,1 – 24,1 21,9 32,1 32.1 61.5Exchange rate difference in liquid funds – – – – – – – – – –0,5 0,7 –1,4 –1.1 0.3

Liquid funds closing balance1) 24,4 31,5 25,1 18,9 45,4 15,6 –197,9 21,9 – 21,9 32,1 61,5 35.3 77.4

1) Difference between ending balance and opening balance between fiscal years, during the period 2001/02 to 2004/05 is attributed to reclassification of overdraft facilities.

SUMMARY

KEY FIGURES

Swedish Accounting Principles IFRS IFRSMay – Apr May – Apr May – Jul

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Growth and profitabilitySales growth, % 26.8 9.8 17.6 21.9 28.7 6.0 1.5 10.8 10.8 22.4 14.8 19.6 15.8

Operating margin, % 10.1 5.1 4.9 6.6 5.9 5.4 4.3 7.1 7.7 10.9 12.4 11.8 12.8

Profit margin, % 9.1 3.5 3.6 4.8 4.0 4.0 2.5 6.4 7.0 10.4 11.7 11.1 11.8

Return on capital employed, % 24.3 10.3 9.8 13.3 11.9 11.2 8.7 14.7 16.2 24.7 26.8 26.7 2) 26,4 3)

Return on shareholders’ equity, % 30.2 6.1 8.4 15.7 10.8 10.4 4.7 17.6 22.3 29.0 38.6 36.2 2) 31.2 3)

Financial positionNet debt/equity ratio, times 0.6 1.2 1.2 1.3 1.6 1.3 1.4 1.1 1.0 0.6 1.1 0.5 1.1

Interest coverage ratio, times 8.4 2.8 3.0 3.1 2.8 2.8 2.1 6.4 6.0 10.9 11.5 12.1 9.4

Capital employed, MSEK 373.3 536.7 568.2 730.3 948.1 908.1 957.3 996.4 1,014.8 1,136.1 1,407.5 1,189.8 1,512.7

Equity/asset ratio, % 42.1 33.6 34.4 32.9 29.6 33.7 32.2 36.5 37.0 45.6 33.9 48.1 35.1

Working capital, MSEK 180.7 243.3 258.2 316.1 398.0 420.9 433.8 484.8 484.4 531.9 626.9 552.1 666.4

Working capital in % of income 23.0 28.2 25.5 25.6 25.0 25.0 25.4 25.6 25.6 22.9 23.5 22.8 2) 24.2 3)

EmployeesNet sales per employee, MSEK 1.4 1.3 1.4 1.4 1.4 1.4 1.5 1.6 1.6 1.8 1.8 0.4 0.4Number of employees, average 549 643 735 854 1,119 1,170 1,166 1,205 1,205 1,288 1,471 1,365 1,685

2) Based on the period 1 August 2005 to 31 July 2006.

3) Based on the period 1 August 2006 to 31 July 2007.

DATA PER SHARE4)

Swedish Accounting Principles IFRS IFRSMay – Apr May – Apr May – Jul

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Average number of shares outstanding, thousands 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,543 51,677 51,500 52,000Number of shares outstanding closing balance, thousands 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 51,500 52,000 51,500 52,000

Profit per share, SEK 1.13 0.27 0.40 0.86 0.70 0.76 0.37 1.52 1.94 3.35 4.90 1.66 1.09

Shareholders’ equity per share, SEK 4.25 4.62 4.91 6.02 6.97 7.67 7.90 9.38 9.75 13.24 12.14 14.58 13.28

Dividends, SEK 0.04 – – 0.00 0.00 – – – 0.00 0.78 5.09 – –4) Number of shares adjusted for share split 100:1 that was passed on the extraordinary general meeting 25 June 2007.

9

Risk factors

RISK FACTORS

RISKS RELATED TO THE COMPANY’S BUSINESS OPERATIONSSystemair is active in competitive marketsSystemair’s markets are fragmented and subject to competition, meaning that there are a large number of small, local companies, and a smaller number of large international companies which are active in Systemair’s markets. Some of the Company’s current or future competitors may have more extensive resources than Systemair and may make use of these in order to increase their market share via aggressive pricing strategies. This can lead to the situation where Systemair is forced to reduce its prices in order to be able to compete and so as to not lose market share. If Systemair is subjected to increased price competition or looses market share, this can have a negative impact on the Company’s business opera-tions, profits and financial position.

Systemair’s products are used by the construction industry which is sensitive to economic fluctuations Systemair’s products are used with the construction of new buildings, as well as in the RCA trade. The construction industry has normally proven to have a cyclical pattern, primarily within the construction of new building, while RCA projects have often reduced the cyclical pattern. The sector’s growth is affected to a large extent by the general economic situation, which in turn is

affected by for example the level of inter-est rates, unemployment, inflation, polit-ical decisions, taxes, the stock market’s development among other factors. The altered conditions for the construction industry can be difficult to predict and a downturn within the construction industry in the Company’s markets could result in that demand for the Company’s products decreases and/or that the sales price of the Company’s products falls, either of which can have negative impacts on Systemair’s business operations, profits and financial posi-tion. Systemair’s sales are also exposed to seasonal variations, as sales most often are lower during the summer period July and December.

Product development Systemair is dependent on its ability to improve existing products and to deve lop new and innovative products. Systemair introduced the duct fan in the ventila-tion market in 1974, and the Company has since been able to successfully further develop its products. Although the Com-pany works for further product develop-ment and to improve its products, there is no guarantee that the Company will continue to be successful in this regard. If Systemair is not continuously successful in meeting its customers’ needs via the products and solutions which the Com-pany provides, Systemair’s business oper-ations, profits and financial position may be negatively influenced.

Suppliers The two German fan motor manufac-turers Ziehl-Abegg and ebm-papst are important suppliers to Systemair. Some of Systemair’s products are developed in conjunction with these suppliers which is why Systemair to a certain extent is dependent on that these manufacturers continue in the future to supply motors to the Company. Supply problems from either of these suppliers would therefore disrupt Systemair’s manufacturing and have a negative effect on Systemair’s business operations, profits and financial position.

Another important input good in Systemair’s products is steel in the form of plate, which is why the Company’s business to some extent is influenced by fluctuations in the price of steel and any disruptions in steel deliveries. The steel market is very sensitive to economic fluctuation, among other reasons due to its high exposure vis-à-vis the construc-tion, automotive, and energy sectors. Demand for steel products has strongly increased in recent years, especially with considerable growth in China, and so too has the price. Historically, it has been possible to distribute price increases among the various parties in the market participants, but there is no guarantee that this will continue to be so in the future. If any future price increases can not be distributed between the partici-pants, this may have a negative impact on the Company’s business operations, profits and financial position.

Trademarks Systemair’s trademarks are of significant importance for the Company’s business. Among the Company’s more trademarks are Systemair, Frico, Fantech and VEAB. Although Systemair has made efforts to protect these trademarks via registration, it can not be guaranteed that these meas-ures will be sufficient in order to protect them. Systemair also can not guarantee that the Company’s compe titors won’t

Investments in securities involves risktaking and different factors influence the price of the share such as its liquidity and the possibility to trade the share. Before an investor decides to invest in Systemair’s shares they should therefore take into consideration the risk factors which are described below, take into consideration all the other information in this pros-pectus and make a general assessment of the situation.

Described below, without ranking in order of importance, are some of the risk factors and circumstances which are regarded as having significant importance for Systemair’s future growth. The description below is not complete, but rather other risks may also face the Company and its shareholders. Additional risks, including those which are not presently known by the Company or which Systemair does not regarded as being important at the present may in the future have an important impact on Systemair’s business operations, profits and financial position.

10

RISK FACTORS

try to use these trademarks with the marketing of their own products or in another way infringe upon these intellec-tual property rights. If the Company’s registered trademarks cannot be protect-ed, irrespective of the reason, this may cause a negative impact on the Compa-ny’s business operations, profits and financial position.

Manufacturing facilities and distribution centres Systemair’s business is dependent upon its ten manufacturing plants and four distribution centres. If any of these were destroyed, shut down, or if the equip-ment in the facilities becomes seriously damaged, the manufacturing and distri-bution of Systemair’s products may become hampered or may have to be sus-pended for a period of time. An extensive and prolonged operational suspension of production could have a significant impact on the Company’s ability to man-ufacture or distribute its products. Systemair has obtained insurance to pro-tect it against property damage and oper-ational interruptions in the amounts which the Company regards to be suffi-cient, but despite this, it can not be guar-anteed all of the Company’s losses will be reimbursed in the event of any damage. Damage to the Company’s manufactur-ing plants or distribution facilities can therefore cause negative impacts on the Company’s business operations, profits and financial position.

Key individuals Systemair is dependent on a number of members of Management, who for the most part have been actively engaged with the Company for extensive periods of time and have collectively developed today’s operational organisation and sys-tems within Systemair. These individuals have extensive knowledge about the ven-tilation industry in general and about Systemair in particular. In the event of the loss of one or more of these individu-als, this could have a negative effect on the Company’s business operations, profits and financial position.

Systemair is also dependent on that the Company is able to maintain an ability to recruit and to retain personnel who have the expertise about the ventilation industry which is required in order to be able to conduct the Company’s business operations in an effective way. If the Company is no longer successful in recruiting and retaining competent per-sonnel under reasonable terms, the Company is at risk of no longer being able to maintain and further develop its business operations. This risk is even more severe in that Systemair’s manufac-turing plants are located in small towns, where it occurs from time to time that there is a shortage of personnel with the required expertise.

Acquisitions Over the years, Systemair has success-fully completed a significant number of acquisitions of companies. The acquired companies have been integrated with Systemair’s other companies and busi-ness operations. Acquisitions have often been companies which have had opera-tional and financial problems, and who requested significant support from Systemair especially in the form of man-agement resources.

Systemair has a continued ambition to expand via acquisitions and in the future it may occur that additional com-panies which can complement or increase the Company’s business operations will be acquired. An acquisition of a company can result in many different operational and financial risks. These risks include, apart from the more or less well-known specific company risks, that suppliers, customers or key personnel decide to leave the acquired company. There is also a risk that the integration of the acquired company becomes more expensive or takes a longer period of time than planned and that calculated synergy effects are not achieved as expected or are not achieved at all. These risks and other acquisition-related risks can have a nega-tive impact on the Company’s business operations, profits and financial position.

IT infrastructureSystemair has a well-constructed IT infrastructure, where the business system constitutes the most central part, which is important for Systemair’s ability to deliver products to its customers at the appropriate time and to be able manage accounts receivable and warehouse levels. Difficulties in maintaining, upgrading and integrating these systems may result in a deteriorated reputation among cus-tomers, increase the business’s operating expenses and decrease profitability. Moreover, these systems are vulnerable to such things as electricity shortages, sys-tem failures, computer viruses and net-work problems. If the IT infrastructure breaks down, it may result in having a negative impact on the Com pany’s busi-ness operations, profits and financial position. Product liability Systemair’s customers ordinarily expect to receive detailed information about the performance of the ventilation products. With marketing and sales, Systemair therefore provides detailed product spec-ifications and the Company conducts continuous testing in its own test facili-ties in order to ensure that the products meet their specifications. It can however not be excluded that products which the Company has sold do not correspond to the product specifications, which can have the consequence that a demand for compensation is directed at the Compa-ny. Furthermore, the Company is subject to legal rules about product liability which can, in the event of personal inju-ry or property damage, entitle an injured party to compensation from the Compa-ny. The Company has obtained a global product liability insurance policy, which is assessed by the Company as being able to cover any damages claimed. This can-not however be guaranteed. In the event a demand for compensation directed against the Company is successful and it is not fully covered by the Company’s insurance coverage, this may have a negative effect on the Company’s profits, business operations and financial position.

11

International business operationsSystemair carries out, either via subsidi-aries or representation offices, business operations in 35 countries, of which many countries experiencing strong growth and transformation to a market economy. The Company is thereby exposed to risks which follow from inter-national business operations such as gov-ernmental political decisions pertaining to commercial trade in the form of the introduction of or increase in customs duties in the Company’s markets, which would significantly disrupt the Compa-ny. In addition, there are differences in statutory legislation and legal rules between different countries, limited legal protection for intellectual property rights in certain countries, different accounting standards and taxation systems, shifting payment terms between different coun-tries, and the risk of political instability.

Systemair has a significant amount of sales to Russia, which is Systemair’s larg-est individual export market. Systemair plans to increase this business as the Company expects that the growth in Russia continues to be strong. The poli-tical tensions in the development of soci-ety and social change along with the uncertainties in the legal system, as with the uncertainty relating to political deci-sions pertaining to trade, means that the conditions in the Russian market may change very quickly and as well that Systemair’s assets in the country can become insecure. Any of the above risks can have a negative impact on Systemair’s business operations, profits and financial position.

FINANCIAL RISKSSystemair is exposed to financial risks via its international business and via its loan financing. Financial risk arises when changes in foreign currency exchange rates and interest rates influence the Group’s cash flow, and in connection

with renegotiation of credits. Financial risk also includes the risk that counter-party might not fulfil its obligations. The risk management within the Group has the objective of limiting the negative effects which may arise to the Group’s profits and cash flow. Control and fol-low-up occur continually by the central finance unit, but it is also conducted in the larger subsidiaries. A more compre-hensive description of the Company’s management of the financial risks can be found in the section Comments on the financial development and prospects for the future, under the heading Financial risk management in this prospectus.

Currency risks – transaction exposure With trade between Group companies, suppliers and customers, a transaction risk arises if payment is made in a curren-cy other than the group company’s local currency. Systemair’s significant inter-national operations entail extensive sales in different currencies and thereby, expo-sure to foreign exchange rate risks. The currency risk is primarily vis-à-vis Euros and US dollars, which is hedged accord-ing to Systemair’s foreign exchange poli-cy. The results of Systemair’s currency hedges have so far been positive, but Systemair can not guarantee that these hedges also in the future will continue to provide positive returns.

Currency risks – translation exposureTranslation exposure arises with the con-solidation, as the foreign subsidiaries’ assets and liabilities are translated to Swedish kronor (SEK). Systemair has elected not to hedge its translation expo-sure, which may have as a consequence that exchange rate gains/losses arise which influences the Group’s shareholder equity.

Borrowings and interest rate riskSystemair intends to continue to finance certain parts of its business via taking loans from credit institutions. Loan contracts contain conditions with usual restrictions (covenants). This borrowing entails certain risks for the Company’s shareholders. Among other things, Systemair can, in the event of significant-ly altered circumstances in the Compa-ny’s markets, have problems to obtain new credit facilities and may thereby need to use a larger part of its cash flow for interest payments and paying down debt. Credit and liquidity riskCredit risk refers to the risk that the counterparty to Systemair can not fulfil its payment obligations, the result of which may be a loss for the Company. A credit assessment is made based on the knowledge which the Company’s man-agement has about the customer and, when necessary, with the assistance of credit bureaus. Each customer also has a credit limit and before this can be exceeded, a new credit examination may be needed to be made.

The liquidity risk refers to the risk that the Company because of a deficien-cy in liquid funds cannot fulfil its finan-cial obligations or has a reduced possibil-ity to carry out its business in an effective way. The liquidity is influenced to a large extent by credit extended to customers and credit received from suppliers. Due to that Systemair’s business has expanded to new markets with varying payment cultures, the length of credit terms have increased somewhat. This has meant an increased cost of tied up capital and a larger risk of credit losses, and thereby a larger risk of a negative impact on the Company’s liquidity and profits.

RISK FACTORS

12

Tax losses carried forwardSystemair has tax losses carried forward, which have been obtained primarily via acquisitions of companies where losses have existed from the company’s business operations, but also in current operations mostly in newly started companies. If Systemair’s business in the future is suc-cessful in generating sufficient taxable income, the Company’s reported deferred tax receivables may be subject to a write-down. The tax recei v ables may also become subject to write downs in the situation where the tax authorities decide that the losses cannot be used either entirely or in part. Unless the Company can utilise the tax losses car-ried forward either entirely or in part, this may negatively influence the Com-pany’s profits and financial position.

RISK’S CONNECTED WITH THE SHARE AND THE OFFERINGSales of a significant number of sharesIn addition to the shares which the Offering covers, the Sellers have agreed that for a period of 360 days, not to offer, sell, contract for the sale, pledge to sell or to be a party to any agreement or in any other way to entirely or partially transfer the financial benefits or conse-quences of shareholding, without acquir-ing the advance consent from the Issuing Agents1). The Sellers may, after the expiry of this period, sell their shares. If a large number of shares are offered to the mar-ket, or if the opinion of the market is that such a sale might occur, this may have a significant negative impact on Systemair’s share price.

DividendsOwners of shares acquired in the Offer-ing will be entitled to dividends, execut-ed from the receiving of the shares. Any dividends for the financial year 2007/08 will be established at the Annual General Meeting after the end of the financial year. The payment is administered by VPC. The amount of any future divi-dends is dependent on the Company’s future profits, cash flow, financial posi-tion, need of working capital, needs for investment capital and other factors which are regarded as being of impor-tance by Systemair’s Board of Directors. There are no guarantees that a dividend will be recommended or will be paid out during any particular year.

RISK FACTORS

1) With the exception of ebm-papst AB and ebm Industrie, who have accepted a period of 180 days.

13

OFFERING TO AQUIRE SHARES IN SYSTEMAIR AB

Offering to acquire shares in Systemair AB

Systemair’s principle shareholders have decided to implement a diversification of the ownership in the Company. The Board of Directors of Systemair has therefore applied for listing of the Company’s shares on the OMX Nordic Exchange.

The diversification of ownership will take place through an offering to acquire shares (“the Offering”), in which the Sellers collectively will divest a maximum of 18,025,000 shares, corresponding to a maximum of approximately 35 percent of the shares in the Company. The Sellers have in addition committed themselves to, upon request of the Issuing Agents, up until the day which falls 30 days after the first day of trading, sell an additional maximum of 2,575,000 shares corresponding to approximately 5 percent of the shares in the Company in order to cover any over-allotment in connection with the Offering (“Overallotment Option”).

The Offering is directed to institutional investors in Sweden and abroad, the general public in Sweden, and employees of the Company. The offering price for all shares which are encompassed by the Offering will be estab-lished through a bidding procedure to institutional investors and is expected to be set within the range SEK 65 – 78 per share. The offering price to the general public will not exceed SEK 78 per share. The final determined offering price and the final number of shares offered, will be announced through a press release on or around 12 October 2007. First day of trading in the Company’s shares on the OMX Nordic Exchange is expected to be 12 October 2007.

In case of full subscription to the Offering and full utilisation of the Overallotment Option, the Sellers will collec-tively remain owners of shares representing approximately 60 percent of the number of shares and votes in the Com-pany. The Sellers have undertaken to refrain from selling additional shares in the Company without the consent of the Issuing Agents, until at the earliest 360 days after the first day of trading.1) Other members of the Board of Direc-tors, the Management and other key employees of Systemair who own shares in the Company have entered into a similar agreement.

The invitation to acquire a maximum of 18,025,000 shares in Systemair is hereby made, in accordance with the terms and conditions for the Offering in this prospectus, corresponding to a maximum of approximately 35 percent of the shares and votes in the Company. If the Overallotment Option is utilised in full, the Offering encompasses no more than approximately 40 percent of the shares and votes in the Company. Upon full subscription to the Offering, and if the Overallotment Option is fully utilised, the value of the Offering amounts to approximately SEK 1,339 – 1,607 million, based on the price range stipulated in the Offering.

Systemair will not receive any proceeds from the sale of shares in the Offering.In other respects, reference is made to the reports in this prospectus, which has been prepared by the Board of

Directors for Systemair in connection with the Offering and the listing of the Company’s shares on the OMX Nordic Exchange.

Skinnskatteberg 27 September 2007

The Sellers

1) With the exception of ebm-papst AB and ebm Industrie, who have accepted a period of 180 days.

14

BACKGROUND AND REASONS

Background and reasons

Systemair was established in 1974 under the name L.H.G. Kanalfläkt AB with the business concept of producing and marketing a duct fan which simplified the work for the ventilation installer. The Company has had very favourable growth, with increased sales during every year and with good profitability since it was founded. The growth has occurred both organically, and via a significant number of acquisitions for the purpose of expanding and broadening the product range as well as to achieve an increased geographic presence.

Systemair was a subsidiary of Ziehl-ebm AB, which now has changed its name to ebm-papst AB, during the period from 1985 to 2004. Gerald Engström was responsible for the development of Systemair which was operated independently from its parent company. During 2004 and 2005, a change of the ownership was implemented where-by Gerald Engström became the majority owner of Systemair. Gerald Engström, ebm-papst and the share-owning members of Management and other key personnel in Systemair entered into a shareholders’ agreement in which the possibility to list Systemair shares on the stock exchange was agreed.

Systemair’s principle shareholders and Board of Directors have determined that a diversification of the ownership and a stock exchange listing of the shares in Systemair would be appropriate and advantageous for Systemair’s contin-ued growth, concurrently with facilitating a future generation change for the principle owner. The shareholders have therefore decided to offer the stock market a maximum of 40 percent of the shares in the Company for acquisition.

Via a stock exchange listing of the shares in Systemair, the Company obtains access to the Swedish and interna-tional capital markets for its continued financing, which is regarded as being important in the light of that Systemair’s strategy is based on continued growth, in part organic growth via the establishment of new sales companies and man-ufacturing plants, and in part via the acquisition of companies with relevant products or strategic geographic posi-tions and presence. Many companies in the ventilation industry are privately owned and payment in the form of publicly traded shares may offer a competitive advantage in negotiations with acquisitions.

Systemair has also determined that the listing of the Company’s shares on the OMX Nordic Exchange will increase the knowledge about Systemair outside of the ventilation and construction industry. An increased awareness about Systemair’s products, and their contribution to an improved indoor environment in the office, industrial and commercial properties and residential housing where they have been installed, is regarded facilitating an increased demand for the Company’s products. The increased awareness about Systemair is in addition expected to bring positive effects with recruitment of employees.

The Board of Directors for Systemair AB is responsible for the contents of this prospectus.1) The Board of Directors for Systemair AB hereby affirms that it has taken all reasonable cautionary measures in order to ensure that the information in the prospectus, to the extent the Board of Directors is aware of, corresponds with the factual situation and that nothing has been omitted which might influence its contents.

Skinnskatteberg, 27 September 2007

Systemair ABThe Board of Directors

1) Information regarding the Board of Directors can be found in the section Board of Directors, members of Management and the auditors.

15

TERMS, CONDITIONS AND INSTRUCTIONS

Terms, conditions and instructions

OFFER PRICE The final offer price will be set by the Sellers in consultation with the Joint Global Co-Ordinators. The offer price is expected to be set within the range of SEK 65 – 78 per share. The price range has been set by the Sellers in consultation with the Joint Global Co-Ordinators based on the assessed investment interest of institutional investors. The offer price will be established in a bidding proce-dure as described below and is expected to be announced on 12 October 2007. The offer price to the public will not exceed SEK 78 per share. Brokerage fees will not be charged.

APPLICATIONOffering to institutional investorsInstitutional investors are invited to par-ticipate in the bidding procedure, which will take place during the time period 1 – 11 October 2007. Systemair’s reserves the right to shorten the applica-tion period in the institutional Offering. In the bidding procedure, the basis is obtained to be able to establish the offer price in the Offering. Applications can be made via any of the Issuing Agents in accordance with the special instructions provided.

Offering to the publicThe Offering to the public encompasses the general public in Sweden. Applica-tions from individuals may be for one or more trading lots of 100 shares each. The application, for a maximum of 10,000 shares, must be made using the estab-lished application forms and must be submitted during the time period 1 – 10 October 2007 according to the following:

To any of Handelsbanken’s or Nordea’s branch offices

or send by post to

Handelsbanken Capital MarketsEmissionsavdelningenSE-106 70 Stockholm

or

Nordea Bank ABIssuer Services A 203SE-105 71 Stockholm

The application must have been received by one of the above recipients at the latest by 5:00 p.m. (CET) on 10 October 2007.

Customers of Handelsbanken who are registered for its Internet services can submit their application for the purchase of shares via the Internet according to the instructions available on the website, www.handelsbanken.se.

Application via Handelsbanken’s Internet service may be made until 12:00 midnight on 10 October 2007. For appli-cations via the Internet, it is required that those who apply have a VP account with any Swedish account operator or a deposi-tory account in Handelsbanken.

Customers of Nordea who are regis-tered for its Internet services can submit their application for the purchase of shares via the Internet according to the instructions available on the website, www.nordea.se.

Application via Nordea’s Internet service may be made until 11:59 p.m. on 10 October 2007. For application via the Internet, it is required that those who apply have a securities account at Nordea.

The application is binding. Only one application form per purchaser will be considered. Incomplete or incorrectly filled in application forms may not be considered. No amendments or addi-tions may be made to the printed text on the application form. Application via telefax will not be accepted by Handelsbanken or Nordea.

Those who apply for the purchase of shares must have a VP account or a secu-rities depository account at a Swedish account operator to which the delivery of the shares can be made. Individuals who do not have a VP account or securities depository account must open a VP account or a securities depository account via their bank or an Account operator prior to the application being submitted. Keep in mind that the open-ing of a VP account or securities deposi-tory account can take some time.

An application form and the prospectus may be obtained from Handelsbanken’s and Nordea’s branch offices or via the Internet at www.systemair.se, www.handelsbanken.se/aktuellaerbju-danden and www.nordea.se/placera.

VP accounts with restricted utilisa-tion rights, such as pledge accounts or reconfiguration accounts (“VKI accounts”) may not be used.

ALLOTMENTThe allotment of shares will be deter-mined by the Sellers in consultation with the Issuing Agents, with the objective to obtain a good institutional ownership base and a broad distribution of shares among the general public in order to facilitate regular and liquid trading in Systemair’s shares on the OMX Nordic Exchange.

Offering to institutional investorsApplications from institutional investors which are believed to become long-term owners in Systemair will be prioritised. However, no guarantees for allotment to any individual institutional investors are provided.

Offering to the publicAllotment is not dependent upon at what time during the application period the application was submitted. In the event of over-subscription, the allotment may occur with a lower number of shares than the application requested or be entirely rejected. Furthermore, the allotment to the general public may wholly or partially be determined by random choice.

Applications from employees of Systemair, business contacts, closely-related parties to the Sellers and from customers of the Issuing Agents may be given special consideration.

Shares may also be allotted to employees of Handelsbanken and Nordea, however without these persons being prioritised. Allotment in such cases will be carried out in accordance with the rules and regulations of the Swedish Securities Dealers Association and the Swedish Financial Supervisory Authority.

16

TERMS, CONDITIONS AND INSTRUCTIONS

NOTIFICATION OF ALLOTMENTFollowing the allotment of shares, a set-tlement note will be sent out by post to those receiving allotment. This is expect-ed to occur on or around 12 October 2007. Information will not be sent to those who were not allotted shares.

PAYMENTFull payment for allotted shares must be made in cash no later than on 17 Octo-ber 2007 in accordance with the instruc-tions in the settlement note sent. Those wishing to pay by way of debiting of their account in Handelsbanken or Nor-dea shall indicate the account number on the application form. Note that the account holder and the individual listed on the application form must be the same person. For those who have provid-ed a custody account in Handelsbanken or Nordea, an automatic debiting of the capital funds account associated to the bank account will occur.

Buyers from the general public who have specified a debiting account in Handelsbanken or Nordea and a VP account in Handelsbanken, Nordea or in another Swedish account operator, and have funds available in the debiting account no later than 12:00 midnight on 17 October 2007, are expected to have the acquired Systemair shares available in the specified VP account on 17 October 2007, although no earlier than 10:00 a.m.

Buyers from the general public who have specified a debiting account in Handelsbanken or Nordea and have specified a custody account with another trustee than the one where the debiting account is held, and have made funds available in the debiting account no later than 12:00 midnight on 17 October 2007, will be expected to have the acquired shares issued to the specified nominee on 17 October 2007, although no earlier then 10:00 a.m. Subsequently, each trustee will register the shares in the custody account of each particular cus-tomer in accordance with the trustee’s routines.

Buyers from the general public who pay for the allotted shares in accordance with the instructions on the settlement note, that is, not having specified a debiting account in Handelsbanken or

Nordea, will have allotted and paid shares transferred to the specified VP account or custody account when pay-ment has been received by Handels-banken or Nordea respectivly. Depend-ing on where, how and at what time of the day payment is made, this may take two to three banking days from the pay-ment date.

DEFICIENT PAYMENTIf full payment is not made within the prescribed time or if there is not sufficient funds available in the indicated account, the allotted shares may be sold to another party. If the selling price in conjunction with such a sale is less than the price according to the Offering, the party who first received the allotment may be com-pelled shot pay the difference.

RECEIPT OF SHARESAfter full payment for allotted shares has been made, the shares will be registered in the buyer’s VP account or custody account. After registration of the shares is made, a securities (VP) note will be sent showing the number of shares in Systemair that have been registered in the VP account. This is expected to occur on or around 17 October 2007. If a custody account has been specified on the application form, the shares will be transferred to the custody account and the note will be sent in accordance with the respective trustees’ procedures.

RIGHTS TO DIVIDENDSOwners of shares acquired in the Offer-ing will be entitled to dividends, execut-ed from the receiving of the shares. The annual general meeting on 9 August 2007 decided on a dividend distributed to the existing shareholders. Dividend for the fiscal year 2007/08, will be decid-ed on at the annual general meeting 2008 and will be distributed by VPC.

CONDITIONS FOR FULFILMENTThe Offering is conditional upon the non-emergence of circumstances that may entail that the date for the comple-tion of the Offering is deemed inappro-priate by the Sellers or the Board of Directors of Systemair. Such circum-stances may be of an economic, financial or political nature and may pertain to

circumstances in Sweden as well as abroad, or that interest in participation in the Offering is viewed by the Sellers as being insufficient. The Offering is sub-ject to the condition that the Sellers, Systemair and the Issuing Agents reach an agreement concerning the sale of the shares on or around 11 October 2007, that certain conditions stipulated in the agreement have been fulfilled and that the agreement has not been terminated (see section Placing agreement). Accord-ingly, the Offering can be fully or partly revoked. Notification in this respect will be provided as soon as possible via a press release.

MARKET LISTINGThe Board of Directors of Systemair has applied for a listing of Systemair shares on the OMX Nordic Exchange. A trading lot has been suggested to consist of 100 shares. Assuming the application for a listing is approved, trading is estimated to start on or around 12 October 2007.

Notice of allotment is expected to be sent on 12 October 2007. This means that trading may commence before notice of allotment has been received and the conditions for completion of the Offering have been fulfilled. In such an event, trading is conditional upon the afore-mentioned and if the Offering is not ful-filled, any delivered shares must be returned and any possible payments will be reverted.

MARKET PRICE STABILISATIONIn conjunction with the Offering, the Issuing Agents may engage in transac-tions on the OMX Nordic Exchange that stabilise the share’s market price or sup-port the price at a higher level that may deviate from what would possibly other-wise apply in the market. Such actions, whose aim is to stabilise the market price of the shares, may be taken during a peri-od of 30 calendar days from the first day of trading on the OMX Nordic Exchange. No guarantee can be provided that these stabilisation actions will be taken and any stabilisation actions taken may be discontinued at any time. Under no circumstances will stabilisation actions be taken at a price that exceeds the established offer price under the Offering.

17

Information regarding market data

INFORMATION REGARDING MARKET DATA

The methods used in order to gather and compile market statistics

for this prospectus have differed between markets. Information

from external market surveys has been utilised to provide an esti-

mate of the size of the construction market within the primary

geographic markets in which Systemair is engaged. Information

in this prospectus about the size of the ventilation markets are

Systemair’s own assessments, which for certain countries are based

on external surveys of the construction market and on official statis-

tics for other countries. The Company’s assessments are based on

information about local conditions and competitors.

Information about the size of the ventilation market refers to

all countries of significance in the primary markets where Systemair

has sales. The reader should keep in mind that information about

the construction market from the sources below does not cover all

countries in which Systemair has sales in the Nordic countries,

Western Europe, and Eastern Europe and CIS.

Information about the construction market in Europe and the

CIS has been obtained from Euroconstruct, a European analysis

institute within the construction industry, and from BuildEcon,

which is one of Euroconstruct’s subsidiary organisations which

analyse Russia and Eastern Europe. Market information from Euro-

construct has been obtained from Euroconstruct, June 2007 and

covers Austria, Belgium, the Czech Republic, Denmark, Finland,

France, Germany, Hungary, Ireland, Italy, the Netherlands,

Norway , Poland, Portugal, Slovakia, Spain, Sweden, Switzerland

and the United Kingdom. Market information from BuildEcon is

based on BuildEcon: Bulgaria, Construction Market Report up to 2008, Forecast tables and BuildEcon: Bulgaria, Construction Market Report up to 2009, Forecast tables. Market data from BuildEcon

covers the countries Bulgaria, Croatia, Romania, Russia, Serbia and

Ukraine.

Information refering to growth in the ventilation industry in

Europe has been obtained from Eurovent, a European trade organi-

sation representing manufacturers active within air treatment and

cooling, and is based on Eurovent Review No. 75, June 2005 and

Eurovent Review No. 97, May 2007. Its survey is based on estimates

of the ventilation market made by member companies.

The information concerning the North American construction

market and forecasts for the future has been obtained from Reed

Construction Data’s report CanaData Annual Construction Forecast 2007–2009 Edition and Reed Chief Economist, Dr. Jim Haughey.

Regarding the exchange rate between U.S. dollar and Canadian

dollar, the exchange rate in effect on 1 January 2007 has been used.

All references to “dollar” herein refer to United States dollar

(“USD”) unless otherwise stated.

Historical developments and forecasts for the growth of the gross domestic product (“GDP”) refer to real growth and are based on data from Euroconstruct, BuildEcon and Reed Construction Data. This information has, for some coun-tries, been complemented with historical statistics from the International Monitory Fund (“IMF”). Forecasted real GDP growth 2009 for Eastern Europe and CIS on page 19 relates to Croatia, the Czech Republic, Hungary, Poland, Rumania, Russia, Serbia and Slovakia.

“The ventilation market”, “the market for ventilation products”

and “the market for the Company’s ventilation products” in the

section Market refers to, unless stated otherwise, the market for

some of the ventilation products which Systemair sells in that coun-

try or that region which is mentioned. In the section Market, the

ventilation market refers to the market for Fans and Accessories, Air

Handling Units and Air Terminal Devices. The market for Smoke

Extract Fans, Air Curtains, and Fan Heaters, as well as Other Venti-

lation Products are not included.1) The market for other ventilation

products and services, such as for example ventilation ducts, flow

and regulating equipment and installation work, are not included

in what is called the ventilation market.

The ventilation market can be divided into sales to construc-

tion of commercial property, construction of residential housing

and infrastructure projects. Commercial property constitutes Syste-

mair’s largest area and consists primarily of offices and buildings for

industrial use and retail trade, while Systemair’s sales for residential

housing primarily refers to single family homes and semi-detached

houses. Systemair’s products are currently used only to a small

extent in infrastructure projects such as telecommunications, road

building and tunnel construction, and energy and water engineer-

ing projects, and for these primarily in the form of tunnel exhaust

fans. Of Systemair’s net sales in the Nordic countries, Western

Europe, and Eastern Europe and CIS during the financial year

2006/07, an estimated 90 percent were attributed to commercial

property and an estimated 10 percent attributed to residential hous-

ing. Of Systemair’s sales in North America during 2006/07, an esti-

mated 20 percent of the net sales attributed to commercial property

and an estimated 80 percent related to residential housing. Hence,

the different construction industries vary in significance for Syste-

mair on different geographic markets. In regard to this, market

descriptions for the ventilation market in Europe refer to commer-

cial property and market descriptions for the ventilation market in

North America refer to residential housing, if not stated otherwise.

1) For information regarding Systemairs product groups see section Operations.

18

Information concerning the size of markets and growth in the con-

struction industry is stated in real terms, unless otherwise stated.

Euroconstruct, BuildEcon and Reed Construction Data have fore-

casted the growth in local currency and converted it to Euro and

dollar at the base year’s exchange rate. Systemair’s sales areas can be

divided into the following primary markets: the Nordic countries,

Western Europe, and Eastern Europe and CIS, North America, and

Other Markets. When the countries’ relative sizes in the section

Market are stated, sales attributed to the divested company Camina

AB are excluded.

■ The Nordic countries refer to Denmark, Finland, Iceland,

Norway and Sweden

■ Western Europe refers to Austria, Belgium, Cyprus, Faroe

Islands, France, Germany, Greece, Ireland, Italy, Liechtenstein,

Luxembourg, Malta, the Netherlands, Portugal, Spain, Switzer-

land and the United Kingdom

■ Eastern Europe and CIS refer to Albania, Armenia, Azerbaijan,

Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech

Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan,

Latvia, Lithuania, Macedonia, Moldova, Montenegro, Poland,

Romania, Russian Federation, Serbia, Slovakia, Slovenia,

Ukraine and Uzbekistan

■ North America refers to Canada and the United States of

America

■ Other markets refer to Afghanistan, Algeria, Australia, Bahrain,

Botswana, British Virgin Islands, China, Dubai, Egypt, Hong

Kong, India, Iran, Israel, Japan, Jordan, Kuwait, Lebanon,

Malaysia, Mongolia, Morocco, Namibia, New Zealand, Oman,

Pakistan, Qatar, Saudi Arabia, Singapore, South Africa, South

Korea, Swaziland, Syria, Tanzania, Thailand, Tunisia, Turkey,

Turkmenistan, Vietnam and Zimbabwe. (In the map below,

countries with sales over SEK 1 million in 2006/07 within

Other markets are indicated).

The Nordic countries

Western Europe

Eastern Europe and CIS

North America

Other markets (sales over MSEK 1)

COUNTRIES WHERE SYSTEMAIR HAS SALES DIVIDED BY PRIMARY MARKETS

INFORMATION REGARDING MARKET DATA

19

MARKETS DESCRIPTIONSystemair develops, manufactures and markets ventilation products which are used in commercial property and in resi-dential housing, for new construction as well as in RCA projects. Systemair is active in the primary markets: the Nordic countries, Western Europe, Eastern Europe and CIS, North America and Other markets. Other markets refers to parts of the Middle East, Asia, Africa and Oceania.1) The market for ventila-tion products differs to a large degree in the various geographic markets for exam-ple concerning matters such as competi-tion, distribution channels and price levels. The Nordic countries have by tra-dition a well developed market for venti-lation, with high demands placed on energy efficient buildings. In countries with warm climates, the same tradition of constructing energy efficient and draught proof buildings does not exist. Therefore, traditionally a similar need for ventilation systems does not exist.The markets differ, not only due to climate related factors, but also because of a dif-ferent view on the need for ventilation systems in different countries.

DRIVING FORCES AND TRENDS Demand for ventilation products is to a significant extent related to the business activity in the construction industry, partially in new construction, and par-tially with RCA projects. The growth within the construction industry, espe-cially in the market for new construc-tion, is affected by the general state of the market. RCA projects are not influenced to the same extent by changes in general economic growth and are less cyclical as a consequence of the continual need to repair and maintain existing buildings. The forecasted real growth rate in GDP, and the distribution of Systemair’s net sales between the different primary geo-graphic markets, is presented below.

Systemair assesses that the total mar-ket for all the Company’s products is also influenced by other driving forces and that this market demonstrates a higher growth than the construction industry as a whole. Eurovent estimates that the European market for Air Handling Units and Fans from 2004 to 2006 had a nom-inal annual growth of approximately 7.3 percent. The total construction market for commercial property and residential housing in the Nordic countries and Western Europe showed a nominal annual growth in the same period of approximately 6.1 percent, according to Euroconstruct. Systemair assesses that the higher growth rate within ventilation is caused by inter alia, an increasing interest in higher energy efficiency and demand for a better indoor environment.

Emerging markets Eastern Europe and CIS have in recent years experienced strong economic growth, which has also meant an increased demand for improved indoor environment in commercial property as well as in residential housing. This has resulted in an increased demand for ven-tilation systems and ventilation products. This development has been particularly favourable for the companies already established in these emerging markets and that have functioning distribution channels and well-established product brands.

Demand for energy savingsIn order to meet an increasing demand for energy savings, the buildings of today are built more draught proof and better insulated than before. This growth has meant an increased need for ventilation systems with heat recovery, which consid-erably reduces the utilisation of energy .

Also, newly adopted rules may be of significance for the demand for ventila-tion products. According to the EU Directive 2002/91/EC property owners are as of January 2006, though with tran-sitional period during 2006 – 2009, obli-gated to provide an energy declaration concerning the energy costs for the prop-erty. According to Systemair’s assessment this directive will most probably increase the demand for energy saving ventilation products.

Ventilation and healthResearch results from the Technical Uni-versity of Denmark as well as the Helsin-ki University of Technology have shown a clear correlation between well func-tioning ventilation and good health, and between well functioning ventilation and ability to perform.2) Higher requirements are placed on air quality in both residen-tial and work environment with an increased need of effective ventilation systems as a consequence.

Market

MARKET

1) See section Information regarding market data for the definition of Systemair’s primary markets.2) Source: P Wargocki, J Sundell, W Bischof, G Brundrett, P. O Fanger, F Gyntelberg, S. O Hanssen, P Harrison, A Pickering, O Seppänen, P Wouters (2002). Ventilation and health in

non-industrial indoor environments: report from a European Multidisciplinary Scientific Consensus Meeting (EUROVEN). Indoor Air 12 (2), 113–128.

Western Europe

Eastern Europe and CIS

The Nordic countries

North America

Percent

0

2

4

6

8

10

2009200820072006200520042003

REAL GDP GROWTH IN SYSTEMAIR’S PRIMARY MARKETS

Source: Euroconstruct, BuildEcon, Reed Construction Data and IMF. For additional information, see section Infor-mation regarding market data for information about the countries which the sources cover.

The Nordiccountries

31%

North America 11%Other markets 4%

Western Europe 29%

Eastern Europe and CIS 25%

(of which EU members

10%)

SYSTEMAIR’S NET SALES PER PRIMARY MARKET 2006/07

20

MARKET

Smoke extract fansIn buildings where many people are present at the same time, it is becoming more common to install special ventila-tion systems for evacuation of smoke and toxic fumes in the event of a fire or smoke development. A number of recent severe accidents in public places have, according to the Company’s assessment, increased the understanding of the importance of effective smoke and heat ventilation, since it usually is toxic fumes that cause injury to people. Systems for evacuation of toxic fumes can be con-structed in order to engage when needed, or to be a part of the building’s normal ventilation systems.

THE VALUE CHAIN FOR VENTILATION PRODUCTSThe value chain for ventilation products differs between different markets, for example regarding the choice of distribu-tion channel. Manufacturers buy input goods from suppliers and develop, man-ufacture and market ventilation products through sales companies or representa-tion offices and sales agents, from which the products are sold either directly to installers or through distributors. The installers’ choice of product is often influenced by ventilation consultants, who specify particular products in their ventilation blueprints and calculations. Thereby these consultants become an

important target group for the sales com-panies and sales agents.

Input goodsIn the production of ventilation prod-ucts, the most important input goods are electrical fan motors and steel in the form of thin sheet steel. Thin sheet steel is used for example in air handling units and fan casings. Manufacturers in the market for ventilation products are directly exposed to changes in the price of steel, but also indirectly through changes in the price for input goods which are composed of steel. The manu-facturers’ suppliers consist of companies which are active on the regional, national and international level. Simple input goods, for example thin sheet steel, insu-lation materials and paint, are purchased primarily from regional or national sup-pliers. Input goods with a higher degree of processing, for example electrical fan motors, are more often purchased from international suppliers. The import of input goods to the Nordic countries and other Western Europe countries from low cost countries, primarily in Eastern Europe, has increased in recent years. This is a result of for example suppliers of input goods relocating their manufac-turing to Eastern Europe in order to have a lower cost of production.

ManufacturersThe ventilation market is fragmented and can be characterised by both nation-al and international manufacturers. In the Nordic countries, Western Europe and North America, the market for ven-tilation products is mature with consid-erable competition and existing barriers to entry in the form of well established distribution channels, brand names and customer relationships. There is also sig-nificant competition in Eastern Europe and CIS, but the faster growth in the market for ventilation products makes it easier for new participants to enter the market.

The European ventilation market consists of different product groups, for example in Fans and Accessories where Soler & Palau and Systemair are large manufacturers, Air Handling Units where GEA Klima technik, Fläkt Woods, Swegon, VTS Clima and Wolf are large manufacturers, and Air Terminal Devices, where Trox is a leading manu-facturer. Other Ventilation Products which are included in ventilation systems are for example ducts and duct parts where Lindab is a leading manufacturer. Systemair is not active in the market for ducts and duct parts. See section Operations for further information about Systemair’s product groups.

The manufacturers compete with a combination of price, product character-

Input goodsManu-

facturers

Sales companies/Representation offices

Installers End users

Direct selling

Ventilation consultants

Direct selling

Ventilation consultants

Sales agents

Distri-butors

Ventilation consultants

Direct selling

OVERVIEW OF THE VALUE CHAIN FOR VENTILATION PRODUCTS

Systemair develops, manufactures and markets ventilation products. In the value chain, Systemair is a manufacturer with own sales companies. Systemair’s products are sold through own sales companies, representation offices and sales agents to distributors and installers. Another important participant in the value chain are ventilation consultants that not infrequently specify products, which the installers normally use.

21

MARKET

istics and reliability of delivery. The prices may be different in different geographic markets, although an equali-sation has occurred in recent years. The quality and performance of ventilation products are continuously developing in the form of both minor adjustments and completely new generations of products. A high degree of reliability of delivery is important for the installer’s business as it can suffer from additional costs if an ordered product is not available when it is needed, since the actual construction project as a whole may then be delayed. The ability to deliver the right product at the right time is a factor which installers and distributors emphasise in the choice of supplier.

Sales companies, representation offices and sales agentsManufacturers in the ventilation market sell their products through their own sales companies or representation offices and through external sales agents. A sales agent is an independent company which represents a manufacturer, but also has the possibi lity to sell competing prod-ucts. The utilisation of these different marketing channels varies to a large extent between different geographic mar-kets. For example, sales agents are used to a greater extent in North America than in Europe. The marketing channels also vary between different manufactur-ers within the same geographic market.

Sales companies or representation offices and sales agents sell the products either directly to installers or to distribu-tors. Distributors maintain their own stocks and also sell competing products, which provides installers with the possi-bility to choose between different brands.

For large construction projects, sales are sometimes made directly to installers. The allocation of sales to distributors and directly to installers varies between different countries. For example are sales primarily made directly to installers in Sweden and Norway, while in Russia and the United Kingdom sales are made pri-marily via distributors.

Systemair assesses that the manufac turers who have their own sales companies have a stronger position than those who only sell through sales agents. The reason for this is primarily that a manufacturer with its own sales company can develop the business with a focus on building up their brand names and offering its entire product line to the market.

Distributors, installers and ventilation consultantsSales companies, representation offices and sales agents market their products primarily to distributors, installers and ventilation consultants.

Distributors have a broad range of products available, which is why they normally do not have the same detailed product knowledge that installers and ventilation consultants have. Distribu-tors buy in large volumes, and may with large and recurring orders be able to negotiate favour able terms.

Installers conduct the installation of ventilation products in the building. They are often small companies and compared to distributors, the installers usually purchase smaller volumes. In particular projects, installers work together with ventilation consultants, who specify which products are to be installed. The ventilation consultant designs a ventilation system based on product specifications, which may refer to a specific manufacturer’s product. This can make it difficult for the installer to deviate from what the ventilation con-sultant specifies. The ventilation consult-ants’ influence over the choice of product makes them an important target group even though they are not customers themselves. Both installers and ventila-tion consultants are generally regarded as having a very good product knowledge.

22

SIZE AND GROWTH OF THE MARKETThe size and growth of Systemair’s primary markets are described below. There are also descriptions of individual countries in the cases where the country in question is among the ten countries where Systemair had its largest sales during the financial year 2006/07.

The Nordic countriesThe Nordic countries is Systemair’s orig-inal market and sales are made both to new construction and RCA projects, for commercial property as well as for resi-dential housing. For 2006, Eurocon-struct estimates that the construction market for commercial property in the Nordic countries amounted to Euro 33.6 billion. Euroconstruct forecasts that the market for commercial property will grow at an average of 2.3 percent in real terms per year until 2009. Systemair esti-mates that the market for its ventilation products for commercial property amounted to approximately Euro 700 million in 2006.1) Systemair has sales in all Nordic countries, of which the largest markets are Norway, Sweden and Den-mark. Norway accounted for approxi-mately 13 percent of Systemair’s net sales for the financial year 2006/07. Sweden’s share amounted to approximately 11 percent, and Denmark amounted to approximately 3 percent during same period. In the Nordic markets, sales take place partly through distributors, and partly directly to installers. In the Nordic countries, the market for construction of commercial property is of greater signifi-cance for Systemair, even though the market for residential housing still is important in Sweden and Norway, pri-marily in the form of air handling units for single family houses.

NorwayEuroconstruct assesses the size of the construction market for commercial property in Norway to be Euro 11.3 billion for 2006, and expects that it will grow in real terms with an average of 0.8 percent annually up to 2009. Systemair estimates that the market for its ventila-tion products for commercial property

amounted to approximately Euro 200 million 2006. Norway constituted Systemair’s second largest market during 2006/07. Euroconstruct estimates that GDP in Norway will grow in real terms by 3.3 percent during 2007. Competi-tors in the Norwegian market include among others Flexit, Fläkt Woods, Swegon and Exhausto.

SwedenEuroconstruct estimates the size of the construction market for commercial property in Sweden to Euro 6.7 billion in 2006, and assesses that it will grow in real terms with an average of 5.0 percent per year up to 2009. Euroconstruct esti-mates that GDP will increase in real terms by 3.9 percent during 2007. The

construction market for residential building in Sweden has, after some years of decreasing activities, recovered and is expected to increase according to Euro-construct. Systemair assesses that the market for its ventilation products for commercial property amounted to approximately Euro 180 million in 2006. Sweden constituted the Compa-ny’s third largest market during 2006/07. Competitors in the Swedish market include among others Fläkt Woods, Swegon and CA Östberg.

DenmarkThe construction market for commercial property in Denmark is estimated by Euroconstruct to be Euro 5.8 billion in 2006, and is expected to grow in real

1) Differences exist between the countries which the respective sources cover. See section Information regarding market data for the definitions.

COUNTRIES WHERE SYSTEMAIR HAS SALES IN THE NORDIC COUNTRIES

MARKET

The construction market in the Nordic countriesBillion Euro 2005 2006 2007 2008 2009

Commercial property, total 31.4 33.6 35.7 35.9 36.0

Of which new construction 17.2 18.7 20.4 20.5 20.5

Of which RCA projects 14.3 14.9 15.2 15.4 15.5

Residential housing, total 41.2 44.5 45.8 45.8 46.4

Of which new construction 18.9 21.2 21.7 21.0 21.1

Of which RCA projects 22.3 23.3 24.2 24.8 25.3

Total 72.7 78.1 81.5 81.7 82.4

Source: Euroconstruct. Data in real terms with base year 2006.RCA – Renovations, Conversions and Additions. Forecasts are made in local currency and converted with the exchange rate from the base year. See section Information regarding market data for information about which countries that are included.

23

terms by an average of 4.3 percent per year up to 2009. The real GDP growth is estimated by Euroconstruct to amount to 2.0 percent during 2007. The Com-pany estimates the market for its ventila-tion products for commercial property to approximately Euro 180 million during 2006. Competitors in the Danish market include among others Exhausto, Novenco and Swegon.

Western EuropeSystemair has, similar to the markets in the Nordic countries, sales primarily to new building and RCA projects in the construction of commercial property in Western Europe. During 2006, that market in Western Europe amounted to Euro 371 billion according to Eurocon-struct. Euroconstruct forecasts that the market will grow in real terms with an average of 2.7 percent per year up to 2009. The ventilation market for com-mercial property amounted, according to the Company’s assessment, to approxi-mately Euro 3.9 billion during 2006.1) Systemair’s largest markets in Western Europe are the United Kingdom, Germany and France, which accounted for approximately 8 percent, approxi-mately 6 percent, and approximately 5 percent respectively of Systemair’s net sales during 2006/07.

United KingdomEuroconstruct estimates the size of the construction market for commercial property in the United Kingdom to be Euro 94.2 billion in 2006 and expects the average annual growth in real terms to be 3.3 percent until 2009. Unlike many other of the markets where Systemair is active, sales in the British market are to a large extent made through distributors. Systemair estimates that the market for its ventilation prod-ucts for commercial property amounted to approximately Euro 1.1 billion in 2006. Euroconstruct estimates that GDP will increase in real terms by 2.7 percent during 2007. Competitors in the British market include among others Nuaire, Ventaxia and Fläkt Woods.

GermanyThe construction market for commercial property in Germany is estimated by Euroconstruct to amount to Euro 53.9 billion in 2006, and is expected to grow in real terms with an average of 4.2 per-cent per year up until 2009. The Ger-man market for Systemair’s ventilation products for commercial property is estimated by the Company to be approx-imately Euro 620 million during 2006. Euroconstruct forecasts that GDP will increase in real terms by 2.4 percent dur-ing 2007. Competitors in the German market include among others GEA Klimatechnik, TLT, Gebhardt, Helios, Rosenberg, Trox and Wolf.

FranceEuroconstruct estimates the French con-struction market for commercial proper-ty to be Euro 57.8 billion in 2006, and estimates the average annual growth in real term until 2009 to be approximately 1.7 percent. The Company assesses that the market for its ventilation products for commercial property in France amounted to approximately Euro 500 million in 2006. GDP in France will, according to Euroconstruct’s forecasts, increase in real terms during 2007 by 1.8 percent. Competitors in the French mar-ket include among others Aldes, France Air and CEAT.

1) Differences exist between the countries which the respective sources cover. See section Information regarding market data for the definitions.

The construction market in Western EuropeBillion Euro 2005 2006 2007 2008 2009

Commercial property, total 361.6 370.6 381.2 391.3 401.4

Of which new construction 209.1 216.8 225.0 232.0 238.0

Of which RCA projects 152.5 153.9 156.2 159.3 163.4

Residential housing, total 589.7 611.9 617.9 620.6 625.2

Of which new construction 308.9 326.7 328.2 325.3 323.9

Of which RCA projects 280.8 285.1 289.7 295.4 301.3

Total 951.3 982.5 999.2 1,011.9 1,026.6

Source: Euroconstruct. Data in real terms with base year 2006.RCA – Renovations, Conversions and Additions. Forecasts are made in local currency and converted with the exchange rate from the base year. See section Information regarding market data for information about which countries that are included.

COUNTRIES WHERE SYSTEMAIR HAS SALES IN WESTERN EUROPE

MARKET

24

Eastern Europe and CISEastern Europe and CIS constitutes the Company’s third largest primary market and accounted for approximately 25 per-cent of net sales during the financial year 2006/07. At present, this is also the fast-est growing market of the markets where Systemair is active. The construction market for commercial property in East-ern Europe and CIS is calculated by Euroconstruct and BuildEcon to have grown in real terms by an average of 9.2 percent annually from 2003 to 2006. Euroconstruct and BuildEcon further estimates that the construction market for commercial property in Eastern Europe and CIS amounted to Euro 59.8 billion in 2006. According to Systemair, the market for its ventilation products for commercial property was approxi-mately Euro 630 million in 2006.1) Euroconstruct and BuildEcon forecast that the market will grow in real terms with an average of 8.5 percent per year from 2006 to 2008. Characteristic for the construction market in Eastern Europe and CIS is that the new con-struction sector is significantly larger than the RCA sector. Russia and Poland

are important sub markets and account-ed for approximately 13 percent and approximately 3 percent respectively of Systemair’s net sales during the financial year 2006/07. The ventilation markets in the countries which are included in East-ern Europe and CIS have varying market structures with significant differences between some of the countries. The mar-kets in many of the Eastern European EU member states are for example more similar to the markets in Western Europe, with respect to the choice of dis-tribution channels among other things.

Russia and other CIS countriesRussia is Systemair’s single largest market and accounted for approximately 13 per-cent of the Company’s net sales during the financial year 2006/07. Systemair’s products are used primarily in construc-tion work for commercial property and Systemair estimates that there is a large need of new commercial property in the Russian market. Today, the Company’s sales are approximately equally divided between new construction and RCA projects. Systemair expects that the Russian market for new construction will grow faster than the market for RCA projects in the next few years and that

MARKET

1) Differences exist between the countries which the respective sources cover. See section Information regarding market data for the definitions.

The construction market in Eastern Europe and CIS Billion Euro 2005 2006 2007 2008

Commercial property, total 53.9 59.8 64.9 70.4

Of which new construction 43.6 48.7 53.2 58.3

Of which RCA projects 10.3 11.1 11.7 12.1

Residential housing, total 27.6 29.9 32.6 34.9

Of which new construction 22.3 24.2 26.6 28.6

Of which RCA projects 5.4 5.7 6.0 6.3

Total 81.5 89.7 97.5 105.3

Source: Euroconstruct and BuildEcon. Data in real terms with base year 2006 for the Czech Republic, Hungary, Poland and Slovakia, with base year 2005 for Croatia, Romania and Russia and with base year 2004 for Bulgaria, Serbia and Ukraine. RCA – Renovations, Conversions and Additions. Forecasts are made in local currency and converted with the exchange rate from the base year. See section Information regarding market data for information about which countries that are included.

COUNTRIES WHERE SYSTEMAIR HAS SALES IN EASTERN EUROPE AND CIS

25

MARKET

the use of air handling units for large buildings will increase. BuildEcon esti-mates the size of the construction market for commercial property in Russia to be Euro 25.1 billion during 2006 and expects that it will grow in real terms an average rate of 11.0 percent per year until 2008. Systemair estimates that the market for ventilation products for con-struction of commercial property in Russia amounted to approximately Euro 270 million in 2006. GDP growth in real terms was 6.4 percent in Russia dur-ing 2005, 6.7 percent during 2006 and is estimated by BuildEcon to amount to 6.2 percent during 2007. In the Russian market sales are by tradition made pri-

marily to distributors. Systemair regards the main competitors in the ventilation market to be the Russian manufacturer and distributor Arktika and the Polish manufacturer of air handling units, VTS Clima, along with a number of local manufacturers. The development in oth-er CIS countries is assessed to be similar to the development in Russia. According to Systemair’s calculations, the market for ventilation products for commercial property in other CIS countries amount-ed to approximately Euro 40 million in 2006. The Company expects that even in these markets there is a significant need of additional commercial properties and thereby, of ventilation products.

PolandThe construction market for commercial property in Poland is estimated by Euro-construct to be Euro 11.5 billion in 2006 and is expected to grow in real terms with an average of 7.4 percent per year until 2009. Systemair estimates that the market for its ventilation products for commercial property amounted to approximately Euro 115 million in 2006. Euroconstruct forecasts that GDP in Poland during 2007 will grow in real terms by 6.5 percent. Competitors in the Polish market include among others VTS Clima, Rosenberg and Soler & Palau.

THE MAJOR EXPORT AWARD

Each year a Swedish company that in recent years has demon-strated great success in its export is awarded the Major Export Award by the Swedish Trade Council. Systemair was elected best export company in May 2007, as the Company’s export activities has demonstrated steady growth in several markets combined with good profitability.

The jury’s motivation:“The management for Systemair has persistently and with own resources created an international group based on the entrepre-neurial idea of the circular duct fan. With production and develop-ment in Skinnskatteberg as basis for operations Systemair has continuously created a group with production in seven countries and own sales companies and exports to a very large number of countries, all this in a highly competitive industry.”

26

MARKET

North AmericaIn North America, Systemair is active in the USA and Canada, which accounted for approximately 8 percent and approxi-mately 3 percent respectively of Syste-mair’s net sales during the financial year 2006/07. The US thereby constituted Systemair’s fourth single largest market during this period. In North America, Systemair is active in the market for ven-tilation products to both residential housing and commercial property. As opposed to the other markets, sales to residential housing is the largest and con-stitutes approximately 80 percent of Systemair’s net sales. Reed Construction Data estimates the construction market for residential housing in North America to be 702 billion USD in 2006, and esti-mates that it will amount to 674 billion USD in 2008. According to correspond-ing estimates of the construction market, it will amount to USD 377 billion in 2006 and grow in real terms with an average of 7.3 percent per year until 2008. The ventilation market in North America is different from the market in Europe regarding the types of ventilation products which are used. For example, central air handling units are not utilised to the same extent as in Europe. Further-more, the use of rectangular ventilation ducts remains the common practice in North America, unlike in Europe where round ducts are considered to be stand-ard. Systemair’s product line has been developed prima rily for the European market, hence the market for Systemair’s ventilation products is relatively smaller in North America compared to Europe. According to the Company’s calcula-tions, the ventilation market for residen-tial housing during 2006 amounted to approximately USD 340 million, and for commercial property to approximately USD 620 million. Competitors in the North American market include Broan-NuTone, Nutech, Panasonic, Radon Away, Renoair and Venmar.

USAReed Construction Data estimates the size in the construction market for resi-dential housing in the US to be USD 639 billion in 2006, and expects that the size of the market will decrease some-what to USD 614 billion in 2008. Reed Construction Data forecasts that GDP during 2007 will grow in real terms by 2.3 percent. Systemair estimates that the market for its ventilation products for construction of residential housing amounted to approximately USD 280 million in 2006, and for construction of commercial property amounted to approximately USD 540 million the same year.

CanadaReed Construction Data estimates the size in the construction market for resi-dential housing in Canada to be USD 63.1 billion during 2006 and expects that the market will amount to USD 60.0 billion in 2008. Reed Construction Data forecasts a real growth of 2.5 per-cent in GDP during 2007. The Compa-ny estimates that the market for its venti-lation products for construction of resi-dential housing amounted to approxi-mately USD 60 million during 2006, and for construction of commercial property to be approximately USD 80 million.

The construction market in North AmericaBillion USD 2005 2006 2007 2008

Commercial property 343.2 376.7 410.5 433.3

Residential housing 714.2 702.4 689.4 673.7

Total 1,057.4 1,079.1 1,099.9 1,107.0

Source: Reed Construction Data. Data in real terms with base year 2005.Forecasts for Canada are made in local currency and translated to USD with to the exchange rate in effect on 1 January 2007.

COUNTRIES WHERE SYSTEMAIR HAS SALES IN NORTH AMERICA

27

Operations

OPERATIONS

INTRODUCTIONSystemair is a supplier of ventilation products with business primarily in Europe and North America. The Company has well-established business operations in areas which have proven to have high growth, in particular in Central Europe and Eastern Europe including Russia. The Group’s products are sold mainly under the brand names Systemair, Frico, Fantech and VEAB. The brand name Systemair represents a standardised, and to a great extent self-developed, product line of ventilation products such as fans, air diffusers, air handling units, intake units and air curtains. The brand name Frico is used for air curtains and

heating systems using fan heaters and radiant heaters. Fantech is the Company’s brand name in North America, and its products include duct fans and other ventilation products as well as ventilation units for residential housing. VEAB is used for heating products within product areas duct batteries, fan heaters and dehu-midifiers.

Systemair’s products are used in new construction as well as with renovations and conversions in both commercial property and residential housing. The Group’s customers are primarily install-ers and distributors of ventilation and electricity products. Ventilation consult-ants are also an important target group as

via their structural blueprints they specify particular ventilation products which are to be used for the construction of new buildings. Systemair has elected to primarily use its own sales organisa-tion with its own sales companies in order to reach its customers, and to limit the use of sales agents to smaller markets. The Company’s experiences show that the model with own sales companies is more profitable, provides higher growth and decreases the dependency on individual sales agents.

Since the establishment of Systemair in 1974, the Company has increased its sales annually, and at the same time showed a positive operating profit. Dur-ing the last 15 years, the average growth in net sales has amounted to approximately 20 percent per year with an average oper-ating margin of approximately 8 percent.

SYSTEMAIR’S POSITION IN THE VALUE CHAIN FOR VENTILATION PRODUCTSSystemair provides high-quality ventila-tion products with a high degree of availability. This is achieved by Systemair through manufacturing a significant pro-portion of the products in its product line for warehousing, to be able to supply the product to the customer with a short

Input goodsManu-

facturers

Sales companies/Representation offices

Installers End users

Direct selling

Ventilation consultants

Direct selling

Ventilation consultants

Sales agents

Distri-butors

Ventilation consultants

Direct selling

OVERVIEW OF SYSTEMAIR’S POSITION IN THE VALUE CHAIN FOR VENTILATION PRODUCTS

Systemair develops, manufactures and markets ventilation products. In the value chain, Systemair is a manufacturer with own sales companies. Systemair’s products are sold through own sales companies, representation offices and sales agents to distributors and installers. Another important participant in the value chain are ventilation consultants that frequently specify products, which the installers normally use.

0

500

1,000

1,500

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2,500

3,000

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

1999/00

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

1992/93

MSEK

0

3

6

9

12

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18

%Net sales EBIT margin

NET SALES AND EBIT MARGIN

28

OPERATIONS

delivery time from one of the Company’s central or local warehouses. Of significant importance in this context is the Compa-

ny’s business and logistics systems, which ensures effective distribution internally as well as externally. Systemair’s production

takes place in ten modern manufacturing plants located in nine different countries.

Country with own sales organisation or other representation

Manufacturing plant

Distribution centre

Eidsvoll Skinnskatteberg

Hässleholm Ukmerge

Maribor

Windischbuch

MariborBratislava

Aarhus

Madrid

Bouctouche

Sarasota

MARKET PRESENCE AND MANUFACTURING

The Nordiccountries

48%

NorthAmerica 14%

Other markets 2%

WesternEurope 23%

EasternEurope and CIS

13%

AVERAGE NUMBER OF EMPLOYEES PER MAIN MARKET 2006/07

The Nordiccountries

31%

North America 11%Other markets 4%

Western Europe 29%

Eastern Europe and CIS 25%

(of which EU members

10%)

SYSTEMAIR’S NET SALES 2006/07 PER MAIN MARKET

The Nordic Countries 43%

NorthAmerica 11%

Other markets 2%

WesternEurope 23%

EasternEuropeand CIS

21%

NUMBER OF EMPLOYEES PERMAIN MARKET 31 JULY 2007

0

200

400

600

800

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2004/05 2005/06 2006/07

SEK million

The NordicCountries

WesternEurope

EasternEurope and CIS

NorthAmerica

Other markets

NET SALES PER MAIN MARKETLAST 3 YEARS

29

BUSINESS CONCEPTSystemair’s business concept is, with simplicity and reliability as core values, to develop, produce and market high-quality ventilation products.

GOALS AND TARGETSOperational targetsSystemair’s overall goal is to be one of the leading ventilation companies in Europe.

Systemair will establish at least two new sales companies per year with the target of having its own sales company in all European countries of significance for the Company. In addition, Systemair will develop its business in selected markets in Asia and the Middle East.

Systemair will also be the most well-reputed company in terms of reliability of delivery, availability and quality on the markets where the Company is active.

Financial targetsSystemair has established a number of targets for the business’s long-term financial growth.

Growth Systemair’s target is to achieve an average net sales growth of at least 12 percent annually over a business cycle, which includes both organic growth and acquisitions.

During the past 10 the years, Systemair has achieved a net sales growth on aver-age of 15.6 percent per year and an aver-age of 15.9 percent during the past three years. The growth is assessed by the Board of Directors to have been achieved via approximately 60 percent organic growth and the remaining share through acquisitions. Systemair intends to estab-lish businesses in new geographic mar-kets, via the establishment of own sales companies or via acquisitions of existing sales companies. Systemair will maintain its strong growth in the fast growing East-ern European market and take market

shares in Western Europe. The Company may also acquire manufacturing compa-nies with products that complement its existing product programme.

ProfitabilitySystemair’s goal is to achieve an average operating margin of at least 10 percent over a business cycle.

Systemair’s operating margin has during the last 10 years amounted to 7 percent on average, and to 10 percent on average during the last three years. Systemair’s operating margin varies with the growth in volume and the utilization of the capacity in the factories as a result of the pattern of the business cycle and the suc-cesses of the sales companies in the mar-ket. The Company expects that with the current structure, with continued sound and future positive prospects, it has good prospects to achieve its target operating margin.

Financial position Systemair’s goal is that the equity-to-asset ratio shall not be below 30 percent.

Systemair’s financial position shall be aligned with the operating risk in the Company’s operations. The financial position is currently sound with an equity-to-asset ratio of 33.9 percent as of 30 April 2007. The Company continu-ously evaluates possible strategic acquisi-tions. Financing of larger acquisitions is intended to be arranged in connection with respective transaction. Systemair’s equity-to-asset ratio is not intended to considerably exceed the Company’s goal over time, given the Company’s current operations and structure.

Dividend policy The Annual General Meeting in a Swedish limited company makes decisions about the issuance of dividends, which normally is made via the approval

of recommendations from the Board of Directors. In this regard, the legal restric-tions in the Companies Act (Sw. Aktie-bolagslagen) must be taken into consider-ation, including any contractual restric-tions for the issuance of dividends to shareholders as well as dividends from subsidiaries to parent companies in the Group.

With regards to the above, Systemair seeks to issue a dividend which in part gives the shareholders a reasonable share of the year’s profits, and in part ensures a stable financial position for Systemair which allows for continued acquisitions, expansion with new own sales companies and satisfies Systemair’s needs for succes-sively increasing manufacturing capacity.

With regards to the Company’s aspirations regarding growth, Systemair’s target for the dividend is around 30 percent of after tax profits.

STRATEGYIn order to attain the targets as estab-lished, Systemair determined its strategy based on the following central elements.

Focused market segmentation and marketing In line with the society’s increased focus on the indoor environment, Systemair has prepared its market strategy vis-à-vis the ventilation industry with a focus on installers, distributors and consultants within the indoor environment sector.

Research shows that there is a clear connection between an improved indoor environment and health and productivi-ty.1) Systemair’s marketing is almost exclusively targeted at ventilation distrib-utors and installers, and makes use of the need for solutions with lower energy consumption and an improved indoor environment, a trend within the building industry.

OPERATIONS

1) Source: P Wargocki, J Sundell, W Bischof, G Brundrett, P. O Fanger, F Gyntelberg, S. O Hanssen, P Harrison, A Pickering, O Seppänen, P Wouters (2002). Ventilation and health in non-industrial indoor environments: report from a European Multidisciplinary Scientific Consensus Meeting (EUROVEN). Indoor Air 12 (2), 113–128.

30

Standardised products of superior qualityThe central aim for Systemair’s product development is to produce products which are simple and robust, and which provide, remove, transport, heat or improve air in a building. The Compa-ny’s products are simple to choose, sim-ple to install, simple to maintain and simple to use. All products are in the upper range when it comes to product quality.

Own sales companies and representation officesSystemair has chosen to have significant control over its distribution out to the market and therefore sells its products primarily via its own sales companies. It has established about 40 sales companies in North America, Europe, Asia and Africa. This gives control and provides economies of scale for marketing with the focus on own products and the strengthening of the brand names. Having own sales companies also pro-vides direct information and a high level of awareness of the demands of the mar-ket and the trends in the various markets where the Group is actively engaged.

International expansion with strong growth in Eastern EuropeA consistent acquisition and establish-ment strategy has been the basis for an internationalisation and expansion where the Company has sales in all significant European countries, of which in 26 coun-tries via own sales companies. In addi-tion, Systemair has its own companies in Canada, China, Dubai, Hong Kong,

India, Singapore, South Africa and USA. Over the last 10 year period, a lot of work has been put into establishing Systemair in Eastern Europe and Russia. The work with successively increasing international-isation of the Group occurs via finding distributors, establishing sales companies or via acquiring local manufacturing and sales companies. Today, Systemair has a good geographic presence, but concur-rently has significant possibilities to fur-ther increase its presence to additional countries in Europe and to develop its position in Russia and other CIS-coun-tries. Good growth possibilities are also regarded to exist in Asia.

STRENGTHS AND COMPETITIVE ADVANTAGESThe management is of the opinion that Systemair has a number of significant strengths and competitive advantages which means that the Company is well-positioned to successfully implement its strategy and to reach its established targets.

Early presence in emerging marketsSystemair early on established itself in the emerging markets and has via a long-time presence strengthened its brand name and established relationships with a broad customer base in these markets. In Rus-sia, currently the Company’s largest mar-ket, Systemair established its presence already back in 1997. The management is of the opinion that a significant part of the Company’s future growth will be relating to countries in Eastern Europe and within the CIS. Systemair’s long-term presence is assessed, along with

the existing manufacturing plants in Lithuania, Slovakia and Slovenia, to constitute a good basis for the Company’s continued growth in these markets. Similarly, Systemair is of the view that the establishment in China, with sales offices in Peking and Shanghai, constitutes a future possibility for growth.

High level of product availability An important element in Systemair’s customer offer is ready availability and fast delivery of products. For this pur-pose, Systemair has built up an effective manufacturing and logistics organisa-tion. The key elements in this strategy are, in part, the manufacturing against future customer orders, and in part that the centralised and local warehouse and their stocks are integrated with each oth-er via the Group’s common business sys-tem, which is used to improve finished goods inventories turnover. The strategy to produce products to be held for future sales, instead of producing the product after receiving the customer order, also means a greater efficiency in manufactur-ing. Also, the stated strategy that to the extent possible establish own sales com-panies provides an increased control over the product chain resulting in that the Company develops a closer contact with its customers. Systemair is of the opinion that having a high degree of product availability and a well-developed logistics system, has strongly contributed to its growth and to the establishment of the Company being regarded as a reliable supplier of ventilation products. For additional information, see the heading Logistics and distribution in this section.

OPERATIONS

Systemair’s development centre for measuring sound and air flow is one of the most modern in Europe.

31

Focused product development and broad range of products Systemair produces high-quality ventila-tion products and continuously develops its product offering. Systemair intends to continue in the future with allocating sig-nificant resources for the development of effective, environmentally-friendly and user-friendly ventilation products. The Company’s test laboratory in Skinn-skatteberg maintains high standards and is AMCA accredited,1) which makes possible a quick development process as Systemair, with this accreditation, can certify products without the involvement of external parties. The Company regards that its product development activity combined with the broad range of prod-ucts creates a significant added value for the customers and strengthens the Com-pany’s brands. Systemair’s range of prod-ucts covers a large part of the existing and prospective customers’ needs for ventila-tion products. For additional informa-tion, see the headings Products and Product development in this section.

Extensive experience fromacquisitionsSystemair has expanded via a combina-tion of organic growth and company acquisitions. Since the founding of the Company in 1974, 26 company acquisi-tions have been successfully completed, 19 of which have occurred over the last ten years. These acquired businesses have been success fully integrated into the Group, and Systemair has attained signi-ficant experience in identifying, acquiring and integrating companies. A number of these companies which Systemair has acquired are companies which, for differ-ent reasons, required significant restruc-turing or a strategic review in order to attain satisfactory profitability. The Com-pany has, based on extensive acquisition experience, prepared a structured acquisi-tion process. Via its broad network, Systemair has a good picture of the range of potential candidates for acquisition and is continuously evaluating possible acquisitions. For additional information,

see the heading Acquisitions in this section.

Modern manufacturing plants Systemair has ten main manufacturing plants, located in Canada, Denmark, Germany, Lithuania, Norway, Slovakia, Slovenia, Spain and Sweden. Systemair has strived to centralise the manufactur-ing of the various products to one or a few, manufacturing plants in order to achieve the advantages associated with economies of scale with large-scale pro-duction. The plants have over all become highly automated and have deployed good production optimisation with the goal of maintaining a high manufactur-ing efficiency. A part of the Company’s more labour intensive manufacturing has been located to the manufacturing plants in Lithuania, Slovakia and Slovenia where personnel costs are relatively low-er. Systemair’s manufacturing plants are for the most part modern as a result of the investments made in recent years and have the capacity for a significant increase in production. For additional information, see the heading Manu-facturing plants in this section.

Well-diversified customer base with established relationshipsSystemair has a large customer base consisting of about 13,000 active cus-tomers, of which the majority are regard-ed as regularly purchasing Systemair products. The customers are of various sizes and active in a large number of geo-graphic markets. No individual customer was responsible for more than three per-cent of the net sales during the previous financial year. The ten largest customers collectively were responsible for less than 12 percent of the Group’s net sales during financial year 2006/07. Systemair is of the view that this geographically diffuse customer base establishes a significant stability and makes the Company less exposed to fluctuations in the business cycles in individual markets as well as to changes in demand from indi vidual customers.

Good relationships with leading suppliersSystemair’s significant expertise within ventilation and broad exposure to custo mers in a large number of countries, makes the Company an attractive cooper-ating partner for leading suppliers of input goods for the products which Systemair produces. This makes Systemair a prioritised customer with many of these suppliers and well-posi-tioned to take advantage of the advance-ments which are made within their prod-uct development. A part of the product development also occurs in cooperation between the company and the suppliers. The Company has, for example, ever since its founding, used fan motors from the two leading German manufacturers Ziehl-Abegg and ebm-papst. Systemair’s close and long-term relationships with leading suppliers are regarded as having substantially contributed to the Compa-ny’s growth and to establishing Systemair as a leading supplier of high-quality ventilation products. For additional information, see the heading Purchasing in this section.

Strong company culture and experienced management groupSystemair has developed a strong company culture with common values (for details see under the heading Systemair ’s Company Culture in this sec-tion), which, according to the manage-ment, is well-anchored in all of the Company’s units and is the basis for the relatively extensive cooperation and transaction exchange which is made between units. This basis occurs succes-sively in part via the Business Board2) and in part via the Systemair Academy with training and the sharing of experience between the different units. In addition, Systemair has a business system which is uniform for the majority of all of its units, which facilitates cooperation and means that all subsidiaries use same work methodology.

OPERATIONS

1) Air Movement & Control Association International, Inc (AMCA) is an independent international association of the world’s manufacturers of ventilation-related products.2) An operational management function with the primary on business development. For additional information, see the heading Organisation in this section

32

OPERATIONS

Systemair’s Group management has extensive experience in the industry and significant expertise within ventilation. The Company’s Management has exten-sive experience in managing internation-al businesses and has successfully achieved the established operational and financial goals. The members of the Management have for the most part been employed within Systemair for a long period and several have held various positions within the Group and in differ-ent markets. The group management is supported by centralised staff consisting of a number of local managers who are regarded as having the expertise which is required in order to successfully imple-ment the Company’s strategy in compet-itive markets.

ACQUISITIONSCompany acquisitions have played an important part in Systemair’s growth and the Company has, via these company acquisitions which have been completed, achieved significant experience. In light of the importance of the acquisitions for Systemair, the Company uses a structural process which includes search process, analysis, agreement, integration, and fol-low-up of acquisitions of companies. This process is intended to ensure that the acquired companies adds a good operation and can be integrated into the Group in the most efficient way. For additional information, see section History for the history of Systemair’s acquisitions.

Search processSystemair’s broad network of contacts contributes to the situation where the Company is able to identify potential candidates for acquisition in the markets where Systemair is presently active as well as in adjacent markets, both geographi-cally and product-wise. The fragmented market also means that there are substan-tial acquisiton possibilities. Acquisition candidates are also often identified by Systemair’s local companies or represen-tation offices. During the fiscal year 1997/98 to the fiscal year 2006/07 Syste-mair has acquired 19 companies with a total turnover of around SEK 750 mil-lion, calculated at respectively acquisition time. This acquisition volume represents approximately 40 percent of the total average growth during the period of 16 percent.

Systemair’s network means that the Company early on can establish a dia-logue with the owners of potential acqui-sition candidates and then often becomes a natural partner for dicussions to the owners, who later on can decide to sell their business. Discussions are common-ly held with agents representing Syste-mair in a number of countries. Systemair engages in on-going discussions with a number of acquisition candidates.

AnalysisPotential acquisition candidates are ana-lyzed based on a number of parameters such as market position, profitability, company culture, customers, competi-tors, history, key personnel continued commitment, how it would complement the range of products and possibilities to coordinate product development, pur-chasing, production, distribution and administration. The overall objective is to control the operational, financial and legal risks which are connected with an acquisition of the particular business as well as to achieve desirable synergy effects. Systemair places significant importance on this stage of the acquisi-tion process.

AgreementThe agreement is to a large extent based on the analysis made and what is deemed as a possible purchase price according to the analysis. Systemair has to a large extent acquired businesses where there has been a need of significant restructur-ing, and where the price of the shares or assets has been low, but where certain restucturing costs have been charged to the income statement. Other important aspects in the negotiations are key peo-ple’s stance to a continued employment and the possibilities to continuously introduce Systemair’s products in the Company’s line of products and sales organisation.

Analysis – Market position – Profitability – Customers – Corporate culture – Competitors – Financial position – History – Management – Product portfolio – Possible improvement – Group integration – Legal due diligence

Agreement– Price – Continued support from management – Products

Integration– Seminars in company values– Management and Business Board – Introduction of: • Reporting routines • Planning tools– Review of: • Customers and suppliers • Organisation • Costs and margins

Follow-up– Budgetoriented– Key financials– Strategic development– Education

Search process– Group management – Subsidiaries/ representation office – Partners – Customers – Suppliers

THE ACQUISITION PROCESS

33

OPERATIONS

IntegrationImmediately after the acquisitions, a review of the acquired business is made. Foremost the following areas are evalu ated:

■ Company culture and values The Company believes that a com-

mon company culture and values are fundamental requirements in order for an acquired business to be suc-cessfully integrated into the Group. Systemair therefore allocates signifi-cant resources to this work where among other things the management and key personnel have a review with the leading individuals in the Group. This occurs directly after the acquisi-tion in the form of seminars and common Group activities for a few days at the company’s main head-quarters in Skinnskatteberg.

■ Customers and suppliers A review is conducted to assess if the acquired company’s products can be marketed on other markets where Systemair is operating, concurrently as the acquired company’s product line is adapted to Systemair’s existing product lines. The acquired compa-ny’s suppliers and purchasing is eval-uated in comparison with Systemair’s in order to achieve an optimal com-bination of price and quality.

■ Organisation A review is made with the intention to increase the focus on customers and sales, and to the extent possible to make the operations in the acquired company more efficient based on Systemair’s business model. If the acquired company has a manufacturing plant an evaluation is made with the intention to optimise the production within the Group after the acquisition with regard to

that this unit has been added. In the same way, a review is made of how the acquired company can be inte-grated into the logistics function and planning for how the company should be integrated in the Group’s business system is initated. With each acquisition, a review is also made of the distribution chan-nels which the acquired company uses with the purpose to increase the focus on customers, sales and relia-bility of delivery.

■ Costs and margins In connection to the integration new targets are established for the acquired business within the frame-work of the common group targets. A plan is formed together with the acquired company with measures to reach these targets. During the initial period after an acquisition, Systemair assists with personnel resources and other sup-port in order to ensure that the meas-ures will be implemented in the most efficient manner. The most impor-tant measures are:• To appoint a Business Board, con-

sisting of the chief executive officer for the acquired company and rep-resentatives from the Company’s management

• To implement Group reporting procedures into the company, concurrently with the acquired company being integrated into the Systemair Group’s common busi-ness systems

• To implement a process for strate-gic and economic planning, plan for growth and a review of the pos-sibilities of operational change in for instance production.

Follow-upSystemair places great weight on a struc-tured and long-term follow-up of the development of the companies it has acquired to be a part of the Group. The evaluation takes place on a monthly basis where the governing primarily takes place via the Company’s Business Board, with a follow-up review of the progress towards the established targets.

The purpose with the follow-up is also to, on a continuous basis, work towards that the acquired company, even culture-wise and in regard to values is integrated into the Group. Recurring on-the-job training and courses within the framework of the Systemair Academy in Skinnskatteberg is a central instrument in this work as well as within the frame-work of the on-going operations to establish a natural cooperation on a daily basis between the acquired company and other companies within the Group.

MOST RECENT ACQUISITIONSDuring the financial year 2006/07, Systemair carried out three acquisitions, the sales company Altexa in Austria in September 2006, the operations of Matthews & Yates in March 2007 and the Slovakian company Imos in April 2007. In June 2007, after the fiscal year 2006/07, the company Koolclima in Spain was also acquired. Below is a brief review of these acquisitions.

34

OPERATIONS

Altexa, AustriaIn September 2006, Systemair acquired the Austrian sales company Altexa, mainly operating in the product areas air curtains and fan heaters. Altexa had a turn over 2006 of the equivalent of approximately SEK 24 million and 12 employees. The acquisition strengthens Systemair’s position in south eastern Europe and enables increased sales through a broadening of Altexa’s product program with heat products from Systemair .

Matthews & Yates, United KingdomIn March 2007, Systemair acquired the rights to the British trademark Matthews & Yates, which is a well-established trademark for train and road tunnel fans. The business turned over the equivalent of approximately SEK 46 million in 2006, of which a significant part was in South East Asia. The acquisition strengthens Systemair’s product range within tunnel fans and makes Systemair more competitive within ventilation pro-curement contracts for large tunnel projects. Matthews & Yates’ manufactur-ing is gradually to be transferred to Systemair’s facilities in Germany and Slovenia which are already manufactur-ing small axial fans today. A joint venture company in Malaysia was also part of the acquisition.

Imos, SlovakiaIn April 2007, Systemair acquired the company Imos in Slovakia. Imos is a leading manufacturer of air terminal devices and fire dampers and has a market-leading position in Slovakia and the Czech Republic. The company has about 150 employees and a turnover of the equivalent of approximately SEK 80 million. The acquisition supplements Systemair’s product portfolio and strengthens Systemair’s position on the East European markets in particular. The objective is that most of Systemair’s pro-duction of air terminal devices should take place at Imos’ production facility in Slovakia.

Already a few years ago Systemair identified Imos as a potential acquisition target and the acquisition is a good example where Systemair through long-term relations has succeeded in acquiring an attractive company. Systemair intends to change the name of Imos to Imos- Systemair.

Koolclima, SpainKoolclima has a strong position in the Spanish market for ventilation units, fans and fan convectors. The operations are located outside Madrid with approxi-mately 50 employees and the turnover amounted to approximately SEK 71 million in 2006. The acquisition strengthens Systemair’s market position in the Spanish market, broadens the product line and facilitates sales of Syste-mair’s existing line of products. After the acquisition Systemair’s sales company in Spain, started in 2006, will be integrated with the Koolclima operations, under the name of Koolclima-Systemair.

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PRODUCTSSystemair started its business in 1974 based on a product idea. The model was a fan solution in a mainframe, which was subsequently further developed into the circular duct fan. The duct fan simplified the work for the installer, who could cut off a part of the ventilation duct and simply install the fan in the duct system. Previously, the installer was forced to make some kind of provisional space-demanding solution that required curv-ing the intake or exhaust of the duct.

Since then, the line of products offered has grown continuously and today encompasses products within the six dif-ferent product groups Fans and Accesso-ries, Air Handling Units, Air Terminal Devices, Air Curtains and Healing Prod-ucts, Smoke Extract Fans and Other Ventilation Products. Systemair’s largest product group is Fans and Accessories.

Systemair’s standard products are presented in a product catalogue of approximately 600 pages, which is avail-able in 13 different languages, including

Russian. The catalogue is printed approximately every other year, in a total edition of approximately 100,000 copies. It is distributed to consultants, distribu-tors and installers. The catalogue con-tains comprehensive descriptions of the products and their technical data along with description of the area in which they are used and comprehensive techni-cal specifications. A frequently updated web-based catalogue can be found in Swedish and English on the Company’s website.

OPERATIONS

Systemair’s duct fans are easy to install, the mounting bracket is already fitted. The long spigot and the special fast clamp gives vibration free connection to the duct.

The circular duct fan – “The straight way”

Earlier solution

THE STRAIGHT WAY

Systemair’s round duct fan facilitates the design and installation of fan systems. Systemair’s standard products are gathered in a product catalogue available in 13 languages, including Russian.

ASSEMBLY OF DUCT FAN

36

OPERATIONS

1) Iris damper – an intake adjustment device which measures among other things air flow in order to be able to monitor and control the ventilation system in an optimal way.

Fans and Accessories The product group Fans and Accessories is Systemair’s largest product group and includes among other products circular and rectangular duct fans, roof fans and box fans for residential housing and commercial properties. The fan programme is marketed under the brand name Systemair in all markets, except in North America where it is sold under the brand name Fantech.

Air Handling UnitsThe product group Air Handling Units covers the full range in its product line from small units suitable for apartments and small houses to large units the size of a shipping container suitable for industrial usage and retail premises. In North America, the Company focuses on units suitable for residential housing which are sold under the brand name Fantech. In other markets the entire product line is sold, from small to large units, under the Systemair brand name.

Air Terminal DevicesThe product group Air Terminal Devices covers products such as air diffusers, iris dampers1), fire dampers and grills. The air diffusers serve the function of delivering and distributing fresh air into the room or to exchange used air from within the room. Air Terminal Devices are sold under the brand name Fantech on the North American market and under the brand name Systemair on other markets.

Air Curtains and Fan HeatersThe product group Air Curtains and Fan Heaters is primarily marketed on the European market under the brand names Frico and Systemair. The range of the product line even covers radiant heaters. Duct batteries and dehumidifiers are sold under the brand name VEAB and are also included in Systemair’s standard product line of ventilation products.

Smoke Extract FansThe product group Smoke Extract Fans covers fans which are tested and certified in order to withstand high temperatures for an extended period of time. The products are tested by independent testing laboratories in order to withstand up to 630°C for a minimum of two hours. The range of the products in the product line includes both roof fans, axial fans and centrifugal fans. The products are sold under the brand name Systemair.

Other Ventilation ProductsWithin the product group Other Ventilation Products, fans and filters for clean-room technology can be found, along with Systemair free cooling, which is used for cooling of base stations in telecommunication networks.

PRODUCT GROUPS

37

OPERATIONS

Fans and AccessoriesSystemair’s product line of fans consists primarily of circular duct fans, rectangu-lar duct fans, roof fans, and axial fans. After the acquisition of Matthews & Yates in March 2007 the product line has been expanded with larger fans for infra-structural projects.There is also an exten-sive accessory programme available that includes products such as filter cartrid-ges, exhaust dampers, mounting brack-ets, duct batteries, regulating equipment and electrical accessories. The products are sold under the brand name Systemair, apart from in North America where the brand name Fantech is used.

Duct fans and other fans are normally assembled in a ventilation system in order to create a negative pressure in the system, which when aided by ducts and air diffusers, will achieve the desired ven-tilation rate. The circular duct fan was Systemair’s first product and has since then been benefited by ongoing develop-ment to encompass a large number of different models in a variety of different sizes. An example of this is the diagonal type duct fans which are intended for greater airflows.

Rectangular duct fans and rectan-gular ventilation ducts are normally used in older buildings or where there is not

sufficient space for circular duct systems. The advantage of using circular duct systems is that they are less expensive and simpler to install, and provide better sealed ventilation systems. Fans are avail-able in many different sizes and there are sound-dampened fans with hatches which makes maintenance and cleaning of the fans and ventilation system easier. Other fans include roof fans which are used as exhaust fans in commercial premises or houses and multi-family dwellings, as well as explosion proof fans, bathroom fans and fans suitable for pro-fessional kitchens.

Fans and Accessories

Air Handling Units

Air TerminalDevices

SmokeExtract Fans

Other VentilationProducts

Air Curtains and Fan Heaters

MAIN BRAND NAMES BY PRODUCT GROUP

REFERENCE PROJECT:

Jet fans to the world’s largest shopping mall in Dubai

The largest shopping mall in the world, Dubai Mall, is construc-ted at the moment in Dubai and is expected to be finished in January 2008. Systemair has delivered 1,826 so called jet fans for the ventila-tion of the car parks. In the shopping mall there are car parks for around 16,000 cars. The order value amounted to approximately EUR 1.3 million and the order was delivered between March and September 2006. At the moment the installation is com-pleted to about 90 percent.

38

Air Handling UnitsThe air handling unit ordinarily provides heat recovery, and is able to filter, cool, heat and transport air. The product group can be divided into the subgroups Residential units, Compact units and Central units, depending on where it will be used and the capacity. Systemair has developed a flexible modular system for air handling units which means that these can be adapted entirely to the cus-tomer’s needs and at the same time the Company can benefit from economically efficient production.

Residential units are adapted for single family and semi-detached houses,

apartment buildings and small offices, and contain centrifugal fans, re-heater batteries, filters and heat-exchangers.

Compact units are suitable for light industry, offices, warehouses, petrol stations, schools and shops. All compact units have an integrated control system with all functions as standard equip-ment. Systemair produces two different types of compact units, i.e. the supply air unit and heat recovery unit. The supply air units are supplied with an electric or hot-water battery. The heat recovery units are produced in four different series, with a plate heat-exchanger or rotary heat exchanger.

Central units are especially adapted for large facilities such as, for instance, air-ports, hospitals and hotels. The central units are produced in 12 different sizes and can be delivered with different types of certified filters, heat recovery systems, cooling systems and fans.

In the North American market, heat recovery units are marketed primarily for use in lower air flow environments, suit-able for single family homes. Two differ-ent basic types are produced: one with heat recovery which is intended for colder climates, and the other with a recycling and dehumidifying function is intended for warmer climates.

OPERATIONS

Ventilation units with heat recovery manufac-tured by Fantech in Canada, intended for single family homes. A heat recovery ventilation unit uses some of the energy in the already warm extract air to heat the colder supply air. This is done in a heat recovery unit, which can be fixed, like the ventilation unit above, or rotating. A heat recovery unit kan recover up to 90 per-cent of the heat in the extract air and thereby significantly reduce heating costs.

Heat recovery system with rotary heat exchanger for residential houses.

Fresh air from outside

Fresh air to inside

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OPERATIONS

Air Terminal DevicesThe product line of Air Terminal Devices encompasses supply and exhaust air dif-fusers and iris dampers. Systemair has developed a new series of supply air dif-fusers marketed under the name Sinus which is available in a number of differ-ent models and suitable for wall or ceil-ing mounting as well as duct mounting.

This diffuser has unique properties mak-ing it possible to distribute cooled supply air with substantial under temperature – down to 14° C, without causing any draft problems. Systemair’s product line of air terminal devices is marketed under the brand name Systemair in Europe, and under the brand name Fantech in the North American market. Through the

acquisition of the Slovakian company Imos in April 2007, Systemair has fur-ther strengthened its position in air ter-minal devices with a broader product range adapted for both Scandinavia and other Europe. The acquisition could also lead to some production co-ordination, where an increased production in Bratislava will be evaluated.

Systemair in Denmark develops and manufactures large customised central units with heat re covery.

Systemair’s development centre has a special room for measuring air flow from air diffusers. A green laserjet is being used to visualise the air flow.

REFERENCE PROJECT:

Air handling units to IKEA in Haparanda

In 2006 the most northern IKEA store in the world was built in Haparanda. The store holds 8,500 products on 24,000 square meters and was inaugurated by Ingvar Kamprad at year end 2006. Systemair delivered the ventilation units worth approximately 300,000 euro.

REFERENCE PROJECT:

The Vilnius Gate, Lithuania

In the centre of Vilnius the shopping mall The Vilnius Gate was built in 2006. The shopping mall also contains residential and office buildings and consists of three linked parts, one 18 storey dwelling part, one 15 storey part for offices and one nine storey part for smaller apartments. The two lower storeys in all three buildings constitute the shopping mall with shops and restaurants. The Vilnius Gate is a modern operated complex with a computer based control system for property automation that controls electricity network, heating, cooling, water system, secu-rity and others. Systemair has delivered products from all prod-uct groups including duct and box fans, axial and roof fans, air terminal devices for offices and shops, smoke extract fans and several different heat recovery units. The order value amounts to around 300,000 euro.

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Air Curtains and Fan HeatersSystemair produces air curtains under the brand names Systemair and Frico and fan heaters and radiant heating products under the brand name Frico.

Air curtains blow air with or without heat in order to create a wall of air that divides heat from cooling but also pro-vides protection against for example insects, pollen and exhaust fumes. It is used in order to keep out cold air, but there are also models where instead hot air is kept out for markets with warm climates. Air curtains can thereby main-tain the desired indoor temperature and contribute to increased energy efficiency and increased comfort. Air curtains are used in places such as store entrées, kiosk windows and industrial gates.

A radiant heater is used in order to provide heating in a limited space. It provides heat first when it hits a surface, making it possible to achieve different temperatures in different parts of a room. The use of radiant heaters is an effective form of heating in situations where only a particular, limited space in large room or commercial premises needs to be heated. Examples are workplaces in industrial property or grandstands in sport stadiums. Most of the manu-facturing occurs at the primary plant in Skinnskatteberg. The Frico subsidiary has specialised in these types of products and has, according to the Company, an established brand name with electricians and electrical distributors, which are the most common distribution channels.

The subsidiary VEAB with a manu-facturing plant in Hässleholm, produces duct heaters and fan heaters for the European market. Some of the duct heaters are sold under the brand name Systemair, while others are sold under the brand name VEAB. The manufacturing also encompasses air dehumidifiers and duct coolers for circular and rectangular ducts, as well as fan healers for fixed or portable installation.

OPERATIONS

REFERENCE PROJECT:

Ventilation units and air curtains to Kyrgyzstan’s international airport

Manas airport in Bishkek, Kyrgyzstan has been equipped with nine large central units and 21 air curtains with automatic control to the value of around 115,000 euro. The opening of the airport was held in August 2007 in the presence of the presi-dents of Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and the government of Kyrgyzstan.

AIR CURTAINS SEPARATE OUTDOOR ENVIRONMENT FROM INDOOR ENVIRONMENT

Air curtains blow air with or without heat in order to create a wall of air that divides heat from cooling but also provides protection against for example insects, pollen and exhaust fumes. Air curtains are used in order to keep out cold air, but models exist for markets with warm climates where instead hot air is kept out. Air curtains can thereby maintain the desired indoor temperature and contribute to increased energy efficiency and increased comfort. Air curtains are used in places such as store entrées, kiosk windows and industrial gates.

Insects

Hot or coldoutdoor air

Heated or cold indoor air

Dust

Pollen

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OPERATIONS

Smoke Extract FansWithin the product group Smoke Extract Fans, there are combustion gas fans, which are specially developed to be used for emergency ventilation of very high temperature smoke and toxic fumes from fires and combustible gas. This fan series has passed a general usage approval to withstand a temperature of 400°C for two hours, but there are also models which are approved to withstand a tem-perature of 630°C for two hours. Systemair provides roof fans as well as large duct fans and centrifugal fans developed for quick evacuation of com-bustion gases from buildings. Jet fans are used for ventilation as well as emergency evacuation of combustion gases in park-ing garages.

Other Ventilation ProductsSystemair has developed an alternative method for the European market for the cooling of base stations for telecommu-nication. This product has been named Systemair Free Cooling, meaning that a fan is used in order to transport hot air away instead of cooling the air, and in this way to be able to achieve a tempera-ture that never exceeds 2°C to 5°C above the outdoor air-temperature. The prod-uct group Other Ventilation Products also includes the fan products and filters for clean-room technology.

REFERENCE PROJECT:

Combustion gas fans to the central station in Berlin, Germany

The service plant for the ICE trains1) in Berlin has been equipped with 54 smoke extract fans for a value of approximately 50,000 euro. The fans are used for both daily ventilation as well as emergency situations. The plant where all the ICE trains are maintained has a length of 253 meters and a width of 35 meters and inside the build-ing there are 3 tracks beside each other. The project was finished in January 2006.

1) ICE – Inter City Express, high speed train on the German railroads.

42

OPERATIONS

Skinnskatteberg

Main facility Land: 95,000 m² Floor area 30,000 m²Owned since: 1981Employees: 360

KlockargårdenLand: 300,000 m² Floor area: 20,000 m²Owned since: 2002 Employees: 50

The headquarters’ facilities in Skinnskatte-berg consist of one of the Company’s two centralised warehouses and the largest of the Company’s manufacturing plants and the Group’s head office. Fans and accesso-ries are primarily manufactured to be held for future orders. The manufacturing in Skinnskatteberg is to a large extent auto-mated with modern machinery and equip-ment, and accompanied advanced compu-ter software. In this plant, the Company’s most advanced testing facilities are located, used for the measurement of technical data in the Company’s products.

In Skinnskatteberg there is an additional manufacturing plant in Klockargårdens Företagsby, which was acquired in 2002. Frico’s central warehouse of approximately 7,000 m² is located here. During 2005/06, Klockargården underwent a refitting in order to adapt the plant for the assembly of Systemair’s smaller air handling units, the compact units.

Hässleholm – VEABLand: 29,000 m²Floor area: 10,000 m²Owned since: 2001 Employees: 90

The manufacturing plant in Hässleholm primarily produces duct batteries and fan heaters under the brand name VEAB. Approximately 70 percent of the manufac-turing in this plant is made against customer orders and the remaining part is made to be held in stock for future orders. The property in Hässleholm offer the possibili-ties of expanding the existing manufacturing plant by approximately 11,000 m² on the presently undeveloped land.

Eidsvoll, Norway Land: 17,000 m²Floor area: 4,800 m²Owned since: 2001 Employees: 30

The manufacturing plant in Eidsvoll pro-duces air handling units for the Norwegian market and is the distribution centre for fans to the Norwegian market.

Hasselager, Århus, DenmarkLand: 25,000 m² Floor area: 12,000 m², to which an additional 4,800 m2 is rentedOwned since: 2000 Employees: 100

The manufacturing plant in Hasselager produces large air handling units and all production at this plant is made against customer orders. As of August 2007, an additional automatic production line was set up making an increase in production of 50 to 60 percent possible.

MAIN MANUFACTURING PLANTS AND OTHER PROPERTIES

MANUFACTURING PLANTS

43

OPERATIONS

Windischbuch, GermanyLand: 41,000 m²Floor area: 16,000 m²Owned since: 1998 Employees: 130

The manufacturing plant in Windischbuch is Systemair’s second largest, and one of Systemair’s two centralised warehouses is located here. The plant is primarily engaged in the assembly of fans and the largest share of the production is made to be held in stock for future orders. During second half of 2006, the size of the warehouse in the plant was increased by 5,400 m² in order to facilitate a higher manufacturing capacity.

Ukmergé, LithuaniaFloor area: 3,600 m²Employees: 60

Systemair rents a production plant in Ukmergé since 2005. At the plant Systemair mainly produces air handling units for resi-dential ventilation, a production which pre-viously took place in Norway.

Maribor, SlovenienLand: 10,000 m² Floor area: 3,700 m²Owned since: 2005 Employees: 45

The manufacturing plant in Maribor was part of the 2005 acquisition of Marvent. The plant in Maribor specialises in the production of smoke extract fans.

Bouctouche, Canada Land: 300,000 m²Floor area: 13,000 m²Owned since: 1995 Employees: 100

The manufacturing plant in Bouctouche primarily produces duct fans and heat ex changers for home ventilation for the North American market. The larger part of the products produced here are made to be held for future orders, but a certain amount is for specific customer orders.

Bratislava, Slovakia Land: 12,000 m2

Floor area: 4,800 m²Owned since: 2007 Employees: 150

The manufacturing plant in Bratislava was part of the 2007 acquisition of Imos. The plant in Bratislava manufactures air terminal devices and fire dampers.

Madrid, Spain Floor area: 6,000 m²Employees: 50

Systemair leases a manufacturing plant in Madrid since the 2007 acquisition of Koolclima. The plant in Madrid manufac tures air handling units.

44

OPERATIONS

Systemair owns all of their manufactur-ing plants, apart from the plants in Lithuania and Spain which are leased under five and four year lease agree-ments. The ownership of production plants is a conscious strategy and the Company has historically been successful in establishing well-adapted manufactur-ing plants at a low cost. All manufactur-ing plants are well-maintained. The investments which are made in the plants are made as necessary for the purpose of increasing manufacturing capacity and warehouse space. The acquisition costs for the property amounts to SEK 560 million and the booked value as of 30 April 2007 amounted to SEK 435 mil-lion. Systemair considers it to be a signi-ficant advantage to own their properties and thereby be able to guarantee low costs both now and in the future.

Systemair has ten main manufactur-ing plants, and four distribution centres, located in ten different countries. These facilities have a total factory space of approximately 130,000 m², including the warehouses. Of the distribution centres Skinnskatteberg, Sweden and Windischbuch, Germany, are to be con-sidered principal.

SwedenThree of Systemair’s plants are in Sweden. The Company’s main plant is located in Skinnskatteberg, and the manufacturing in this factory is to a large degree automated with a machine park fitted with high-quality machinery and equipment, supported by advanced com-puter software. For example, steel plate processing occurs in an automatic line of close to 100 metres long with multiple processing machines and a computer controlled sheet steal storage system. The manufacturing line was inaugurated in 1998 and along with an upgrading of the machinery and equipment entailed an investment of approximately SEK 65 million. In order to improve the internal logistics, the system uses unmanned, computer-controlled forklifts for internal transportation of materials between workstations, for managing warehouse operations and for transportation of the products to the loading dock. During 2002, Systemair increased its production in Skinnskatteberg and another manu-facturing plant was added when the nearby Klockar gårdens Företagsby was acquired. One of Systemair’s two central-ised warehouses is located in close vicini-ty of both of the manufacturing plants in Skinnskatteberg. The third plant in

Sweden is located in Hässleholm and manufactures products under the brand name VEAB.

Nordic regionSystemair has two additional manufac-turing plants in the Nordic counties. In Hasselager, located just outside Århus in Denmark, are custom-ordered ventila-tion units for high volume air flows manufactured. During 2006, a decision was made to make an investment in a new production line in order to enable a 50–60 percent increase in production. In order to increase production capacity 4,800 m2 adjacent to the existing plant has been leased. The new line was inau-gurated in August 2007 and meant an investment of approximately SEK 12 million. In the Company’s plant in the town of Eidsvoll in Norway, ventilation units for the Norwegian market are pro-duced.

Rest of EuropeSystemair has five additional manufac-turing plants in Europe. The second largest manufacturing plant is located in the town of Windischbuch in Germany. Most products manufactured at this plant are based on the assembly of pur-chased components. During the second

Production line at the Company’s main plant in Skinnskatteberg.

Unmanned, computer-controlled forklifts in the warehouse in Skinnskatteberg.

45

half of 2006, the plant was expanded by 5,400 m² in order to enable a higher manufacturing capacity. Systemair’s other centralised warehouse is located in Windisch buch, where fans, air diffusers, heating products and air curtains among other products are warehoused.

To increase the manufacturing capaci-ty and to decrease the expenses for partic-ularly labour-intensive products, Systemair entered into a lease for a manu-facturing plant in Ukmergé in Lithuania in April 2005. The production at the plant in Lithuania began in autumn 2005 and up to 31 December 2006 required an investment of approximately SEK 10 mil-lion, including the necessary renovation of the premises and the purchase of two automated punching machines and two presses for the mandrel of steel plate details. The completed products are trans-ported from the plant in Lithuania to the centralised warehouse in Skinnskatteberg or directly to the larger markets for stor-age and further distribution.

The establishment of the manufac-turing plant in Lithuania has been suc-cessful and Systemair already sees the need for a larger manufacturing space. In September 2006 it was therefore decided to acquire a piece of industrial zoned land in Ukmergé, Lithuania and the Company’s ambition is to build a new manufacturing plant of approximately 10,000 m² on the acquired property. When completed, the plant which the Company now leases will be vacated. The new manufacturing facilities are planned and could be ready for occupan-cy during 2008.

Systemair’s third European manufactur-ing plant is located in Maribor, Slovenia. This plant became a part of Systemair real estate holdings in 2005 in connec-tion with the acquisition of Marvent and is specialised in high temperature smoke extract fans.

Systemair has another manufactur-ing plant located in Bratislava, Slovakia. The plant manufactures air diffusers and fire dampers, and became part of Systemair holdings in connection to the 2007 acquisition of Imos.

The fifth European manufacturing plant is located in Madrid, Spain. Systemair leases the plant, which is spe-cialised in air handling units.

Products for the North American market are primarily produced at the Company’s plant in Bouctouche, located in eastern Canada in the vicinity of Halifax. This plant has a close working relationship with the plant in Skinnskat-teberg, as certain components for the production in Bouctouche are produced in Skinnskatteberg and are sent to Canada for assembly. A part of the manufacturing for the North American market also occurs in the Company’s plant in Sarasota, USA.

The manufacturing at the plants is planned monthly with the goal of hold-ing between 15 and 30 days worth of sales in stock. With the objective to optimise manufacturing and warehous-ing, the Company has developed a ware-house, logistics and distribution system between the centralised warehouses and the sales companies, where a certain amount of goods are held. For more

information, see heading Logistics and distribution.

Other propertiesIn addition to the manufacturing plants, Systemair owns 10 real estate properties according to the table below. The prima-ry usage of these properties are offices and warehouses for Systemair’s sales companies.

PURCHASINGSystemair’s purchasing in Europe is pri-marily handled centrally via a purchasing department, but depending on the size of the subsidiaries, there may be a local purchasing organisation with a lead buy-er managing the department. All manu-facturing companies have their own pur-chasing organisation and coordination of the purchases are made via one to three meetings a year and via daily contacts. For certain product groups, for example motors, electrical components and acces-sories, there are global supplier agree-ments where the respective unit can buy directly from selected suppliers under terms established centrally. In addition to these centrally managed purchases, there are a number of local suppliers where the agreements are negotiated locally. Systemair has a well-developed business system for all units, which pro-vides good possibilities for the follow-up of prices and contractual terms. The bulk of the sales companies’ total purchases are products manufactured by or pur-chases made by Systemair, the propor-tion however varies between the different companies. On the collective level, the proportion is around 80 percent. The sales companies which were established by Systemair in principle only sell Systemair’s products, while the acquired companies also sell other products. The proportion of Systemair products in acquired companies ordinarily gradually increases over time.

Generally, Systemair strives to achieve long-term supplier relationships where the supplier will meet the require-ments concerning environmental consid-erations, quality, logistics, price and

OPERATIONS

Company City Country Area, sqm

Altexa-Frico Vienna Austria 2,100

Fans & Spares Birmingham United Kingdom 1,636

Gelu-Frico Schlierbach Germany 3,042

Systemair Vanda Finland 700

Systemair Warsaw Poland 2,500

Systemair Prague Czech Republic 380

Systemair Sandnes Norway 2,181

Systemair Tallin Estonia 2,430

Systemair US Estates Sarasota USA 8,000

Villavent Oxford United Kingdom 582

23,551

46

OPERATIONS

technical expertise. Systemair tries to place large volumes with selected suppli-ers in order to decrease the costs, both for the supplier and for Systemair. In order to decrease the dependency on individual suppliers and in order to increase the supplier’s ability to respond to Systemair’s accelerated need of prod-ucts, Systemair endeavours to purchase a maximum of 20 percent of its suppliers’ total output. Certain suppliers are responsible for the bulk of the deliveries within individual product groups. Some are considered as strategic by Systemair’s management based on their possibility to grow in line with Systemair and to main-tain a reliable supply of products in the future. During the financial year 2006/07, Systemair had approximately 1,400 suppliers, where the 10 largest suppliers were responsible for approxi-mately 37 percent of Systemair’s total purchases.

In order to secure the production and sales, Systemair has decided to keep its critical components in stock. Where it is possible, the purchases are made directly on needs-based terms depending on manufacturing or sales requirements. Sys-temair has chosen to place the largest part of the quality control in the supplier stage. The frequency of defects from sup-pliers has been so small that an additional receiving inspection has not been consid-ered to be necessary. Any deficiencies in quality will instead be caught in the final inspection in the manufacturing where all products are tested by computer con-trolled equipment. An increased share of purchasing comes from Eastern Europe, where several large suppliers have estab-

lished business operations in order to maintain and increase their competitive-ness.

The largest proportion of the Group’s purchases consists of motors, which represents approximately 24 per-cent of the total purchases. As Systemair’s fans are in the upper quality range, the motors, which are a critical component, are purchased from well-reputed manu-facturers. The suppliers of motors are primarily the German manufacturers ebm-papst and Ziehl-Abegg. Historical-ly, ebm-papst has delivered smaller motors and Ziehl-Abegg larger motors, but today a majority of motor types can be found at both suppliers. The manage-ment of Systemair regards ebm-papst and Ziehl-Abegg to be world- leading suppliers of high-quality external rotor motors. Systemair has signed supplier agreements with both suppliers, meaning that they are a prioritised provider of motors within selected segments. The agreements are premised on that ebm-papst and Ziehl-Abegg will continue to offer market-related terms. Since the beginning of 1974, Ziehl-Abegg and ebm-papst have been Systemair’s primary suppliers of motors, and historically have displayed high competitiveness.

Steel sheet for the manufacturing operations is purchased from a local service centre. The raw materials are delivered by one of the three main steel suppliers SSAB, Ruukki and Arcelor. The reason for this is to decrease vulnerability to any possible operational interruption in the steel mills, and to have control of market prices from different suppliers and in different countries.

LOGISTICS AND DISTRIBUTIONSystemair’s business model is based on the three cornerstones for increased customer value: products, expertise and logistics. The logistics organisation’s priority is to ensure a high level of availability of prod-ucts for the customer via satisfying the delivery of the right product, at the right time and to the right destination.

Systemair has a selected standard assortment of approximately 2,000 prod-ucts where the service objective is that these products always will be available for delivery directly from the distribu-tion centres located in Sweden and Germany. In each local sales company, there is at least one warehouse where approximately 600 of these standard products can be found in stock. This warehousing philosophy means that Systemair can offer all customers in Europe a delivery time for standard products of within 24 hours from local warehouses and within 72 hours from the distribution centre in either Sweden and Germany.

In order to meet the Company’s growth ambitions and continous changes a common business system has been implemented. Today, 31 companies of total of 52 operative companies make use of the common business system, and the goal is that the remaining companies will be integrated within two years. This tool ensures and makes possible the control and follow-up of the entire service chain from manufacturing, purchasing, ware-housing and delivery to the customer. The internal distribution has a high level of automation where distribution order proposals are based on history, incoming orders, forecasts and the quantities in the warehouse, and automatically generates resupply of the local warehouse stock from the distribution centres.

In Europe, Systemair has manufac-turing facilities in Sweden, Denmark, Norway, Germany, Lithuania, Slovakia, Slovenia and Spain. The units in Denmark, Norway and VEAB’s plant in Hässleholm distribute the majority of their completed products directly to end customers, while the other manufactur-

The Nordiccountries 33%

North America 6%

Other Markets 1%

Western Europe 55%

Eastern Europeand CIS 5%

PURCHASE BY REGION 2006/07

Fan motors 24%Steel sheet 7%

Merchandise 35%

Other components

4%

PURCHASE BY CATEGORY 2006/07

47

ing plants deliver their completed prod-ucts to the distribution centres. The dis-tribution centre in Sweden primarily serves northern Europe, Russia, Asia and North America, while the distribution centre in Germany handles deliveries to other places in Europe, Australia, Middle East and Africa. The majority of the transportation within Europe is made by truck, while deliveries to North America, Asia, Middle East and Africa are made by sea freight in containers.

In North America, manufacturing takes place in Bouctouche, Canada and some assembly is also made in Sarasota, USA. Some components that have been processed by Systemair in Europe are also shipped to Canada. The plant in Canada also functions as a distribution centre with direct deliveries to customer and internal distribution to the plant in Sarasota and to three external distribu-tion centres. These distribution centres are operated by external distributors to improve flexibility and are located in

Toronto for the Canadian market, and in Ohio and Nevada for the market in the USA.

SALES ORGANISATIONSystemair has a local sales company in each of its larger markets and an export department which sells to other markets. The local sales company consists of a Managing Director, together with a sales manager, who quite often has previously been a ventilation consultant or installer, and a sales team. Larger sales companies may also have administrative personnel. Each sales company also has a Business Board. For additional information, see the heading Organisation in this section.

Sales companies sell products from both Systemair and other suppliers, but the goal is that 80 to 90 percent of the products which are sold by sales compa-nies will be products from Systemair’s basic product line. Systemair endeavours to sell standard products with a similar range of the product line in each sales

company. Systemair’s customers are primarily installers and distributors with-in the electrical and ventilation indus-tries. An important target group for Systemair is also venti lation consultants that design ventilation systems and spec-ify particular products for installers industries. However, depending on underlying market structures the sales distribution between installers and dis-tributors on different markets varies. For example, the markets in United King-dom, Russia, Canada and the USA are driven by distributor sales, while the markets in Germany, the Baltic states and the Nordic countries are to a greater extent driven by installers and ventila-tion consultants. As a result of the mar-ket structure, Systemair has a very broad customer base. During the financial year 2006/07, Systemair had approximately 13,000 customers of which the ten larg-est represented less than 12 percent of the Company’s net sales.

OPERATIONS

Warehouse Skinnskatteberg, Sweden Warehouse Windischbuch, Germany

48

The export department within Systemair sells to markets where Systemair does not have any of its own sales companies. The sales via the export department are most often made via dealers, and the export department also evaluates markets which may at a future date be suited for the establishment of own sales companies.

New sales companies are established either via acquisitions of an existing company, often an agent, or via a new company being established.

PERSONNEL AND DEVELOPMENT OF HUMAN RESOURCESSystemair endeavours to having well-trained, knowledgeable and motivated employees. In the Systemair Academy, the Company has relationships with leading research expertise within the field. The purpose of Systemair Academy is to provide on-going basic and advanced training to salespersons and technicians in the Group, primarily regarding ventilation theory, sales tech-niques and new products. The training also takes place in the field of ventilation and health, in other words how ventila-tion influences people’s health, abilities to perform and wellbeing. During 2007, a comprehensive development pro-gramme, based on customer surveys, was implemented for the employees in Sweden and abroad.

Decentralisation and entrepreneurship characterises Systemair and has been a factor in its success in retaining key per-sonnel in the companies acquired. Another important factor with company acquisitions is integration. Via inviting all employees in a newly acquired sales company, or the company management if it is a manufacturing company that has been acquired, to the Company’s main office in Skinnskatteberg, the integration works out smoother. The personnel are able to see a modern manufacturing plant with both automated production and more labour-intensive assembly work and an advanced laboratory for measurements of sound and air flow. They have the opportunity to experience Systemair’s strong company culture and the clear common values which form the basis for the strong solidarity and com-mitment which characterises the organi-sation.

During the financial year 2006/07 the average number of employees amounted to 1,471, of which 29 percent were women and 71 percent were men. The split of men and women varies between different subsidiaries and manu-facturing plants. It should be noted that the manufacturing plant at the headquar-ters office has five forepersons, of which four are women.

Persons in key positions are recruited both externally and internally, and Syste-mair has made the assessment that the future recruitment needs will be able to be met.

A good and stimulating workplace is crucial in order to be able to recruit and retain skilled employees. The work envi-ronment in offices and workshops is something which is prioritised. Signifi-cant commitments and substantial resources are expended on creating an environment where the personnel feels good physically and mentally. These efforts have been successful, for example the extended absence due to illness dur-ing 2006/07 at the plant in Skinnskatte-berg decreased to 0.5 percent, which can be compared to the previous year’s extended absence of 1.5 percent.

No conflicts in the form of work stoppages, reduced working speed or other types of industrial action have occurred.

NUMBER OF EMPLOYEES(AVERAGE)

2006/07 1,471

2005/06 1,288

2004/05 1,205

2003/04 1,1662002/03 1,170

OPERATIONS

49

SYSTEMAIR’S COMPANY CULTURE

Systemair has a company culture where the value norms and monthly profit reporting govern and lead the organisation. Systemair views the organisation as being transparent, pragmatic, direct and efficient. In order to strengthen the norma-tive forces in a positive way, Systemair has collected and put down in writing those values and standards which the organisation itself has chosen to be governed by. These values consist of seven key norms for interaction between employees.

These seven key norms are:

We make the work of the ventilation installer easierThis represents the central vision and involvement to work in a consistent manner to simplify and be direct.

We make it simple – the straight wayThis motto has long been the basic philosophy at Systemair. To always question if the decisions and activities undertaken, are the best approach, to ensure that the simplest and most economical solution is chosen. The simplest is often the best, and Systemair has a long-standing tradition when it comes to accommodating such solutions. Everyone is respon-sible to themself, to ensure that work responsibilities and the daily tasks can be carried out simply and well. To keep track and prioritise, has for many, proven to make an impact when it comes to simplifying the daily routines. “Simple and robust” is present in all parts of the product development as well. The products are, and are intended to be, an easy choice, easy to install, maintain and use.

We are trustworthy and reliableTo take a collective responsibility in order to keep our promises is of high priority within Systemair’s organisation. Prod-uct knowledge, both the possibilities and limitations of the products, is expertise within the organisation. By means of direct management, such as short response times and proper feedback, Systemair builds confidence for its brands.

We do not sit and wait Systemair has an aggressive basic attitude. The objective is to be proactive by seeking new possibilities, using the informa-tion available in the decision-making process and then quickly acting on it. Growth is a part of the core within the Systemair culture, something which means that the pace is always fast and that one needs to keep the focus on what is actually important. This makes the organisation pragmatic and aggressive. The display of initiative and responsibility is rewarded on a daily basis, and everyone is encouraged to seek information and ask for assistance when it is needed.

We grow stronger through changeSystemair dares to go its own way – an organisation which has learnt from large changes and continually has larger work responsibilities, does not regard change as a problem, but rather as a part of everyday life. With major restructuring and fast growth, the organisation has also learnt that some decisions can turn out to be a mistake and need to be changed. In such a case, it is important that neither ego nor prestige takes priority, and thus the way we do it at Systemair is not to assert ones status.

We speak outAt Systemair, it is both a right and an obligation to speak up when someone does not agree, sees a problem or mistake, or sees

the need for a change. An open dialogue is the key in direct communication between the parties concerned, and where

solutions are the priority, and personal attacks are avoided. Good initiatives are rewarded on a daily basis and everyone is loyal

to the decisions made.

We believe in our (business) conceptSystemair has a product line which everyone is in agreement with and which is being marketed. It is important for the Group to take advantage of the economies of scale which are present in a broad sales network and that everyone is in agreement about which products are to be included in the standard product line. All transactions at Systemair are to be, first and foremost, based on financial profit, and it is therefore understood that on certain occasions, an order must be declined.

OPERATIONS

50

OPERATIONS

PRODUCT DEVELOPMENTSystemair has adopted a strategy which places special importance on product development, and the Company strives to be a market leader in regards to the level of technology and design in their products. In Skinnskatteberg, Systemair has one of Europe’s most modern devel-opment centres concerning ventilation products. Product development is prima-rily focused on improvement of existing products and is carried out within all of Systemair’s product groups. It should be additionally mentioned that Systemair focuses on environmentally-friendly product development and undertakes comprehensive testing of energy con-sumption as well as ensuring that each product and its components is able to be recycled and that the product’s input goods are environmentally-friendly. Within the ventilation industry, patents and design protection are used only to a limited extent, which underlines the importance of always being well-prepared with one’s product development work. Systemair’s product development organi-sation makes use of a standardised and well-thought-out development process.

Systemair’s product development is conducted primarily at the manufactur-ing facilities in Skinnskatteberg

(Sweden), Windischbuch (Germany), Hasselager (Denmark), Madrid (Spain) Bouctouche (Canada), Marvent (Slove-nia) and at Imos (Slovakia). A limited amount of product development also takes place at Frico in Partille (Sweden). The product development organisation employs some 60 staff, of which the largest development unit is located in Skinnskatteberg with approximately 20 full-time employees. In Skinnskatteberg, for example, the ventilation unit series Topvex with heat recovery has been developed, a product which is specially adapted for premises with limited space such as daycare centres and schools. In Germany, a new generation of smoke extractions has been developed. The duct fan was the basis for Systemair’s start just over 30 years ago and in recent years a lot of work has been done to develop a new generation of duct fans with improved technical properties, regarding i.a. higher effectiveness and improved air tightness. Systemair continuously invests in the development of new manufacturing tools and equipment in order to be able to produce larger quantities of particular series in an effective and competitive manner.

During the period 2006/07, the expenses for product development

amounted to approximately SEK 45 mil-lion, corresponding to two percent of sales. Within Systemair’s product devel-opment work, an important part is the cooperative relationship we have devel-oped with leading universities and tech-nical institutes, such as Chalmers University of Technology in Gothen-burg, the Royal Institute of Technology affiliate in Gävle, Mälardalen University, The Technical University of Denmark and The Norwegian University of Science and Technology, for the purpose of having continual access to the most recent technological developments. Within the ventilation industry, it is an advantage if the products are certified by a third party in order to thereby enjoy as high credibility as possible. The certifica-tion is conducted by independent trade organisations, where the two most important organisations are the Ameri-can organisation AMCA and its Europe-an counterpart Eurovent.

Accredited development centerThe majority of Systemair’s product development is carried out by the com-pany development centre and laboratory in Skinnskatteberg. The development centre was inaugurated in January 2003 and meant an investment of approxi-

The main plant in Skinnskatteberg.

51

mately SEK 7 million. The centre is one of the forty or so AMCA accredited development centres for ventilation products in the world, and one of Europe’s most advanced laboratories for ventilation research. In the development centre, parameters such as sound level, air flow, pressure and energy consump-tion can be measured with a high degree of precision. For example, a testing sta-tion exists in the form of a reveberation room where the level of the background noise is under 10 dBA, which in princi-ple corresponds to an absolutely quiet environment. The purpose with the room is to measure and present the cor-rect sound data for Systemair’s products. The reveberation room is approximately 230 m² with double shells built without parallel walls for optimum acoustics and the innermost room is suspended on steel springs in order to minimize the background noise from nearby activities. The development centre also has special climate chambers, which for example can reproduce outside temperatures as low as –20ºC. This means that Systemair is able to test fans and air handling units at sev-eral different levels of air humidity and temperatures, according to both the American AMCA standards and to the European CEN1) standards. During 2005, the laboratory made more than 700 measurements of air flow, noise levels and energy consumption. The test

results are stored in a database and are used in the on-going work related to product development.

Product development is also under-taken at several of Systemair’s plants, including the newly acquired Imos in Slovakia.

QUALITY SYSTEMS AND CERTIFICATIONSystemair actively works with quality matters and strives to have the highest product quality on the market within all its product lines. Since 1993, Systemair in Sweden has been certified according to ISO 9001. In addition to Systemair in Sweden, the subsidiaries Fantech in Canada, VEAB in Hässleholm, Systemair in Denmark, Systemair in Germany, Imos-Systemair in Slovakia and Marvent in Slovenia are also certi-fied according to ISO 9001. Work with the introduction of quality certification according to ISO 9001 standards is tak-ing place in the sub-group, Frico.

ENVIRONMENTAL MANAGEMENT SYSTEMSFor Systemair, environmental issues and environmental work is a prioritised area and the Company is engaged in continu-ous efforts to improve its products, methods and approaches in order to decrease the impact on the environment. Systemair’s manufacturing plants in

Sweden are certified according to ISO 14001 and the intention is that also the other manufacturing plants will seek environmental management certifica-tion. Systemair believes that the Compa-ny’s manufacturing plants and businesses meet the requirements in all the relevant environmental laws and environmental provisions which the Company is cov-ered by.

MATERIAL CONTRACTS Systemair’s main suppliers of fan engines are the German manufacturers Ziel-Abegg AG and ebm-papst. During the financial year 2006/07, Ziehl-Abegg AB delivered approximately 34 percent, and ebm-papst approximately 51 percent, of the fan engines Systemair uses in its pro-duction. The Company does not have any written, main agreement with ebm-papst, rather the business relation is based on a long term co-operation. Systemair and ebm-papst agree on the price on a semi-annual basis, whereupon Systemair currently orders the fan engines when needed. ebm-papst deliv-ers the engines with a reference to its general terms and conditions. Systemair’s business relation to Ziehl-Abegg AG can in all material aspects be described in a similar way as the relation to ebm-papst.

In the daily business Systemair con-cludes agreements on purchase of mate-rial, mainly steel, and services, for exam-ple IT and transport services. Systemair also daily concludes agreements in rela-tion to the sale of the Company’s ventila-tion products. The agreements with Systemair’s customers are typically formed by an order, written or verbal, which is then confirmed in writing by Systemair, together with a reference to Systemair’s general terms and conditions. The Company is of the opinion that the terms and conditions of the daily busi-ness agreements do not deviate from what is regarded as industry standard. With exception for the contractual rela-tions with Ziehl-Abegg AG and ebm-papst, the Company does not assess that there is any particular agreement of material significance for the Company’s business as a whole.

OPERATIONS

1) CEN – European standardisation committee.

52

OPERATIONS

DISPUTESThe Company’s wholly owned subsidiary Frico AB is currently subject to a claim from a real estate company. In autumn 2004, the counterpart claimed damages from Frico AB in the amount of SEK 1.1 million for costs caused by an alleged wrongful calculation of the heating requirement in connection with building of a sports arena in Bromma, Sweden. Frico AB does not consider itself liable and rejects the counterpart’s claim for damages. The dispute is to be settled in court and proceedings are expected to take place in the municipal court of Mölndal, Sweden, in autumn 2007.

Frico AB’s Dutch subsidiary Gelu-Frico B.V. has claimed compensation from a Dutch company in a first instance court for installations of climate roofs made by Gelu-Frico B.V. in 2005. The total claim of Gelu-Frico B.V. amounts to approximately EUR 820,000, of which EUR 329,000 have been written of in the 2006/07 annual report. The counterpart has rejected Gelu-Frico B.V.’s claim. Proceedings are expected to take place in autumn 2007.

Except from what has been stated above, the Company does not currently know of any on-going or expected dis-putes or arbitration proceedings that would, separately or together, be assessed to have a significant negative effect of the Company’s business, financial position or results.

INSURANCESSystemair is insured against damage to property and business interruption. The Company also has a global liability insurance covering claims from third party due to product damages caused by products assignable to any of the Group companies. The Management and Board of Directors of Systemair are covered by insurance to an extent the Company deems adequate for a company of its size and within its industry. Systemair believes that the Company’s insurance coverage is adequate, considering the risks typically associated with the busi-ness. No part of the business is assessed to be of such nature that insurance coverage can not be obtained on reasonable terms.

RELATED PARTY TRANSACTIONSebm-papst which is one of the Compa-ny’s major shareholders is also one of the Company’s most important suppliers of fan engines, see heading Material con-tracts. Systemair appreciates that the pur-chases from ebm-papst are made on mar-ket terms. During the operating year 2006/07, Systemair purchased fan engines from ebm-papst for a total of around SEK 161 million, which corre-sponds to 13 percent of Systemair’s total purchases.

On 20 October 2006, the Company acquired, through its wholly-owned sub-sidiary Systemair US Estates LLC, two properties and all the shares in a partner-ship in Sarasota, Florida. The Company’s main shareholder was, at the time of the transaction, owner of half of the partner-ship interests, which only assets were the properties. The transaction was carried out on market terms. The total price of USD 4,400,000 was based on two inde-pendent appraisals.

Other than as set forth above, none of the members of the Board of Direc-tors, the executive management or share-holders has or had any part in any trans-actions with the Company which are or were unusual in their nature or condi-tions or significant to the Company’s business taken as a whole and that were effected during the current or immedi-ately preceding three financial years. This also applies to earlier financial years and which remain in any respect outstanding or unperformed.

Except for the car loans mentioned under the heading Renumeration to Management in the section Board of Directors, members of Management and the auditors, no loans are outstanding from the Company to any member of the Board of Directors, the executive management or any shareholder or audi-tor in the Group and there are no guar-antees provided by the Company for the benefit of any such person.

Other than the Board fees set by the Annual Meeting and payments under agreements with the Management, there are no transactions or dealings with related parties.

DOCUMENTS AVAILABLE FOR REVIEWDuring the period of validity of the pro-spectus copies of the following docu-ments can be reviewed at Systemair’s main office, located at Industrivägen 3, 739 30 Skinnskatteberg, Sweden, during ordinary business hours during the week: ■ Articles of Association for

Systemair AB■ Annual report for the financial years

2006/07 and 2005/06■ Interim report for the first quarter

2007/08■ This prospectus■ The Swedish Financial Supervisory

Authority’s decisions concerning this prospectus.

ORGANISATIONAL STRUCTURESystemair’s organisation consists of the Executive Group Management with common functions for the Group, and 52 operative subsidiaries in 33 countries and representative offices in Russia and Ukraine. The Executive Management has an overall responsibility for the Group’s development and for the subsi-diaries, acquisitions of companies and the establishment of new ones.

The Executive Group Mangement consists of the Chief Executive Officer and the following functions:■ Finance, with responsibilities for the

Group’s financing, acquisition issues and investor relations

■ Marketing with responsibilities for the Group’s marketing and strategic position in the market. Marketing also participates in the establishment of new sales companies, and with the acquisition of sales companies

■ Purchasing with responsibilities for coordination of the Group’s purchases including support to the subsidiaries of the Group in their purchasing of input goods and trading goods

■ Manufacturing and IT with responsi-bilities for optimisation of the Group’s manufacturing and manufac-turing methods, and responsibility for the Group’s maintenance of its IT systems and the development of these.

53

ORGANISATIONAL STRUCTURE – EXECUTIVE GROUP MANAGEMENT AND COMMON GROUP FUNCTIONS

OPERATIONS

Subsidiaries in the NordicCountries• Denmark• Finland• Norway• Sweden

Subsidiaries in Western Europe • Austria • Belgium • France • Germany • Ireland • Netherlands • Portugal • Spain • Switzerland • United Kingdom

Subsidiaries in Eastern Europe and CIS• Bulgaria • Czech Republic • Estonia • Hungary • Latvia • Lithuania • Poland • Romania • Russia1) • Slovakia • Slovenia • Turkey• Ukraine1)

Subsidiaries in North America• Canada• USA

Subsidiaries in Other Markets• Dubai• Hong Kong • India • Singapore • South Africa

Business Boards

Product developmentMats Sàndor

AccountingAnders Ulff

PurchasingPeter Olofsson

Finance and IRGlen Nilsson

CommunicationBerit Gestrin

Production and ITMats Lund

LogisticsTaina Veittikoski

MarketingSvein Nilsen

CEOGerald Engström

Executive Group Management

Common Group Functions

1) The operation in Russia and Ukraine are conducted through representive offices.

Other Common Group Functions consist of:■ Accounting with responsibilities for

the Group’s financial reporting and anything related to internal reporting procedures

■ Logistics with responsibilities for dis-tribution of the Company’s products

■ Product development with responsi-bilities for coordination of develop-ment of existing and new products, and with the testing of products in order to meet the specifications and standards

■ Information with responsibilities for the Group’s internal and external communication, and providing assist-ance to Accounting and Finance relat-ing to investor relations.

Control of subsidiariesWith the intention of managing and developing Systemair’s subsidiaries, a system exists with a Business Board at each subsidiary. The subsidiaries are headed by a Managing Director who, for his/her support, has a Business Board which consists of one or two individuals

from Systemair’s management. The Business Board discus ses various ques-tions such as business development, positioning in the market, product releases, expansion and acquisitions. The Business Board also serves the purpose of achieving an effective coordination with-in the Group and as far as possible a con-sistent behaviour within the Group.

54

HISTORY

Founding and ownership development Systemair was founded in 1974 by Gerald Engström along with two colleagues under the name L.H.G. Kanalfläkt AB. The operations were based on a new product idea, the circular duct fan, which facilitated installation of fans in ventilation systems compared to fans of earlier design. The manufacturing began in small scale with a manufactur-ing facility in Skinnskatteberg. From the beginning, exports constituted more than 50 percent of the Company’s sales, primarily as a result of successful sales in Norway. The product line grew gradually to encompass rectangular duct fans and sales on several other European markets commenced.

The German fan motor manufactur-ers Ziehl-Abegg and ebm-papst, which have been suppliers to Systemair since the foundation, became part-owners to Systemair in 1985 through the Swedish subsidiary Ziehl-ebm, now ebm-papst AB, after a change of name. The sub-sequent year, Gerald Engström was appointed chief executive officer. During the years 2004 and 2005 the ownership structure in Systemair changed when Ziehl-Abegg sold its shares and Gerald Engström along with ebm-papst became the largest owners. For additional infor-mation, see section Share capital and ownership. The parent company L.H.G. Kanalfläkt AB changed its name in 2002 to Systemair AB.

1970s and 1980s Systemair initiated an international expansion with its own subsidiaries in 1978, through the establishment of the sales company L.H.G. Kanavapuhallin in Finland. Export to the US began in 1981, through the Company RB Kanalflakt in Sarasota, Florida, which was established and owned by a local sales agent. In 1987, Systemair acquired 50 percent of the shares in the company. In the North

American market, the Company markets ventilation products under the brand name Fantech. During 1989, the expan-sion continued with the acquisition of a sales company in Denmark. During the period 1989 to 1991, Systemair gradually acquired all of the shares of the Nor wegian sales company Jolin.

1990s The business was substantially broadened in 1992 as a result of the acquisition of the business operations from the then OTC listed company Frico International. Following the acquisition, the product line was expanded with the addition of fan heaters and air curtains. During the second half of the 1990s, Systemair’s dis-tribution channels were revised when the Company decided that the sales would be made primarily through its wholly-owned sales companies instead of as pre-viously through a combination of own and external sales organisations. Environ-ment Air in Canada, a manufacturer of heat exchangers and at that time a Systemair customer was aquired during 1995. The Company acquired an addi-tional manufacturing plant in Bouctou-che in Canada in 1996 for manufacturing of, among other products, heat exchang-ers and duct fans for the North American market. The Company opened its own representation office in Russia (in Mos-cow) in 1997. During 1997 Systemair also acquired SCIE Systemair, which was Systemair’s sales agent in France and later came to name the Group.

1998/99 During the financial year, Europair in Södertälje was acquired, a company active in the development and sales of diffusers. The same year, the German company LTI Lüftungstechnik in Windischbuch was acquired together with its manufacturing plant. This com-pany became an important manufactur-ing unit and a central warehouse in

Systemair’s logistics systems. The Com-pany produces and markets ventilation equipment for both the German market and for export. LTI Lüftungstechnik’s sales companies in the United Kingdom, Poland and Singapore were integrated into the Group and renamed Systemair

1999/00During the year, the sales company AS APF Grupp in Estonia, with its subsidi-ary in Latvia, was acquired. The same year, the Company also opened a repre-sentation office in Shanghai, China in order to market Systemair’s products in the Chinese market.

2000/01A new distribution centre was completed in Skinnskatteberg during 2000/01, which meant that the Group’s products could be distributed more efficiently. Through the acquisition of Danvent in Denmark, Systemair broadened its range of products to include air handling units for large buildings. During the year, 75 percent of the sales company UAB Alitas in Lithuania was acquired and a sales company was established in Turkey under the name Systemair.

2001/02During the year, Systemair acquired VEAB Heat Tech in Hässleholm, a lead-ing manufacturer of duct batteries and fan heaters, and the unit manufacturer Auranor Aggregater in Eidsvoll, Norway. The same year, the sales company Bivent in Austria and Phoenix Components in the United Kingdom with manufactur-ing and sales of air curtains under the brand name Shearflow, were acquired. During the year, the remaining 50 per-cent of the shares in RB Kanalflakt in the USA were also acquired, and sales com-panies were established in Hong Kong, Hungary and Ireland.

History

55

2002/03During the year Systemair acquired the sales company Meijdijk Ventilatietech-niek in the Netherlands. In Skinnskatte-berg, Systemair purchased an industrial property of approximately 26,000 m² on approximately 30 hectares parcel of land, Klockargården. During the same year, Systemair’s development centre in Skinnskatteberg was put into operation, which has an AMCA accredited labora-tory for the measurement of air flow, energy utilization, electrical safety and sound.

2003/04During the year, the British company Fans & Spares was acquired, which is a distributor of fans and ventilation prod-ucts with nine branches in the United Kingdom. During the year, the German air curtain manufacturer Gelu and the Swiss distributor Antlia (which at the time cooperated with Systemair), were also acquired. A sales company was established in Belgium and a new ware-house for the Norwegian market was built at Systemair’s existing manufactur-ing plant in Eidsvoll.

2004/05During the year the Company established sales companies in South Africa and Romania, and an additional one in the Netherlands in order to market fan heat-ers under the brand name Frico. During the year, the company Pyrox was sold with its manufacturing plant in Tysnes in Norway. During spring 2005, Systemair established a manufacturing plant in Ukmergé in Lithuania, which took over the manufacturing of heat recovery units for residential ventilation from Systemair’s manufacturing plant in Norway.

2005/06In November 2005, Marvent in Slovenia was acquired with a manufacturing plant specialised in high temperature fans for combustion gas ventilation. During the month of December, the sales company Multiventilacao in Portugal was acquired, a company focused on the marketing of ventilation and refrigera-tion equipment. Systemair also estab-lished sales companies in Dubai and Spain, as well as opened a representation office in India, which later was converted into a sales company. During the year, the chief executive officer of Systemair Gerald Engström was awarded Entre-preneur of the Year in Sweden.

2006/07 In August 2006, Systemair established another representation office in China, this time in Beijing, and in September 2006 the sales company Altexa in Austria was acquired. In 2007 Systemair acquired the assets of Matthews & Yates in the United Kingdom, a leading axial fan manufacturer, as well as the Slova-kian company Imos, a producer of air diffusers.

2007/08In June 2007 Systemair acquired the Spanish company Koolclima, with sales and manufacturing of air handling units. During the year Systemair was awarded the Major Export award.

HISTORY

ENTREPRENEUR OF THE YEAR

Ernst & Young holds the Entrepreneur of the Year award each year to highlight entrepre-neurs and to increase the interest for entrepreneurship. The award is presented to entrepreneurs in 37 countries who later represent their country in the international final in Monte Carlo.

Entrepreneur of the Year is awarded to the person who best personifies the criteria of the competition:

■ Business development – a person who is characterised by innovation and innovative creativity and has a strong aspiration for growth

■ Profitability – a person who creates lasting financial results through own financial commitment and risk taking

■ Leadership and personnel policy – a person with good leadership skills and good personnel policy

In 2005, Gerald Engström was awarded Entrepreneur of the Year in Sweden. The jury’s motivation was:“Long-term thinking and consist-ency are two distinctive attributes of the Entrepreneur of the Year 2005. For more than 30 years he has built a large and successful company in a region with old indus-trial traditions. Uniterrupted profit-ability and growth also signifiy the billion-company he has created. Gerald Engström is awarded Entre-preneur of the Year 2005 for his exceptional achievment in making the ventilation company Systemair AB a Swedish company of world class.”

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Condensed financial information

CONDENSED FINANCIAL INFORMATION

SELECTED HISTORICAL FINANCIAL INFORMATION In this section, financial information is presented in summary form for the financial years 1997/98 to 2006/07 and the interim periods 1 May – 31 July 2006 and 1 May – 31 July 2007. The financial information is presented for the accounting period 2004/05 to 2006/07 and is made according to the Interna-tional Financial Reporting Standards (IFRS). From January 1 2005, all listed companies within the EU report accord-ing to IFRS. The effects of the transition to IFRS for Systemair are presented below. The financial statements for the period 1997/98 to 2004/05 have been prepared in accordance with the Swedish Annual Accounts Act (Sw. Årsredovis-nings lagen) and Recommendations from the Swedish Accounting Standards Board (Sw. Bokföringsnämnden).

For commentary on this information, see sections Comments on the financial devel-opment and prospects for the future and Interim report for the period 1 May – 31 July 2007.

EFFECTS OF THE TRANSITION TO IFRS The financial statements for 2006/07 and subsequent consolidated accounts have been prepared in accordance with IFRS. Financial statements have, up to and including 2005/06, been prepared in accordance with the Swedish Annual Accounts Act and Recommendations from the Swedish Accounting Standards Board. The years 2004/05 and 2005/06 have been restated in accordance with IFRS.

The most significant effects of the conversion to IFRS concern the account-ing of goodwill, pensions and financial

instruments. In the 2004/05 income statement, cost of goods sold decreased as goodwill no longer shall be amortised. In the balance sheet goodwill and share-holders equity decreased, which is related to the reversal of goodwill amortisation. Financial fixed assets increased, as a result of revaluation of shares held in Repant in accordance with IFRS. Provi-sions for pensions increased as a result of reclassification of provisions for pensions in Norway in accordance with IFRS.

Changes in the cash flow statement are only attributed to reclassifications of various posts, not to actual changes in the cash flow.

For a more detailed account of the changes arising as a result of the transi-tion to IFRS, see note 2 in section Financial statements.

SUMMARY OF THE CONSOLIDATED PROFIT AND LOSS STATEMENTS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRS

May – Apr May – Apr May – Jul

MSEK 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Income 784.7 861.5 1,012.8 1,235.0 1,589.8 1,685.3 1,710.8 1,895.9 – 1,895.9 2,321.2 2,664.2 599.1 693.9Cost of goods sold –515.5 –588.4 –704.9 –867.0 –1,098.1 –1,174.9 –1,157.6 –1,217.2 2.4 –1,214.8 –1,459.4 –1,651.6 –375.4 –441.9

Gross profit/loss 269.1 273.1 307.9 368.0 491.7 510.4 553.2 678.7 2.4 681.1 861.8 1,012.6 223.7 252.0

Other operating income 8.2 13.7 9.2 19.4 18.6 9.4 22.1 19.0 – 19.0 27.0 29.6 4.0 9.9

Selling expenses –137.6 –163.6 –175.1 –199.2 –274.4 –283.0 –349.4 –417.4 10.4 –407.0 –480.6 –531.6 –117.7 –127.6

Administrative costs –54.7 –66.6 –82.4 –99.0 –130.4 –127.1 –128.0 –133.1 – –133.1 –135.0 –147.5 –34.7 –37.6Other operating expenses –5.9 –12.5 –10.2 –7.4 –11.2 –19.3 –24.1 –13.5 – –13.5 –20.2 –33.7 –4.4 –7.7

Operating profit/loss 79.2 44.1 49.5 81.8 94.3 90.3 73.8 133.7 12.9 146.6 253.0 329.4 70.9 89.0

Net financial income/expense –8.2 –14.0 –13.3 –23.1 –30.2 –23.8 –31.7 –12.3 –2.0 –14.3 –11.3 –18.0 –4.4 –7.4

Profit/loss after financialincome/expense 71.0 30.1 36.2 58.7 64.0 66.6 42.1 121.4 10.9 132.3 241.7 311.5 66.5 81.6

Tax on the profit/loss for the year –13.9 –14.5 –16.9 –17.1 –27.6 –28.4 –22.7 –45.0 10.4 –34.6 –71.2 –56.9 19.3 –24.0

Minority shareholders’ share in the profit/loss for the year –0.7 –2.1 0.8 1.5 –1.3 –0.2 –1.1 –0.5 _ –0.5 –1.0 –1.4 –0.5 –0.8

Net profit/loss 56.4 13.4 20.0 43.0 35.2 37.9 18.3 75.9 21.3 97.2 169.5 253.2 85.3 56.8

57

SUMMARY OF THE CONSOLIDATED CASH FLOW STATEMENTS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRSMay – Apr May – Apr May – Jul

MSEK 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Cash flow from current operations before change in working capital 87,1 48,6 63,2 98,3 113,5 102,2 89,8 144,2 –3,5 140,7 255,1 295,1 63.4 85.5

Changes in working capital –28,7 –59,6 –14,9 –60,9 –81,7 –23,2 –12,9 –53,8 –15,6 –69,4 –36,1 –91,6 –27.7 –40.0

Cash flow from current business operations 58,4 –11,0 48,3 37,5 31,8 79,1 76,9 90,4 –19,1 71,3 219,0 203,5 35.7 45.5

Cash flow from investment activities –67,6 –128,7 –61,7 –149,9 –190,0 –21,1 –103,0 –53,9 –2,9 –56,8 –92,6 –216,3 –19.3 –70.8Cash flow from financing activities 21,7 146,9 6,9 106,2 184,7 –0,9 –47,2 –38,6 22,5 –16,1 –116,9 43,6 –12.1 40.9

Increase/decrease in cash and bank deposits 12,5 7,2 –6,4 –6,1 26,4 57,0 –73,3 –2,2 –0,6 –1,6 9,4 30,8 4.3 15.6

Liquid funds opening balance1) 11,9 24,4 31,5 25,1 18,9 –41,4 –124,6 24,1 – 24,1 21,9 32,1 32.1 61.5Exchange rate difference in liquid funds – – – – – – – – – –0,5 0,7 –1,4 –1.1 0.3

Liquid funds closing balance1) 24,4 31,5 25,1 18,9 45,4 15,6 –197,9 21,9 – 21,9 32,1 61,5 35.3 77.4

1) Difference between ending balance and opening balance between fiscal years, during the period 2001/02 to 2004/05 is attributed to reclassification of overdraft facilities.

SUMMARY OF THE CONSOLIDATED BALANCE SHEETS

Swedish Accounting PrinciplesAdjust-

mentto IFRS

IFRS IFRS

30 Apr 30 Apr 31 Jul

MSEK 1998 1999 2000 2001 2002 2003 2004 2005 2005 2006 2007 2006 2007

Assets

Intangible fixed assets 6.1 25.0 21.0 24.9 62.4 49.0 56.3 44.0 13.0 57.0 63.4 76.5 63 96.1

Tangible fixed assets 178.0 254.7 275.8 373.7 442.9 416.2 432.9 417.9 – 417.9 467.0 617.7 458.4 640.8

Financial fixed assets 4.3 3.8 7.6 8.7 17.0 12.2 50.9 72.7 17.0 89.8 105.8 100.5 139.5 101.1

Total fixed assets 188.4 283.5 304.5 407.3 522.3 477.5 540.1 534.6 30.0 564.7 636.3 794.7 660.9 838.0

Inventories 173.9 194.2 199.5 255.8 328.7 323.5 361.8 376.4 – 376.4 403.8 500.3 420.7 543.0

Short-term receivables 134.1 196.7 206.0 257.8 301.3 333.8 314.5 366.4 0.0 366.4 435.0 538.6 454.8 541.4

Cash and bank deposits 24.4 31.5 25.1 18.9 45.4 15.6 24.1 21.9 – 21.9 32.1 61.5 35.3 77.4

Total current assets 332.4 422.4 430.6 532.5 675.3 672.8 700.4 764.7 0.0 764.7 870.9 1,100.3 910.8 1,161.8

Total assets 520.7 706.0 735.1 939.8 1,197.7 1,150.3 1,240.5 1,299.3 30.0 1,329.4 1,507.2 1,895.0 1,571.7 1,999.8

Shareholders’ equity and liabilities

Shareholders’ equity attributable to Parent Company’s shareholders 212.7 231.0 245.4 301.1 348.5 383.7 394.8 468.8 18.5 87.3 681.9 631.1 751.1 690.8

Minority interest 6.5 6.3 7.2 7.9 5.6 3.6 5.1 5.1 – 5.1 5.9 11.7 5.5 12.0

Shareholders’ equity 219.2 237.3 252.6 309.0 354.1 387.3 399.9 473.9 18.5 492.4 687.8 642.9 756.6 702.8

Provisions 20.1 21.6 19.6 12.0 17.4 5.8 40.7 44.9 11.3 56.2 64.2 75.5 58.5 69.1

Long-term interest-bearing liabilities 71.8 154.5 165.7 243.6 364.0 325.4 273.2 247.9 – 247.9 225.3 251.7 235.4 280.5

Long-term non-interest-bearing liabilities – – – – – – – – – – – – – –

Long-term liabilities 71.8 154.5 165.7 243.6 364.0 325.4 273.2 247.9 – 247.7 225.3 251.7 235.4 280.5

Short-term interest-bearing liabilities 82.3 145.0 149.9 177.7 230.0 195.3 284.1 274.5 – 274.5 223.0 512.8 197.8 529.4

Short-term non-interest-bearing liabilities 127.3 147.6 147.3 197.5 232.2 236.4 242.5 258.1 0.2 258.4 306.9 412.0 323.4 418.0

Short-term liabilities 209.6 292.6 297.2 375.2 462.2 431.7 526.6 532.6 0.2 532.9 529.9 924.8 521.2 947.4

Total shareholder equity and liabilities 520.7 706.0 735.1 939.8 1,197.7 1,150.3 1,240.5 1,299.3 30.0 1,329.4 1,507.2 1,895.0 1,571.7 1,999.8

CONDENSED FINANCIAL INFORMATION

58

KEY FIGURES

Swedish Accounting Principles IFRS IFRSMay – Apr May – Apr May – Jul

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Growth and profitabilitySales growth, % 26.8 9.8 17.6 21.9 28.7 6.0 1.5 10.8 10.8 22.4 14.8 19.6 15.8

Operating margin, % 10.1 5.1 4.9 6.6 5.9 5.4 4.3 7.1 7.7 10.9 12.4 11.8 12.8

Profit margin, % 9.1 3.5 3.6 4.8 4.0 4.0 2.5 6.4 7.0 10.4 11.7 11.1 11.8

Return on capital employed, % 24.3 10.3 9.8 13.3 11.9 11.2 8.7 14.7 16.2 24.7 26.8 26.71) 26.42)

Return on shareholders’ equity, % 30.2 6.1 8.4 15.7 10.8 10.4 4.7 17.6 22.3 29.0 38.6 36.21) 31.22)

Financial position

Net debt/equity ratio, times0.6 1.2 1.2 1.3 1.6 1.3 1.4 1.1 1.0 0.6 1.1 0.5 1.1

Interest coverage ratio, times8.4 2.8 3.0 3.1 2.8 2.8 2.1 6.4 6.0 10.9 11.5 12.1 9.4

Capital employed, MSEK 373.3 536.7 568.2 730.3 948.1 908.1 957.3 996.4 1,014.8 1,136.1 1,407.5 1,189.8 1,512.7

Equity/asset ratio, % 42.1 33.6 34.4 32.9 29.6 33.7 32.2 36.5 37.0 45.6 33.9 48.1 35.1

Working capital, MSEK 180.7 243.3 258.2 316.1 398.0 420.9 433.8 484.8 484.4 531.9 626.9 552.1 666.4

Working capital in % of income23.0 28.2 25.5 25.6 25.0 25.0 25.4 25.6 25.6 22.9 23.5 22.81) 24.22)

Employees

Net sales per employee, MSEK1.4 1.3 1.4 1.4 1.4 1.4 1.5 1.6 1.6 1.8 1.8 0.4 0.4

Number of employees, average549 643 735 854 1,119 1,170 1,166 1,205 1,205 1,288 1,471 1,365 1,685

1) Based on the period 1 August 2005 to 31 July 2006.

2) Based on the period 1 August 2006 to 31 July 2007.

DATA PER SHARE3)

Swedish Accounting Principles IFRS IFRSMay – Apr May – Apr May – Jul

97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 04/05 05/06 06/07 2006 2007

Average number of shares out-standing, thousands 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,543 51,677 51,500 52,000Number of shares outstanding closing balance, thousands 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 51,500 52,000 51,500 52,000

Profit per share, SEK 1.13 0.27 0.40 0.86 0.70 0.76 0.37 1.52 1.94 3.35 4.90 1.66 1.09

Shareholders’ equity per share, SEK 4.25 4.62 4.91 6.02 6.97 7.67 7.90 9.38 9.75 13.24 12.14 14.58 13.28

Dividends, SEK 0.04 – – 0.00 0.00 – – – 0.00 0.78 5.09 – –

3) Number of shares adjusted for share split 100:1 that was passed on the extraordinary general meeting 25 June 2007.

CONDENSED FINANCIAL INFORMATION

DEFINITIONS OF KEY FIGURES

Net sales growthNet sales growth is the change of net sales in relation to the net sales of the previous period.

Operating marginOperating profit divided by net sales.

Profit marginProfits after financial income/expenses divided by net sales.

Return on capital employed Profits after financial income divided by the average capital employed.

Return on shareholder equityProfits after tax divided with average shareholders’ equity.

Net debtInterest-bearing provisions and liabilities less financial assets including liquid funds.

Net debt/equity, ratioNet liabilities divided by shareholders’ equity at the end of the year.

Interest coverage ratioProfits after financial gain/loss plus financial expenses divided by financial expenses.

Capital employedTotal assets less non interest-bearing liabilitites.

Equity/asset ratioShareholders’ equity divided by total assets.

Working capitalNon interest-bearing short term assets less non interest bearing short term liabilities.

Net sales per employeeNet sales for the year divided by the average number of employees.

Profit per shareNet profit divided by the average number of shares.

Shareholders’ equity per shareClosing balance shareholders’ equity divided by the number of shares at the end of the period.

59

0

100

200

300

400

500

600

700

800

2006/072005/062004/05

May–Jul Aug–Oct Nov–Jan Feb–Apr

MSEK

QUARTERLY NET SALES FOR THE THREE MOST RECENT YEARS

0

20

40

60

80

100

120MSEK

2006/072005/062004/05

May–Jul Aug–Oct Nov–Jan Feb–Apr

OPERATING PROFIT PER QUARTER FORTHE THREE MOST RECENT YEARS

300

350

400

450

500

550

600

650

2006/20072005/20062004/2005

MSEK

31 Jul 31 Okt 31 Jan 30 Apr

WORKING CAPITAL PER QUARTER FORTHE THREE MOST RECENT YEARS

INTRODUCTIONSystemair’s net sales has on average increased by 15.6 percent per year during the last ten-year period, and by on aver-age 15.9 percent per year during the last three-year period. The growth is derived from both organic growth and growth via acquisitions, where organic growth contributed about 60%. The growth is a consequence of the Group management’s strategy aiming to increase the sales in existing markets and to establish Systemair in new markets.

Systemair’s operating margin amounted to 12.4 percent during the financial year 2006/07. On average, the operating margin has been 7.3 percent during the last ten-year period. The oper-ating margin was lower during the period 1998/99 – 2003/04 mostly due to a decline in Russia and acquisitons of com-panies in need of restructuring, which co-incided with a generally weaker market, in particular 2002/03 – 2003/04. The increased operating margin is explained primarily by that Systemair succeeded in increasing its volumes and at the same time implemented consistent efforts in order to maintain a low level of costs and efficient purchasing operations.

IMPORTANT FACTORS WHICH INFLUENCE SYSTEMAIR’S PROFITS AND FINANCIAL POSITIONThe growth within the construction and ventilation industrySystemair’s products are used primarily within the construction industry. The business cycles within the construction industry in Systemair’s markets are strongly influenced by the general economic situation and the economic growth in the respective market. The construction market in Europe, and especially the construction market in Eastern Europe, has proven to have strong growth in recent years. Further-more the development in the ventilation market is considered stronger than the construction market. Systemair is of the view that this growth has contributed to the recent net sales growth and that sales will continue to be dependent on the business cycles within the construction industry but in particular the ventilation market. The effects of the swings in con-struction of new building are somewhat muffled however in that Systemair has a large share of the sales in RCA projects and by that Systemair has a broad geo-graphic presence, which makes the Com-pany less sensitive for swings in a sepa-rate market.

The price of fan motors and steelThe largest share of Systemair’s purchas-ing consists of fan motors. The purchases of fan motors during the financial year 2006/07 amounted to SEK 290 million, corresponding to 24 percent of the Com-pany’s total purchasing. Systemair since the beginning used two suppliers, ebm-papst AG and Ziehl-Abegg AG, which historically have delivered fan motors of good quality at competitive prices. As the motors constitute a large part of the cost for Systemair’s products, the pur-chase prices for these have significant importance for Systemair’s profits, even if Systemair historically has been able to pass on price increases to end customers

Systemair uses steel in the form of thin sheet steel as an input good in the Company’s manufacturing process. The purchasing of steel during the financial year 2006/07 amounted to SEK 85 mil-lion, which constituted 7 percent of the Company’s total purchasing. Systemair’s profits are therefore influenced by future steel prices and the possibilities of being reimbursed for higher steel prices. The steel market has shown to have strongly rising prices during recent years, primari-ly as a result of increased energy prices and prices for the raw materials, irons and zinc, which are used in the manufac-turing of steel. Steel is purchased at market prices from the suppliers SSAB, Ruukki and Arcelor.

Comments on the financial development and prospects for the future

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

60

Seasonal variationsSystemair’s sales, profits and working capital are exposed to seasonal variations, as there is a lower demand of its products in July and December. The lower sales during this period means that the working capital also is somewhat reduced, as the lower level of sales leads to a lower amount of accounts receivable. However, at the same time a certain build-up of finished goods inventories occurs right before the higher sales dur-ing the period August to November.

AcquisitionsSystemair’s strategy covers both organic growth and growth via acquisitions. In line with this strategy, the Company has consequently made a number of acqui-sitions, which include both sales compa-nies and manufacturing companies. The acquisitions which Systemair has made can be characterised as being of primarily smaller companies within a particular product niche, or sales companies oper-ating in important markets. During 2003/04, Antlia, Fans & Spares and Gelu were acquired. Antlia had at the time of the acquisition sales of SEK 30 million and had been the local distribu-tor for Systemair in Switzerland for over 25 years. Fan & Spares is a British distributor of fans and ventilation mate-rials, with 50 employees and at the time of the acquisition had estimated sales of SEK 100 million. Gelu is a German air curtain manufacturer which had annual sales of SEK 35 million at the time of the acquisition. No acquisitions were made during 2004/05. During 2005/06 how-ever, Marvent in Slovenia and Multi -ventilacao in Portugal were acquired. Marvent produces fans capable of han-dling high temperatures designed for

smoke and heat ventilation and had a turnover of approximately SEK 28 mil-lion with about 45 employees in 2005. Multiventilacao, today renamed System air Portugal, is a sales company of ventilation products with a turnover of approximately SEK 55 million and about 35 employees in 2005.

DivestmentsPyrox, a Norwegian manufacturer air handling units for the residential house market units, was sold during the finan-cial year 2004/05. Pyrox had a turnover of approximately SEK 74 million with about 55 employees in 2003/04. The divestment of Pyrox was made to increase the efficiency of production.

Since the end of the financial year 2006/07 Camina, a Swedish manufactur-er of wood-burning stoves, has been sold. Camina had a turnover of approximately SEK 53 million with about 13 employees in 2006/07. The divestment of Camina was made in order to concentrate Systemair’s operations to ventilation.

Tax situation On 30 April 2007 Systemair had tax receivables in the amount of SEK 74 mil-lion. The tax receivables are based on the current tax rate in the countries which the subsidiaries are domiciled. The tax receivables are expected to reduce actual tax payments in the pace they can be used as an offset against future taxable income in the countries in question. In addition, on 30 April 2007 the Compa-ny had tax receivables in the amount of SEK 36 million in foreign subsidiaries, which have not been carried forward since it is not considered certain that these will be able to be used as offsets against taxable results within the requi-

site future. Systemair estimates that the future tax burden is going to be 22 – 26 percent at the estimated level of utilisation of deficit deductions. For additional information see Tax losses car-ried forward in this section.

FUTURE PROSPECTS Systemair considers the future develop-ment for the Company’s markets to remain promising. In Europe, the Com-pany sees a potential for increased sales on several markets and it is estimated that the recently acquired companies will con-tribute positively. It is considered that the strong demand for Systemair’s products in Eastern Europe and the CIS will continue, and the Company foresees the potential of selling larger part of their product range on these markets.

One of the most important invest-ments for the expansion in eastern Europe during the present financial year will be the building of a production plant in Lithuania which will become a cornerstone for the quickly developing product area, air handling units.

In North America a weakening resi-dential sector is expected, which is partly compensated by a broadened product port folio and sales to other customer segments.

Systemair’s income amounted to approximately SEK 2,664 million for the financial year 2006/07. This includes acquisitions made during the year SEK 24 million. An estimated additional full year effect of the income in these acquired companies, amounted to approximately SEK 150 million. In addition, Systemair has in June 2007 acquired Koolclima with a yearly income of approximately SEK 71 million.

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

Acquisitions and companies sold since the fiscal year 2004/05

Date Company Transaction CountryNet sales contribution during transaction year (SEK million)

May 2004 Pyrox Divestment Norway 0

November 2005 Marvent Acquisition Slovenia 5

December 2005 Multiventilacao Acquisition Portugal 22

September 2006 Altexa Acquisition Austria 14

March 2007 Matthews & Yates Acquisition UK 5

April 2007 Imos Acquisition Slovakia 5

June 2007 Koolclima Acquisition Spain n.a.

August 2007 Camina Divestment Sweden n.a.

61

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

FINANCIAL INFORMATIONNet salesSystemair’s net sales are generated through the sale of ventilation products. The company defines net sales as the invoiced value for systems and products after deductions made for discounts, bonuses, other price allowances, credit invoices and commissions paid to retail-ers. VAT or similar taxes are not included in net sales.

Cost of goods soldCost of goods sold includes raw material costs, freight costs and costs attributable to production plant, depreciation of pro-duction assets, salaries related to manu-facturing, costs in connection with the maintenance of equipment. Deviations from inventory taking and the discard-ment of goods is included as well as the costs of sold goods.

Other operating revenueOther operating revenue includes exchange profits on receivables and debts that are related to operations, capital gains on external sales of fixed assets as well as sales not included as ordinary sales, such as licences, royalties and government subsidies.

Selling expensesSelling expenses include costs related to the sales function, for example salaries for sales and marketing personnel, ware-house personnel at the sales companies, the costs of printed marketing materials, rents for sales offices and travelling expenses associated with sales activities. Systemair also reports losses on accounts receivable, guarantee costs and deprecia-tion of assets according to plan used by the sales function. Inventory obsoles-cence for raw materials, semifinished goods, finished goods is also reported as selling expenses.

Administration costsAdministration costs mainly include sal-aries, rents and other costs for adminis-trative units and functions at Group and local business management levels as well as central purchasing. Systemair also

reports the depreciation of assets accord-ing to plan which are used in the admin-istrative operations as an administration cost.

Other operating costsOther operating costs mainly include exchange losses on receivables and debts related to operations.

Interest revenueInterest revenue includes interest from banks and other financial institutions as well as interest revenue on current receiv-ables. This item also includes exchange profits attributable to differences in rates on loans.

Interest costsInterest costs include interest costs paid to banks and other financial institutions for short-term and long-term debts including interest on overdue payments for supplier debts. This item also includes exchange losses attributable to differences in rates on loans.

Other financial revenues and costsOther financial revenues and costs include the distribution of profits from affiliated companies. This item also includes capital gains and capital losses on the sale of financial fixed assets.

Tax on current year’s earningsTax on current year’s earnings includes actual tax costs including changes in deferred taxes.

1 MAY 2006 – 30 APRIL 2007 COM-PARED WITH 1 MAY 2005 – 30 APRIL 2006, ACCORDING TO IFRSNet salesFor the financial year 2006/07 net sales grew to SEK 2,664 million, correspond-ing to an increase of 14.8 percent or SEK 343 million compared to the financial year 2005/06. In the Nordic region net sales increased from SEK 757 million to SEK 832 million, which corresponds to an increase of 10.0 percent. In Western Europe net sales increased from SEK 651 million to SEK 769 million, which cor-responds to an increase of 18.1 percent.

Sales in Eastern Europe and CIS contin-ued to be strong and net sales increased from SEK 519 million to SEK 671 mil-lion, which corresponds to an increase of 29.2 percent. In North America net sales decreased from SEK 303 to SEK 287 million, which corresponds to a decrease of 5.3 percent. The reduced net sales in North America could mainly be explained be decreasing exchange rates on American and Cana dian dollars. In local currency net sales increased by around two percent. A decline in home-building in the USA has affected the sales growth negatively. Other markets increased net sales from SEK 92 million to SEK 106 million, which corresponds to an increase of 15.2 percent. Adjusted for acquisitions and divestments, net sales increased by 13.7 percent. The main factor contributing to the increase of net sales was increased sales volumes, mainly within Ventilation units. Price increases contributed to a minor part of the net sales increase. Exchange rate fluc-tuations due to consolidation of foreign subsidiaries affected net sales negatively by SEK 40 million. Adjusted for this recounting effect, net sales increase amounted to 16.5 percent.

Cost of goods soldThe cost of goods sold increased to SEK 1,652 million for the financial year 2006/07, which corresponds to an increase of 13.2 percent or SEK 192 mil-lion compared to the fiscal year 2005/06. The increase in cost of goods sold was mainly related to increased purchase volumes. Production in countries with lower production costs, mainly related to production-related salaries, has contin-ued to increase, which has had a positive effect on the cost of goods sold. Systemair runs a continuous improve-ment program at all production plants to create a more cost efficient production.

Gross profit and gross marginThe gross profit increased to SEK 1,013 million for the financial year 2006/07, which corresponds to an increase of 17.5 percent or SEK 151 million compared to the financial year 2005/06. The gross

62

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

margin increased to 38.0 percent, com-pared to 37.1 percent for the previous year. The increase of gross margin was mainly due to scale benefits at all pro-duction plants.

Other operating incomeOther operating income increased to SEK 30 million for the financial year 2006/07, which corresponds to an increase of 9.6 percent or SEK 3 million compared to the financial year 2005/06. Exchange gains relating to operations represented the largest individual item in other operating income and accounted for approximately 33 percent of other operating income.

Selling expensesSelling expenses increased to SEK 532 million for the financial year 2006/07, which corresponds to an increase of 10.6 percent or SEK 51 million compared to the financial year 2005/06. Selling expenses in relation to net sales dropped from 20.7 percent in 2005/06 to 20.0 percent in 2006/07. Adjusted for acqui-sitions the relation dropped to 19.9 per-cent. Selling expenses consists mainly of personnel costs which amounted to SEK 255 million during 2006/07, which cor-responds to an increase of 13.1 percent or SEK 30 million compared to 2005/06. In relation to the total selling expenses the share of personnel costs increased from 47.0 percent in 2005/06 to 48.0 percent in 2006/07.

Administrative expensesAdministrative expenses increased to SEK 148 million for the financial year 2006/07, which corresponds to an increase of 9.3 percent or SEK 13 mil-lion compared to the financial year 2005/06. Administrative expenses in relation to net sales dropped from 5.8 percent 2005/06 to 5.5 percent 2006/07. Acquisitions completed during the year made a marginal contribution to the increase of administrative expenses.

Administrative expenses consists mainly of personnel costs, which amounted to SEK 82 million in 2006/07, which cor-responds to an increase of 12.0 percent or SEK 9 million compared to 2005/06. In relation to total administrative expenses personnel costs increased from 54.0 percent in 2005/06 to 55.3 percent in 2006/07.

Other operating expensesOther operating expenses increased to SEK 34 million for the financial year 2006/07, which corresponds to an increase of 66.8 percent or SEK 14 mil-lion compared to the financial year 2005/06. The chief contributing factor to the increase in other operating expen-ses was exchange losses relating to opera-tions, which increased to SEK 8 million. Exchange losses relating to operations represented the largest individual item of other operating expenses and amounted to SEK 19 million of other operating expenses, corresponding to 55.2 percent.

Operating profit and operating marginThe operating profit increased to SEK 329 million for the financial year 2006/07, which corresponds to an increase of 30.2 percent or SEK 76 mil-lion compared to the financial year 2005/06. The operating margin increased to 12.4 percent in 2006/07 compared to 10.9 percent in 2005/06. The increase in operating margin was mainly attributable to diminished expen-ditures in relation to sales and produc-tion scale benefits. Acquisitions comple-ted during the year made a marginal con-tribution to Systemair’s operating profit.

Interest incomeInterest income increased to SEK 11 mill-ion for the financial year 2006/07, which corresponds to an increase of 105.5 per-cent or SEK 6 million compared to the financial year 2005/06. The increased interest income is mainly attributable to

increased exchange gains on loans. Inter-est income on bank balances contributed SEK 6 million and exchange gains on loans contributed SEK 6 million.

Interest expenseInterest expense increased to SEK 29 million for the financial year 2006/07, which corresponds to an increase of 17.6 percent or SEK 4 million compared the financial year 2005/06. The increased interest expense was mainly attributable to increased bank loans and higher mar-ket interest rates. The costs for the Com-pany’s loans increased from SEK 18 mil-lion to SEK 27 million, which corre-sponds to an increase of 45.7 percent or SEK 8 million. Exchange losses on loans decreased from SEK 6 million to SEK 2 million, which corresponds to a decrease of 70.2 percent or SEK 4 million.

Other financial income and expensesOther financial income dropped to SEK 0.3 million for the financial year 2006/07, which corresponds to a decrease of 96.1 percent or SEK 7 mil-lion compared to the financial year 2005/06, when the Company accounted for a realised gain from sales of Repant shares and dividend from an associated company under other financial income. Other financial expenses amounted to SEK 0.7 million in the financial year 2006/07.

Tax on current year’s profitTax on current year’s profit dropped from SEK 71 million in 2005/06 to SEK 57 million in 2006/07, which corre-sponds to a decrease of 20.1 percent. The decrease is mainly related to utilisation of acquired tax losses carried forward and one-off item related to acquired tax losses that have been taken up on the date of acquisition. The tax burden for 2006/07 was 18.3 percent compared to 29.5 per-cent for 2005/06.

63

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

1 MAY 2005 – 30 APRIL 2006 COM-PARED WITH 1 MAY 2004 – 30 APRIL 2005, ACCORDING TO IFRSNet salesFor the financial year 2005/06, net sales grew to SEK 2,321 million, which corre-sponds to an increase of 22.4 percent or SEK 425 million compared to the finan-cial year 2004/05. In the Nordic region net sales increased from SEK 650 million during the financial year 2004/05 to SEK 757 million during the financial year 2005/06, which corresponds to an increase of 16.4 percent. In Western Europe net sales increased from SEK 535 million to SEK 651 million, which cor-responds to an increase of 21.6 percent. Sales continued to be strong in Eastern Europe and CIS and the net sales increased from SEK 406 million to SEK 519 million, which corresponds to an increase of 28.0 percent. In North America net sales increased from SEK 244 million to SEK 303 million, which corresponds to an increase of 23.9 per-cent. Other markets increased net sales from SEK 61 million to SEK 92 million, which corresponds to an increase of 51.6 percent. Adjusted for acquisitions and disposals, mainly the acquisitions of Marvent and Multiventilacao, net sales grew by 21 percent. The main factor contributing to the increase in net sales was an increase in sales volumes, mainly air handling units. Price increases were responsible for a small part of the reve-nue increase. Exchange rate fluctuations constituted 4.6 percentage points or SEK 88 million of the net sales increase.

Cost of goods soldThe cost of goods sold rose to SEK 1,459 million for the financial year 2005/06, which corresponds to an increase of 20.1 percent or SEK 245 million compared to the financial year 2004/05. The main reason for the increase in cost of goods sold was increased purchase volumes and a greater utilisation of production capa-cities. Since the beginning of 2005/06, production in Lithuania has been increasing gradually and has replaced the purchases previously made from Pyrox in Norway. This transfer of production to a

country with lower costs has had a posi-tive effect on the cost of goods sold, in particular for production-related salaries. Systemair’s production units did not increase their costs at the same pace as the increase in sales.

Gross profit and gross marginThe gross profit increased to SEK 862 million for the financial year 2005/06, which corresponds to an increase of 26.5 percent or SEK 181 million compared to the financial year 2004/05. The gross margin increased to 37.1 percent for 2005/06 compared to 35.9 percent for 2004/05. The increase in the gross mar-gin was mainly attributable to scale ben-efits at all production units.

Other operating incomeOther operating income increased to SEK 27 million for the financial year 2005/06, which corresponds to an increase of 42.1 percent or SEK 8.0 mil-lion compared to the financial year 2004/05. The chief factor contributing to the increase was exchange gains relat-ing to operations on accounts receivable and accounts payable, which increased by SEK 4.5 million, to SEK 13 million. Exchange gains relating to operations represented the largest individual share of other operating revenue and account-ed for 47.4% of other operating revenue. Another larger item was represented by a capital gain of SEK 1.1 million for the sale of a small property in Denmark.

Selling expensesSelling expenses increased to SEK 481 million for the financial year 2005/06, which corresponds to an increase of 18.1 percent or SEK 74 million compared to the financial year 2004/05. Selling expenses in relation to net sales dropped from 21.5 percent to 20.7 percent. Adjusted for the acquisitions of Marvent and Multiventilacao, the relation dropped to 20.6 percent. Selling expen-ses consists mainly of personnel costs which amounted to SEK 226 million in 2005/06, corresponding to an increase with 13.1 percent or SEK 26 million compared to 2004/05. Average number

of empolyees amounted to 1,288 employees during 2005/06 compared to 1,205 empolyees during 2004/05, corre-sponding to an increase of 83 employees or 6.9 percent. In relation to total selling expenses the share of personnel costs decreased from 49.1 percent to 47.0 per-cent.

Administrative expenses Administrative expenses were relatively constant for 2005/06 compared to 2004/05, SEK 135 million and SEK 133 million, respectively. Administrative expenses in relation to net sales dropped from 7.0 percent to 5.8 percent. Adjust-ed for the acquisition of Marvent and Multiventilacao, the relation dropped to 5.1 percent. A reclassification of real estate-related costs of SEK 2.5 million from administrative expenses to other operating expenses reduced the adminis-trative expenses by the same amount. Administrative expenses consists mainly of personnel costs which amounted to SEK 73 million in 2005/06, correspond-ing to an increase with 7.8 percent or SEK 5.3 million compared to 2004/05. In relation to total administrative expenses the share of personnel costs increased from 50.8 percent to 54.0 per-cent.

Other operating expensesOther operating expenses increased to SEK 20 million for the financial year 2005/06, which corresponds to an increase of 49.6 percent or SEK 6.7 mil-lion compared to the financial year 2004/05. The main reason for the increase in other operating expenses was represented by the reclassification of real estate-related expenses of SEK 2.5 mil-lion from administration expenses to other operating expenses. In addition, exchange losses relating to operations increased by SEK 2.4 million. Exchange losses relating to operations represented the largest individual item of other oper-ating expenses and amounted to SEK 10.4 million of other operating expenses, corresponding to 51.4 percent.

64

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

Operating profit and operating marginThe operating profit increased to SEK 253 million for the financial year 2005/06, which corresponds to an increase of 72.6 percent or SEK 106 mil-lion compared to the financial year 2004/05. The operating margin increased to 10.9 percent for 2005/06 compared to 7.7 percent for the previous year. The growth of the operating margin was mainly attributable to the diminished expenditures in relation to sales and pro-duction scale benefits. The acquisitions of Marvent and Multiventilacao contribut-ed marginally to Systemair’s operating profit for 2005/06.

Interest incomeInterest income increased to SEK 5.5 million for the financial year 2005/06, which corresponds to an increase of 52.8 percent or SEK 1.9 million compared to the financial year 2004/05. The increased interest income is mainly related to increased bank balances.

Interest expensesInterest expenses increased to SEK 25 million for the financial year 2005/06, which corresponds to an increase of 8.4 percent or SEK 1.9 million as compared to the financial year 2004/05. The increase in interest expenses was mainly related to exchange losses on loans, mainly in euro.

Other financial income and expensesOther financial income dropped to SEK 7.6 million for the financial year 2005/06, which corresponds to a decrease of 12.6 percent or SEK 1.1 mil-lion compared to the financial year 2004/05. During 2005/06, other finan-cial income consisted mainly of capital gains from the sale of shares in Repant, a company listed on the stock market. During 2004/05, other financial income consisted mainly of the profit from the sale of the group company Pyrox and the capital gain from the sale of shares in the, at that time, associated company, Repant. Other financial expenses con-sisted mainly of the share of losses in the associated company Repant during the same year.

Tax on current year’s profitThe tax on the current year’s profit rose from SEK 35 million in 2004/05 to SEK 71 million in 2005/06, which corre-sponds to an increase of 105.8 percent. The increase is mainly related to a higher taxable income in 2005/06. The tax bur-den for 2005/06 was 29.5 percent and 26.2 percent for 2004/05.

NOTES TO THE BALANCE SHEETIntangible assetsThe Company’s intangible assets prima-rily consist of goodwill which has arisen via acquisitions. The goodwill items amounted as of 30 April 2007, to SEK 75 million. Systemair has often acquired small companies, and companies or busi-

nesses operations in need of restructuring and rationalisation. The Company has successfully integrated and rationalised acquired companies with low profitabili-ty. All in all this has meant that Systemair has not had to pay purchase prices, which have resulted in major goodwill posts.

Tangible assetsThe Company’s tangible assets consist primarily of buildings, in the form of manufacturing plants and to a certain extent, also offices as well as machinery and equipment. The Company has his-torically been successful in establishing well-customised manufacturing plants at a low cost. The booked value of Systemair’s buildings and land amounted to SEK 435 million as of 30 April 2007. All the manufacturing plants are well-maintained and no significant invest-ments for maintenance are planned. The Company’s real property holdings means all in all that there is good access to well-adapted manufacturing facilities and offices at a low operating cost. Systemair invests continuously in new production machines and the Company’s machinery is assessed to be modern and well main-tained.

Working capitalSystemair’s working capital in relation to net sales has been slightly decreased over the past few years. The change is mainly driven by the active and prioritised work with accounts receivable and inventory effectivisation.

An important means of assistance in this work is a joint business system for a majority of the companies within the Group, which enhances to keep the fin-ished products inventory at an optimal level. At present 31 of Systemair’s 52 operating companies have the same busi-ness system and the integration of other companies, where considered appropri-ate, is in progress. To reduce accounts receivable Systemair has intensifiered the follow-up both on local- and board level. Credit information checks are also made at a regular pace of new customers.

Systemair’s intangible assets IFRS

SEK million 30 April 2005 30 April 2006 30 April 2007

Goodwill 57.0 63.4 75.0

Other intangible assets 0.0 0.0 1.5

Total intangible assets 57.0 63.4 76.5

Systemair’s tangible assetsIFRS

SEK million 30 April 2005 30 April 2006 30 April 2007

Buildings and land 296.3 326.3 434.6

Plant and machinery 65.6 77.7 93.0

Equipment and tools 49.0 50.3 59.2Construction in progress 6.9 12.6 30.9

Total tangible assets 417.9 466.9 617.7

65

QUARTERLY BREAK-UP OF WORKING CAPITAL FOR THE LAST THREE YEARS

0

200

400

600

800

1,000

1,200

–500

–400

–300

–200

–100

0

Apr –07Jan –07Oct –06Jul –06Apr –06Jan –06Oct –05Jul –05Apr –05Jan –05Oct –04Jul –04

SEK million

Other short-term receivables

Accounts receivable

Inventory

Accounts payable

Other short-term liabilities

Working capital/net sales 12 months rolling

0

5

10

15

20

25

30

2004/05 2005/06 2006/07

%

In the chart below Systemair’s working capital is showed by quarter for the last three years, divided by main items. As showed by the chart working capital in

relation to the last twelve months net sales increased temporarily by the end of the second quarter (October) in 2005/06 and 2006/07. This is mainly explained

by increased accounts receivables as a result of strong sales during the quarter.

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

Shareholder equity and total liabilities with information about guarantee commitments and pledges1)

IFRSSEK million 30 April 2007

Liabilities for guarantee commitments 3.6

Liabilities for pledges2) 395.0Unsecured credit3) 853.5

Total short-term liabilities 1,252.1

Share capital 52.0

Other contributed capital 0.5

Other reserves –2.2

Retained profits 580.8

Minorities 11.7

Shareholder equity 642.9

Shareholder equity and total liabilities 1,895.0

1) Systemair’s guarantee commitments and pledges are not related to specific short-term and long-term debt, but related to a total credit framework, whereby the division, of guarantee commitments and pledges into short-term and long-term debt is not possible.

2) Pledged assets consist of floating charges (239.4) and real estate (155.6).3) Other liabilities and provisions.

Shareholder equity and indebtedness During the third quarter 2006/07, the Board of Directors for Systemair voted to issue dividends in the amount of SEK 200 million. The purpose with the divi-dend was to create a well-adjusted capital structure taking into regard the growth

which Systemair anticipates including acquisitions of some small companies, as well as for an adaptation to being a stock exchange listed company. In connection with the dividend, Systemair incurred new loans via which the net indebtedness increased by SEK 200 million. Below

there is a presentation of Systemair’s shareholder equity and liabilities per 30 April 2007, including information about guarantee commitments and pledges.

Systemair’s net indebtedness as of 30 April 2007 is also presented on the follow-ing page. The Group’s net indebtedness amounted to around SEK 679 million at specified date. Note that the information is older than 90 days from the date of this prospectus. No material changes of these items have however occurred since 30 April 2007. A more brief description of shareholder equity and indebtedness as of 31 July 2007 can be found in the interim report for the first quarter 2007/08, which is included in this prospectus.

Bank loansSystemair’s financial debt amounted to SEK 765 million as of 30 April 2007 con-sisting of unused bank overdraft of SEK 462 million, short-term part of long-term liabilities of SEK 51 million and long-term bank loans of SEK 252 million.

66

Systemair had as of 30 April 2007 a given bank overdraft amounting to a total of SEK 560 million, whereof 98 million is unused. Some of the Company’s bank loans are restricted by covenants. The covenants mean that Systemair has com-mitted itself to keep the Company’s equity to assets ratio and interest coverage ratio within certain limits, given in the loan agreements. Systemair’s current indebted-ness means that the Company’s equity to asset ratio and interest rate coverage is within the required levels, according to the financial policy.

Financial resources and cash flowSystemair’s financial resources are prima-rily made up of the cash flow generated from operations, liquid funds and the company’s non-utilised credit facilities. As of 30 April 2007, Systemair had liq-uid assets and other short-term invest-ments for a total of SEK 62 million as well as a non-utilised overdraft facility of SEK 98 million.

None of Systemair’s subsidiaries are subject to significant legal or financial limitations regarding their possibilities of transferring funds to the parent company via dividends or loans.

Systemair’s loans are subject to certain restrictions from the borrower, see fur-ther Bank loan in this section.

Systemair’s borrowing requirements varies as a result of seasonal variations in the Company’s working capital. Systemair does not expect any increase in their borrowing requirements during the present or coming financial years over and above the framework stipulated in the existing loan agreement. The table above shows the payment undertakings Systemair had as of 30 April 2007 regarding financial liabilities.

Except for what is reported in the interim report for the period, 1 May – 31 July 2007 on pages 81 – 89, no signif-icant changes to the Group’s financial position or market position have occurred.

The Company considers that finan-cial resources are sufficient to satisfy their need for working capital.

INVESTMENTSHistorical investmentsThe Group’s total investments amounted to SEK 213 million during 2006/07, of which Systemair’s investments in tan-gible assets amounted to SEK 172 mil-lion. The most significant investments in machinery and equipment was made at the production units in Skinnskatteberg, Hässleholm, Denmark, Canada and Lithuania. Total investments in machin-ery and equipment amounted to SEK 44 millions.

In USA the property in Sarasota, Florida, where the subsidiary Fantech is situated, has been acquired for around SEK 32 million. The property comprises around 700 m2 office space and around 7,000 m2 warehouse and assembly space. In Vienna, Austria, Altexa-Frico GmbH has acquired its premises for around SEK 23 million. In Skinnskatteberg the ware-house has been extended with another 3,000 m2, an investment of approxi-mately SEK 11 million. The premise was finished in the beginning of May 2007. After the extension Systemair has dispos-al of around 50,000 m2 in Skinnskatte-berg. In Windischbuch, Germany, the Groups distribution centre for Central

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

Financial net indebtdness in Systemair1)

IFRSSEK million 30 April 2007

Cash and liquid funds 61.5

Securities held for sale 0.1

Liquidity 61.6

Bank overdraft 462.2

Short-term part of long-term liabilities 50.6

Other short term liabilities 0

Total short-term liabilities 512.8

Net short-term intebtedness 451.2Long-term bank loans 251.7

Issued bonds 0

Other long-term loans 0

Long-term indebtedness 251.7

Financial assets 24.3

Net indebtedness 678.6

1) Only interest bearing liabilities are presented in the table

Summary of cash flow from current operationsIFRS

SEK million 2004/05 2005/06 2006/07

Operating profit before tax 146.6 253.0 329.4

Adjustments for items not impacting on liquidity 52.7 64.1 38.4

Taxes paid –39.3 –42.7 –56.3Changes in working capital –69.4 –36.2 –91.6

Cash flow from current the operations 90.6 238.2 219.9

Payment obligations concerning financial liabilitiesIFRS

SEK million 30 April 2005 30 April 2006 30 April 2007

Liabilities to credit institutions 522.4 448.5 764.5

Total 522.4 448.5 764.5

Payment obligations concerning financial liabilities as of 30 April 2007

Less thanone year

One tofive years

More thanfive years TotalSEK million

Liabilities to short-termcredit institutions 512.8 81.8 169.9 764.5Total 512.8 81.8 169.9 764.5

67

Europe has been extended with around 5,900 m2. The total investment in the extension amounted to SEK 20 million and was finished in January 2007.

During 2006/07 Systemair acquired companies for SEK 50 million. The companies Altexa in Austria, Matthews & Yates in the United Kingdom and Imos in Slovakia was acquired, see the heading Acquisitions in this section.

The Group’s total investments made were SEK 93 million in 2005/06, of which Systemair’s investments in tangi-ble assets amounted to SEK 78 million. During the year production was com-menced at the plant in Lithuania, where the Company invested in new machin-ery. The main plant in Skinnskatteberg increased machinery assets, partly to increase capacity and partly to enable production of compact air handling units. Production facilities at the Klockar-gården property in Skinnskatteberg were also rebuilt to be used for assembly of so-called compact air handling units.

The subsidiary VEAB in Hässleholm increased existing storage area and pro-duction facilities to a cost of SEK 9 million .

The subsidiary Gelu-Frico in Ger-many acquired an industrial and office building to a cost of SEK 10 million.

During the year an extensive upgrade of the Group’s business system was also

made to a new technology platform, enhancing operational safety.

In 2005/06 Systemair acquired busi-nesses to a cost of SEK 20 million. The companies Marvent in Slovenia and Multiventilacao in Portugal were acquired, see heading Acquisitions in this section. In Canada a former production facility was sold for SEK 2 million.

The Group’s total investments made were SEK 57 million in 2004/05, of which Systemiar’s investments in tangi-ble assets amounted to SEK 47 million.

Systemair in Norway invested in two machines for production of rotating heat exchangers to make the production more effective. Fantech in Canada invested in a new machine for flat heat exchanges. Systemair in Skinnskatteberg invested in a new powder coating facility and improved production efficiency. In Skinnskatteberg new exhibition facilities were also built at Klockargården proper-ty and a rebuilding was initiated to create a new finished goods storage facility for Frico’s products.

In 2004/05 the Norwegian subsidi-ary Pyrox was divested for SEK 7.4 mil-lion. Pyrox mainly manufactured venti-lation units for residential houses, a pro-duction which has been relocated to Lithuania.During the year Systemair also partici-pated in two new issues, totalling SEK

17.6 million, in the former associated company Repant.

Ongoing investmentsThe Company has no ongoing invest-ments of substantial size.

Systemair’s Board of Directors and Management have not made any deci-sions regarding future investments in fixed assets either.

SENSITIVITY ANALYSISSystemair’s growth is influenced by a large number of factors. These factors include, among others, the factors which are found in this section and those which are presented in the section Risk factors. The table below describes the hypotheti-cal effects on Systemair’s operating prof-its 2006/07 as particular factors are changed. The calculations below are hypothetical and should not be inter-preted as an indicator of which particular factors are more or less likely to change or, if they do change, the size of the change. Actual changes and their impact may be larger or smaller than what has been stated in the table below. In addi-tion, it is likely that actual changes will influence more items. Caution should therefore be taken in the interpretation of the sensitivity analysis as changes in different items could have countering effects.

EXPENSES IN CONNECTION WITH THE OFFERING AND STOCK EXCHANGE LISTINGSystemair’s expenses in connection with the Offering and the Company’s stock exchange listing are estimated by the Company to be approximately SEK 6 million.

FINANCIAL RISK MANAGEMENT The Systemair Group is exposed to financial risks via its international busi-ness operations and via its leveraging. Financial risk arises with changes in exchange rates and interest rates which result in variations in the Group’s cash flow and when credits are to be renegoti-ated. Financial risk also includes the risk that another party may not fulfil their

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

Historical investmentsIFRS

SEK million 2004/05 2005/06 2006/07

Acquisition of subsidiaries –8.7 –19.5 –49.8

Divestment of subsidiaries 7.7 0.0 0.0

Acquisition of tangible assets –47.1 –77.9 –171.5

Divestment of tangible assets 3.5 3.2 3.6

Change in financial assets –12.2 1.5 1.5

Cash flow from investment activities –56.8 –92.6 –216.3

Sensitivity analysis concerning effects on operating profit 2006/07SEK million Operating profit

+/– 5% in volume +/– 93

+/– 5% in material costs +/– 65

+/– 5% in sales and administrative costs +/– 34

+5% in exchange rate between SEK/EUR +16– 5% in exchange rate between SEK/EUR – 16

+5% in exchange rate between SEK/USD +5

– 5% in exchange rate between SEK/USD –5

As seen in the table, a five percent change in euro exchange rate affects the operating profit with around SEK 16 million for 2006/07. This effect is compensated correspondingly by effects on financial income through exchange gains and losses on borrowings in euro.

68

obligations. The risk management with-in the Group has the intention of limit-ing the negative effects which may arise with the Group’s profits and cash flow. Review and follow-up by the centralised finance unit takes place continuously, and it also takes place in the larger sub-sidiaries.

Exchange rate risks – transaction exposureWith trade between Group companies, suppliers and customers, a transaction risk arises if payment is made in a currency other than the group company’s local cur-rency. Systemair operates business opera-tions in 33 countries and has extensive sales in various currencies, which leads to an extensive risk of exposure to changes in exchange rates. The foreign exchange risk is primarily vis-à-vis Euros and US dol-lars. The inflow of Euros is currently larger than the outflow, and the policy has been to sell Euros on forward exchange agreements with a maximum contract length of 18 months. The inflow of US dollars is also larger than the outflow, and the policy here has been to sell 50 percent of inflow on contracts of a maximum of 12 months. Systemair’ has so far experi-enced positive results from its currency hedging and is of the opinion that the current strategy is well-balanced.

Exchange rate risks – translation exposure Translation exposure arises with the consolidation, as the foreign subsidiaries’ assets and liabilities are translated to SEK. Systemair applies the current exchange rate method, meaning that assets, liabilities and equity have been translated according to the exchange rate in effect at the close of the reporting period and that the profit and loss state-ments are translated the average exchange rate for the financial year. Foreign currency exchange rate gains/losses which arise via this method are reported directly to shareholder equity. Systemair has elected not to hedge its translation exposure. This may have as a

consequence that exchange rate gains/losses arise which influence the Group’s shareholder equity.

Borrowings and interest rate risk The Group has until now had a policy of having two primary banks: Handels-banken and Nordea. Commitments also exist in Nordic Investment Bank. Several of the subsidiaries also have local banking relationships in order take care of domes-tic banking services such as payment of salaries. A historically positive growth in profits and cash flow has resulted in good liquidity and a strong equity/debt ratio for the Group. In order to have the flexi-bility desired, the Group has up until now elected to have primarily short-term loans in Euros and Swiss francs, with vari-able interest rates and terms of 3 to 12 months. The evaluation of the mix of loan currencies is made at their respective maturity dates. As of 30 April 2007, these loans amounted to an amount corre-sponding to SEK 246 million. The policy to primarily have loans with variable interest rates has so far been successful and the Group sees no reason in the immediate future to change this. Apart from the above mentioned loans, there are two cash pools in order to finance the current operations. A Nordic one with its base in Sweden and a Central European with the base in Germany. Via these, the Group effectively maintains effective con-trol and good cash management.

Credit risks and liquidity risksCredit risk refers to the risk that one of Systemair’s counter parties cannot fulfil their payment obligations, which may lead to a loss for the Company. Systemair does not believe that the Company has any significant credit risks, as the Com-pany has a very large number of custom-ers and is not dependent upon any single individual customer. During 2006/07, the Company’s largest customer was responsible for approximately 3 percent of the Company’s sales, and the ten larg-est customers were responsible for not less than approximately 12 percent of the

Company’s net sales. A credit assessment is made based on the knowledge which the Company management has about the customer and, when necessary, with the assistance of credit bureaus or other similar credit information providers. Each customer also has a credit limit, and prior to exceeding this, a new credit review is conducted. As Systemair is expanding on new markets with different payment customs there is a tendency of increasing credit times. This leads to an increased cost for capital tied up and a higher risk for credit losses.

The liquidity risk refers to the risk that the Company because of a deficien-cy in liquid assets cannot fulfil its finan-cial obligations or has a reduced possi-bility to carry out its business in an effec-tive way. The liquidity is influenced to a large extent by credit extended to cus-tomers and credit received from suppli-ers. As Systemair has a few primary sup-pliers, the payment terms with these are of importance for the Company’s liquid-ity. Systemair has many smaller custom-ers and changes of payment ability and credit terms for these customers have in general a much smaller effect on the Company’s liquidity.

Tax losses carried forward Systemair has tax losses carried forward, which have been obtained primarily via acquisitions of Companies where losses have existed from the company’s business operations. Postponed tax receivables on these losses have been accounted for to the extent they have been deemed to be likely to lead to lower future tax pay-ments. If Systemair’s business in the future is successful in generating suffi-cient taxable income, the Company’s reported deferred tax receivables may be subject to a write-down. The tax receiv-ables may also become subject to write downs in the situation where the tax authorities decide that the losses cannot be used either entirely or in part.

COMMENTS ON THE FINANCIAL DEVELOPMENT AND PROSPECTS FOR THE FUTURE

69

Board of Directors, members of Management and the auditors

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

BOARD OF DIRECTORS

Standing from left: Jan Philippiak, Gerald Engström and Göran RobertssonSitting from left: Lars Hansson, Kevin Rowland, Elisabeth Westberg and Knut Stålenhag

Name Date of birth Member since Position Holdings Independent1)

Lars Hansson 1942 2006 Chairman of the Board of Directors 50,000 Yes

Gerald Engström 1948 1974 Member of the Board, Chief Executive Officer and Group President

32,983,3002) No3)

Jan Philippiak 1971 2006 Member of the Board – No4)

Göran Robertsson 1943 2006 Member of the Board 25,000 Yes

Elisabeth Westberg 1948 2006 Member of the Board 25,000 Yes

Kevin Rowland 1954 2002 Employee representive – –

Knut Stålenhag 1962 2004 Employee representive – –

1) According to the OMX Nordic Exchange’s listing requirements.2) Gerald Engström’s shares are held indirectly via Färna Invest.3) Gerald Engström is not independent due to being the Chief Executive Officer and as a major shareholder. 4) Jan Philippiak is not independent due to being a representative of ebm-papst as a larger shareholder.

Information regarding shares includes companies and related parties.

70

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

Lars Hansson was elected to the Board of Directors in December 2006 and has been Chairman of the Board of Directors since then.

Other responsibilities/positions: Chairman of the Board of Directors of S-group Holding Aktiebolag and Föreningen Svensk Företagshälsovård. Member of the Board and Managing Director of Kvarnbäcken Konsult Aktiebolag and Aktiebolaget Halvarsvikens Vänner. Member of the Board of TRR Trygghets-rådet Aktiebolag.

Former Board memberships/participation in companies during the previous five years: Chairman of the Board of Directors of Svenskt Näringsliv Supportbolaget Aktiebolag, ALMEGA Aktiebolag and Projektbyrån Stockholm AB. Member of the Board in Alecta pensionsförsäkring and Fastighets Aktiebolag Tornet.

Previous positions: Development and Design Manager at Bahco Ventilation during the 1970’s, Managing Director Theorells Ingenjörs byrå 1984 – 1990, Managing Director VBB 1990 – 1997, Managing Director Sweco 1997 – 2000.

Principle education: Lars Hansson has a civil engineering degree from the Kung-liga Tekniska Högskolan in Stockholm.

Gerald Engström has been Chief Execu-tive Officer and Group President since 1986. Gerald Engström was one of the founders to Systemair in 1974 and has since been a member of the Board.

Other responsibilities/positions: Member of the Board and Managing Director of Färna Invest AB. Member of the Board of Färna Herrgård Aktiebolag, Repant ASA, listed on the Oslo Stock Exchange and Indutrade Aktiebolag, listed on the OMX Nordic Exchange.

Former Board memberships/participation in companies during the previous five years: Chairman of the Board of Bransch-föreningen Svensk Ventilation.

Previous positions: Managing Director of Ziehl-ebm Aktiebolag and Färna Herrgård Aktiebolag.

Principle education: Technical high school, Luleå. Business studies at Stock-holm University. IFL’s Top Management Program.

Jan Philippiak was elected to the Board of Directors in December 2006.

Other responsibliites/positions: Chief Financial Officer of ebm-papst Mul-fingen GmbH & Co. KG, Germany.

Principle education: Diplom-Kaufmann at University of Tübingen.

Göran Robertsson was elected to the Board of Directors in December 2006.

Other responsibilities/positions: Chairman of the Board of VVS Tekniska Före-ningen and Förlags AB VVS. Member of the Board of Directors of Air Power Innovation i Karlskoga AB and Eurovent Certification Company.

Former Board memberships/participation in companies during the previous five years: Member of the Board of Swegon Aktie-bolag, Stifab Farex Aktiebolag and Thermia Holding Aktiebolag. Deputy memover of the Board of Directors of Svensk Ventilation AB.

Previous positions: Managing Director of Stifab Farex Aktiebolag 1995 – 2005.

Principle education: Engineering degree and IFL’s one year management educa-tion.

Elisabeth Westberg was elected to the Board of Directors in December 2006.

Other responsibilities/positions: Member of the Board of Swedfund International Aktiebolag, Nord Pool ASA and Nord Pool Clearing ASA.Former Board memberships/participation in companies during the previous five years: Board member in Talloil AB.

Previous positions: Vice president, Handelsbanken Capital Markets 1991 – 2006.

Principle education: A degree in philo-sophy from the University of Uppsala.

Kevin Rowland was elected in 2002. Employee Representative for SIF.

Knut Stålenhag was elected in 2004. Employee Representative for IF Metall.

The Board members Jan Philippiak and Gerald Engström are appointed by ebm-papst and Färna Invest respectively in accordance with the share holder agree-ments between the parts. The sharehold-er agreement will cease to exist at the same time as it is decided to complete the Offering.

No members of the Board of Direc-tors during the previous five years have been involved in any bankruptcy, receiv-ership winding-up a member a Board of Directors, Deputy member of a Board of Directors, member of Management. No members of the Board of Directors dur-ing the previous five years have been sen-tenced in any fraud-related matters or been subject to official accusations or penalties of monitoring or regulatory authorities (including approved trade associations) and none of these has been forbidden by a court to act as a member of a Board of Directors or company management or in any way prohibited from pursuing business activities during the past five years.

The Company does not know of any conflicts of interest between the mem-bers of the Board of Directors obliga-tions vis-à-vis Systemair and their private interests and/or other obligations.

No members of the Board of Direc-tors are entitled to any benefits upon completion of their appointment. No members of the Board of Directors have any family relationship with another member of the Board of Directors or Management.

The office address for the members of the Board of Directors is:Systemair AB (publ)Industrivägen 3SE-739 30 SkinnskattebergSweden

71

Gerald Engström has been Chief Executive Officer and Group President since 1986. Gerald Engström was one of the founders of Systemair in 1974 and has since been a member of the Board. See further Board of Directors.

Glen Nilsson has been the Finance Director since 1999.

Former Board memberships/participation in companies during the previous five years: Member of the Board of Directors of Villavent (Sweden) AB.

Previous positions: Finance director Transwede Airways AB. Administrative manager ICA Detaljhandel AB.

Principle education: Master of Science in Business Administration, Uppsala University.

Svein Nilsen has been the Marketing Director since 2000.

Previous positions: Head of Trondheim department, Pyrox Jolin, which was acquired 1988.

Principle education: Engineer VVS-technique, Trondheim Institute of Technology.

MANAGEMENT

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

Name Date of birth Emploment year Position Holdings

Gerald Engström 1948 1974 Chief Executive Officer and Group President 32,983,300

Glen Nilsson 1952 1999 Finance Director 150,000

Svein Nilsen 1947 1988 Marketing Director 200,000

Mats Lund 1957 1982 Manufacturing Director 200,000

Peter Olofsson 1953 1990 Purchasing Director 200,000

Mats Lund has been the Manufacturing Director since 2003.

Previous positions: Computer program-mer, Asea.

Principle education: Computer program-ming and IT studies at Mälardalen’s Högskola.

Peter Olofsson has been Purchasing Director since 2002.

Previous positions: Own business within farming and forestry, regional Manager Försäkrings AB Skandia and Sales responsible in Sweden for Adolf Ahlers GmbH.Principle education: Industrikaufmann in Germany 1973 – 1976.

Information about holdings of shares are inclusive of holdings by companies and closely related.

72

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

No members of Management have any family relationship with a Member of the Board of Directors or other member of Management.

No members of the Management during the previous five years have been involved in any bankrupcty, reciever ship winding-up a member a Board of Direc-tors, Deputy member of a Board of Directors, member of Management. No members of the Board of Directors dur-ing the previous five years have been sentenced in any fraud-related matters or been subject to official accusations or penalties of monitoring or regulatory authorities (including approved trade associations) and none of these have been forbidden by a court to act as a member of a Board of Directors or company management or in any way prohibihed from pursuing business activities during the past five years.

The Company does not know of any conflicts of interest between the obliga-tions of the members of Management vis-à-vis Systemair and their private interests and/or other obligations. The office address for the Management is:Systemair AB (publ)Industrivägen 3SE-739 30 SkinnskattebergSweden

GOVERNANCE ISSUESThe Board of Directors and the CEOUnder the Swedish Companies Act, the Board of Directors is ultimately respon-sible for the organization and the man-agement of a company. The Articles of Association of Systemair provide that the Board of Directors is to consist of between three and eight directors. The Board currently consists of seven mem-bers (including the employee representa-tives). In addition to the provisions in the Articles of Association, Swedish law provides that the labour unions that rep-resent the Company’s employees have the right to appoint two additional direc-tors and two deputy directors.

Under Swedish law, the Managing Direc-tor and at least half of the Board mem-bers must be residents of a country with-in the European Economic Area, unless the Swedish Companies Registration Office grants an exemption. The Com-pany’s Articles of Association provide that Board members who are elected at a General Meeting of shareholders shall serve for a term expiring at the next Annual General Meeting. The labour unions representing the Company’s employees have discretion to fix the term of the Board members who are employee representatives. While such term may not exceed four years, these members may serve for an unlimited number of consecutive terms.

Board members elected by the share-holders may be removed from office at any time by a general meeting of the shareholders and Board members may at any time resign from the Board. Vacan-cies on the Board may only be filled by a resolution of the shareholders. Under Swedish law, the Managing Director or Chief Executive Officer of a Swedish public limited liability company may not serve as chairman of the Board.

The work of the Board of Directors follows adopted work procedures and the Board has resolved on instructions for the Managing Director. The work proce-dures of the Board provide that the Board meet at least six times during the operating year.

The Swedish Code of Corporate GovernanceThe rules of the OMX Nordic Exchange provide that the Swedish Code of Corporate Governance (the ‘‘Corporate Governance Code’’) is to be applied by all companies on the OMX Nordic Exchange with a market value exceeding SEK 3 billion. The Company will com-ply with the Corporate Governance Code following completion of the list-ing. The Corporate Governance Code is based on the principle of ‘‘comply or explain,’’ meaning that a Company may deviate from the provisions set forth therein, provided that each such devia-tion is properly explained.

Under the Corporate Governance Code the Company is required, among other things, to have a remuneration commit-tee, an audit committee and a nomina-tion committee. The Corporate Govern-ance Code also sets forth composition requirements for each of these commit-tees, as well as for the Board of directors.

The Corporate Governance Code provide that the Company is to adhere to certain independence requirements as regards the composition of the Board of directors. Such requirements entail, among other things, that (i) no more than one member of the Management may also serve as a member of the Board, (ii) the majority of the Board members must be independent of the Company and of the management, and (iii) at least two of such independent Board mem-bers must also be independent of the Company’s principal shareholders (i.e. shareholders who directly or indirectly control 10% or more of our shares or votes of the Company). The chairman of the Board of directors will in accordance with the Corporate Governance Code be appointed by the shareholders’ meeting. Furthermore, according to the Corporate Governance Code, deputies to the Board directors are not to be appointed.

Pursuant to the Corporate Govern-ance Code a special report, a “Corporate Governance Report,’’ is to be attached to the Company’s annual report. Such Cor-porate Governance Report is to contain a statement that the Corporate Govern-ance Code is being applied by the Com-pany and a brief description of how it has been applied during the last financial year. In the Corporate Governance Report, the Company is also to describe in what respects the Corporate Govern-ance Code is not being applied and clear-ly explain the reasons therefore. It is to be stated in the report whether or not the Company’s auditors have reviewed it.

73

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

COMMITTEES OF THE BOARD OF DIRECTORSRemuneration CommitteeThe Board has established a remunera-tion committee. The role of the remu-neration committee is to prepare mat-ters, for resolution by the Board of direc-tors, relating to remuneration in the form of salary, bonus, pension, severance payment, securities and any other kind of remuneration to the Managing Direc-tor and Management. The remuneration committee is also to assist the Board in preparing proposal for guidelines for sal-ary and other remuneration to the Man-aging Director and Management, which is to be submitted to the general meeting of shareholders for resolution. The mem-bers of the committee are annually appointed by the Board at the first ordi-nary Board meeting. The committee is to consist of three members. No member is to participate in the preparation of mat-ters concerning his or her own remunera-tion. The chairman of the Board is to be the chairman of the committee. The remuneration committee presently con-sists of Lars Hansson, Elisabeth Westberg and Göran Robertsson.

Audit CommitteeThe Board of directors has resolved that the Board in its entirety, excluding the Managing Director of the Company, is to carry out the matters to be handled by the audit committee.

The audit committee is to ensure the quality of the Company’s financial state-ments, is to meet regularly with the audi-tors, evaluate the audit work, assist the nomination committee in preparing the election of auditors, ensure that the Company has a functioning system of internal control and prepare an annual report of the internal control. The Board of Directors’ resolution not to establish an audit committee is based on the view held by the Board that the matters referred to above are so significant that the entire Board of Directors (excluding the Managing Director) should decide on them. The Board of Directors believes this approach to be appropriate given the size of the Board.

NOMINATION COMMITTEEAt the Annual General Meeting 2007, it was resolved that the Company is to have a nomination committee comprised of three members; the chairman of the Board and one representative from each of the two largest shareholders in terms of votes. The names of these representa-tives, and the names of the shareholders that they represent, is to be made public no later than six months before the Annual General Meeting 2008 and is to be based on the number of votes imme-diately prior to publication. The term of office of the nomination committee is to end when a new nomination committee has been elected. The chairman of the nomination committee is, unless the members agree otherwise, to be the member that represents the largest share-holder in terms of votes. Under the Corporate Governance Code, the nomi-nation committee is required to have at least three members, the majority of which must not be members of the Board of Directors. In addition, the chairman of the nomination committee is not permitted to be a member of the Board of Directors and the Managing Director or other Managers are not per-mitted to be members of the nomination committee. In connection with the reso-lution of the nomination committee it was noted that the Company’s largest shareholder is a member of the Board of Directors as well as Managing Director in the Company, and it was resolved, in deviation from the Corporate Govern-ance Code, that this is not to disqualify him from being a member of the nomi-nation committee if he, at the time of the establishment of the nomination com-mittee, is entitled to a seat in the com-mittee pursuant to the above guidelines due to the size of his shareholding.

The nomination committee is to make recommendations for the election of the chairman of the Board, other members of the Board, the auditors and recommendations regarding the remu-neration of the chairman and other directors and regarding any remunera-tion in respect of committee work as well as remuneration of the auditors. The

proposals are to be presented at the shareholders’ meeting.

REMUNERATIONRemuneration to the Board of directorsAt the Annual General Meeting held 9 August 2007, it was decided that remu-neration for the time until the end of the next Annual General Meeting is to be paid by SEK 300,000 to the chairman of the Board and by SEK 150,000 to each of the Board members elected by the general meeting and not employed by the Company. Remuneration to the Board includes committee work. For the operating year 2006/07, remuneration was paid to the Board in accordance with a resolution by an Extraordinary General Meeting held 20 December 2006, which was also when the Board got its present composition. The Extraordinary Meet-ing resolved that remuneration for the time until the end of the next Annual General Meeting was to be paid to the chairman of the Board by SEK 200,000 and to each of the Board members elect-ed by the general meeting and not employed by the Company by SEK 100,000. Except for this, no other remu-neration was paid to the Board during the operating year 2006/07.

Remuneration to ManagementThe Annual General Meeting held 9 August 2007 resolved on guidelines for salary and other compensation to the Managing Director and other members of the Management. The levels of remu-neration to the Management, including the Managing Director, are revised annu-ally. The remuneration to the Manage-ment consists in a combination of fixed and variable salary, where the variable salary is set based on achieved results and individual targets. The variable salary amounts to a maximum of two months salary.

In 2006/07 the Company’s Manag-ing Director and Chief Executive Offic-er, Gerald Engström, received a fixed sal-ary of SEK 1.2 million. The total sum of compensation to other Managers, the Finance Director Glen Nilsson, the

74

BOARD OF DIRECTORS, MEMBERS OF MANAGEMENT AND THE AUDITORS

Manufacturing Director Mats Lund, the Marketing Director Svein Nilsen and Purchasing Director Peter Olofsson, amounted in 2006/07 to SEK 4,5 mil-lion.

Glen Nilsson and Svein Nilsen have free company cars. The members of Management have a possibility of car loans of maximum 250,000 each.

Notice of dismissal and severance payment to ManagementThe employment of the Managing Director Gerald Engström can be termi-nated upon 12 months notice from the Company or six months notice from the Managing Director. The employment of the financial director Glen Nilsson can be terminated upon 10 months notice, with a right to maintained salary if it is the Company that gives notice and six months if Glen Nilsson give notice. Marketing Director Svein Nilsens employment can be terminated upon 12 months notice from the Company or six months notice from Svein Nilsen. The employment of other members of Management can be terminated upon the time stipulated in the collective bar-gaining agreement in force. The Compa-ny has not agreed on any severance pay-ments or other benefits at the end of the appointment, to the Managing Director or other members of the Management.

Gerald Engström’s employment agreement contains a non-compete undertaking, under which he is bound to refrain from employment and work in a Company conducting business compet-ing with Systemair AB during twelve months after termination of his employ-

ment. Svein Nilsens employment agree-ment contains a non-compete undertak-ing, under which he may not, without the Company’s consent, work in a com-peting business during twelve months after termination of his employment. Should the Company choose to invoke the clause, Svein Nilsen is entitled to maintain his salary and other benefits.

Incentive programmeThe Annual General Meeting held on 9 August 2007 resolved to implement a long term incentive programme. The programme includes a maximum of 80 members of Management and key employees. The persons included in the programme will be offered to acquire a maximum of 320,000 warrants at mar-ket price1) during the period from and including 1 October 2007 to and includ-ing 11 October 2007. The exercise price of the warrants is to correspond to 120 percent of the price per share that is resolved on in the Offering. The war-rants can be exercised at three occasions; 14 days after the publication of (i) the report for the first quarter for the opera-tional year 2010/11, (ii) the report for the third quarter for the operational year 2010/11 and (iii) the report for the first quarter for the financial year 2011/12. Assuming that all warrants be exercised, the programme will result in a dilution corresponding to approximately 0.6 per-cent.

Since the transfer of the warrants is made at market price the proposal will not entail any social security charges for the Company for participants in Swe-den. The Company also intends to trans-

fer warrants to participants resident out-side of Sweden. The Company may have to pay social security charges or other similar costs as a cause of laws and regu-lations in countries where such partici-pants are resident. However, the total cost for the Company, including social security charges or similar costs, as a cause of Incentive Programme 2007, is not to exceed SEK 4,000,000.

With exception for the programme resolved on the Annual General Meeting 2007, the Company has no other incen-tive programmes, and there are currently no decision or plans to implement fur-ther programmes.

PensionsThe Company’s Management is covered by the pension plan ITP. In 2006/07 the costs for the pensions to Management was SEK 1.1 million.

AUDITORSThe Company’s auditor is Thomas Forslund, of Ernst & Young AB. Ernst & Young AB was elected as auditing Com-pany in the Annual General Meeting 2004, for the time until the end of the Annual General Meeting 2008. The Company has no deputy auditors. Thomas Forslund is a member of the FAR-SRS (the institute for the account-ancy profession in Sweden). The office address of Ernst & Young AB is Jakobsbergsgatan 24, SE-103 99 Stock-holm, Sweden.

In 2006/07, the total compensation paid for auditing and consulting to Ernst & Young was SEK 2.3 million.

1) The market price is to be calculated according to the Black & Sholes valuation model.

Table of compensation and other benefits in 2006/07 (SEK)Position Salary/Fee Variable salary Other benefits Pensions Total

Chairman of the Board 200,000 – – – 200,000

Other Board members 300,000 – – – 300,000

Manging Director 1,200,000 – – 200,000 1,400,000

Other members of Management 3,400,000 – 200,000 900,000 4,500,000

Summa 5,100,000 – 200,000 1,100,000 6,400,000

75

Share capital and ownership

SHARE CAPITAL AND OWNERSHIP

SHARE AND SHARE CAPITALSystemair is a public limited company, which shares have been issued in accord-ance with Swedish legislation and the shareholders owners rights are governed by the Swedish Companies Act. Syste-mair’s shares are electronically registered at VPC. At the time of the Offering Systemair’s share capital amounted to SEK 52 million, distributed on 52 mil-lion shares, of which all are fully paid. No new shares will be emitted in connec-tion to the Offering. At the time of the listing Systemair’s shares will only be of one class according to the articles of asso-ciation. According to Systemair’s articles

of association the issued share capital must not be lower than SEK 50 million and not exceed SEK 200 million and the number of shares must not be lower than 50 million and not exceed 200 million. The shares are denominated in Swedish krona and every share has a ratio value of SEK 1. All shares will at the time of list-ing have the same rights to the Compa-ny’s assets, profit, and surplus at liquida-tion and entitle to the same voting rights at Systemair’s shareholders’ meeting. In a new share issue all shareholdes have right of priority to the new shares relative to number of shares they currently own, except in cases where the emission

decision implies a deviation from share-holders priority right. All shares are transferable without constraints.

The description below of Systemair’s share capital is based on the structure of the Company’s share capital after the implementation of the Offering.1) Deci-sions about changes in order to achieve the share structure below were approved at the extraordinary shareholders’ meet-ing on 25 June 2007, subject to certain conditions. At the extraordinary share-holder’s meeting on 1 October a decision will be made to enable an immediate reg-istration.

1) Prior to the Offering, Systemair’s share capital is distributed between series A shares and series B shares. At the time of the stock exchange listing of the Company, Systemair will have only one class of shares where all shares will have equal voting rights.

Par value Change of Share- Change Change Total Total TotalSEK share capital, capital, of number of number number number number

Years Transaction /shares SEK SEK A shares B shares A shares B shares shares

1994 Bonus issue A shares 100 7,000,000 10,000,000 +70,000 – 100,000 – 100,000

1995 New issue A shares 100 14,000,000 24,000,000 +140,000 – 240,000 – 240,000

1996 Bonus issue A shares 100 26,000,000 50,000,000 +260,000 – 500,000 – 500,000

2006 New issue B shares1) 100 1,500,000 51,500,000 – +15,000 500,000 15,000 515,000

2006 New issue B shares2) 100 500,000 52,000,000 – +5,000 500,000 20,000 520,0002007 Split: 100:1 1 – 52,000,000 +49,500,000 +1,980,000 50,000,000 2,000,000 52,000,0002007 Conversion of shares

into one class 1 – 52,000,000 –50,000,000 –2,000,000 – – 52,000,000

1) The extra general meeting on 2 December 2005 decided on a new issue of up to 15,000 shares of series B (ratio value 100 SEK/share) directed to Management and other key employees. The issue price was settled at SEK 1,300 per share, corresponding to SEK 13 per share after share split. The offering price to individuals will not exceed SEK 78 per share. See page 15 for information on the price in the Offering.

2) At the Board meeting on 20 December 2006 it was decided to propose the extra general meeting on 20 December 2005 a new issue of up to 5,000 shares of series B (ratio value 100 SEK/share) directed to Management, other key employees and some newly assigned members of the Board. The issue price was settled at SEK 3,200 per share , corresponding to SEK 32 per share after share split. The offering price to individuals will not exceed SEK 78 per share. See page 15 for information on the price in the Offering.

THE SHARE CAPITAL’S DEVELOPMENTThe share capital has, since 1994, undergone the following changes.

AUTHORISATION OF NEW SHARE ISSUEAt the annual shareholders’ meeting on 9 August 2007 it was decided to author-ise the board until next annual share-holders’ meeting at one or several occa-tions to issue at most 5,200,000 shares, whereby the share capital can be increased by at most SEK 5,200,000. The authorised share issue will be made at market terms and can be made with or without deviation from shareholders’ priority right, mainly to enable financing of acquisitions.

INCENTIVE PROGRAMMEThe Annual General Meeting held on 9 August 2007 resolved to implement a long term incentive programme, consist-ing of warrants to be offered to a maxi-mum of 80 members of Management and key employees in Systemair. The warrants are held by a fully owned sub-sidiary within the Group until they have been acquired by the employees. See the heading Incentive programme in the sec-tion Board of Directors, members of Man-agement and the auditors.

OWNERSHIP Systemair’s shares are, before the planned stock exchange listing and sale of shares, divided between two classes of shares: A shares with one vote per share and B shares with a one-tenth vote per share. At the extraordinary shareholders’ meeting of Systemair on 25 June 2007, it was approved, conditioned by that the selling price per share in the Offering is deter-mined, that the Company should have only one share class and all shares at the time of the stock exchange listing will thereby have equal voting rights.

76

SHARE CAPITAL AND OWNERSHIP

Holdings after the Offering if the Overallotment Option is not used

Holdings after the Offering if the Overallotment

Option is used

Holdings before the Offering

ShareholderNumber of

A shares

Number of

B shares

Per-centage

of capital

Per-centage of votes

Number of shares

Percentage of capital

and votesNumber of

shares

Percentage of capital

and votes

Larger shareholders

Färna Invest1) 32,983,300 – 63.4% 65.7% 21,514,145 41.4% 19,789,980 38.1%

ebm-papst AB2) 16,466,700 – 31.7% 32.8% 11,060,855 21.3% 10,210,020 19.6%

ebm Industrie3) 550,000 – 1.1% 1.1% 0 0.0% 0 0.0%

Other selling shareholders4) 1,500,000 2.9% 0.3% 900,000 1.7% 900,000 1.7%

Other shareholders 500,000 1.0% 0.1% 500,000 1.0% 500,000 1.0%New shareholders – – – – 18,025,000 34.7% 20,600,000 39.6%

Total 50,000,000 2,000,000 100,0% 100,0% 52,000,000 100.0% 52,000,000 100.0%

1) The office address to Färna Invest is Industrivägen 3, 739 30 Skinnskatteberg, Sweden.2) The office address to ebm-papst AB is Äggelundavägen 2, 175 62 Järfälla, Sweden.3) The office adress to ebm Industrie is Bachmühle 2, D-74673 Mulfingen, Germany.4) Some members of Management and other key employees. For office adresses see heading Other selling shareholders above.

In the table below, Systemair’s ownership structure is stated before and after the Offering with the information based on that the Issuing Agents decide that (i) the Overallotment Option will not be uti-lised and (ii) the Overallotment Option will be fully utilised .

LARGER SHAREHOLDERSFärna InvestFärna Invest is a company wholly-owned by Gerald Engström and its primary activity is to manage the shareholding in Systemair.

ebm-papst ABebm-papst AB, former Ziehl-ebm AB, is a wholly owned subsidiary of the Ger-man company ebm Beteiligungs GmbH, which is an associated company of ebm-papst. ebm-papst AB’s principle business is the sales of fan motors in the Swedish market produced by ebm-papst. ebm Industrie is also an associate company of ebm-papst.

OTHER SELLING SHAREHOLDERS Certain members of Management and other key employees are selling shares in the Offering. These sellers (and their respective position, office location and possessed number of shares before the Offering within parenthesis) are; Fredrik Andersson (Regional Director Russia and CIS, Moscow, 150,000), Mats Lund

(Production Director, Skinnskatteberg, 200,000), Kurt Maurer (Managing Director Systemair Germany, Windisch-buch 150,000), Svein Nilsen (Marketing Director, Skinnskatteberg, 200,000), Glen Nilsson (Chief Financial Officer, Skinnskatteberg, 150,000), Peter Olofsson, (Purchasing Director, Skinnskatteberg, 200,000), Glen Thompson (Vice President Fantech, Sarasota, 50,000), Anders Ulff (Director of Finance, Skinnskatteberg, 100,000), Jonas Valentin, (Managing Director Frico, Partille, 150,000), Ola Wettergren (President Fantech, Sarasota, 150,000). All selling shareholders from Man-agement and other key employees are selling a maximum of 35 percent pro rate of their possessions in the Offering and an additional maximum of 5 percent pro rate if the Overallotment Option is fully utilised.

See pages 121 – 122 for each office location’s address. SHAREHOLDER AGREEMENT The Sellers are currently parties to a shareholder agreement. This agreement will cease concurrently when the deci-sion is made to proceed with the Offering .

RIGHTS TO DIVIDENDSOwners of shares acquired in the Offer-ing will be entitled to dividends, execut-

ed from the receiving of the shares. The annual general meeting on 9 August 2007 resolved on a dividend distributed to the existing shareholders. Dividend for the fiscal year 2007/08, will be decid-ed on at the annual general meeting 2008 and will be distributed by VPC. If a shareholder cannot be reached via VPC, the shareholder’s assets concerning the dividend remains on account at Systemair and is limited only via rules about statute of limitations. If a share-holder does not claim its dividend within the statute of limitations period, which is ten years from issuance date for issuance of the dividend, the dividend will become the property of the Company.

Systemair’s shareholders are entitled to a share of any surpluses in the event of any winding-up in relation to the number of shares which they hold. There are no restrictions for dividends or spe-cial procedures for shareholders resident outside of Sweden. For shareholders who are not for purposes of taxation resident in Sweden and who receive dividends on shares in a Swedish limited company, the Swedish coupon tax will however be paid, with reservations for any applicable double taxation treaties. For additional information, see the heading Taxation of dividends in the section Tax considerations in Sweden.

77

Articles of Association and other information

THE ARTICLES OF ASSOCIATION § 1The name of the Company is Systemair AB. The Company is public (publ).

§ 2The board shall have its registered office in the municipality of Skinnskatteberg.

§ 3The Company shall carry on manufac-ture and sale of ventilation and heating products, own and lease machinery and machinery equipment for the engineer-ing-, processing- and mechanical manu-facture industry as well as transport- and building material industry and vehicles, office equipment and data equipment, own and administer real property, and conduct other business compatible therewith.

§ 4The share capital shall be minimum SEK 50,000,000 and maximum SEK 200,000,000.

§ 5The number of shares shall be minimum 50,000,000 and maximum 200,000,000.

§ 6 The board shall, with the exception of persons who may be appointed in a dif-ferent order due to law, be composed of minimum three and maximum eight members with maximum three deputies. The members and the deputies shall be elected at a general meeting for the peri-od until the next annual general meeting has been held.

§ 7For the audit of the Company’s annual report and the management of the board and the managing director, a registered accounting company, or one auditor, with or without deputy auditor, shall be elected at the annual general meeting.

§ 8Notice to a general meeting shall be made by announcement in Post- och Inrikes Tidningar (“the Swedish Official Gazette”) and in Svenska Dagbladet. Shareholders who wish to participate in a general meeting must be (i) listed in a print-out or other presentation of the entire shareholders’ register showing the position five weekdays prior to the meet-ing and (ii) notify the Company of the intention to participate no later than 3.00 pm, on the day stipulated in the notice convening the meeting. This day may not be a Sunday, other public holi-day, Saturday, Midsummer’s Eve, Christ-mas Eve or New Year’s Eve and may not be earlier than the fifth weekday prior to the meeting

§ 9The following matters shall be dealt with at the annual general meeting: 1. Election of chairman of the meeting.2. Preparation and approval of voting

list.3. Election of one or two persons to

approve the minutes. 4. Examination of whether the meeting

has been duly convened.5. Approval of agenda for the general

meeting.6. Presentation of the annual accounts

and the audit report and, where appropriate, the consolidated accounts and the consolidated audit report.

7. Resolutions on a) adoption of the income state-

ment and the balance sheet and, where appropriate, the consoli-dated income statement and the consolidated balance sheet;

b) allocations of the Company’s profit or loss in accordance with to the adopted balance sheet;

c) discharge from liability for the board members and the manag-ing director, if any.

8. Determination of directors’ fees and auditors’ fees.

9. Election of board and, where appli-cable, auditor, deputy board mem-bers and deputy auditors.

10. Other matter to be dealt with at the general meeting pursuant to the Companies Act or the articles of association.

§ 10The financial year of the Company shall be 1 May – 30 April.

§ 11The Company’s shares shall be registered in a Central Securities Depository Regis-ter pursuant to the Financial Instruments Accounts Act (1998:1479).

Formation of the Company and legal form of business entity Systemair is a public limited company. The Company’s registration number is 556160-4108. The company was formed in Sweden, registered at the Swedish Companies Registration Office (Sw. Bolagsverket) previously Swedish Patent and Registration Office, (Sw. Patent- och registreringsverket) on 13 March 1972, and has been conducting its present busi-ness operations since 1974. The Compa-ny’s present trade name is Systemair AB and was registered at Bolagsverket on 25 September 2002. The Company’s legal form of business is governed by the Swedish Companies Act 2005 (2005:551) and the Company’s shares have been issued in accordance with Swedish legislation. Decisions about the Articles of Association as above stated, were adopted at the Extraordinary Gen-eral Meeing on 25 June 2007. Decisions about changes in § 4 of the share capital structure, resulting in that all shares will be of same class, and about the removal of provisions on pre-emption are condi-tioned on that all preconditions for a list-ing of Systemair’s shares on the OMX Nordic Exchange have been fulfilled. The Articles of Association as stated above will be registered at the Swedish Companies Registration Office before trading in the Company’s shares at the OMX Nordic Exchange begins.

ARTICLES OF ASSOCIATION AND OTHER INFORMATION

78

In accordance with the conditions stipu-lated in a special agreement on the sale of shares that is intended to be entered into about 11 October 2007, (“the Placing Agreement”) between Systemair’s major shareholders, i.e. Färna Invest, ebm-papst AB and ebm Industrie, Systemair and the Issuing Agents, the Issuing Agents shall assign purchasers of the shares in the Offering on certain condi-tions, and if the Issuing Agents fail in this respect, they shall themselves acquire the shares. The major shareholders shall undertake to sell the shares included in the Offering.

The shares shall be offered at the offering price (within the range SEK 65–78) determined by the major share-holders after consultation with the Issu-ing Agents. In the Placing Agreement, Färna Invest and ebm-papst AB agree on the basis of the Overallotment Option, to commit themselves, upon request

from Handelsbanken and Nordea, at the latest 30 calendar days from the first trading day of the Company’s shares, to sell a maximum of 2,575,000 additional shares for the purpose of covering the overallotment within the framework of the Offering.

The Issuing Agents may terminate the Placement Agreement upon certain events, for example, the termination of trading on the OMX Nordic Exchange or other negative events that significantly alter the Company’s financial position or operations or other negative events in the financial markets. If the Issuing Agents terminate their obligations the Offering may be cancelled. In such a case, no shares will be delivered in the Offering. All trading in the shares prior to pay-ment and delivery are made at the own risk of the parties concerned.

The major shareholders and the Company have agreed to indemnify the

Issuing Agents in certain circumstances in connection with the Offering.

In relation to the Issuing Agents, Färna Invest have undertaken that not until at earliest 360 days from the first trading day they will not without written consent from the Issuing Agents, divest additional shares in the Company. ebm-papst AB and ebm Industrie have made corresponding undertakings for a period of 180 days.

The remaining sellers’ agreements with the Issuing Agents as regards the sale of shares are intended to be set forth in a separate document (the “Placement Letter”). Under the Placement Letter, the remaining sellers undertake not to sell additional shares in Systemair within a period of 360 days. Other Board mem-bers, members of the management and other key employees of Systemair have entered into similar undertakings.

Placing agreement

PLACING AGREEMENT

79

Tax considerations in Sweden

TAX CONSIDERATIONS IN SWEDEN

TAXATION OF DIVIDENDS IndividualsFor individuals, dividend payments on marketquoted shares, as the shares in Systemair are intended to be, are taxed in the capital income category at a tax rate of 30 percent. Preliminary tax of 30 per-cent is normally withheld on dividend payments by VPC or, for nominee regis-tered shares, by the nominee.

Limited liability companiesFor limited liability companies, dividend payments are taxed as income from busi-ness operations at a tax rate of 28 per-cent.

TAXATION AT DISPOSAL OF SHARESIndividualsFor individuals, capital gains on market quoted shares, as the shares in Systemair are intended to be, are taxed in the capi-tal income category at a tax rate of 30 percent.

A capital gain or capital loss is com-puted as the difference between the received payment, after deduction of

sales costs, and the acquisition cost. The acquisition cost of all shares of the same series and type is computed collectively in accordance with the average method. For marketquoted shares, the acquisition cost may alternatively be determined in accordance with the standard method to 20 percent of the sales price after deduc-tion of sales costs.

A capital loss on quoted shares is ful-ly deductible against taxable capital gains in the same year on shares and other quoted securities that are taxed as shares except for units in Swedish investment funds that only contain Swedish receiva-bles (Sw. fordringsrätter). Any excess losses are 70 percent deductible against other income from capital.

If an overall capital deficit arises, a reduction from tax on income from employment and business operations as well as real estate tax is granted. A tax reduction of 30 percent is provided for deficits that do not exceed SEK 100,000 and 21 percent of any remaining deficit. Deficits cannot be carried forward to later fiscal years.

Limited liability companiesFor limited liability companies, capital gains are taxed as income from business operations at a tax rate of 28 percent. Capital gains and capital losses are calcu-lated in the same manner as for individu-als as described above. Deductible capital losses on shares may only be offset against taxable capital gains on shares and other securities that are taxed as shares. In certain cases, capital losses may be offset against capital gains within a certain corporate group if group contri-butions are permitted among the compa-nies. Capital losses that cannot be uti-lised during a certain year may be carried forward and be utilised against eligible capital gains in subsequent fiscal years. Special rules and regulations apply for certain categories of companies.

NET WEALTH TAXATIONThe Swedish Government has informed that the net wealth taxation act should be abolished as from this year, see bill 2006/07:100.

SHAREHOLDERS WITH A LIMITED TAX LIABILITY IN SWEDENIndividualsFor individuals with limited tax liability in Sweden and who receive dividend payments on shares in a Swedish limited liability company, a Swedish withholding tax is normally withheld. The tax rate is 30 percent, but is generally reduced under tax treaties that Sweden has con-cluded with other countries for the avoidance of double taxation. Most of Sweden’s tax treaties in this context ena-ble a reduction of the Swedish tax to the treaty’s tax rate immediately at the time of payment, provided that required information about the domicile of the

1) Shares that are not yet quoted or traded on a market are deemed as held for business purposes. Market quoted shares, as the Systemair shares are intended to be, are deemed to be held for business purposes if, among other things, the shareholding constitute a capital asset of the investor and the holding either amounts to at least 10 percent of the voting capital or is required by the business which is conducted by the owner company or another closely associated company defined in a certain manner. For a capital gain on quoted shares to be tax exempt and a capital loss to be not deductible, the shares must also have been held for business purposes by the holder during a consecutive period of at least one year prior to the sale. For a dividend on quoted shares to be tax exempt, the shares may not be sold within one year from the date on which the shares became classified as held for business purposes by the holder. It should be noted that certain rules are applicable when the classification of shares changes.

Below follows a summary of certain Swedish tax regulations that may apply to individuals and limited liability companies who acquire shares in Systemair through the Offering. Unless otherwise stated, the summary is based on regulations and practice currently in force and is intended only as general information for shareholders with an unlimited tax liability in Sweden. The summary does not cover situations in which securities are held as current assets in business operations or are held by partnerships. Neither does it deal with the special tax regulations applying to certain corporate categories nor the special rules on tax exempt capital gains, including non-deductibility of capital losses, and dividends on shares held for business purposes1) by companies which may be applicable on share-holding in Systemair. Neither are the special rules and regulations dealt with which may be applicable on investments in companies which are or have previously been closely-held companies or regarding shares which have been acquired on the basis of such holdings. Special rules may apply to certain categories of shareholders. Each shareholder should therefore consult a tax advisor for information regarding the particular consequences which may arise in an individual case, including the applicability and effects of foreign rules and tax treaties.

80

party receiving the dividend payment is made available. In Sweden, VPC or, for nominee registered shares, the nominee, normally deducts the withholding tax. If 30 percent withholding tax is withheld upon payment to someone who is enti-tled to be taxed at a lower tax rate, a refund can be requested from the Swed-ish Tax Agency prior to the expiration of the fifth calendar year after the dividend is paid.

Individuals who have limited tax liability in Sweden and who do not con-duct business operations from a perma-nent establishment in Sweden are nor-mally not taxed in Sweden on capital gains upon the sale of such shares. How-ever, the shareholder may be subject to taxation in the country in which the shareholder is tax resident. According to a special tax rule, however, individuals with limited tax liability in Sweden may be subject to Swedish taxation upon the sale of Swedish shares, if they at any time

during the year in which the sale is made or the ten calendar years preceding such year were resident in Sweden or perma-nently lived here. However, the applica-bility of the rule is in several cases limited by tax treaties between Sweden and other countries.

Limited liability companiesFor limited liability companies with lim-ited tax liability in Sweden and who receive dividend payments on shares in a Swedish limited liability company, a Swedish withholding tax is normally withheld. The tax rate is 30 percent, but is generally reduced under tax treaties that Sweden has concluded with other countries for the avoidance of double taxation. The withholding of withhold-ing tax and the possibility to be taxed at a lower rate is made in the same manner as for individuals as described above.

Limited liability companies who have limited tax liability in Sweden and

who do not conduct business operations from a permanent establishment in Swe-den are normally not taxed in Sweden on capital gains upon the sale of such shares. However, the shareholder may be subject to taxation in the country in which the shareholder is tax resident.

CERTAIN TAX CONSIDERATIONS FOR EMPLOYEES IN SYSTEMAIRNo taxation normally occurs at receipt of shares. However, under some circum-stances the receipt of shares can be deemed as a taxable benefit for employ-ees. No taxable benefit should occur pro-vided that the employees, including members of the board and deputy mem-bers of the board as well as current share-holders, on the same conditions, acquires no more than 20 percent of the total amount of shares available and the employee do not acquire shares to a value of more than SEK 30,000.

TAX CONSIDERATIONS IN SWEDEN

81

Interim report for the period 1 May – 31 July 2007

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

SUMMARY FOR THE THREE MONTHS ■ Net sales for the first quarter increased by 16% to SEK 694 million (599). The acquisition of Koolclima, Spain, contributed

2 percent to this growth. The effects of exchange rate fluctuations in translation of the accounts of foreign subsidiaries had no material impact on the growth.

■ Operating profit (EBIT) rose by 26% to SEK 89 million (71). The operating margin was 13% (12).

■ Profit after tax fell to SEK 58 million (86) due to changes in deferred taxes.

■ Earnings per share before and after dilution totalled SEK 1.09 (1.66).

COMMENTS BY GERALD ENGSTRÖM, CEO■ Growth still strong in Eastern Europe & CIS.

■ Koolclima, a Spanish manufacturer of ventilation products, was acquired.

■ Preparations continue for the stock exchange listing of Systemair’s shares in autumn 2007.

NET SALES Net sales for the period May 2007–July 2007 amounted to SEK 693.9 million (599.1). The period was distinguished by continued high demand for the Group’s products in most markets, with the exception of the North American mar-ket. The increase in sales in the period was 15.7 percent, adjusted for the effect of exchange rate fluctuations in transla-tion of the accounts of foreign subsidiar-ies. Companies acquired during the year contributed SEK 13.3 million, or 2.2 percent, to this growth. Normally, the first quarter is Systemair’s weakest quar-ter, for seasonal reasons.

0

200

400

600

800

Q1May–Jul

Q4Feb–Apr

Q3Nov–Jan

Q2Aug–Oct

2005/06 2006/07 2007/08

SEK million

NET SALES PER QUARTER COMPAREDWITH SAME PERIOD LAST YEAR

Net sales – geographical distribution2007 2006

May – Jul change % of total May – Jul % of total

Nordic region 180.9 12% 26% 160.9 27%

Western Europe 223.9 22% 32% 183.9 31%

Eastern Europe & CIS 186.7 31% 27% 142.1 23%

North America 67.3 –20% 10% 83.7 14%

Other markets 35.2 23% 5% 28.5 5%

Total 693.9 16% 100% 599.1 100%

82

The markets in Eastern Europe & CIS continue to show strong growth, above all in the commercial property construc-tion sector. The acquisition of Imos in Slovakia in March 2007 also impacted favourably on sales in Eastern Europe & CIS. The North American market declined by 20 percent, compared with the previous period, on account of reduced residential construction and a lower USD exchange rate. The US dollar weakened by 5.4% compared to the rate in the same period in the preceding year. In local currency, sales fell by 16%.

PROFITSThe operating profit for the period totalled SEK 89.0 million (70.9). This represented an increase of 25.6%, despite a fall of one percent in the gross margin from the preceding year. The improve-ment in operating profit is primarily

attributable to higher sales volumes, high utilization of capacity at the production facilities and lower sales and administra-tive expenses relative to net sales.

Tax for the period amounts to SEK –24.0 million (19.3), corresponding to a tax charge of 29.4%. The difference from the same period in the preceding year arises from a deferred tax income of SEK 37.2 million entered in June 2006. The deferred tax income relates to the acqui-sition of companies where deficits have arisen in operations conducted, but also in the day-to-day operations.

ACQUISITIONS AND ESTABLISHMENTSOn 1 June 2007, Systemair acquired the assets of Koolclima S.L., a Spanish manufacturer of ventilation products. The acquisition means that Systemair’s position in the Spanish market is rein-

forced. It also provides Systemair with an efficient production facility in southern Europe.

Koolclima’s ventilation systems and fans hold a strong position in the Span-ish market. Operations are conducted just outside Madrid and employ around 70 people. In the 2006 calendar year, Koolclima reported net sales of SEK 71 million. The Spanish market accounts for the predominant share of the compa-ny’s sales. Systemair is taking over the Koolclima business and its assets from the Spanish Koolair Group. The produc-tion building does not form part of the acquisition and will be leased from the seller. Under the terms of the acquisition, Systemair Spain S.L.U. and Koolclima will establish the company Koolclima-Systemair S.L.U.

The price paid to acquire Koolclima was preliminarily made up as follows:

Cash payment SEK 37.8 million

Total acquisition cost SEK 37.8 million

Assets acquired

Actual value of assets taken over SEK 18.5 million

Goodwill SEK 19.3 million

Assets and liabilities acquired Book value Adjustment Actual value

Goodwill – 19.3 19.3

Machinery and equipment 6.3 – 6.3

Inventories 8.4 – 8.4

Other current assets 5.5 – 5.5

Other operating liabilities –1.7 – –1.7

18.5 19.3 37.8

Effect on cash flow

Purchase price, incl. supplementary payment –37.8

Change in Group’s liquid assets at acquisition –37.8

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

83

Koolclima is included in the group accounts from 1 June 2007. If Koolclima had been consolidated from the 1 May 2007 instead, the consolidated net sales for the period May until July would totalled SEK 701.0 million. The operat-ing profit for the period May until July would have been SEK 89.4 million.

During the period covered by the interim report, a minority holding of 15% was acquired in Camina AB. The price paid amounted to SEK 1.1 million. The acquisition was the first stage of a process to sell all shares in the company, which was effected after the balance sheet date.

ACQUISITIONS AND DISPOSALS OF COMPANIES AFTER THE END OF THE PERIOD COVERED BY THE REPORTOn 16 August, Systemair AB sold all shares outstanding in Camina AB to EcoTec Värmesystem AB for SEK 7.2 million. Camina develops and markets above all solid-fuel stoves and tiled stoves. The products are marketed under the brands Camina, Svenska kakelugnar and Wärmo. With headquarters and warehousing facilities in Motala, the company had 13 employees in the past financial year and reported sales of SEK 57 million. Camina’s products fall out-side Systemair’s core area and the sale of the company represents a streamlining of Systemair’s business. As a result of the deal, Systemair reports a capital gain of SEK 4.8 million on consolidation.

A letter of intent has been signed regarding the acquisition of Clima-product S.p.A. in Italy. Climaproduct has a strong position on the Italian mar-ket as a supplier of ventilation products. The company has long been a distributor of the Systemair product range, especial-ly fans and air terminal devices. Clima-product was established 20 years ago and has its head office in Milan. The compa-ny has 41 employees and annual net sales of approximately EUR 11 million. The acquisition is part of Systemair’s objec-tive to establish its own sales companies in all European countries of significance. The acquisition analysis, including an

estimate of fair values, has not yet been prepared as the supporting documents have still not yet been fully prepared.

INVESTMENTS AND DEPRECIATIONInvestments by the Group during the period totalled SEK 70.8 million (19.3). Depreciation of fixed assets amounted to SEK 17.6 million (12.9). Investments in tangible assets totalled SEK 30.4 million (7.5). The largest investments in plant and machinery were made at the manu-facturing plants in Sweden, Denmark and Canada.

PERSONNELThe average number of employees in the Group totalled 1,685 (1,365). At the end of the period, the number of employees was 1,713 (1,377), 56 of whom joined the Company through companies acquired during the period. New appointments were primarily made at the production facilities in Sweden, Lithuania, Germany and Denmark.

CASH FLOW AND FINANCIAL POSITIONThe cash flow from current operations before changes in working capital during the period amounted to SEK 85.5 mil-lion (63.4), an increase attributable to substantially improved operating profits. Working capital rose SEK 40.0 million (27.7), mainly because of a higher level of inventories. The value of inventories generally shows a seasonal increase dur-ing the summer, ahead of the autumn peak season. Investment activities were relatively high in the construction of new buildings and machinery, amounting to a gross SEK 31.5 million (7.5) for the period. Investments in the acquisition of subsidiaries totalled SEK 37.8 million (11.8) during the period. The net cash flow from financing activities amounted to SEK 40.9 million (–12.1), as a result of increased borrowing.

The consolidated equity/assets ratio was 35.1% (48.1) at the close of the period. The fall in this ratio is attributa-ble to dividends issued in the parent company in the amount of SEK 264.8

million during the 2006/07 financial year. The purpose of the dividend pay-ments was to create a well-adjusted capi-tal structure. The consolidated quick-asset ratio was 230 percent (234 percent) at the close of the period.

STOCK MARKET LISTING IN 2007Systemair has applied for a listing on the OMX Nordic Exchange Stockholm. Systemair’s principal owners are Färna Invest (63% of the shares), and the German fan motor manufacturer ebm-papst (33%). The remaining four per-cent of the shares are held by Systemair’s senior executives and Board members. Färna Invest AB is a company that is wholly owned by Systemair’s CEO Gerald Engström. Handelsbanken Capital Markets and Nordea Bank have been appointed financial advisors for the stock market listing.

FINANCIAL TARGETSIn April 2007, Systemair’s Board of Directors adopted three financial targets and a dividend policy.

Growth in salesMinimum 12% over a business cycle, both organic and acquired

Operating marginMinimum 10% over a business cycle

Equity/assets ratioMinimum 30%

DividendsApproximately 30 percent of profits after tax

In the 2006/2007 financial year, all the objectives set were achieved.

MATERIAL RISKS AND FACTORS OF UNCERTAINTYThe risks that Systemair has identified in its business consist of currency risk, bor-rowing and interest-rate risk, credit and liquidity risk and loss carry-forwards. The material risks and factors of uncer-tainty affecting Systemair are described in more detail in the Company’s 2006/07 Annual Report. No significant

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

84

change occurred in the risk situation during the period covered by the interim report.

TRANSACTIONS WITH RELATED PARTIESSystemair’s major transactions with relat-ed parties consist of transactions with ebm-papst AB and ebm-papst Mulfingen GmbH & Co. KG. Transactions with related parties are detailed in Note 37 to the Accounts in Systemair’s 2006/07 Annual Report. During the period cov-ered by the interim report, no significant change took place in the scale of these transactions.

PARENT COMPANYSales by the Parent Company for the first quarter of 2007/2008 totalled SEK 221.6 million (195.2), with operating profits amounting to SEK 30.2 million (26.1). During the period, the Parent Company wrote down the value of the shares held in the leasing company Kanalfläkt Industrial Services AB. The write-down impacted on net financial items in the amount of SEK –10.0 mil-lion. The write-down was eliminated on consolidation.

The average number of employees in the Parent Company was 363 (301).

An extraordinary general meeting of shareholders was held on 25 June, at which it was decided to carry out a 100-for-1 share split. Following the share

split, the number of shares outstanding totals 52,000,000.

At the Company’s annual general meeting, held on 9 August 2007, it was decided that an incentive programme should be launched. Within the pro-gramme, around 80 senior executives will be offered the chance to acquire war-rants. If the warrants are exercised in full, a total of 320,000 shares may be issued, leading to a dilution of 0.6 percent. It is proposed that subscription for shares based on warrants may take place during three periods during the 2010/11 and 2011/12 financial years.

FINANCIAL INFORMATIONInterim reports will be issued on 17 December 2007 and 7 March 2008.

Skinnskatteberg, 13 September 2007Systemair AB (publ)

Gerald EngströmCEO

This interim report has not been subject to a general review by the Company’s auditor.

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

85

CONSOLIDATED INCOME STATEMENT

2007 2006 2006/07 2006/07May – Jul May – Jul Aug – Jul May – Apr

SEK million 3 mth 3 mth rolling 12 12 mth

Net sales 693.9 599.1 2,759.0 2,664.2

Cost of goods sold –441.9 –375.4 –1,718.1 –1,651.6

Gross profit 252.0 223.7 1,040.9 1,012.6

Other operating income 9.9 4.0 35.5 29.6

Selling expenses –127.6 –117.7 –541.5 –531.6

Administrative expenses –37.6 –34.7 –150.4 –147.5

Other operating expenses –7.7 –4.4 –36.9 –33.7

Operating profit 89.0 70.9 347.6 329.4

Interest income 1.8 1.4 11.7 11.3

Interest expense –9.7 –6.0 –32.6 –28.8

Other financial income and expenses 0.5 0.2 –0.1 –0.4

Profit after financial items 81.6 66.5 326.6 311.5

Tax on profit for the period –24.0 19.3 –100.2 –56.9

Profit for the period 57.6 85.8 226.4 254.6

Attributable to:

Parent Company’s shareholders 56.8 85.3 224.8 253.2

Minority shareholding 0.8 0.5 1.6 1.4

Earnings per share before dilution, SEK1) 1.09 1.66 4.34 4.90

Earnings per share after dilution, SEK1) 1.09 1.66 4.34 4.90

Average number of shares in period before dilution1) 52,000,000 51,500,000 51,794,500 51,676,500

Average number of shares in period after dilution1) 52,000,000 51,500,000 51,794,500 51,676,500

1) The Company does not have any convertible loans or warrants. The total number of shares outstanding at the end of the accounting period was 52 000 000. During the interim report period, a 100-for-1 share split was carried out. The figures for earlier periods provided for comparison have been adjusted.

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

86

CONSOLIDATED BALANCE SHEET

SEK million 31-07-2007 31-07-2006 30-04-2007

Goodwill 94.3 63.0 75.0

Other intangible assets 1.8 – 1.4

Tangible assets 640.8 458.4 617.7

Financial and other fixed assets 101.1 139.5 100.5

Inventories 543.0 420.7 500.3

Current receivables 541.4 454.8 538.6

Liquid assets 77.4 35.3 61.5

Total assets 1,999.8 1,571.7 1,895.0

Equity 702.8 756.6 642.9

Long-term liabilities, provisions 69.1 58.5 75.6

Long-term liabilities, interest-bearing 280.5 235.4 251.7

Current liabilities, interest-bearing 529.4 197.8 512.8

Current liabilities, non-interest-bearing 418.0 323.4 412.0

Total equity and liabilities 1,999.8 1,571.7 1,895.0

CONSOLIDATED CHANGES IN EQUITY

2007 2006 2006/07

SEK million May – Jul May – Jul May – Apr

Opening balance 642.9 687.8 687.8

Change in market value of marketable securities 0.6 –12.8 –33.4

Transferred to income statement for period –0.4 – –1.0

Acquisition of minority shareholding in subsidiary –1.0 – –

Translation differences 3.7 –3.9 –20.9

Total income and expenses charged directly to shareholders’ equity 645.8 671.1 632.5

Profit for the period 57.6 85.8 254.6

Total income and expenses 703.4 756.9 887.1

New share issue – – 16.0

Dividend – – –264.8

Acquisition of subsidiary with minority shareholding – – 5.1

Dividend in subsidiary to minority shareholder –0.6 –0.3 –0.5

Closing balance 702.8 756.6 642.9

Attributable to:

Parent Company’s shareholders 690.8 751.1 631.2

Minority shareholding 12.0 5.5 11.7

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

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CONSOLIDATED CASH FLOW STATEMENT

2007 2006 2006/07May – Jul May – Jul May – Apr

SEK million 3 mth 3 mth 12 mth

Operating profit 89.0 70.9 329.4

Adjustment for non-cash-flow items 17.4 9.4 38.4

Financial items –7.7 –4.6 –16.4

Income taxes paid –13.2 –12.3 –56.3

Cash flow from current operations before changes in working capital 85.5 63.4 295.1

Changes in working capital –40.0 –27.7 –91.6

Cash flow from current operations 45.5 35.7 203.5

Cash flow from investment activities –70.8 –19.3 –216.3

Cash flow from financing activities 40.9 –12.1 43.6

Cash flow for period 15.6 4.3 30.8

Opening balance, liquid assets 61.5 32.1 32.1

Translation differences on liquid assets 0.3 –1.1 –1.4

Liquid assets at close of period 77.4 35.3 61.5

KEY FIGURES – GROUP

2007 2006 2006/07 2005/06

May – Jul May – Jul May – Apr May – Apr

Net sales SEK m 693.9 599.1 2,664.2 2,321.2

Growth % 15.8 19.6 14.8 22.4

Operating profit SEK m 89.0 70.9 329.4 253.0

Operating margin % 12.8 11.8 12.4 10.9

Profit after net financial items SEK m 81.6 66.5 311.5 241.6

Profit margin % 11.8 11.1 11.7 10.4

Return on capital employed % 26.4 26.7 26.8 24.7

Key ratios per share1)

Earnings per share before dilution SEK 1.09 1.66 4.90 3.35

Earnings per share after dilution SEK 1.09 1.66 4.90 3.35

Equity per share before dilution SEK 13.51 14.69 12.14 13.24

Equity per share after dilution SEK 13.51 14.69 12.14 13.24

Shares outstanding at end of period Number 52,000,000 51,500,000 52,000,000 51,500,000

1) During the interim period, a 100-for-1 shares split was carried out. The figures for earlier periods provided for comparision have been adjusted.

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

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PARENT COMPANY INCOME STATEMENT

2007 2006 2006/07May – Jul May – Jul May – Apr

SEK million 3 mth 3 mth 12 mth

Net sales 221.6 195.2 900.7

Cost of goods sold –160.2 –140.8 –647.9

Gross profit 61.4 54.4 252.8

Other operating income 8.7 4.5 29.0

Selling expenses –24.2 –20.0 –101.3

Administrative expenses –12.8 –10.3 –48.2

Other operating expenses –2.9 –2.5 –15.6

Operating profit 30.2 26.1 116.7

Interest income 7.1 3.2 20.7

Interest expense –10.0 –3.5 –24.6

Other financial income and expenses –8.9 32.1 112.5

Profit after financial items 18.4 57.9 225.3

Appropriations –4.2 –6.8 –26.4

Pre-tax profit 14.2 51.1 198.9

Tax on profit for the period –4.6 –5.8 –24.5

Net profit for the period 9.6 45.3 174.4

PARENT COMPANY BALANCE SHEET

SEK million 31-07-2007 31-07-2006 30-04-2007

Goodwill 0.2 0.3 0.2

Tangible assets 123.8 108.1 120.3

Financial assets 726.2 455.4 721.6

Inventories 144.2 105.6 137.2

Current receivables 287.3 216.2 270.7

Liquid assets 240.1 156.1 206.6

Total assets 1,521.8 1,041.7 1,456.6

Equity 376.5 490.1 367.0

Untaxed reserves 109.6 85.8 105.4

Long-term liabilities, provisions 0.9 1.4 0.9

Long-term liabilities, interest-bearing 397.0 128.1 364.0

Current liabilities, interest-bearing 506.7 160.6 460.6

Current liabilities, non-interest-bearing 131.1 175.7 158.7

Total equity and liabilities 1,521.8 1,041.7 1,456.6

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

89

GENERAL ACCOUNTING PRINCIPLESSystemair’s financial reports were up to and including 2005/06 prepared in accordance with the Swedish Annual Accounts Act (Årsredovisningslagen) and the General Recommendations of the Swedish Accounting Standards Board (Bokföringsnämnden).

As of 2006/07, the consolidated financial reports have been prepared according to IFRS (International Finan-cial Reporting Standards).How the tran-sition to IFRS is to be presented is stated in IFRS 1 when IFRS is first applied.The main rule is that the new principles are to be applied retroactively and informa-tion provided for comparison is to be recalculated.The most significant effects of the conversion to IFRS on the consoli-dated accounts concern the accounting for goodwill, pensions and financial

instruments. These effects are presented in the 2006/2007 annual report, where the valuation principles and supplemen-tary disclosures required on application of IFRS are also described.

This interim report has been pre-pared in accordance with IAS 34 “Inter-im Financial Reporting”, which accords with the requirements set forth in the Swedish Financial Accounting Standards Council’s (Redovisningsrådet) Recom-mendation RR 31 “Interim Reporting for Groups”. The accounting principles applied are identical to those described in the 2006/2007 annual report.

The Parent Company’s accounts have been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Financial Accounting Stand-ards Council’s Recommendation RR 32:06 “Accounting by Legal Entities”.

SEGMENT REPORTINGSystemair’s opportunities and risks are primarily associated with the solutions offered to customers.The Group’s sales are based mainly on ventilation prod-ucts.The Group has a variety of product groups offering a range of functions and performances, although all are intended for the same area of application among customers, i.e. the ventilation of business premises and homes. Customers are mainly professional fitters and distribu-tors. As all sales of ventilation products feature similar risks and opportunities, Systemair is active in only one business area, which thus comprises all reporting activities for the company as a whole.As a secondary segment, Systemair reports by geographical regions.Internal follow-up of the Company’s business is per-formed on a country-by-country basis.

DEFINITIONS OF KEY FIGURES

Operating profit (EBIT)Profit before financial items and tax.

GrowthGrowth is the change in net sales in relation to the sales for the previous year.

Operating marginOperating profit divided by net sales.

Profit marginProfit after financial income/expenses divided by net sales.

Return on capital employedProfit after financial income, calculated on a rolling 12-month basis, divided by the average capital employed.

Capital employedTotal assets less non-interest-bearing liabilities.

Number of employeesThe number of employees at the end of the period covered by the report. New employees, terminated positions, part-time employment and paid overtime are all converted to full-time positions.

Earnings per shareThe profit for the period divided by the average number of shares outstanding during the period.

Equity/assets ratioAdjusted equity divided by the balance sheet total.

Equity per shareEquity divided by the number of shares outstanding at the end of the period.

INTERIM REPORT FOR THE PERIOD 1 MAY – 31 JULY 2007

90

Financial statements

FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT

SEK million, 1 May – 30 April Note 2004/05 2005/06 2006/07

Net sales 3 1,895.9 2,321.2 2,664.2

Cost of goods sold 4 –1,214.8 –1,459.4 –1,651.6

Gross profit 681.1 861.8 1,012.6

Other operating income 7 19.0 27.0 29.6

Selling expenses 4 –407.0 –480.6 –531.6

Administrative expenses 4, 5, 6 –133.1 –135.0 –147.5

Other operating expenses 8 –13.5 –20.2 –33.7

Operating profit 9, 10 146.6 253.0 329.4

Result from financial investments

Result from participations in Group companies 24 4.7 0.3 0.3

Result from participations in associated companies 25 –4.0 – –

Result from other securities and receivables held as fixed assets 11 4.0 7.3 –0.7

Interest income and similar profit/loss items 12 3.6 5.5 11.3

Interest expenses and similar profit/loss items 13 –22.6 –24.5 –28.8

Profit after financial items 132.3 241.7 311.5

Tax 14 –34.6 –71.2 –56.9

Profit for the period 97.7 170.5 254.6

Attributable to:

Parent Company’s shareholders 97.2 169.5 253.2

Minority shareholdings 0.5 1.0 1.4

Earnings per share before dilution 35 194.31 335.30 490.05

Earnings per share after dilution 35 194.31 335.30 490.05

91

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

SEK million, 30 April Note 2005 2006 2007

ASSETS

Fixed assets

Intangible assets 15

Goodwill 57.0 63.4 75.0

Other intangible assets – – 1.5

57.0 63.4 76.5

Tangible assets 15

Buildings and land 296.3 326.3 434.6

Plant and machinery 65.6 77.7 93.0

Equipement and tools 49.0 50.3 59.2

Constructions in progress 6.9 12.7 30.9

417.9 467.0 617.7

Financial and other assets

Other securities held as fixed assets 16 23.2 59.1 24.2

Participations in associated companies 27 0.1 0.1 0.1

Deferred income taxes recoverable 14 56.3 38.9 73.9

Other long-term receivables 17 10.2 7.7 2.3

89.8 105.8 100.5

Totalt fixed assets 564.7 636.3 794.7

Current assets

Inventories 30

Raw materials and consumables 130.4 142.2 184.1

Work in progress 10.5 14.0 14.7

Finished products 235.5 247.6 301.5

376.4 403.8 500.3

Current receivables

Accounts receivable - trade 323.3 400.2 501.8

Other receivables 26.8 15.0 18.6

Prepaid expenses and accrued income 18 16.3 19.7 18.1

Other investments – 0.1 0.1

366.4 435.0 538.6

Cash and bank balances 21.9 32.1 61.5

Total current assets 764.7 870.9 1,100.3

TOTAL ASSETS 1,329.4 1,507.2 1,895.0

92

FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEET

SEK million, 30 April Note 2005 2006 2007

EQUITY & LIABILITIES

Equity 19

Share capital 50.0 51.5 52.0

Other capital contributed 0.0 0.0 0.5

Other reserves 7.3 52.9 –2.2

Profit brought forward, including net profit for the year 430.0 577.5 580.8

Equity attributable to Parent Company’s shareholders 487.3 681.9 631.1

Minority shareholdings 5.1 5.9 11.7

Total equity 492.4 687.8 642.9

Long-term liabilities

Interest-bearing long-term liabilities 20 247.9 225.3 251.7

Provisions for pensions 34 12.1 11.7 9.7

Provisions for deferred tax liabilities 14 39.2 46.4 60.3

Other provisions 4.9 6.1 5.5

Total long-term liabilities 304.1 289.5 327.3

Current liabilities

Interest-bearing current liabilities 20 274.5 223.0 512.8

Accounts payable - trade 139.8 174.2 207.5

Income tax liability 22.8 26.3 46.7

Other liabilities 18.6 16.0 53.1

Accrued expenses and deferred income 21 77.2 90.5 104.7

Total current liabilities 532.9 529.9 924.8

Total liabilities 837.0 819.4 1,252.1

TOTAL EQUITY & LIABILITIES 1,329.4 1,507.2 1,895.0

Pledged assets 28 430.2 384.0 395.0

Contingent liabilities 29 37.5 13.1 3.9

93

FINANCIAL STATEMENTS

CHANGES IN EQUITY – GROUPAttributable to Parent Company’s shareholders

SEK millionShare

capital

Other contributed

capitalOther

reserves1)

Profit brought

forward, incl. net profit

for the year

Attributable to minority

share-holdings

Total equity

Equity, 1 May 2004 50.0 0.0 0.0 332.8 5.1 388.0

Changes in value of financial assets available for sale 9.3 9.3

Exchange rate differences –2.0 –2.0

Total income and expenses taken direct to equity 7.3 0.0 7.3

Dividend in subsidiary paid to minority shareholders –0.5 –0.5

Net profit for the year 97.2 0.5 97.7

Equity, 30 April 2005 50.0 0.0 7.3 430.0 5.1 492.4

Equity, 1 May 2005 50.0 0.0 7.3 430.0 5.1 492.4

Changes in value of financial assets available for sale 33.8 33.8

Transferred to income statement for period –0.9 –0.9

Exchange rate differences 12.7 0.4 13.1

Total income and expenses taken direct to equity 45.6 0.0 0.4 46.0

Dividend in subsidiary paid to minority shareholders –0.6 –0.6

New share issue 1.5 18.0 19.5

Dividends –40.0 –40.0

Net profit for the year 169.5 1.0 170.5

Equity, 30 April 2006 51.5 0.0 52.9 577.5 5.9 687.8

Equity, 1 May 2006 51.5 0.0 52.9 577.5 5.9 687.8

Changes in value of financial assets available for sale –33.4 –33.4

Transferred to income statement for period –1.0 –1.0

Exchange rate differences –20.7 –0.2 –20.9

Total income and expenses taken direct to equity –55.1 0.0 –0.2 –55.3

Dividend in subsidiary paid to minority shareholders –0.5 –0.5

Acquisition of subsidiary with minority shareholding 5.1 5.1

New share issue 0.5 0.5 15.0 16.0

Dividends –264.8 –264.8

Net profit for the year 253.2 1.4 254.6

Equity, 30 April 2007 52.0 0.5 –2.2 580.9 11.7 642.9

1) “Other reserves” include exchange rate differences and changes in value of financial assets available for sale.

Specification of “Other reserves”SEK million

Exchange rate differences

Actual value of reserve Total

Opening balance, 1 May 2004 0 0 0

Change during the year –2.0 9.3 7.3

Closing balance, 30 April 2005 –2.0 9.3 7.3

Opening balance, 1 May 2005 –2.0 9.3 7.3

Change during the year 12.7 32.9 45.6

Closing balance, 30 April 2006 10.7 42.2 52.9

Opening balance, 1 May 2006 10.7 42.2 52.9

Change during the year –20.7 –34.4 –55.1

Closing balance, 30 April 2007 –10.0 7.8 –2.2

94

FINANCIAL STATEMENTS

CONSOLIDATED CASH FLOW STATEMENT

SEK million, 1 May – 30 April Note 2004/05 2005/06 2006/07

Current operations

Operating profit 146.6 253.0 329.4

Interest received 3.6 5.5 11.3

Interest paid –22.9 –24.7 –27.7

Adjustment for non-cash items etc. 32 52.7 64.1 38.4

Income taxes paid –39.3 –42.7 –56.3

Cash flow from current operations before changes in working capital 140.7 255.1 295.1

Changes in working capital

Inventories –28.4 –7.1 –96.0

Current receivables –62.8 –28.4 –88.5

Accounts payable - trade 9.2 31.9 37.1

Current liabilities 12.6 –32.6 55.8

Cash flow from current operations 71.3 219.0 203.5

Investment activities

Acquisition of subsidiaries 31 –8.7 –19.5 –49.8

Sale of subsidiaries 7.7 – –

Acquisition of intangible assets – – –

Acquisition of tangible assets –47.1 –77.9 –171.5

Sale of tangible assets 3.5 3.2 3.6

Acquisition of financial assets –23.0 – –

Sale of financial assets 10.8 1.5 1.5

Cash flow from investment activities –56.8 –92.6 –216.3

Financial activities

Loans raised 27.4 52.4 359.0

Amortization of loans –43.5 –148.8 –65.4

Dividend to shareholders – –40.0 –266.0

New share issues – 19.5 16.0

Cash flow from financial activities –16.1 –116.9 43.6

Increase/decrease in liquid assets –1.6 9.4 30.8

Liquid assets at start of year 24.1 21.9 32.1

Exchange difference in liquid assets –0.5 0.7 –1.4

Liquid assets at year-end 21.9 32.1 61.5

95

FINANCIAL STATEMENTS

PARENT COMPANY INCOME STATEMENT

SEK million, 1 May – 30 April Note 2005/06 2006/07

Net sales 3 714.8 900.7

Cost of goods sold 4 –502.9 –647.9

Gross profit 211.9 252.8

Other operating income 7 26.4 29.0

Selling expenses 4 –93.2 –101.2

Administrative expenses 4, 5, 6 –41.4 –48.2

Other operating expenses 8 –8.8 –15.6

Operating profit 9, 10 94.9 116.7

Result from financial investments

Result from participations in Group companies 24 35.3 113.9

Result from other securities and receivables accounted for as fixed assets 11 3.2 –1.4

Other interest income and similar profit/loss items 12 7.5 20.7

Interest expenses and similar profit/loss items 13 –12.0 –24.6

Profit after financial items 128.9 225.3

Appropriations 22 –3.9 –26.4

Pre-tax profit 125.0 198.9

Tax 14 –24.9 –24.5

Net profit for the year 100.1 174.4

96

FINANCIAL STATEMENTS

PARENT COMPANY BALANCE SHEET

SEK million, 30 April Note 2006 2007

ASSETS

Fixed assets

Intangible assets 15

Goodwill 0.3 0.2

0.3 0.2

Tangible assets 15

Buildings and land 60.5 58.7

Plant and machinery 38.1 32.3

Equipment and tools 6.3 8.1

Construction in progress 6.2 21.2

111.1 120.3

Financial assets

Participations in Group companies 26 311.3 358.9

Receivables from Group companies 36 90.9 338.6

Other long-term holdings of securities 16 25.0 24.1

Other long-term receivables 17 4.1 0.0

431.3 721.6

Total fixed assets 542.8 842.1

Current assets

Inventories

Raw materials and consumables 47.6 70.1

Work in progress 2.5 4.8

Finished products 55.1 62.3

105.2 137.2

Current receivables

Accounts receivable - trade 55.9 84.7

Receivables from Group companies 127.3 179.1

Other receivables 1.7 4.3

Prepaid expenses and accrued income 18 2.3 2.6

187.2 270.7

Cash and bank balances 145.1 206.6

Total current assets 437.5 614.5

Total assets 980.3 1,456.6

97

FINANCIAL STATEMENTS

PARENT COMPANY BALANCE SHEET

SEK million, 30 April Note 2006 2007

EQUITY & LIABILITIES

Equity 19

Restricted equity

Share capital 51.5 52.0

Statutory reserve 10.0 10.0

61.5 62.0

Unrestricted equity

Share premium reserve 18.0 33.5

Profit brought forward 265.2 97.1

Net profit for the year 100.1 174.4

383.3 305.0

Total equity 444.8 367.0

Untaxed reserves 23 79.0 105.4

Provisions 1.4 0.9

Long-term liabilities

Liabilities to credit institutions 20 106.8 134.7

Liabilities to Group companies 53.9 274.3

Liabilities to associated companies – –

160.7 409.0

Current liabilities

Bank overdrafts 20 120.9 415.7

Liabilities to credit institutions 20 18.6 –

Accounts payable - trade 48.1 67.3

Income tax liability 5.7 16.0

Liabilities to Group companies 75.9 24.9

Other liabilities 0.4 17.4

Accrued expenses and deferred income 21 24.9 33.1

294.5 574.4

Total equity and liabilities 980.3 1,456.6

Pledged assets 28 225.1 225.1

Contingent liabilities 29 134.5 179.4

98

FINANCIAL STATEMENTS

CHANGES IN EQUITY – PARENT COMPANY

Unrestricted equity

SEK million Share capital

Statutory reserve

Share premium

reserve

Profit brought

forward, inc. net profit for

the yearTotal

equity

Equity, 1 May 2005 50.0 10.0 – 349.9 409.9

Group contribution provided –62.1 –62.1

Tax impact, Group contribution provided 17.4 17.4

New share issue 1.5 18.0 19.5

Dividend –40.0 –40.0

Net profit for the year 100.1 100.1

Equity, 30 April 2006 51.5 10.0 18.0 365.3 444.8

Equity, 1 May 2006 51.5 10.0 18.0 365.3 444.8

Group contribution provided –4.8 –4.8

Tax impact, Group contribution provided 1.3 1.3

New share issue 0.5 15.5 16.0

Dividend –264.8 –264.8

Net profit for the year 174.4 174.4

Equity, 30 April 2007 52.0 10.0 33.5 271.5 367.0

99

FINANCIAL STATEMENTS

PARENT COMPANY CASH FLOW STATEMENT

SEK million, 1 May – 30 April 2005/06 2006/07

Current operations

Operating profit 94.8 116.7

Adjustment for non-cash items

Depreciation 15.9 16.4

Other items –0.5 –1.8

110.2 131.4

Interest received 7.6 20.7

Interest paid –12.0 –24.6

Income taxes paid –7.5 –23.1

Cash flow from current operations before changes in working capital 98.3 104.4

Changes in working capital

Inventories –6.8 –32.0

Current receivables –36.0 –94.7

Accounts payable - trade 68.1 –31.9

Current liabilities –11.1 35.7

Changes in working capital 14.2 –122.9

Cash flow from current operations 112.5 –18.5

Investment activities

Acquisition of tangible assets –16.7 –25.5

Sale of tangible assets – –

Acquisition of Group companies –22.2 –280.5

Sale of Group companies 0.3 232.9

Dividend of shares in subsidiaries 38.5 113.6

Group contributions provided –62.1 –4.8

Acquisition of financial assets –55.6 –233.1

Sale of financial assets 1.3 1.6

Cash flow from investment activities –116.5 –195.8

Financial activities

Dividend to shareholders –40.0 –264.8

New share issue 19.5 16.0

Loans raised 97.3 579.9

Amortization of loans –37.9 –55.4

Cash flow from financial activities 38.9 275.7

Increase/decrease in liquid assets 34.9 61.5

Liquid assets at start of year 110.2 145.1

Liquid assets at year-end 145.1 206.6

100

NOTES TO THE ACCOUNTSNOTE 1 ACCOUNTING AND VALUATION POLICIES Systemair AB’s group accounting for the financial year ending 30 April 2007 has been approved by the board and the Managing director for publication on July 24 and will be presented to the 2007 shareholder’s meeting for approval. The parent company is a Swedish limited company registered in Skinnskatteberg, Sweden.

Basis of preparationSystemair’s consolidated accounts are based on historical cost, with the exception of Financial derivative instruments and Financial assets available for sale. These assets and liabilities are accounted for at fair value. Unless otherwise indicated, all amounts are in millions of Swedish kronor (SEK million).

Statement of compliance with regulations appliedThe consolidated accounts have been prepared in accordance with Internatio-nal Financial Reporting Standards (IFRS), as adopted for use within the EU. Furthermore, the consolidated accounts have been prepared in accordance with Swedish law, by application of Recommendation RR 30:06 (Supplementary Accounting Rules for Groups) of the Swedish Financial Accounting Standards Council. In drawing up the financial reports for the Parent Company, the Council’s Recommendation RR 32:06 (Accounting for Legal Entities) has been applied. Information on the effects of the adoption of IFRS is provided in Note 2, below.

New standards not yet in forceSystemair has not prematurely adopted IFRS 7 Financial Instruments: Disclosures that will come into force during 2007.

Consolidated accountsBasis of consolidationThe consolidated accounts cover the Parent Company and its subsidiaries. The financial reports for the Parent Company and the subsidiaries comprised by the consolidated accounts refer to the same period and have been prepared in accordance with the accounting policies applied to the Group.

All intra-Group receivables and liabilities, income and expenses, profits and losses arising in transactions between companies included in the consolidated accounts are eliminated in their entirety.

A subsidiary is included in the consolidated accounts from the date of acquisition, i.e. the day on which the Parent Company gains a decisive influence over the company, and is included in the consolidated accounts until the day on which the decisive influence ceases. Normally, decisive influence over a subsidi-ary is gained via a holding of more than 50% of the voting rights represented by the shares, but may also be obtained by other means, such as an agreement.

Subsidiaries acquired are reported in the consolidated accounts in accord-ance with the purchase method. The same applies to businesses acquired directly. In the purchase method, the acquisition cost of the shares, or of the directly acquired business, is apportioned over the assets acquired, undertakings assumed and liabilities at the time of acquisition on the basis of their fair values at this time. If the acquisition value exceeds the fair value of the net assets of the company acquired, the difference is reported as goodwill. If the acquisition value is less than the fair value of the net assets of the company acquired, the differ-ence is recognized directly in the income statement.

A minority interest is the share of profits and net assets in a part-owned company that accrues to other owners. Minority interests in profits are included in the profit after tax reported in the consolidated income statement. Minority interests in net assets are included in equity in the consolidated balance sheet, but are stated separately from equity attributable to the shareholders of the Parent Company.

Investments in associated companiesAn associated company is an entity in which the Group exercises a significant influence, but which is not a joint venture. A significant influence normally exists in the case of a shareholding that represents between 20 and 50% of the votes. Holdings in associated companies are reported in accordance with the equity method. In this method, the value of the Group’s shares in associated companies is represented by the Group’s share in the equity of the associated companies, plus goodwill on consolidation and any other remaining value adjustments at the time of acquisition. Goodwill and other value adjustments at acquisition are calculated in the same way as in business acquisitions as described above. In the consolidated income statement, the Group’s share of the associated company’s

reported profit after tax is accounted for as Shares in profits in associated com-panies, adjusted where appropriate to reflect any depreciation, impairment or reversals of value adjustments. Dividends received from the associated company are deducted from the stated value of the investment. Holdings in associated companies are accounted for in the Parent Company income statement in accordance with the historical cost method.

Translation of accounts of foreign operationsA foreign operation is one that is conducted in an economic environment with a currency (functional currency) other than the Group’s accounting currency (SEK). Assets, including goodwill and other surplus values, as well as liabilities in such operations, are translated into the accounting currency on the balance sheet date. The income statements for the foreign operations are translated to SEK using a weighted average of the exchange rates for the year. Any exchange differences arising during translation are taken direct to equity. On the sale of an independent foreign operation, the accumulated exchange differences are accounted for in the income statement along with the profit or loss on the sale.

Translation of receivables and liabilities in foreign currencyTransactions in foreign currency are translated at the rate prevailing on the transaction date. On the balance sheet date, monetary receivables and liabilities stated in foreign currencies are translated at the rate prevailing on that date. All exchange differences are taken to the income statement, other than exchange differences arising in loans in foreign currency raised to hedge net investments in foreign operations. Exchange differences in such loans are taken direct to equity, under the heading of translation differences, and are transferred to the income statement in the event of any future sale of the foreign operation.

Net salesNet sales is reported at the actual value of the remuneration received, or the remuneration that will be received, for goods and services sold within the regular activities of the Group. The revenue is reported once delivery has been made to the customer in accordance with current terms and conditions of sale. Net sales is reported exclusive of value added tax and net after deduction of any discounts.

Tangible and intangible assets with a limited useful lifeTangible and intangible assets are reported at historical cost, less accumulated depreciation and any impairments. Depreciation is applied on a linear basis over the useful life of the asset, to an estimated residual value. Land and goodwill are not depreciated.

The following depreciation periods are applied:Product development 3–5 yearsBuildings 25–50 yearsPlant and machinery 3–7 yearsEquipment and tools 3–5 years

Research and developmentDevelopment expenditure is reported as an intangible asset, but only if the following criteria are satisfied: a well defined development project with concrete plans as to how and when the asset will be used in operations must exist; it must be possible for expenses to be calculated reliably; and the asset must be considered likely to create future economic benefits. In addition, it must be con-sidered technically feasible for the project to be completed, and the Group must be considered to have the resources required for development to be brought to completion. The historical cost of the intangible asset includes not only the cost of personnel and direct purchases, but also the share of indirect costs that may be attributed to the asset. In view of the useful life of the asset, depreciation is applied over 3-5 years. Other development expenses are written off as incurred. As of the balance sheet date there were no development projects deemed to meet the above criteria.

Impairment of assetsRegular assessments are made during the year to establish whether any assets have declined in value. During the assessment, the recoverable value of the asset is calculated.

In the case of goodwill and other intangible assets with an indeterminate useful life, as well as other intangible assets that at the time are not yet ready for use, the recoverable value is calculated annually.

FINANCIAL STATEMENTS

101

If it is not possible to determine largely independent cash inflows for a particular asset, the assets to be tested for impairment shall for that process be grouped at the lowest level where it is possible to identify largely independent cash inflows (a cash-generating unit). An impairment loss is reported when the reported value of an asset or cash-generating unit exceeds the recoverable value. Any impairment loss is taken to the income statement.

Impairment losses in respect of assets attributable to a cash-generating unit are allocated first to goodwill, and are then applied proportionally to other assets in the unit.

Calculation of recoverable valueThe recoverable value is whichever is the higher of net realizable value or the value in use. The value in use is the present value of future cash inflows, dis-counted by an interest rate based on risk-free interest, adjusted to reflect the risk associated with the particular asset. In the case of an asset that does not generate cash flows, the recoverable value is calculated for the cash-generating unit in which the asset is included. Reversal of impairment lossesImpairment losses are reversed if a subsequent increase in the recoverable value may on objective grounds be attributed to an event occurring after the impairment loss was applied.

Impairment losses in respect of goodwill are not reversed.An impairment loss is reversed only to the extent that the asset’s reported

value does not exceed the value that the asset would have had if no impairment loss had been applied.

InventoriesInventories are stated at the lower of cost and net realizable value for raw materials and commercial goods and at production cost for produced goods. Net realizable value is the estimated selling price in normal conditions, less the costs incurred in completing the sale. Cost is based on the current purchasing price, less a deduction for obsolescence in the required amount. Deliveries between Group companies are priced in line with the market. Internal gains in the inventories of Group companies are eliminated in the consolidated accounts. These eliminations are taken to operating profit.

Financial assetsFinancial assets are classified into various categories, depending on the intention behind the acquisition of the particular asset. The classification is determined at the original time of acquisition. A financial asset is removed from the balance sheet when the legal rights to the cash flow cease.

Financial assets accounted for at fair value via income statementIn Systemair’s balance sheet, this category includes derivative instruments not classified as hedging instruments. The assets are shown at fair value, with changes in value being reported in the income statement.

Loan receivables; accounts receivable – tradeLoan receivables and accounts receivable – trade are financial assets with fixed payments, or payments for which amounts may be determined. These receiv-ables are associated with the Group’s deliveries of goods and services and are accounted for at cost. They are accounted for in the amounts in which they are expected to be received, following a deduction for bad debts, which are assessed on a case-by-case basis. Loan receivables and accounts receivable – trade are anticipated to be of short duration and so are stated in their nominal amounts, undiscounted.

Investments held until maturity Investments held until maturity are financial assets that are not derivatives with fixed payments or payments that may be fixed, with a fixed duration and that will be held until maturity. These investments are accounted for at their accrued historical cost.

Available for sale financial assets Available for sale financial assets are assets that have either been attributed to this category or have not been classified in any of the other categories. They are included among fixed assets unless the Company’s management intends to sell off the asset within 12 months of the balance sheet date. Available-for-sale finan-cial assets are, after the date of acquisition, stated at fair value. Unrealized gains and losses arising from changes in the fair value of non-monetary instruments

classified as assets are taken to equity. When instruments classified as available-for-sale assets are sold or when they are subject to an impairment loss, accumu-lated adjustments of the fair value are taken to the income statement.

Financial liabilitiesFinancial liabilities reported at fair value via income statementIn Systemair’s balance sheet, this category includes derivative instruments not classified as hedging instruments. The value of the liabilities is assessed on an ongoing basis at fair value, with changes in value being reported in the income statement.

Other financial liabilitiesThis category includes interest-bearing and interest-free financial liabilities that are not held for resale. The liabilities are accounted for at accrued cost.

Long-term liabilities have a remaining term of one year or more, whereas liabilities with a shorter duration are accounted for as current liabilities. Accounts payable – trade have a short anticipated duration and so are account-ed for in their nominal amount, undiscounted.

ProvisionsProvisions are reported in the balance sheet when the Group has an obligation (legal or constructive) as a result of a past event and it is probable that an out-flow of resources associated with economic benefits will be required to settle the obligation, and the amount may be reliably estimated. If the Group antici-pates receiving compensation corresponding to a provision that has been made, for example via an insurance agreement, the compensation is accounted for as an asset in the balance sheet but only when it is almost certain that the com-pensation will be received. If the effect of the time value of the future payment is believed to be significant, the value of the provision is determined by estimation of the present value of the expected future payment using a discount factor (before tax) reflecting the market’s current valuation of the time value and any risks associated with the obligation. The gradual increase of the amount of provi-sion that this method entails is recognized as an interest expense in the income statement.

Employee benefitsPensions and similar post-employment benefit obligations Systemair operate several separate post-employment benefit plans. These plans are classified as either defined-benefit or defined-contribution. A defined-benefit pension plan is one that specifies an amount for the pension benefit that an employee will receive on retirement. A defined-contribution pension plan is one in which the Group pays fixed contributions to a separate legal entity. Defined-contribution plans are accounted for as an expense during the period in which the employees perform the service to which the remuneration refers. Defined-benefit plans are valued separately for each plan, on the basis of the benefits earned during prior and current periods. The liability accounted for under the heading of Provision for pensions, defined-benefit pension plans, is the present value of the defined-benefit obligation on the balance sheet date, less the fair value of the plan assets, with an adjustment for unreported actuarial gains and losses.

The Group’s obligations with regard to other defined-benefit pension plans are calculated separately for each plan using what is known as the Projected Unit Credit Method. In this method, the obligation is calculated as the present value of the estimated pension payments in the future. The obligation calculated in this way is compared to the fair value of the plan assets that secure the obligation. Any difference is accounted for as a liability/asset taking into account actuarial gains and losses, as accrued. Estimation of future payments is based on actuarial assumptions including assumptions as to life expectancy, future salary increases, personnel turnover and factors of relevance to the selection of discount rate.

Any changes to and deviations from the actuarial assumptions normally lead to actuarial gains or losses.

Actuarial gains or losses are not reported as long as the accumulated gains or losses are less than 10% of the highest of the present value of the obligations. If the accumulated gain or loss exceeds the said limit, the amount of the gain or loss is reported, as accrued, in the income statement over the expected average remaining periods of service of the employees participating in the plans.

If the calculation of the amount results in an asset for the Group, the amount reported for the asset is limited to the net total of unreported actuarial losses and unreported past service costs, plus the present value of available refunds from, and reductions in future contributions to, the plan.

FINANCIAL STATEMENTS

102

FINANCIAL STATEMENTS

Share-based remunerationNo agreements on share-based remuneration exist within the Group.

Lease agreementsLease agreements in which essentially all risks and benefits associated with ownership do not accrue to the Group are classified as operating leases. Lease charges for such agreements are accounted for as an expense in the income statement on a linear basis over the term of the agreement. Systemair classifies all current lease agreements as operating leases.

Loan expensesLoan expenses affect the income statement in the period to which they pertain. Any costs incurred in connection with the raising of loans are distributed over the term of the loan on the basis of the liability reported.

Income taxIncome tax consists of tax currently payable and deferred tax. Income taxes are accounted for in the income statement when referring to income statement items, and are taken directly to equity when the underlying transaction is taken directly to equity.

Current tax is that which is to be paid or recovered for the current year, using the tax rates enacted, or substantively enacted, by the balance sheet date. This includes any adjustments applied to current tax pertaining to prior periods.

Deferred tax is calculated according to the balance sheet method, in which deferred tax is calculated for all temporary differences identified on the balance sheet date, i.e. differences between the taxable values of the assets and liabilities on the one hand and their reported values on the other. Deferred tax assets are also accounted for in the balance sheet in respect of unused tax losses carried forward.

However, a deferred tax liability is not reported in the balance sheet for taxable temporary differences relating to goodwill. In addition, deferred tax is not reported if the temporary difference pertains to investments in subsidiaries and associated companies where the Group has a decisive influence over when the reversal of the temporary difference will take place and it is likely that the temporary difference will not be reversed in the foreseeable future.

Deferred tax assets are reported only to the extent that that it is probable that future taxable profits will be available against which the temporary differ-ences or unutilized tax losses carried forward can be utilized. The reported val-ues of the deferred tax assets are reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax assets to be utilized.

Deferred tax assets and tax liabilities are calculated using the tax rates that are expected to apply in the period when the assets are realized or the liabilities settled, on the basis of the tax rate (and the tax legislation) in force, or substan-tively in force, on the balance sheet date. Accrued tax assets and tax liabilities are reported net in the balance sheet, provided that the tax will be paid in the net amount.

In the Parent Company, untaxed reserves are accounted for with the inclu-sion of any deferred tax liability. In the consolidated accounts, untaxed reserves are divided into two components, a deferred tax liability accounted for as a pro-vision, and a portion of equity.

Cash flow statementThe cash flow statement presents information on inward and outward payment flows. The indirect method is used for current operations. Items classified as liquid assets comprise cash and bank deposits, plus current liquid investments in which the original term is less than three months.

Testing of goodwill for impairment lossGoodwill has an indeterminate useful life. It is not depreciated, but is assessed annu-ally for any impairment loss. Goodwill with an indeterminate useful life was tested for impairment on 30 April 2007 and no need for any impairment adjustment was identified.

Government assistanceGovernment assistance is reported when there is reasonable assurance that the Company will meet the conditions attached to the grant and will receive the grant. The Company received three types of government assistance, govern-ment grants, loans for which repayment may be waived and grants relating to assets.

The Parent Company received government grants in the form of employment grants from NUTEK (the Swedish Agency for Economic and Regional Growth) in the amount of SEK 0.0 million (0.2) and development grants in the amount of SEK 0.0 million (0.7). The employment grant was offset against salaries paid in the department concerned, while the development grant was offset against the investments associated with the grant.

In Canada, the Group received, from the local provincial authority, loans for which repayment may be waived, in the amount of SEK 0.0 million (1.0). The income was reported in the income statement under the heading of Other interest income and similar profit/loss items. In connection with an investment in machinery, a capital grant amounting to SEK 0.8 million was received from the Province. The grant has reduced the initial cost for the machinery.

Important estimates and assumptionsThe preparation of financial reports requires sophisticated estimates and assumptions for accounting purposes. In addition, management makes various judgements as to the application of the Group’s accounting policies. Estimates and judgements may affect the income statement, balance sheet and supplemen-tary disclosures provided in the financial reports. The estimates and assumptions that could represent a possibility of major adjustments to reported values in the next financial year are described below.

Impairment tests of goodwillEvery year, Group management tests goodwill for impairment in accordance with the accounting policy described above. A number of estimates have to be applied during this test. Neither a reduction in the assumed rate of growth nor a rise in the assumed discount rate of two percentage points would result in any impairment loss. For more detailed information on impairment testing of good-will, please see Note 15.

Provisions for pensionsEstimates and judgements play a major role in measuring provisions for pen-sions. The present-value calculation of this item is based on actuarial assump-tions. Estimates and judgements are evaluated continuously, on the basis of both past experience and reasonable expectations as to the future. In the case of pension obligations, the present-value calculation is based on assumptions described in the relevant note.

Deferred tax assetsThe Group’s deferred tax assets are for the most part based on tax losses carried forward in subsidiaries. The Group’s management has made assumptions and judgements as to the future earning capacity of these subsidiaries over the next three-year period and on that basis has assessed the possibility for future offsetting of profits against these losses.

NOTE 2 IMPACT OF ADOPTION OF IFRSThis financial report for the Group is the first to be produced in compliance with IFRS. The accounting policies described in the section headed “Accounting and valuation policies ” have been applied in drawing up the Group’s financial reports for the years 2006/07, 2005/06 and 2004/05, and in the Group’s open-ing balance as per 1 May 2004. In drawing up the opening balance sheet for the Group, the amounts stated in accordance with accounting policies previously applied have been adjusted in line with IFRS. Clarifications as to how the changeover from the former accounting policies to IFRS has affected the Group’s financial position, financial results and cash flows are presented in the following tables and accompanying explanations.

Accumulated translation differences arising in translation of the accounts of foreign subsidiaries have been set to zero for the start of the 2004/05 financial year. Translation differences arising after that point are accounted for separately under the heading of Other reserves, in equity capital.

IFRS standards applied:The Systemair Group’s consolidated income statement and balance sheet have been affected by the following IFRS standards:

a) IFRS 1 First-Time Application of IFRS Systemair has chosen to avail itself of the exemption that permits no adjustment to be made in respect of acquisitions in the period prior to 1 May 2004. A review of the acquisitions carried out since 1 May 2004 indicates that no adjust-ment is necessary regarding the acquisition analyses performed.

103

FINANCIAL STATEMENTS

b) IFRS 3 Business CombinationsIn the consolidated accounts, IFRS 3 has been applied to all business combina-tions. According to IFRS 3, goodwill is no longer to be amortized. Instead, good-will must be tested for impairment. This testing must be carried out whether or not there is any indication of any impairment. In addition, a more detailed ana-lysis of intangible assets is required in the event of a business combination. Until April 2004, goodwill was amortized on a straight-line basis over the estimated useful life of the asset, between 5 and 10 years. Regular assessments were car-ried out to establish any requirement for amortization of goodwill. Under IFRS 3, the Group ceased amortization of goodwill on 1 May 2004. Reversals of goodwill amortizations for 2004/05 and 2005/06 totalled SEK 13.0 million and SEK 12.1 million, respectively. The impairments were accounted for under the heading of Cost of goods sold, in the amounts of SEK 2.4 million and SEK 2.5 million, respectively, and under Selling expenses, totalling SEK 10.6 million and SEK 9.6 million, respectively. No impairments were identified following tests for impairment as described in IFRS.

c) IAS 1 Presentation of financial statements According to IAS 1, minority interests are to be reported as a separate compo-nent of equity, instead of between liabilities and equity. In the income statement, minority participations are no longer to be eliminated, but are to be included in the profit reported for the period. In the income statement, specification is required of what share of the net profit for the year is attributable to the Parent Company’s shareholders and the holders of minority interests, respectively.

d) IAS 14 Segment reportingBecause all sales of ventilation products are exposed to similar risks and oppor-tunities, Systemair operates in only one area of business which consequently coincides with the system of reporting for the Group as a whole. Secondary segment reporting is provided per geographical area. Internal monitoring of the business is conducted per legal entity.

e) IAS 19 Employee benefitsIn the course of the changeover to IFRS, actuarial calculations have been applied in accordance with IAS 19, to significant pension plans. As a result of these calcu-lations, the provisions for pensions previously reported have been increased by SEK 15.5 million for 2003/04, by SEK 15.8 million for 2004/05 and by SEK 17.2 million for 2005/06.

f) IAS 39 Financial instrumentsUnder IAS 39, financial assets including derivatives are to be reported at fair values, without any deduction for selling expenses. Systemair holds shares in Repant ASA, of Norway, which is listed on the Oslo Stock Exchange. Repant develops and sells reverse vending systems. These shares have been accounted for as a financial asset that is available for sale, and consequently gains and losses that arise in reporting at fair value are taken direct to equity, via the recognition of changes in equity. Systemair’s holding of shares in Repant totalled 50,904,822 on 30 April 2005, and 49,106,450 on 30 April 2006. Fair value amounted to SEK 22.9 million and SEK 58.8 million, respectively.

Furthermore, all derivative instruments are to be reported at fair value in the balance sheet. Because hedge accounting is not applied, changes in fair value have been reported via the income statement.

Effects on income statement and balance sheetThe summary below illustrates the effects of the application as described above of IFRS on income statement, balance sheet and equity for the years 2004/05 and 2005/06.

Consolidated Balance Sheet, 1 May 2004

SEK million

According to earlier principles

Adjust-ment, IFRS IFRS

According to IFRS

ASSETS

Intangible assets 56.3 56.3

Tangible assets 432.9 432.9

Financial assets 50.9 4.3 e) 55.3

Total fixed assets 540.1 4.3 544.5

Inventories 361.8 361.8

Current receivables 314.4 –0.8 f) 313.5

Cash and bank balances 24.2 24.2

Total current assets 700.4 –0.8 699.5

Total assets 1,240.5 3.5 1,244.0

EQUITY & LIABILITIES

Equity 394.8 –12.0 e), f) 382.8

Minority interests 5.1 5.1

Total equity 399.9 –12.0 388.0

Provisions 40.7 15.2 e), f) 55.9

Long-term liabilities 273.2 273.2

Current liabilities 526.6 0.3 f) 526.9

Total equity and liabilities 1,240.5 3.5 1,244.0

Consolidated Income Statement, 1 May 2004 – 30 April 2005

SEK million

According to earlier principles

Adjust-ment, IFRS IFRS

According to IFRS

Net sales 1,895.9 1,895.9

Cost of goods sold –1,217.2 2.4 b) –1,214.8

Gross profit 678.7 2.4 681.1

Other operating income 19.0 19.0

Selling expenses –417.4 10.4 b), e) –407.0

Administrative expenses –133.1 –133.1

Other operating expenses –13.5 –13.5

Operating profit 133.7 12.9 146.6

Result from financial investments

Result from participations in Group companies 4.7 4.7

Result from participations in associated companies – –4.0 f) –4.0Result from other securi-ties and receivables held as fixed assets 2.0 2.0 f) 4.0Other interest income and similar profit and loss items 3.6 3.6

Interest expenses and simi-lar profit and loss items –22.6 –22.6

Result after financial items 121.4 10.9 132.3

Tax on profit for the year –45.0 10.4 b), e), f) –34.6

Minority shares in profit for the year –0.5 –0.5

Net profit for the year 75.9 21.3 97.2

104

Consolidated Balance Sheet, 30 April 2005

SEK million

According to earlier principles

Adjust-ment, IFRS IFRS

According to IFRS

ASSETS

Intangible assets 44.0 13.0 b) 57.0

Tangible assets 417.9 417.9

Financial assets 72.7 17.0 b), e), f) 89.8

Total fixed assets 534.6 30.0 564.7

Inventories 376.4 376.4

Current receivables 366.4 0.0 f) 366.4

Cash and bank deposits 21.9 21.9

Total 764.7 0.0 764.7

Total assets 1,299.3 30.0 1,329.4

EQUITY & LIABILITIES

Equity 468.8 18.5 b), e), f) 487.3

Minority participations 5.1 5.1

Total equity 473.9 18.5 492.4

Provisions 44.9 11.3 e), f) 56.2

Long-term liabilities 247.9 247.9

Current liabilities 532.6 0.2 f) 532.9

Total equity and liabilities 1,299.3 30.0 1,329.4

Consolidated Income Statement, 1 May 2005 – 30 April 2006

SEK million

According to earlier principles

Adjust-ment, IFRS IFRS

According to IFRS

Net sales 2,321.2 2,321.2

Cost of goods sold –1,461.9 2.5 b) –1,459.4

Gross profit 859.2 2.5 861.8

Other operating income 27.0 27.0

Selling expenses –489.7 9.1 b), e) –480.6

Administrative expenses –135.0 0.0 b) –135.0

Other operating expenses –20.2 –20.2

Operating profit 241.3 11.7 253.0

Result from financial investments

Result from participations in Group companies 0.3 0.3

Result from participations in associated companies – –Result from other securi-ties and receivables held as fixed assets 5.7 1.6 f) 7.3Other interest income and similar profit and loss items 5.5 5.5

Interest expenses and simi-lar profit and loss items –24.5 –24.5

Result after financial items 228.3 13.3 241.7

Tax on profit for the year –61.5 –9.7 b), e), f) –71.2

Minority shares in profit for the year –1.0 –1.0

Net profit for the year 165.9 3.6 169.5

Consolidated Balance Sheet, 30 April 2006

SEK million

According to earlier principles

Adjust-ment, IFRS IFRS

According to IFRS

ASSETS

Intangible assets 38.4 25.1 b) 63.4

Tangible assets 466.9 466.9

Financial assets 66.2 39.7 b), e), f) 105.8

Total fixed assets 571.4 64.8 636.2

Inventories 403.8 403.8

Current receivables 435.0 0.0 f) 435.0

Cash and bank deposits 32.1 32.1

Total 870.9 0.0 870.9

Total assets 1,442.3 64.8 1,507.1

EQUITY & LIABILITIES

Equity 628.4 53.4 b), e), f) 681.8

Minority participations 5.9 5.9

Total equity 634.3 53.4 687.7

Provisions 53.2 11.1 e), f) 64.2

Long-term liabilities 225.3 225.3

Current liabilities 529.6 0.3 f) 529.9

Total equity and liabilities 1,442.3 64.8 1,507.1

FINANCIAL STATEMENTS

105

NOTE 3 INFORMATION ON SECONDARY SEGMENTS – GEOGRAPHICAL REGIONSThe Group’s operations are geographically divided mainly into the Nordic region, Western Europe (excluding the Nordic region), Eastern Europe and the CIS, North America and Other markets.

Region Nordic comprises Denmark, Finland, Iceland, Norway and Sweden. The Western European region is made up of Austria, Belgium, Cyprus,

Faeroe Islands, France, Germany, Greece, Ireland, Italy, Liechtenstein, Luxem-bourg, Malta, Netherlands, Portugal, Spain, Switzerland and the UK.

Region Eastern Europe including the CIS consists of Albania, Armenia, Azerbaijan, Belarus, Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Macedonia, Moldavia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Ukraine and Uzbekistan.

North America consists of the USA and Canada.

Other Markets comprise Afghanistan, Algeria, Australia, Bahrain, Botswana, British Virgin Islands, China, Dubai, Egypt, Hong Kong, India, Iran, Israel, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mongolia, Morocco, Namibia, New Zealand, Oman, Pakistan, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Swaziland, Syria, Tanzania, Thailand, Tunisia, Turkey, Turkmenistan, Vietnam and Zimbabwe.

Sales income is shown by geographical market in which the customer operates. Assets and investments are reported according to where the asset is located.

By geographical market

Net sales Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Nordic Region 650.1 756.6 832.0 294.7 389.2

Western Europe 535.2 650.9 768.7 147.8 167.1

Eastern Europe, including CIS 405.6 519.1 670.9 250.3 319.3

North America 244.3 302.6 286.6 5.7 7.1

Other Markets 60.7 92.0 106.0 16.3 18.0

1,895.9 2,321.2 2,664.2 714.8 900.7

Of sales by the Parent Company, sales to other Group companies accounted for SEK 432 million (320), and sales to associated companies (ebm-papst AB) accounted for SEK 6 million (6). Purchases by the Parent Company from other Group companies totalled SEK 149 million (86) and from associated companies SEK 1 million (2).

By geographical market

Group Assets Investments

SEK million 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Nordic region 762.0 796.0 928.8 34.8 32.6 103.6

Western Europe 317.7 391.0 509.5 7.2 18.6 20.5

Eastern Europe including CIS 85.0 125.3 230.0 2.5 16.0 11.5

North America 145.8 164.7 186.6 2.7 3.2 36.1

Other Markets 18.8 30.3 40.2 1.8 0.2 1.7

1,329.4 1,507.2 1,895.0 49.0 70.6 173.4

Investments refer to intangible and tangible assets.

FINANCIAL STATEMENTS

NOTE 4 CLASSIFICATION ACCORDING TO TYPE OF COST

SEK millionCost of

goods soldSelling

expensesAdministrative

expenses Total

2004/05

Material costs –956.8 – – –956.8

Personnel costs –190.5 –199.7 –67.6 –457.7

Depreciation costs –26.1 –14.8 –7.4 –48.4

Other costs –41.5 –192.5 –58.1 –292.0

–1,214.8 –407.0 –133.1 –1,754.9

2005/06

Material costs –1,169.8 – – –1,169.8

Personnel costs –211.1 –225.8 –72.9 –509.8

Depreciation costs –26.5 –16.5 –8.0 –51.0

Other costs –52.1 –238.3 –54.1 –344.5

–1,459.4 –480.6 –135.0 –2,075.0

2006/07

Material costs –1,300.2 – – –1,300.2

Personnel costs –247.8 –255.3 –81.6 –584.7

Depreciation costs –29.5 –17.1 –7.6 –54.2

Other costs –74.1 –259.1 –58.3 –391.6

–1,651.6 –531.6 –147.5 –2,330.6

Total product development costs amounted to approximately SEK 45 million in 2006/07 and SEK 40 million in 2005/06.

106

FINANCIAL STATEMENTS

NOTE 5 FEES TO AUDITORS

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Auditing services

Ernst & Young –1.6 –1.6 –1.7 –0.4 –0.4

Others –1.0 –1.3 –1.4 – –

–2.6 –2.9 –3.1 –0.4 –0.4

Other services

Ernst & Young –0.8 –0.2 –0.6 –0.2 –0.4

Others –0.2 –0.4 –0.2 – –

–1.0 –0.6 –0.8 –0.2 –0.4

NOTE 6 LEASING

Book value of leasing costs Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Operational leases 8.5 9.2 9.7 – –

Total minimum lease payments for the Group, under non-cancellable operating leases in which the remaining term is more than one year fall, are due as follows:

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Operational leases – nominal value

Within 1 year 6.8 7.9 8.9 – –

Years 2–5 18.2 13.7 14.5 – –

Later than 5 years 6.1 5.2 4.2 – –

31.1 26.8 27.6 0.0 0.0The Group has no financial leases.

NOTE 7 OTHER OPERATING INCOME

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Exchange rate gains, operational 8.3 12.8 10.1 6.7 3.4

Intra-Group income – – – 16.8 21.8

Gain on sale of tangible assets 0.1 1.1 2.4 – 0.0

Other income, miscellaneous 10.6 13.1 17.1 2.9 3.8

19.0 27.0 29.6 26.4 29.0

NOTE 8 OTHER OPERATING EXPENSES

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Exchange rate losses, operational –8.0 –10.4 –18.6 –3.9 –7.0

Intra-Group expenses – – – –4.8 –8.5

Loss on sale of tangible assets – –0.4 –0.1 – –

Other expenses, miscellaneous –5.5 –9.4 –15.0 –0.1 –0.1

–13.5 –20.2 –33.7 –8.8 –15.6

107

NOTE 9 EMPLOYEES AND PERSONNEL COSTS

2004/05 2005/06 2006/07

SEK millionAverage no.

of employeesOf whom,

menAverage no.

of employeesOf whom,

menAverage no.

of employeesOf whom,

men

Parent Company 281 185 290 181 343 216

Subsidiaries in:

Nordic Region 357 297 342 285 364 305

Sweden 136 109 148 118 150 122

Denmark 105 98 100 92 107 98

Finland 8 6 8 7 8 7

Norway 108 84 86 68 99 78

Western Europe 275 202 301 220 335 254

Austria 6 4 5 3 13 10

Belgium 3 2 4 3 3 2

France 48 40 49 39 40 32

Germany 109 75 127 92 147 113

Ireland 4 3 5 4 5 4

Netherlands 8 7 8 6 9 7

Portugal 0 10 5 29 19

Spain 0 0 3 2

Switzerland 8 7 10 8 6 4

UK 89 65 83 61 80 61

East. Europe, incl. CIS 83 49 115 80 185 126

Bulgaria 0 0 1 1

Czech Republic 10 4 9 4 9 5

Estonia 20 10 18 10 18 9

Hungary 2 1 3 2 3 3

Latvia 6 5 6 6 7 5

Lithuania 13 5 22 12 53 28

Poland 19 13 20 15 22 17

Romania 1 1 4 4 4 3

Russia 3 2 3 2 3 2

Slovakia 9 6 10 7 24 16

Slovenia 0 20 18 40 36

Ukraine 0 0 1 1

North America 190 120 217 127 209 114

Canada 129 88 150 95 148 86

USA 61 32 67 32 61 28

Rest of World 19 15 23 20 35 28

China 0 1 1 1 1

Dubai 0 0 4 3

Hong Kong 3 2 3 2 3 2

India 0 0 1 1

Singapore 9 8 9 7 9 7

South Africa 1 1 3 3 5 4

Turkey 6 4 7 7 12 10

1,205 867 1,288 913 1,471 1,043

FINANCIAL STATEMENTS

108

FINANCIAL STATEMENTS

Group Parent Company

% of women on Board and in management 2004/05 2005/06 2006/07 2005/06 2006/07

Board, excluding trade union representatives 0% 0% 0% 0% 20%

Group management – – – 0% 0%

Company management 8% 8% 9% – –

Salaries, other remuneration and social welfare costs Salaries and other remuneration Social welfare costs

SEK million 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Board and CEO

Parent Company 0.7 1.2 1.7 0.3 0.6 0.8

Subsidiaries, Nordic Region 7.0 6.7 7.2 2.0 2.1 2.6

Western Europe 8.5 9.3 10.9 1.3 1.3 2.7

Eastern Europe, incl. CIS 2.8 4.0 6.0 0.5 1.0 1.2

North America 2.7 3.2 3.1 0.3 0.3 0.3

Rest of World 1.4 1.7 2.5 0.1 0.2 0.3

23.1 26.1 31.5 4.5 5.5 7.9

Remuneration to senior executivesrecognized as expenses during the year

SEK millionBasic salary/

FeeVariable

remuneration Other benefits Pension expense Total

2004/05

Board chairman – – – – –

Other Board members – – – – –

CEO 0.7 0.1 – 0.1 0.9

Other senior executives1) 3.1 0.3 0.1 0.8 4.3

3.8 0.4 0.1 0.9 5.2

2005/06

Board chairman – – – – –

Other Board members – – – – –

CEO 1.2 0.0 – 0.2 1.4

Other senior executives1) 3.3 0.4 0.2 0.9 4.8

4.5 0.4 0.2 1.1 6.2

2006/07

Board chairman 0.2 – – – 0.2

Other Board members 0.3 – – – 0.3

CEO 1.2 0.0 – 0.2 1.4

Other senior executives1) 3.4 0.0 0.2 0.9 4.5

5.1 0.0 0.2 1.1 6.41) Group management, 4 persons excluding CEO

Salaries, other remuneration and social welfare Salaries and other remuneration Social welfare costs

SEK million 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Other employees

Parent Company 87.3 92.5 112.7 38.2 38.5 47.3

Subsidiaries, Nordic Region 114.7 122.6 128.6 27.6 29.7 31.4

Western Europe 77.7 87.2 96.2 17.5 18.9 19.7

Eastern Europe, incl. CIS 8.2 13.2 22.4 2.3 2.9 6.1

North America 33.5 42.5 43.6 3.3 4.7 5.2

Rest of World 2.8 3.1 3.5 0.3 0.4 0.9

324.1 361.1 407.0 89.1 95.1 110.6

109

FINANCIAL STATEMENTS

Of social welfare costs paid by the Parent Company, pension costs accounted for SEK 9.3 million (8.1), including SEK 0.2 million (0.2) on behalf of the Board and CEO. In other Group companies, pension expenses totalled SEK 14.0 million (10.6), including SEK 2.5 million (1.2) on behalf of Boards and CEOs.

Remuneration policyThe Chairman and Board members receive remuneration in accordance with the decision of the Annual General Meeting. Fees are not paid to Board mem-bers who are employees of the Group.

Remuneration to the CEO is determined by the Board on the basis of proposals by the Remuneration Committee, consisting of Lars Hansson, Elisabeth Westberg and Göran Robertsson. Remuneration to other senior executives is determined by the CEO, following consultation with the Remuneration Committee.

Apart from the CEO, other senior executives consist of: Mats Lund, Manufacturing Director Svein Nilsen, Marketing Director, Glen Nilsson, CFO, Peter Olofsson, Purchasing Director.

Remuneration to the CEO and other senior executives is made up of the basic salary, variable remuneration, company car benefit and pension. At present, there is no agreement with the CEO on variable remuneration. In the case of other senior executives, variable remuneration may amount to between one and two extra monthly salary payments. The variable remuneration is normally based on any improvement in the respective individual’s area of responsibility, relative to the preceding year, the Group’s profit after net financial items and the outcome of individual development plans.

PensionThe pensionable age for the CEO and other senior executives is 65 years. In the case of the CEO, a defined-contribution pension insurance policy amounting to SEK 0.2 million has been contracted. Pension benefits on behalf of other senior executives are being paid within the scope of the agreement-based collective ITP and alternative ITP schemes.

Severance paymentsAgreements are in place with CEOs of subsidiaries, to the effect that benefits will be paid for 6-12 months in the case of termination of employment by the Company. There is no agreement with the Parent Company’s CEO providing entitlement to a severance payment. Notice of termination of employment for other senior executives is in accordance with current collective agreements with SIF (The Swedish Union of Clerical and Technical Employees in Industry).

Sickness absence Parent Company

% of standard working hours 2005/06 2006/07

Total sickness absence 6,0% 5,3%

Long-term sickness absence 1,5% 0,5%

Sickness absence, women 8,3% 5,4%

Sickness absence, men 4,6% 5,3%

Employees < 30 years 4,5% 4,5%

Employees 30 – 49 years 7,2% 6,2%

Employees > 49 years 3,9% 3,7%

NOTE 10 DEPRECIATION OF INTANGIBLE AND TANGIBLE ASSETS

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Goodwill – – – 0.2 0.1

Other intangible assets – – 0.1 – –

Buildings 12.1 12.7 14.5 4.0 4.0

Plant and machinery 18.5 19.3 21.5 9.0 9.9

Equipment and tools 19.2 22.9 22.1 2.8 2.3

49.8 54.9 58.2 16.0 16.3

Straight-line depreciation, by function

Cost of goods sold 25.8 26.5 29.5 10.6 11.3

Selling expenses 15.0 16.5 17.1 3.7 3.6

Administrative expenses 7.5 8.0 7.6 1.7 1.4

Other operating expenses 1.5 3.9 4.0 – –

49.8 54.9 58.2 16.0 16.3

NOTE 11 RESULT FROM OTHER SECURITIES AND RECEIVABLES HELD AS FIXED ASSETS

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

“Exchange rate losses/gains from long-term receivables” 0.1 –0.8 –2.2 –0.7 –2.2

Result from other securities and receivables 3.9 8.1 1.5 3.9 0.8

4.0 7.3 –0.7 3.2 –1.4

NOTE 12 INTEREST INCOME AND SIMILAR PROFIT/LOSS ITEMS

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Interest income, external 1.5 2.9 5.6 0.5 2.5

Interest income, associated companies – – – 7.0 15.2

Exchange gains on loans 2.1 2.6 5.7 – 3.0

3.6 5.5 11.3 7.5 20.7

110

FINANCIAL STATEMENTS

NOTE 13 INTEREST EXPENSES AND SIMILAR PROFIT/LOSS ITEMS

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Interest expenses, external –20.3 –18.4 –26.8 –7.4 –15.5

Interest expenses, associated companies – – – –1.4 –9.0

Exchange losses on loans –2.1 –5.7 –1.7 –3.1 –0.1

Other financial expenses –0.2 –0.4 –0.3 –0.1 0.0

–22.6 –24.5 –28.8 –12.0 –24.6

At year-end, the Group had outstanding forward contracts denominated in EUR. The total net value, translated to SEK at the rate on the balance sheet date, was SEK 61.4 million (71.1), ((89,4)). All forward contracts were accounted for in the Parent Company. These forward contracts were reported at fair value. Hedge accounting is not applied. Any changes in value are reported in the income statement.

NOTE 14 TAX ON PROFIT FOR THE YEAR

Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Current tax –38.2 –44.0 –68.2 –7.5 –23.1

Tax impact of Group contributions – – – –17.4 –1.4

Deferred tax 3.6 –27.2 11.3 – –

–34.6 –71.2 –56.9 –24.9 –24.5

The Group’s tax charge represents 18.3% (29.5%) of the Group’s pre-tax profit. The difference between reported tax and anticipated tax charge is explained below.At the financial year-end, the Systemair Group had deferred tax assets totalling SEK 11.8 million (7.4) that were not taken into account in the calculation of its

deferred tax assets. Deferred tax assets are reported, provided that it is probable that tax losses carried forward may be offset against future taxable surpluses, on the basis of assessments in each individual company. No time restrictions are applied to the duration of the tax losses carried forward corresponding to the deferred tax assets capitalized.

Reconciliation of effective tax Group Parent Company

SEK million 2004/05 2005/06 2006/07 2005/06 2006/07

Pre-tax profit 132.3 241.7 311.5 125.0 198.9

Tax at current tax rate for Parent Company –37.0 –67.7 –87.2 –35.0 –55.7

Impact of foreign tax rates –1.5 –3.9 –1.3 – –

Non-deductible expenses –8.0 –1.3 –4.0 –0.5 –0.5

Tax-exempt income 2.2 2.6 2.3 1.2 0.3

Increase in tax losses carried forward without corresponding capitalization –0.9 –0.8 –4.0 – –Deferred income tax recoverable, attributable to tax losses carried forward not capitalized at acquisition1) 10.6 0.3 37.7 – –Dividends from subsidiaries – – – 9.8 31.8

Adjustments relating to prior years 0.0 –0.1 0.0 –0.1 0.0

Miscellaneous 0.0 –0.3 –0.4 –0.3 –0.4

–34.6 –71.2 –56.9 –24.9 –24.51) Deferred tax revenue attributable to tax losses carried forward not capitalized at acquisition.

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Deferred income taxes recoverable

Plant and machinery 9.3 5.9 6.0 – –

Inventories 6.4 6.7 8.3 – –

Current receivables – – 0.4 – –

Pension provisions 4.4 4.8 4.5 – –

Tax losses carried forward 28.6 21.4 49.9 – –

Miscellaneous 7.7 0.0 4.8 – –

56.3 38.9 73.9 – –

Deferred tax liabilities

Plant and machinery – – 2.4 – –

Inventories – – 0.3 – –

Untaxed reserves 30.8 42.4 44.0 – –

Miscellaneous 8.4 4.0 13.6 – –

39.2 46.4 60.3 – –

111

FINANCIAL STATEMENTS

NOTE 15 INTANGIBLE AND TANGIBLE ASSETS

GroupSEK million, 30 April 2005 Goodwill

Other intangible

assetsBuildings and land

Plant and machinery

Equipment, tools, etc.

Work in progress

Accumulated acquisition values

At beginning of year 56.3 – 397.3 191.0 162.0 2.7

Via business acquisitions 2.0 – – – – –

Acquisition during the year – – 3.8 6.4 18.8 18.0

Sales/disposals –15.0 – –15.1 –2.4 –34.8 –0.1

Reclassifications – – 1.1 11.1 1.4 –13.7

Translation difference –0.9 – 2.9 0.2 1.8 –

42.4 0.0 390.0 206.3 149.2 6.9

Accumulated depreciation

At beginning of year – – –83.8 –123.4 –108.6 –

Via business acquisitions – – – – – –

Sales/disposals 14.5 – 6.5 1.8 29.1 –

Reclassifications – – – – – –

Translation difference – – –0.5 –0.1 –1.4 –

Depreciation for the year – – –12.1 –18.5 –19.2 –

14.5 0.0 –89.9 –140.2 –100.1 0.0

Accumulated impairment

At beginning of year – – –3.8 –0.5 – –

During the year – – – – – –

0.0 0.0 –3.8 –0.5 0.0 0.0

Book value 57.0 0.0 296.3 65.6 49.0 6.9

GroupSEK million, 30 April 2006 Goodwill

Other intangible

assetsBuildings and land

Plant and machinery

Equipment, tools, etc.

Work in progress

Accumulated acquisition values

At beginning of year 57.0 – 390.0 206.3 149.2 6.9

Via business acquisitions 5.8 – 10.1 3.6 10.8 1.2

Acquisition during the year – – 24.3 15.6 16.5 21.5

Sale/disposals – – –3.6 –0.2 –6.9 –

Reclassifications – – 1.8 11.8 1.8 –15.5

Translation difference 0.6 – 10.9 5.3 3.2 –

63.4 0.0 433.5 242.4 174.6 14.1

Accumulated depreciation

At beginning of year – – –89.9 –140.2 –100.2 –1.2

Via business acquisitions – – –0.2 –1.7 –6.6 –

Sale/disposals – – 1.6 0.2 5.7 –

Reclassifications – – 0.0 0.1 –0.1 –

Translation difference – – –2.1 –3.3 –0.6 –

Depreciation for the year – – –12.7 –19.3 –22.6 –0.3

0.0 0.0 –103.3 –164.2 –124.3 –1.5

Accumulated impairment

At beginning of year – – –3.9 –0.5 – –

During the year – – – – – –

0.0 0.0 –3.9 –0.5 0.0 0.0

Book value 63.4 0.0 326.3 77.7 50.3 12.6

112

FINANCIAL STATEMENTS

GroupSEK million, 30 April 2007 Goodwill

Other intangible

assetsBuildings and land

Plant and machinery

Equipment, tools, etc.

Work in progress

Accumulated acquisition values

At beginning of year 63.4 – 433.5 242.4 174.6 14.1

Via business acquisitions 12.5 3.1 38.0 33.9 3.3 –

Acquisition during the year – – 91.0 17.0 29.9 33.6

Sale/disposals – – –0.7 –2.7 –10.5 –2.8

Reclassifications – – 6.1 9.2 –1.3 –14.0

Translation difference –1.0 – –7.6 –3.3 –3.0 –0.1

75.0 3.1 560.3 296.5 193.0 30.9

Accumulated depreciation

At beginning of year – – –103.3 –164.3 –124.3 –1.5

Via business acquisitions – –2.1 –5.8 –18.3 –1.6 –

Sale/disposals – – 0.7 2.4 8.5 1.5

Reclassifications – – – –3.6 3.6 –

Translation difference – 0.6 1.2 2.0 2.2 –

Depreciation for the year – –0.1 –14.5 –21.5 –22.1 –

0.0 –1.6 –121.7 –203.3 –133.8 0.0

Accumulated impairment

At beginning of year – – –3.9 –0.5 – –

During the year – – 0.1 – – –

0.0 0.0 –3.8 –0.5 0.0 0.0

Book value 75.0 1.5 434.6 93.0 59.2 30.9

The total tax assessment value for the Group’s Swedish real estate totalled SEK 61.1 million (58.6), of which buildings represented SEK 52.2 million (50.0).

Testing of goodwill impairmentThe book value of goodwill for each segment is indicated in the table below. Goodwill has been apportioned over cash-generating units and countries, and then tested for impairment. The recoverable value for cash-generating units has been established on the basis of the value-in-use of the units, which is made up of the present value of the expected future cash flows. The discount rate used in these estimates is 8.5%.

The estimates of future cash flow are based on an assessment of anticipated rate of growth and changes in margin, in turn based on the budget for the following year, the management’s long-term expectations for the business and the historical trend. The assumed long-term rate of growth has been set at 3%. Two scenarios are used in which the variable for rate of growth and changes in margin are varied and used to obtain a range between a minimum value and an anticipated value for the business. Even the lowest estimate indicates that the recoverable value for goodwill is higher than the book value in all cash-generating units.

Parent CompanySEK million, 30 April 2007 Goodwill

Buildings and land

Plant and machinery

Equipment, tools etc.

Work in progress

Accumulated acquisition values

At beginning of year 1.9 106.0 123.1 35.4 6.2

Acquisitions for the year – – 1.0 4.1 20.4

Sales/disposals – – –0.1 – 0.0

Reclassifications – 2.3 3.1 – –5.3

1.9 108.3 127.1 39.5 21.2

Accumulated depreciation

At beginning of year –1.6 –45.5 –85.0 –29.1 0.0

Sales/disposals – – 0.1 – 0.0

During the year –0.1 –4.0 –9.9 –2.3 0.0

–1.7 –49.5 –94.8 –31.4 0.0

Book value 0.2 58.7 32.3 8.1 21.2

The tax assessment value totals SEK 29.0 million (29.0), of which buildings represent SEK 25.7 million (25.7).

113

FINANCIAL STATEMENTS

NOTE 16 OTHER LONG-TERM HOLDINGS OF SECURITIESThis item consists largely of shares held in Repant ASA, which is listed on the Oslo Stock Exchange. The shares are accounted for as a financial asset available for sale. The shares are accounted for at fair value, with any value adjustment being taken directly to equity.

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Opening balance 0.3 23.2 59.1 24.9 25.0

Acquisitions 0.0 3.9 0.0 3.9 0.0

Sales 0.0 –0.9 –0.5 –3.8 –0.8

Reclassifications 13.6 0.0 0.0 0.0 0.0

Revaluation 9.3 32.9 –34.4 0.0 0.0

23.2 59.1 24.2 25.0 24.1

Number of shares1) 50,904,822 49,106,450 2,372,223 49,106,450 2,372,223

1) Reverse 1-for-20 split carried out on 3 January 2007.

NOTE 17 OTHER LONG-TERM RECEIVABLES

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Opening balance 5.3 10.2 7.7 5.6 4.1

Additional receivable 5.9 0.5 0.3 0.0 0.0

Receivables settled –1.2 –3.2 –2.5 –1.6 –1.0

Reclassifications 0.0 0.0 –3.2 0.0 –3.2

Translation differences 0.2 0.2 –0.1 0.1 0.0

Closing balance 10.2 7.7 2.3 4.1 0.0

NOTE 18 PREPAID EXPENSES AND ACCRUED INCOME

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Prepayment of rent 1.7 2.0 3.0 0.1 0.2

Miscellaneous 14.6 17.7 15.1 2.2 2.4

16.3 19.7 18.1 2.3 2.6“Miscellaneous” comprises standard items such as insurance premiums etc.

NOTE 19 SHARE CAPITAL AND PROPOSED DIVIDEND

Number of shares 2005 2006 2007

Shares issued as per 1 May 500,000 500,000 515,000

New share issue – 15,000 5,000

Shares issued as per 30 April 500,000 515,000 520,000

On 30 April 2007, the registered share capital totalled SEK 52,000,000, repre-sented by 500,000 class A shares and 20,000 class B shares. Prior to the planned listing and offering of shares, shares in Systemair are divided into two classes, A shares with one vote per share, and B shares with one tenth of a vote per share.

During the financial year, the Company carried out an issue, which brought SEK 19.5 million into the Company. The objective of the issue was to give the Board and senior executives the chance to acquire shares in the Company. At present, the Group is not operating any share option programme, convertible loans or other share-based incentive programme.

Systemair’s major shareholders, Färna Invest AB and ebm-papst AB, are parties to a shareholder agreement, the effect of which, in brief, is that 90% of the votes or more are required for any decision to be implemented regarding amend-ment of the Company’s Articles of Association, introduction of any incentive programme, sale of any significant part of the Company or removal of the CEO from office. Furthermore, 100% of the votes are required in connection with any decision on, for example, adoption of budget, distribution of unappropriated profit, investments in excess of SEK 20 million or raising of loans. The parties also agree that the shares in the Company should be offered in the market and to sell off pro rata 40% of the shares, pending the stock market floatation of the Company, at which point this agreement will cease to be valid.

The Board of Directors proposes to the Annual General Meeting of Share-holders a dividend of SEK 146 per share, representing a total amount of SEK 75.9 million .

114

FINANCIAL STATEMENTS

NOTE 20 INTEREST-BEARING LIABILITIES

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Long-term liabilities

Bank loans for between one and five years 116.1 85.0 81.8 – –

Bank loans for more than five years 131.8 140.3 169.9 106.8 134.7

247.9 225.3 251.7 106.8 134.7

Current liabilities

Bank overdraft 197.3 141.0 462.2 120.9 415.7

Current portion of bank loans 77.2 82.0 50.6 18.6 –

274.5 223.0 512.8 139.5 415.7

Lender bankSEK million, 30 April 2007 Loan limit

Amount utilized

Unutilized amount

Weighted interest rate Currency

Long-term loans

Parent Company

Nordea 126.4 126.4 0.0 4.45% EUR/CHF

Nordiska Investeringsbanken 8.4 8.4 0.0 2.75% CHF

134.7 134.7 0.0

Group

Nordea 160.1 160.1 0.0 4.69% SEK/EUR/CHF/USD

Nordiska Investeringsbanken 43.0 43.0 0.0 4.54% CHF/DKK/EUR

Svenska Handelsbanken 42.5 42.5 0.0 4.95% CAD/EUR/GBP

Other credit institutions 5.6 5.6 0.0 4.95% CAD/EUR

251.2 251.2 0.0

Current loans

Parent Company

Nordea 245.0 210.4 34.6 4.35% SEK

Svenska Handelsbanken 219.9 205.3 14.5 4.60% SEK/EUR

464.9 415.7 49.2

Group

Nordea 317.9 242.5 75.4 4.55% SEK/EUR/EEK/DKK/LVL/NOK

Nordiska Investeringsbanken 5.1 5.1 0.0 4.54%

Svenska Handelsbanken 268.4 242.1 26.2 4.65% SEK/EUR/GBP/HKD/SGD

Bank CIC 9.0 2.6 6.4 4.85% EUR

ACOA 1.6 1.6 0.0 0.00%

Royal Bank 3.4 3.4 0.0 6.15%

Others 15.5 15.5 0.0 4.75%

620.8 512.8 108.0

Credit limits granted for bank overdrafts in the Group totalled SEK 559.9 million (260.3), ((140.6)). The corresponding figure for the Parent Company was SEK 464.9 million (181.2).

Systemair has undertaken vis-à-vis Nordea Bank that no company in the Group will, without the bank’s consent, issue collateral for loans, and that the Parent Company will transfer to another party its ownership of shares or control of a subsidiary or subsidiaries that has or have current credits with the bank. Furthermore, Systemair guarantees that its interest coverage ratio, measured at the end of each quarter as a rolling 12-month value, will not fall below 3.5 and that the Company’s equity/assets ratio will not at any time fall below 30%.

NOTE 21 ACCRUED EXPENSES AND DEFERRED INCOME

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Salary and holiday pay liability 38.7 45.0 51.2 15.2 18.3

Liability, employer’s social welfare charges 14.3 16.7 18.1 7.3 9.1

Commission payments and bonuses 4.1 10.2 10.6 0.8 1.8

Miscellaneous 20.1 18.6 24.8 1.6 4.0

77.2 90.5 104.7 24.9 33.2

115

FINANCIAL STATEMENTS

NOTE 22 APPROPRIATIONS, OTHER

Parent Company

SEK million, 30 April 2006 2007

Allocation to tax allocation reserve –8.4 –27.5

Reversal of tax allocation reserve 4.4 0.0Difference between book depreciation

and straight-line depreciation 0.1 1.1

–3.9 –26.4

NOTE 23 UNTAXED RESERVES

Parent Company

SEK million, 30 April 2006 2007

Difference between book depreciation and straight-line depreciation 27.4 26.3

Tax allocation reserve, provision for tax 2003 5.1 5.1

Tax allocation reserve, provision for tax 2004 8.5 8.5

Tax allocation reserve, provision for tax 2005 12.4 12.4

Tax allocation reserve, provision for tax 2006 17.2 17.2

Tax allocation reserve, provision for tax 2007 8.4 8.4

Tax allocation reserve, provision for tax 2008 – 27.5

79.0 105.4

NOTE 24 RESULT FROM PARTICIPATIONS IN GROUP COMPANIES

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Result from sale of shares in subsidiary 4.7 0.3 0.3 0.3 0.3

Dividend from subsidiary – – – 35.0 113.6

4.7 0.3 0.3 35.3 113.9

NOTE 25 RESULT FROM PARTICIPATIONS IN ASSOCIATED COMPANIES

Group

SEK million, 30 April 2005 2006 2007

Result from sale of shares in associated company –4.0 – –

–4.0 0.0 0.0

116

FINANCIAL STATEMENTS

NOTE 26 PARTICIPATIONS IN GROUP COMPANIESParent Company’s holdings of shares in Group companies:

Subsidiary Co. reg. no. Registered office Holding1), % Number of shares Book value

Frico Group AB 556439-7700 Partille, Sweden 100 50,000 0.5

Animac AB 556311-3926 Motala, Sweden 100 2,500 2.7

Klockargårdens Företagsby AB 556632-5774 Skinnskatteberg, Sweden 100 1,000 0.1

Fläktskräddaren i Skinnskatteberg AB 556362-9137 Skinnskatteberg, Sweden 100 1,000 0.1

VEAB Heat Tech AB 556138-3166 Hässleholm, Sweden 100 3,000 65.6

Camina AB 556615-1568 Motala, Sweden 85 4,500 4.3

Kanalfläkt Industrial Service AB 556063-2530 Skinnskatteberg, Sweden 100 5,000 4.9

Systemair AS Norway 100 82,000 21.5

Systemair Oy Finland 100 20 0.3

Fantech Ltd Canada 100 44,6002) 24.7

Kanalflakt Industrial Estate Inc Canada 100 10,000 4.9

R.B. Kanalflakt Inc USA 100 500 32.1

Systemair SAS France 100 9,994 6.5

Villavent Ltd UK 100 349,999 2.0

Systemair Ltd UK 100 50,000 1.9

Systemair GmbH Germany 100 – 10.4

Systemair SA Poland 100 200 0.9

Systemair as Czech Republic 100 – 1.2

Systemair as Slovakia 100 – 0.5

Systemair (SEA) PTE Ltd Singapore 75 750,000 0.8

Systemair AS Estonia 75 3,128 6.0

Systemair Tic Ltd Sir Turkey 100 649 1.6

Systemair SIA Latvia 100 2,500 1.1

UAB Systemair Lithuania 100 520 9.6

Systemair A/S Denmark 100 10,101 35.1

Systemair GmbH Austria 100 – 0.9

Systemair Rt Hungary 100 2,000 4.5

Systemair B.V. Netherlands 100 40 2.5

Systemair N.V. Belgium 100 – 0.9

Systemair Ltd Ireland 100 1 –

Systemair AG Switzerland 100 250 31.9

Systemair RU Russia 50 865 0.2

Systemair (HK) Ltd Hong Kong 100 300 0.2

Fans & Spares Ltd UK 100 500,000 6.8

Systemair Ltd South Africa 100 1,000 0.1

Systemair Rt Romania 100 1,000 0.9

UAB Systemair Production Lithuania 100 500 1.3

Marvent d.o.o. Slovenia 100 – 9.2

Systemair EOOD Bulgaria 100 – 0.1

Multiventilacao Portugal 100 200,000 10.1

Systemair S.L.U. Spain 100 – 0.1

Imos-Asek Spol. s.r.o Slovakia 80 – 47.9

Systemair FZE Dubai 100 – 2.1

358.91) The share of equity and voting power is the same in all Group companies.

2) Of which 44.400 preferential shares

117

FINANCIAL STATEMENTS

Parent Company’s indirectly controlled subsidiaries:

Indirectly controlledParent Company

Registered office

Holding, %

Frico AS Frico AB Norway 100

Frico France SAS Frico AB France 100

Frico Ltd Frico AB UK 100

Frico AB Frico Group AB Partille, Sweden 100

Altexa-Frico GmbH Frico AB Austria 100

GELU-Frico GmbH Frico AB Germany 100

GELU-Frico BV Frico AB Netherlands 100

Fantech Inc R.B. Kanalflakt Inc USA 100

Kanalflakt Inc R.B. Kanalflakt Inc USA 100

Systemair US Estates LLC R.B. Kanalflakt Inc USA 100

Repant Produktion AB

Kanalfläkt Industrial Service AB

Skinnskatteberg, Sweden 100

Kanalfläkt Management Service AB

Kanalfläkt Industrial Service AB

Skinnskatteberg, Sweden 100

Camina International SARL Camina AB France 100

Changes in Group companies:

Parent Company

SEK million, 30 April 2006 2007

At beginning of year 289.5 311.3

Acquisitions during the year 21.4 73.2

New share issues during the year 0.6 207.3

Sales during the year –0.2 –232.9

Liquidations – –

Mergers – –

311.3 358.9

NOTE 27 PARTICIPATIONS IN ASSOCIATED COMPANIES

Associated company Co. reg. no. Registered office Holding, % Number of shares Book value

Capro Product AB 556109-7055 Malmö, Sweden 40 500 0.1

0.1

NOTE 28 ASSETS PLEDGED

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Assets pledged for own liabilities vis-à-vis credit institutions

Floating charges 270.5 224.5 239.4 97.4 97.4

Real estate mortgages 159.7 159.5 155.6 30.0 30.0

Other assets pledged – – – 97.7 97.7

430.2 384.0 395.0 225.1 225.1

NOTE 29 CONTINGENT LIABILITIES

Group Parent Company

SEK million, 30 April 2005 2006 2007 2006 2007

Guarantees on behalf of subsidiaries – – – 132.6 179.1

Guarantees and other contingent liabilities 34.2 11.3 3.6 – –

Conditional contributions 3.3 1.8 0.3 1.8 0.3

37.5 13.1 3.9 134.4 179.4

NOTE 30 INVENTORIESInventories held in the Group are accounted for at cost in all three years, after a reasonable deduction for obsolescence. The direct cost of materials during the year amounted to SEK 1,300.2 million (1,169.8).

NOTE 31 CHANGES IN GROUP COMPOSITION – BUSINESS ACQUISITIONS

In September 2006, a 100% stake was acquired in Altexa GmbH, an Austrian sales company based in Vienna. Altexa has been established for 30 years, and today holds a market leading position in Austria in the air curtain product sector. The company also sells gas-fired radiant heaters, representing a valuable com-plement to the Frico product range. Annual sales for the company amounted to around SEK 24 million. Since the acquisition, the company has been renamed Altexa-Frico GmbH.

In March 2007, the assets of Matthews & Yates, a leading UK producer of axial fans, were acquired. The acquisition provides Systemair with access to the world market in rail and road tunnel fans. In 2006, the business recorded sales of around SEK 46 million. More than 60% of sales take place in markets outside the UK, including a major share in southeast Asia. Through the transaction, Systemair has taken over the assets, liabilities and operations of Matthews & Yates, includ-ing the rights to the brand, from the privately owned Spire Group. Production will gradually be transferred from the UK to Systemair’s facilities in Germany and Slovenia, which today is already manufacturing axial fans on a major scale.

In April 2007, 80% of the shares outstanding were acquired in Imos, Slovakia, a producer of air diffusers and fire dampers. The acquisition provides Systemair with an extended product range and higher market shares, above all in Eastern Europe. Imos, which is based south of Bratislava, today employs around 150 people and has sales of approximately SEK 80 million. The company exports 65% of its production and is a market leader in Slovakia and the Czech Republic in its product sector. Imos will continue its production operations and will become Systemair’s production resource for air diffusers and fire dampers. The company was established 15 years ago by five partners. CEO Peter Havlovic owns the remaining 20% of the shares and remains in his current position.

The purchase consideration paid for the acquisitions of Altexa, Matthews & Yates and Imos may be provisionally accounted for as follows:

Cash payment SEK 52.6 million

Estimated additional purchase consideration SEK 9.4 million

Total amount paid SEK 62.0 million

Assets acquired

Fair value for assets taken over, net SEK 51.7 million

Goodwill SEK 10.3 million

Arisen goodwill relates mainly to Systemair’s expectations on a strengthened market position in Eastern Europe and internationally within the product area air duffusers .

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FINANCIAL STATEMENTS

Assets and liabilities acquiredSEK million

Book value

Adjust-ment

Fair value

Goodwill – 10.3 10.3

Brand 0.7 0.3 1.0

Land and buildings 10.9 21.3 32.2

Machinery and equipment 16.4 1.0 17.4

Inventories 11.0 – 11.0

Other current assets 24.2 – 24.2

Liquid assets 2.7 – 2.7

Interest-free liabilities (incl. deferred tax liability) –1.9 –4.4 –6.3

Interest-bearing liabilities –6.6 – –6.6

Other current liabilities –18.8 – –18.8

Minority interest – –5.1 –5.1

38.6 23.4 62.0

Impact on cash flow, SEK million

Purchase consideration paid, incl. additional payments –62.0

Purchase consideration unpaid 9.4

Liquid assets in companies acquired 2.7

Additional purchase consideration paid regarding acquisitions in prior years –

Change in liquid assets of Group –49.9

No information is provided on how the above-mentioned acquisitions would have affected the Group’s net sales and results if they had taken place at the beginning of the financial year, on the basis that such a consideration is not considered feasible in practice. The operations of Matthews & Yates were restructured immediately after acquisition, and thus relevant figures for the year as a whole cannot be produced. In the early part of 2006, the contracting busi-ness at Imos was placed in a separate company. As a result, it is not possible to isolate the effect of how an acquisition at the beginning of the financial year would have affected the Group.

NOTE 32 SUPPLEMENTARY INFORMATION TO CASH FLOW STATEMENT

Adjustment for non-cash flow items etc., SEK million, 30 April 2005 2006 2007

Depreciation 49.8 54.9 58.2

Changes in provisions 1.7 1.0 –16.2

Provisions for pensions –1.5 –1.1 –1.4

Result from sale of fixed assets 2.7 9.3 –2.2

52.7 64.1 38.4

NOTE 33 INFORMATION ON PARENT COMPANYSystemair AB is a Swedish-registered limited liability company. Its registered office is in Skinnskatteberg. The address of the Company’s headquarters is Industri vägen 3, SE-739 30 Skinnskatteberg, Sweden. The Company’s registration number is 556160-4108. The consolidated accounts for 2006/07 cover the Parent Company and its subsidiaries, together referred to as “the Group”.

NOTE 34 PROVISIONS FOR PENSIONSSystemair operates several separate post-employment benefit plans. These plans are classified as either defined-benefit or defined-contribution. A defined-benefit pension plan is one that specifies an amount for the pension benefit that an employee will receive on retirement. A defined-contribution pension plan is one in which the Group pays fixed contributions to a separate legal entity. Defined-contribution plans are accounted for as an expense during the period in which the employees perform the service to which the remuneration refers. Defined-benefit plans are accounted for separately for each plan, on the basis of the ben-efits earned during prior and current periods. The liability reported under the heading of Provision for pensions, defined benefit pension plans, is the present value of the defined-benefit obligation on the balance sheet date, less the fair value of the plan assets, with an adjustment for unreported actuarial gains and losses.

Defined-benefit plans are operated primarily in Norway. The major share of pension obligations in the Group’s Swedish operations consists of a defined-benefit pension plan encompassing several employers. The plan is insured via the Alecta Mutual Insurance Company. Sufficient information is not available to ena-ble an account to be provided of the Group’s proportional share of the defined-benefit obligation and of the plan assets and costs that are associated with the plan. As a result, the plan is accounted for as a defined-contribution plan and so premiums paid are accounted for as an expense.

The pension obligation is calculated annually with the aid of independent actuaries using what is known as the Projected Unit Credit Method. The calcula-tion is performed on the basis of actuarial assumptions, including assumptions as to anticipated salary and pension increases and anticipated return on plan assets. Changes in actuarial assumptions and outcomes that deviate from assumptions give rise to actuarial gains and losses.

In the case of salaried employees in Sweden, Systemair subscribes to the ITP Plan via insurance with Alecta. According to a pronouncement – URA 45 – by the Emerging Issues Task Force of the Swedish Financial Accounting Stand-ards Council, ITP pensions managed by Alecta are to be accounted for as defined-contribution, as stated in section 30 of IAS 19.

Defined-benefit pension plans, SEK million, 30 April 2005 2006 2007

Present value of obligations 27.1 30.0 31.9

Fair value of plan assets –18.6 –21.9 –24.7

Present value of net obligations 8.5 8.2 7.2

Unrecognized actuarial gains and losses 2.1 2.3 1.4

Net liability before payroll tax 10.7 10.4 8.6

Payroll tax liability 1.4 1.3 1.1

Net liability as per Balance Sheet 12.1 11.7 9.7

Defined-benefit pension plans, SEK million 2005/06 2006/07

Changes in defined-benefit plan obligation

Defined-benefit plan obligation, 1 May 27.1 30.0

Benefits paid –0.3 –0.3

Cost of service in current period, plus cost of interest 3.4 3.4

Actuarial gain or loss –2.5 0.7

Exchange rate differences 2.3 –1.8

Defined-benefit plan obligation, 30 April 30.0 31.9

Changes in plan assets

Fair value of plan assets, 1 May 18.6 21.9

Payments in 4.1 3.5

Benefits paid out –0.3 –0.3

Anticipated return 0.8 1.0

Difference between anticipated and actual return (actuarial gain or loss) –2.5 0.0

Exchange rate differences 1.2 –1.3

Fair value of plan assets, 30 April 21.9 24.7

Cost recognized in income statement, SEK million 2004/05 2005/06 2006/07

Cost of service in current period 2.1 2.3 2.2

Payroll tax 0.4 0.4 0.3

Interest expenses relating to obligation 1.1 1.1 1.2

Anticipated return on plan assets –0.7 –0.8 –1.0

Net cost reported in income statement 2.9 2.9 2.7

Actuarial assumptions, % 2004/05 2005/06 2006/07

Discount rate 4.70 3.85 4.35

Anticipated return on plan assets 5.70 4.85 5.35

Anticipated rate of increase in salaries 3.00 3.00 3.00

Anticipated rate of inflation 2.00 2.00 2.00

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FINANCIAL STATEMENTS

NOTE 35 EARNINGS PER SHARE

Group, SEK million 2004/05 2005/06 2006/07

Earnings per share before dilution (SEK) 194.31 335.30 490.05

Earnings per share after dilution (SEK) 194.31 335.30 490.05

Net profit for the year attributable to the Parent Company’s share holders 97,155 169,470 253,242

Weighted average number of shares outstanding before dilution 500,000 505,425 516,765

Weighted average number of shares outstanding after dilution 500,000 505,425 516,765

The Company does not have any programme of convertible loans or subscrip-tion options. The total number of shares outstanding at the end of the account-ing period was 520,000. At the beginning of the accounting period, the total was 515,000.

NOTE 36 RECEIVABLES FROM GROUP COMPANIES

Parent Company

SEK million 2005/06 2006/07

At beginning of year 24.6 90.9

Loans raised 55.6 16.3

Amortization of loans –1.3 –1.6

Reclassifications 13.0 235.0

Value adjustments –1.0 –1.9

90.9 338.6

NOTE 37 TRANSACTIONS WITH RELATED PARTIESDuring the year, Systemair AB sold products to ebm-papst AB to the value of SEK 6.3 million (6.4). Product purchases from ebm-papst AB totalled SEK 1.4 million (2.2). Purchases of products from ebm-papst AB’s parent company in Germany, ebm-papst GmbH, totalled SEK 161.2 million (103.4) during the year. Systemair AB purchased hotel and conference services from Färna Herrgård & Spa AB, which is owned by Gerald and Wenche Engström, at a cost of SEK 2.0 (2.0) million.

NOTE 38 FINANCIAL RISKSSystemair is exposed to financial risks via its international operations and its loan financing. Financial risk arises when changes in exchange rates and interest rates affect the Group’s cash flows and during any renegotiation of credits. Financial risk also includes the risk of a counterparty failing to meet his obligations. The objective of risk management in the Group is to limit the possible adverse impact on the Group’s results and cash flow. Risk is monitored and followed up on an ongoing basis by the Group’s financial management function, but also within the major subsidiaries.

Currency risk – transaction exposureDuring trading between Group companies and with suppliers and customers, a transaction risk arises if payment is made in a currency other than the local currency of the particular Group company. Systemair’s major international operations represent substantial sales in differing currencies and therefore a currency risk exposure. This currency risk is primarily vis-à-vis EUR and USD and is hedged via Systemair’s currency policy. The outcome of currency hedging by Systemair has up to now been successful, but Systemair cannot guarantee that its hedging measures will continue to be successful in the future.

Currency risk – translation exposure Translation exposure arises during consolidation, when the assets and liabilities of the Group’s foreign subsidiaries are translated to SEK. Systemair has made a decision not to hedge its foreign currency translation exposure, and as a result it is possible that exchange rate effects may arise that have an impact on the Group’s equity.

Borrowing and interest rate riskSystemair intends to continue to finance a certain share of its operations by raising loans from credit institutions. This borrowing represents certain risks to the Company’s shareholders. For example, Systemair may, in the event of major changes in conditions in the Company’s markets, encounter problems in secur-ing new credit facilities and as a result may need to use a larger portion of its cash flow for interest payments and amortization.

Credit and liquidity riskCredit risk refers to the risk that a counterparty of Systemair may be unable to meet its payment obligations, as a result of which the Company may incur a loss. A credit assessment is performed on the basis of the knowledge that the Com-pany’s management has of the customer, as well as – if necessary – with the aid of credit rating companies. Every customer also has a credit limit, which may only be exceeded if a new credit rating is performed. Liquidity risk is the risk that the Company will be unable, through lack of liquidity, to fulfil its financial obligations, or will have its capacity to conduct its operations in an effective way reduced. Liquidity is to a major extent affected by credit to customers and credit from suppliers. As Systemair’s operations have expanded in new markets with differing payment cultures, the credit periods have lengthened somewhat. This has increased the cost of tied-up capital and also the risk of credit losses and consequently increased risk of negative impact on the Company’s liquidity and results.

Tax losses carried forwardSystemair benefits from tax losses carried forward, which have arisen acquired mainly through acquisition of companies where deficits have occurred in opera-tions conducted, but also in the day-to-day operations of, above all, new compa-ny start-ups. If Systemair’s operations should in the future not succeed in gener-ating sufficient taxable surpluses, the deferred tax assets reported in the Com-pany’s accounts may be subject to impairment. Tax assets may also be subject to impairment in the event that the tax authorities take the view that the tax losses carried forward may not fully or in part be tax deductible. If the Company can-not utilize the tax losses carried forward in full, this may adversely affect the Company’s results and financial position.

NOTE 39 SIGNIFICANT EVENTS AFTER THE FINANCIAL YEAR-END

Stora Exportpriset (Major Export Prize)In May 2007, Stora Exportpriset was awarded to Systemair for the strong growth in its exports and international sales in recent years, with successes in several markets, while at the same time the company has maintained good profitability and positive growth in its Swedish business.

The jury commented: “Systemair’s management has in a sustained way and using its own resources established an international group built on the entrepreneurial concept of the circular duct fan. From a production and technology development base at Skinnskatteberg, the Company has systematically built up a Group with produc-tion facilities in seven countries, its own sales companies and exports to a very large number of countries, all in a highly competitive industry.”

Acquisition of KoolclimaOn 1 June 2007, Systemair acquired the assets of Koolclima, a Spanish manufac-turer of ventilation products. The acquisition includes the rights to the Koolclima brand and constitutes a reinforcement of Systemair’s position in the Spanish market.

Koolclima’s ventilation systems, fans and fan convectors hold a strong position in the Spanish market. Operations are conducted just outside Madrid, employing around 70 employees. Koolclima has net sales of around SEK 71 million.

Stock market listing in 2007Systemair intends to apply for a listing on the Stockholm Stock Exchange in 2007. The purpose of the listing is to be able to continue the Company’s suc-cessful growth, both organically and via acquisitions. Systemair’s largest owners are Gerald Engström, via a company, (63% of the shares) and the German fan motor manufacturer ebm-papst (33%). The remaining four percent of the shares are held by Systemair’s senior executives and members of the Board of Direc-tors. Handelsbanken Capital Markets and Nordea Bank have been appointed financial advisors for the stock market listing.

120

Auditor’s Report on historical financial information for the years 2004/05 – 2006/07

AUDITOR’S REPORT ON HISTORICAL FINANCIAL INFORMATION FOR THE YEARS 2004/05 – 2006/07

To the Board of Directors of Systemair AB (publ)Corporate ID 556160-4108

We have conducted an audit of pages 90 – 119 of the financial reports of Systemair AB (publ), which comprise the consolidated balance sheets as at 30 April 2007, 30 April 2006 and 30 April 2005, and the consolidated income state-ments and cash flow statements for the periods 1 May 2006 – 30 April 2007, 1 May 2005 – 30 April 2006 and 1 May 2004 – 30 April 2005, and the balance sheets of the parent company as at 30 April 2007 and 30 April 2006, and the income statements and cash flow statements of the parent company for the periods 1 May 2006 – 30 April 2007and 1 May 2005 – 30 April 2006, and a summary of significant accounting policies and other explanatory notes for the years 2006/07, 2005/06 and 2004/05.

RESPONSIBILITY OF THE BOARD OF DIRECTORS AND THE MANAGING DIRECTORThe board of directors and the managing director are responsible for the preparation and the fair presentation of the financial reports in accordance with applicable law, International Financial Reporting Standards (IFRS) as adopted by the European Union, other applicable supplementary standards, and with the requirements of the Prospectus Direc-tive implementing Regulation EU 809/2004. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial reports that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial reports based on our audit. We conducted our audit in accordance with FAR SRS’s proposed standard RevR 5 Granskning av prospekt (Examination of prospectuses). This standard requires that we comply with the applicable ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial reports are free from material misstatement.

An audit conducted in accordance with FAR SRS’s proposed standard RevR 5 Granskning av prospekt involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial reports. The audit procedures selected depend on the auditor’s judgement, including the assessment of risks of material misstatement in the financial reports, whether due to fraud or error. In making those risk assessments we consider internal control rel-evant to the entity’s preparation and fair presentation of the financial reports as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by the board of directors and the managing director, as well as evaluating the overall presentation of the financial reports.

We believe that the audit evidence that we have obtained is sufficient and appropriate to draw reasonable conclu-sions on which to base our audit opinion.

OPINIONIn our opinion, the consolidated financial reports the for the years 2006/07, 2005/06 and 2004/05 (the latter as com-parative year) give a true and fair view of the financial position of the Company group as of 30 April 2007, 2006 and 2005 (the latter as comparative year), and of its financial performance and its cash flows for the financial years then ended in accordance with the International Financial Reporting Standards, as adopted by the European Union.

In our opinion, the financial reports for the years 2006/07 and 2005/06 (the latter as comparative year) give a true and fair view of the financial position of Systemair AB (publ) as of 30 April 2007 and 2006 and of its financial performance and its cash flows for the financial years then ended in accordance with the Annual Accounts Act (1995:1554) and the Swedish Financial Accounting Standards Council’s standard RR 32:06.

Stockholm, 27 September 2007Ernst & Young ABThomas Forslund

Authorised Public Accountant

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Addresses

ADDRESSES

SYSTEMAIR’S HEADQUARTERS

Systemair AB (publ)Industrivägen 3SE-739 30 SkinnskattebergSwedenTel: +46 222 440 00

SUBSIDIARIES

Systemair GmbHTenscherstrasse 8AT 1230 ViennaAustriaTel: +43 1 615 38 50 10

Systemair NVResearch Park HaasrodeRoomeinstraat 6/00 01BE-3001 Heverlee-LeuvenBelgiumTel: +32 16 38 70 80

Systemair EOODDimitar Manov str. 211404 SofiaBulgariaTel: +359 29 54 91 92

Systemair Shanghai Co., LtdModern Communication BuildingRoom 702, No. 201, New Jin qiao RdShanghai, ZP 201206ChinaTel: +86 21 625 69 900

Systemair SAOsinalická 12/104CZ-182 00 Prague 8Czech RepublicTel: +420 28 391 09 00-2

Systemair A/SVed Milepaelen 7DK-8361 HasselagerDenmarkTel: +45 87 38 75 00

Systemair ASPeterburi Str 99B138 12 TallinEstoniaTel: +372 60 618 88

Systemair OySnödrivsvägen 2FI-01390 VandaFinlandTel: +358 0 207 920 520

Systemair S.A.S53 Avenue CarnotF-69250 Neuville sur SaôneFranceTel: +33 47 242 94 44

Systemair GmbHSeehöfer Str 45D-97944 WindischbuchGermanyTel: +49 79 309 27 20

Systemair Ltd.72, Cheston Road, AstonBirmingham, B7 5EJUnited KingdomTel: +44 121 322 08 50

Systemair Hongkong Ltd.Room 505, HSH Mongkok Plaza794-802 Nathan Road, KowloonHong KongTel: +852 21 91 55 62

Systemair Bécsi út 267H-1037 BudapestHungaryTel: +36 14 53 01 61

Systemair Fans PTV Ltd.Flat no. 4602, Plot no. 7, sector 6New Delhi-110075IndiaTel: +91 11 427 402 09

Systemair Ltd.Unit 02, Furry Park, SantryDublin 9IrelandTel: +353 18 62 45 44

Systemair SIABalasta dambis 80ALV-1048, RigaLatviaTel: +371 7 60 18 41

Systemair UABVerkiu Str. 29, 23 BlockLT-09108 VilniusLithuaniaTel: +370 52 74 18 70

Systemair UAB ProductionPasilés str. 10LT-20194 UkmergéLithuaniaTel: +370 340 601 65

Systemair BVLonden 24NL-2993 LA BarendrechtThe NetherlandsTel: +31 180 65 62 60

Systemair ASP.B. 293 NO-4303 SandnesNorwayTel: +47 51 96 97 00

Systemair S.AAleja Krakowska 169Lazy k/WarszawaPL-05-552 Wolka KosowskaPolandTel: +48 22 703 50 00/10

Systemair S.ARua D. Marcos da Cruz,16934455-482 PerafitaPortugalTel: +351 22 999 79 00

Systemait RtStr. Vasile Roaita, Nr 11CCod 075100 Otopeni IllfovRomaniaTel: +40 31 405 55 88

Systemair rep. officeArhangelsky per 7, b.l, office 2RU-101000 MoscowRussiaTel: +7 495 933 14 42

Systemair (SEA) Pte Ltd.2 Bukit Batok Street 24#03-15/16, Skytech BuildingSingapore 659480, SBP-349326SingaporeTel: +65 68 42 06 88

122

Systemair a.sOdborárska 52831 02 BratislavaSlovakiaTel: +421 24 920 531 17

IMOS-Systemair, s.r.o900 43 Kalinkovo 146SlovakiaTel: +421 240 20 31 11-12

Marvent d.o.oSpelina ul. 002SI-2000 MariborSloveniaTel: +386 2 460 18 07

Systemair (Pty) Ltd.16 Kunene Circle, Omuramba ParkMontague Gardens7441 Cape TownSouth AfricaTel: +27 21 551 57 59

Koolclima-Systemair S.L.U.C/Montecarlo,14 Pol. Nd.Uranga 28942 Fuenlabrada MadridSpainTel: +34 91 600 29 00

Systemair AGIndustriestr. 17CH-3362 NiederönzSwitzerlandTel: +41 62 961 54 54

Systemair Ltd. Sti.Kucukyali Is Merkazi, Girne Mah.Irmak Sok. C-Block, No:10Maltepe-34852 IstanbulTurkeyTel: +90 216 489 53 25

Systemair Middle East FZEP.O. Box 186 28, Jebel Ali Free ZoneDubai U.A.E(Warehouse #S1 AM01)DubaiTel: +97 1 48 86 09 06

Fantech Ltd50 Kanalflakt WayBouctouche E4S 3M5CanadaTel: +1 506 743 95 00

Fantech Inc1712 Northgate BlvdSarasota, FL 34234USATel: +1 941 309 60 00

Frico ABBox 102SE-433 22 PartilleSwedenTel: +46 31 336 86 00

Altexa FricoKolpingstrasse 14A-1230 ViennaAustriaTel: +43 1 616 24 400

Frico S.A.S53 Avenue CarnotF-69250 Neuville sur SaôneFranceTel: +33 47 242 94 44

GELU-Frico BVSteenovenw. 35708 HN HelmondThe NetherlandsTel: +31 492 590 786

Frico ASVollaveien 20A, AlnabruNO-0614 OsloNorwayTel: +47 23 37 19 00

GELU-Frico GmbHDieselstr. 4, Postfach 121773278 SchlierbachGermanyTel: +49 70 21 97 00 30

Frico Ltd72, Cheston RoadBirmingham, B7 5EJUnited KingdomTel: +44 16 34 73 50 20

FINANCIAL ADVISORS

Handelsbanken Capital Markets Blasieholmstorg 12SE-106 70 StockholmSweden

Nordea Bank ABSmålandsgatan 17SE-105 71 StockholmSweden

ACCOUNTS OPERATOR

VPC ABRegeringsgatan 65SE-103 97 StockholmSweden

ADDRESSES

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Systemair AB (publ)Industrivägen 3

739 30 SkinnskattebergSweden

Tel + 46 222 440 00www.systemair.se