T h e k e rs G ro u p A n n uA l r e p o r T

2008

the clear objective is to develop kers from a leading roll manufacturer into a world class company.

Bengt Nilsson

President & CEO

Contents
Presidents comments ................................................2 Market overview .........................................................6 Division Cast Rolls America .......................................8 Division Cast Rolls Europe.......................................10 Division Forged Rolls ...............................................12 Division Specialty Rolls ............................................14 kers in China .........................................................19 An innovative company ............................................20 Quality, Safety and Environment ..............................22 Financial Statements ...............................................25 Presentation of the Board of Directors .....................28 Group Executive Management .................................29 kers Group World wide .......................................31 Contact information ..................................................32

Graphical production: EttOrd AB, Strngns Photo: Patrik Borg, Ann Heine, Mona Skoglund, Tedd Soost and The kers Group Translation: Amesto, Gteborg | Prepress: Bildrepro i Stockholm AB Print: Centraltryckeriet, Linkping, 2009 | Paper: MultiDesign White Original, Papyrus

PR ES i D En T S C O M M En TS

A record year in spite of a turbulent market

2008 was a very turbulent year for the global roll industry. The overheated market situation in 2007 was normalized during the first half of the year, to be followed by a dramatic decline of the market in the last quarter.
Bengt nilsson president & Ceo

duction a few years ago, have become industry standard in many markets such as Europe and north America for exam ple. nonetheless, it is likely that this vol atility has created an insecurity that has contributed to the weaker order intake in the final months of the year.

new ownership structure

For kers, a large part of the year was dominated by the process in which the private equity firm Altor acquired 85 percent of the Group from STC inter finans. Formal closing of the transac tion was completed on July 23. The fact that STC Interfinans remains as a sig nificant minority shareholder is a sign of their continued belief in the Group and should also ensure continuity in the development of kers. Following intense conceptual work within the executive management team during the second quarter, the com pany launched an improvement program called kers 25. This program aims far beyond the Business Plan that was approved in October 2007. During the startup of kers 25, the company found itself in the rapidly fall ing market. in response, the focus in the final weeks of the year was changed towards short term activities in order to deal with the new market reality. As a result of the capacity adjust ments decided upon during Q4 the

This dramatic slowdown was caused by the rapid decline of global steel demand. in turn, this decline in demand led to significant output decreases by the steel producers of the world, in order to meet the actual demand. if the development of global roll demand in recent years has been with out historical parallels, this is also true for the speed and the size of the slowdown. The leading roll makers experienced low order intake in Q4 and were also faced with demands to postpone shipments, from a few months to up to over a year, as well as of cancellations. In the first half of 2008, both raw material and energy prices increased rapidly with scrap prices reaching record levels during springtime. in the summer months prices started to fall as rapidly. The impact of volatile raw mate rial prices has, to a large extent, been dealt with through variable surcharges. These surcharges, since their intro

workforce will be decreased by around 15 percent and that activity in many plants will be dramatically reduced dur ing the first half of 2009. A new product division organiza tion was introduced in January 2008. During the year the new structure has been consolidated and a number of key recruitments were made. new corpo rate functions such as Global Produc tion Support and Corporate Develop ment were established.

Facilitate dramatic improvements

i am convinced that kers now has an organizational structure that will facil itate the dramatic improvements that we intend to achieve. Following the new divisional structure, a decision was taken to establish two subsidiar ies of kers France S.A., one for each of the plants in Sedan and Fraisses. From an operational standpoint, these plants are now part of the Divisions Cast Rolls Europe and Specialty Rolls. The remaining activities within kers France S.A. are part of Division Forged Rolls. A new product development model, SPiDER, has been introduced during the year. There are currently a number of highly promising new products in the pipeline with significant commercial potential.

Best year in history

Sales 2008 amounted to 3.592 MSEK, which is 12.4 percent above the 2007 level (3.195 MSEK). The operating profit, EBiT, was 378 MSEK (304 MSEK). As a result 2008, in spite of the very weak last quarter, was the best year in the history of kers in absolute figures. Operating cash flow amounted to 393 MSEK (94 MSEK). The total investments 2008 were 283 MSEK (200 MSEK). One of the largest projects was the new vertical spin casting machine in the Chinese plant.

The improvement program kers 25 will run during a number of years and will have effects in all areas of the Group. The program contains short term cost saving and cash generat ing actions as well as more structural improvements. During the life of the program a separate program office will secure that all activities are followed and controlled. The clear objective is to develop kers from a leading roll manu facturer to a world class company. Bengt nilsson President & CEO

GloBal cRUdE STEEl pRodUcTIon pER MonTh

Million metric tons 125 000 100 000 75 000 50 000 2004 2005 2006 2007 2008

ToTal SalES 2004 2008

MSEK 4 000 3 000 2 000 1 000 0 2004 -05 -06 -07 -08

SalES pER REGIon

Percentage of total sales Europe 52% Asia incl Australia 27% North America 17% Africa 2% Latin America 2%

EBIT 2004 2008

MSEK 400 300 200 100

KEY FIGURES
MSEK 2004 Sales Operating expenses Depreciation EBIT EBIT Margin Investments in fixed assets Return on capital employed 2.081 -98 -42 neg 176 neg 2005 2.501 -91 88 4% 156 6% 2006 2.671 -97 182 7% 61 14% 2007 2008 3.195 3.592 -109 304 10% 199 18% -120 378 11% 283 17%

-2.026 -2.322 -2.392 -3.007 -3.378

2004 -05 -06 -07 -08

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

My colleagues are definitely the most important thing for me, and in the foundry at kers we have a really good team and great team spirit. the fact that kers also offers an exciting job, working with molten iron thats extremely rewarding to me.
Therese Andersson
Foundry worker kers Styckebruk, Sweden

I really value my job and the way I am developing at kers. I have not only been able to become an expert in my profession, but I have also experienced other areas such as coatings and heat treatments. this means that my job isn't a routine. I hope I can carry on in this way for further development in the future.
Franck Violette
Foundry worker Sedan, France

The kers Group | Annual Report 2008

M A R K E T Ov ERv i E W

Closer to customers
Despite the rapid downturn in the world economy, 2008 was the best year in kers history. The company strengthened its position as a global market leader offering quality rolls for the global steel and aluminum industries.
ulf Gyllenholm senior Vice president Marketing & sales

Ian McWhirter executive Vice president Corporate Development

Compared to 2007, sales in China increased by more than 50 percent and by an even greater percentage in india. The increase in volumes sold was achieved without comprising profitabil ity levels. By far the most important product area for kers has been, and contin ues to be, rolls for flat products within the spheres of carbon steel, stain less steel and aluminium. Within these areas, which comprise the vast major ity of Group activities, kers has a very strong market position. For long pro ducts, kers has taken more of a niche approach with excellent capabilities to produce larger sized section mill rolls, both cast and forged, at our sites in Sweden and France.

has its roots primarily in these markets. Today our sales offices in these markets are complemented by sales offices in China and Brazil. Through this network, kers today sells to customers in over 50 countries. Our traditional markets have been, and will continue to be, important mar kets for kers, but with the rapid growth of the steel production in many emerg ing markets, the importance of the mar kets outside the traditional regions has increased greatly for kers in recent years.

New sales and service offices

Consequently, we have decided to build up a number of new sales and service offices in selected markets in the com ing years. Working from a number of simi lar hubs, kers will have an even more commanding presence on the global market. The company is currently con sidering a number of possible locations for its own sales offices. By leveraging our existing sales and service capability and complementing it with more local market presence, we believe that we can work even closer with our customers, to deliver superior products and services. in this challeng ing market environment, we believe that this proactive approach is key to secur ing kers continued development, positioning kers to benefit from the changing global steel landscape.

tomer to always choose the correct roll for any particular application. An approach incorporating total cost of ownership is being increasingly imple mented by kers' customers. in prac tice, this means that a switch to a high tech roll solution may yield significantly better operating and overall financial results for the customer. With the purpose of further strength ening the customer perception of kers as an important supplier in China, kers held a very successful customer semi nar in China in March 2008. More than one hundred customers attended the seminar. kers' technology and know how, as well as customer case studies were presented.

roll manufacturer into becoming a worldclass company.

Terms and conditions

One very important objective for kers, and the entire roll industry is to estab lish more developed commercial rela tions between roll makers and their cus tomers. Roll manufacturing includes long throughput times with high exposure to fluctuating raw material prices and var ying exchange rates. in the last quarter of 2008, when the market situation was dramatically worsened, it also became obvious that clearer commercial rules have to be established in this particular market. Postponements and cancellations must be handled in accordance with agree ments between the parties.

Focus on change
Within our marketing and sales acti vities, one objective is to rapidly adapt to prevailing market conditions. Per haps even more important, the work and efforts to improve and change, will also prepare the business for the upturn when it eventually arises, ensur ing that kers comes out on top. Our overall objectives are to be faster, more reliable and efficient as well as more customerfocused, achieving more profitability and thus develop from being the leading global

strengthening the organization

Efforts in this regard are not limited to improving kers' global sales presence. Key recruitments have also been made during 2008 and will continue also in 2009 as a number of the experts in the organization are approaching retire ment. kers objective is to have an excellent commercial team regardless of where the customers are located or what products they are using.

Increasing our global sales and service presence

As every rolling mill is unique, working closely with our customers to constantly improve our understanding of how we can meet their needs is something we continually strive to do. This has been one important contributing factor to the success we have enjoyed in our tra ditional markets of Europe and north America. With kers long and rich history of manufacturing in Western Europe and north America, our salesforce also

Win-win relationship with our customers

An arrangement with everadvancing levels of technical expertise and more proactive advisory services, delivered in the mill, for customers is our objec tive. This enables kers to help the cus

SalES dISTRIBUTIon pER coUnTRY

Canada Finland Brazil Spain Great Britain Sweden South Korea Luxembourg Belgium France Italy Germany Other countries USA China

SalES dISTRIBUTIon pER Roll MIll applIcaTIon

I really enjoy the everyday contacts with customers and co-workers within kers. We are a very good team, supporting each other towards our goals. this highly motivated team work can only lead to success. For me personally, I get a lot of new experiences in the field of marketing and sales, which I find both most interesting and developing.
Barbara Kure
Sales Coordinator Ravne, Slovenia

Narrow strip mill rolls Plate mill rolls Aluminium mill rolls & Continous casting Cluster mill rolls Cold strip mill rolls Section mill rolls Back up rolls Co products Hot strip mill rolls

0%

5% 10% 15% 20%

20%

40%

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

D i v i S i O n CAST RO L LS A M ER i CA

the competitive position is strong

2008 was a strong year for Division Cast rolls America. product reliability and mill operating knowledge is the foundation on which excellent service to customers is built.
Division Cast Rolls America is a strong supplier of Hot strip mill rolls in the north American market. in the last year the division has focused on increasing export sales. During 2008, 26 percent of the roll production was exported. The majority of exported rolls are shipped to Asia, primarily to China. Last year, tech nical sales visits were made to many interesting markets. Exchanging know ledge and experiences of rolling mill practices related to technology rolls, supports the development of sales in new markets. ties are showing improved performance and surface retention. ing mills which are assembled onto roll necks. The potential for growth in this market is excellent. During the year, vertical Seal devel oped a successful business repairing steel mill backup and work roll chocks. ity and performance, will be important in 2009.

Moving forward in 2008

Division Cast Rolls America exceeded its objectives through the first three quarters of 2008, but economic con ditions in the fourth quarter adversely affected yearend results. Unfortu nately, the unexpected economic down turn came very quickly and full recovery is yet unclear. An important achievement in 2008 was the fact that the safety record improved significantly. The number of Lost Time Accidents was reduced by 25 percent and resulted in a decreased number of work days lost. The vertical Seal facility manu factures bearing components for roll

Broad spectrum of cast rolls

The rolls manufactured from the Divi sion can be grouped into two catego ries: standard and technology. Standard rolls are grades that most roll manufac turers produce. Requiring advanced manufacturing techniques, technology rolls are highly refined grades made from highspeed steel. in north Amer ica; Division Cast Rolls America is the leading manufacturer of technology rolls.
The highly respected kers brand represents product quality, reliability and outstanding service. In a global economy, this strong brand recognition greatly strengthens our competitive position.

Market leadership
The Division Cast Rolls America sales department has many years of opera tional, technical and product develop ment experience in working closely with the rolling mills and maintaining strong customer relationships. The company uses the product and rolling mill oper ating knowledge to provide excellent service, to improve rolling practices and to solve problems for the custom ers. These valueadded services, along with the supply of reliable product qual

Tom Adams Division Manager Cast rolls America shorT FACTs 2008 employees: 330 F.T.E. products: Hot strip mill rolls, Cold strip mill rolls vertical Seal: Bearings, bush ings, sleeves and chocks locations: Avonmore, Hyde Park and Pleasantville, PA, USA produced volume: 22.000 t

equipment and research investments

in 2008, two major capital expenditure projects were initiated and will be com pleted in 2009. The first is the construc tion of a magnesium wire treatment sta tion used to produce nodular iron for the roll core. This process will improve the environment for the workforce. The second project is the installation of a rebuilt CnC lathe. During the year, research efforts introduced new roll grades offering improved surface quality for roughing stand applications. Performance trials conducted at several customer facili

F.T.E.= Full time equivalance

For me, kers has shown that with hard work and commitment many opportunities are presented. Having been given the opportunity to communicate with customers on a daily basis has shown me a new perspective of what their concerns and needs are. the opportunity to learn and grow, with help from knowledgeable and experienced people at kers, has made the transition very rewarding.
SalES pER REGIon
Asia 26% North America 74%

SalES
20% of the Group

nUMBER oF EMploYEES
330 people (21% of the Group) Year average F.T.E.

InvESTMEnTS
13% of the Group

Robert E. Klingensmith
Technical Sales Engineer Avonmore, PA, USA

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

D i v i S i O n CAST RO L LS EU RO PE

Well equipped to face the future

Increased production capacity ensured that Division Cast rolls europe was more able to cope with the strong level of demand, primarily within plate mill rolls.
As a result of changes and improve ments during the year, Division Cast Rolls Europe is well equipped to face the future. At the same time, the market for hot mill rolls at the end of the year was markedly affected by the changes in the economic situation. The Division has two production facil ities, one in kers Styckebruk, Sweden, and one in Sedan, France. The number of employees at the Swedish facility is 310, while 200 people are employed at the French site. The biggest manufacturing activity in terms of volume within Division Cast Rolls Europe is still hot strip mill rolls for roughing mill works and finishing mill works. Manufacturing of plate mill rolls and hot strip mill rolls takes place at both production units. Large section mill rolls are manufactured at the produc tion unit in kers Styckebruk, Sweden. at which point the situation altered somewhat in certain segments due to the rapidly faltering global econ omy. Section mill rolls and plate mill rolls are still experiencing a good level of demand and the Division's units are adjusting production capacity to satisfy workload demands. The situation is dif ferent for hot mill rolls, and adjustments have been made to match customers' reduced requirements for new rolls. At the end of 2008, the number of temporary staff in the Division was reduced, owing to the impact of changed production capacity resulting from cur rent market conditions. Over the year, the organization has also been strength ened by several important key recruit ments at both the Division and site level. delivery from the Division's units has been improved, and the ambitious groupwide targets for improved reliabil ity have been attained almost one hun dred percent. Safer working environ ments and higher attendance among employees are positive results from the year's other initiatives. Achieving these objectives requires constant develop ment of both employees and production facilities, something that never stops.

Constant improvements
The focus in the kers Group is on get ting closer to its customers. Division Cast Rolls Europe is working along these lines and is well aware of the challenges it faces. increased focus on customers' requirements, involv ing, among other things, investment in increased technical support and service on site for customers, is obvious. Work ing to ensure constant improvement has yielded results and the Division has increased production and improved the quality of its products. Reliability of

kerstin konradsson Division Manager Cast rolls europe shorT FACTs 2008 employees: 510 F.T.E. products: Hot strip mill rolls, Plate mill rolls, Section mill rolls locations: kers Stycke bruk, Sweden; Sedan, France produced volume: 31.000 t

Customers throughout the world

The Division has customers throughout the world. Our general approach, regard less of where in the world the customer is located, is to endeavor to promote cus tomer confidence and to ensure that our product functions optimally after delivery. By reviewing the technical requirements in advance together with the customer, Division Cast Rolls Europe can ensure that the correct product with the correct specifications is ordered and delivered every time. Constantly improving and develop ing both products and quality level is the driving force for Division Cast Rolls Europe. Our products are well estab lished and have a worldclass reputa tion within the industry and this posi tion must be maintained.

Increase in production capacity

During 2008, two brand new heattreat ment installations were planned for the Swedish facility. This will contribute substantially to increasing production capacity and ensuring faster deliveries. The Division had almost full order books right through to the fall of 2008,

The desire and ability to change and adapt is present within the Division. We have made great progress in terms of quality, reliability of delivery, safety and working environment.

I have a background in mechanical engineering and am now responsible for process engineering and machines used in the manufacture of rolls. I have had the opportunity to pursue my chosen career. My job tasks are extremely varied, and I am constantly mastering new skills and gaining experience. kers offers a very interesting work environment, which provides me with a solid basis for my future development.

Frdric Husson

SalES
29% of the Group

SalES pER REGIon

Africa 4% Americas 7% Asia 40% Europe 49%

nUMBER oF EMploYEES
510 people (32% of the Group) Year average F.T.E.

InvESTMEnTS
30% of the Group

Preparation department for numerical control Sedan, France

10

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

11

D i v i S i O n FO RG ED RO L LS

sweeping changes
Division Forged rolls has undergone major changes during 2008, both in terms of its organization and on the market. Following the new divisional structure, the executive management has been renewed to a large degree and new high tech rolls have been produced and tested in our customers' facilities on a broader scale.
Division Forged Rolls has three produc tion plants. These are located in France and Belgium. The plant in Thionville includes steel works, forging, heat treat ment and machining. The plant in Ber laimont performes heat treatment and machining, while the plant in Liege manufactures ESR material (Electro slag remelting) including forging and heat treatment.
Our Division and our people strive for and achieve such great efficiency and such a high level of competence, know-how and quality, that we can only but strenghten our market-leading position.

philippe Bello Division Manager Forged rolls shorT FACTs 2008 employees: 470 F.T.E. products: Section mill rolls, backup rolls, ingots, forged bars and mechanical pieces locations: Liege, Belgium; Berlaimont and Thionville, France produced volume: Coproducts 43.000 t Rolls 19.000 t

25 program, aimed at increasing the service level while becoming more and more efficient. With the help of mod ern improvement tools, there have been reductions of non conformities, inci dents and delays. The average through put time has also decreased as well as the response time to customer requests.

higher value for the customer

The stringent specifications and the high quality that forged bars and mechanical pieces demand, push the whole Division to much higher stand ards than rolls request. As a result, our customers for forged rolls can rely on the worldwide best in class when rolls are concerned. For kers it is important that the cus tomer gets the lowest total cost of own ership, in order to get the most profit able solution. Factors such as a long service life, few production stoppages, good technical support, and timely deliveries are vital. Research and development remains the fuel for future growth. Through refinement of production methods, constant development of steel qual ities, improvement in heat treatment and close collaboration with custom ers' engineers, new types of rolls have been designed and tests have begun, in 2008, to increase the value of our rolls for our customers.

production capacity
At the end of 2008, the number of employees in the Division was 450, of which 60 percent work in Thionville. The Division's main operations are the production of section mill rolls for manufacturing long products, backup rolls for cold and hot rolling, and com plementary products, primarily ingots, forged bars and mechanical pieces. The production capacity for section mill rolls is around 5.000 tons per year. The entire output of section mill rolls is

set aside for Europe. Division Forged Rolls' section mill rolls are estimated to have 5 percent of the market. Around 6.000 tons of backup rolls are manufactured annually and sold prima rily in Europe and Asia. The Division has around 8 percent of the global market. in the steel works, extra capacity enables the Division to manufacture ingots and forged bars, accounting for half of the sales of the Division.

earnings unchanged
2008 saw the market shift from rising demand and strong production expan sion with associated new hiring during the first six months, to a faltering econ omy with decreasing volumes and lay offs affecting temporary staff during the second half of the year. Despite this,

Division Forged Rolls' earnings have remained unchanged compared with the previous year. During this downturn, the Division will continue to invest in research and devel opment in preparation for expected mar ket recovery. Thanks to kers' very strong name and the Division's exten sive knowhow in relation to its compet itors, Division Forged Rolls will be in an excellent position when demand picks up again. Through close contact with customers, the Division is able to guide and follow potential market changes.

Increasing the service level

in order to maintain and strengthen its marketleading position, Division Forged Rolls initiated a number of development projects within the kers

It is very motivating for me to work in a friendly team with challenging responsibilities in a worldwide company making products of the highest quality. In my job as a pyrometric technician I get opportunity to increase my knowledge as we develop techniques and working methods continuously. the comfort I feel with the kers atmosphere is essential for my job satisfaction.
Raphael Borges
Pyrometric Technician Berlaimont, France

SalES
32% of the Group

SalES pER REGIon

Americas 2% Asia 13% Europe 85%

nUMBER oF EMploYEES
470 people (29% of the Group) Year average F.T.E.

InvESTMEnTS
46% of the Group

12

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

13

D i v i S i O n S PECi A LT y RO L LS

Increased efficiency with new organization

Division specialty rolls has put a lot of effort into production improvements. Increased production volumes, decreased work in progress and shortened throughput times have been key areas. production programs between the plants play an important role in the work to optimise efficiency.
During 2008, each of the three plants in the Division benefited from strong demand. Although Europe remains the key market, rolls are delivered to cus tomers world wide. 2008 was a breakthrough year for business in China for Division Specialty Rolls, selling primarily rolls for clus ter mills and work rolls for cold rolling to new customers. The Chinese market is gaining in importance for the Division, with a continuously rising market share. development of rolls for cluster mills using powder steel. new roll qualities were also tested for continuous casting of aluminium as well as for workrolls for cold rolling. The first rolls using these new methods and new steel grades have already been delivered to cus tomer during 2008. in the production unit with the most suit able production facilities. The Fraisses unit produces work rolls for cold rolling and rolls for aluminium, while the Sder fors unit specialises in the production of rolls for cluster mills and narrow strip mill rolls. in Ravne both product groups are produced as well as work rolls for cold rolling. This specialization has lead to a 10 percent increase of productivity in Ravne and Sderfors. Significant investments have been made in Ravne with an additional heat treatment line. investments have also been made in new machines in Sder fors. in the Fraisses unit, focus has been cost cutting in order to improve produc tivity. Among other actions, the number of employees has been reduced.

Increased productivity
A reorganization and specialization pro gram has been completed during the year. Every product group is now made

kers, a safe place to work

Division Specialty Rolls succeeded in better safety in 2008. The number of labour accidents was lower than in recent years. The company wide safety program has positively improved the attitude regarding safety in the Division.

Miran rebernik Division Manager specialty rolls shorT FACTs 2008 employees: 300 F.T.E. products: Cluster mill rolls, narrow strip mill rolls, cold mill work rolls, aluminum work rolls locations: Fraisses, France; Ravne, Slovenia; Sderfors, Sweden produced volume: 7.712 t

The leading producer of forged rolls

Division Specialty Rolls is already one of the largest global producers of forged rolls. in times like these, the determi nation is not only to preserve but also to increase market share for all product groups. The technical consulting and service for customers will be intensified. The production units will continue with production restructuring to cut costs and to increase productivity. As 2009 will be a difficult year, all resources are there to reach the planned targets in spite of extreme business challenges.

Development of new products and methods

One of the key factors driving kers' position as a market leader is new product development. Efforts, com pany wide, focus on developing prod ucts that maximize performance and cost effectiveness for our customers. 2008 included several achievements in new product development regarding the products in Division Specialty Rolls. A main emphasis has been on the

We put a lot of hard work and efforts into improving our production.

Challenges, development, variation, participation and a sense of community. the management's enthusiasm and desire to develop the company into a worldclass player is stimulating. Its interesting and exciting to be involved and contribute to this development. I have an extremely varied and challenging job, which also involves working with people from other countries and cultures.
Fredrik Lvstrm
Project manager Sderfors, Sweden

SalES
16% of the Group

SalES pER REGIon

Other 7% Americas 12% Asia 15% Europe 66%

nUMBER oF EMploYEES
300 people (18% of the Group) Year average F.T.E.

InvESTMEnTS
11% of the Group

14

The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

15

I really enjoy working with mechanical things and with the machines we have at kers. I find it especially interesting to work with the impressive dimensions of the rolls we produce here at kers in thionville.
Thomas Baticle
Machine operator Thionville, France

 K ERS i n C H i n A

Laying the foundations for high-tech roll manufacturing in China

For kers, to have its own manufacturing units in markets where its products are sold is a major asset. China, the largest steel producer in the world, has for a long time been an important market for kers. In 2007, shanxi kers TIsCo roll Co. ltd. was set up in Taiyuan, south west of Beijing.
With roll production in the largest and fastest growing market in the world, kers can much more effectively pro vide service to Chinese customers. Shorter transport routes also make a big difference in terms of the environmental impact and delivery times. The company is jointly owned by kers AB (60%) and Taiyuan iron & Steel Co. Ltd. (TiSCO) (40%), and evolved from TiSCO's former roll manu facturer, TiSCO Roll. An extensive development program has been implemented, involving qual ity improvements, enhanced efficiency and an expansion in capacity. of precision, manufactured in China. Other sizable investments in 2008 included new cooling pits, induction and heat treatment furnaces, lathes and mill ing machines.

sales and distribution

kers is responsible for the marketing and sales of rolls produced at Shanxi kers TiSCO Roll Co. Ltd. A new sales company kers Rolls Trading (Shang hai) Company Ltd has been established during the year to handle this. in paral lel, the kers Shanghai Representative office is responsible for the sales of rolls manufactured in other parts of the kers organization.

Anders hallberg Chairman of the Board shanxi kers TIsCo roll Co. ltd. shorT FACTs 2008 employees: 320 F.T.E. products: Hot strip mill work rolls location: Taiyuan, Shanxi, China produced volume: 6.500 t

It is very interesting and positive with the international atmosphere in kers. We come from many different countries with different cultures all working together towards the goal An even better kers. We do this by adopting the kers working methods which have shown to be succesful over the years. I really appreciated the training program I experienced when I was new in kers.

kers' technology
The quality improvements will be made possible by transferring kers techno logy to the company. Employees from Shanxi kers TiSCO Roll Co. Ltd. have visited kers' various facilities in Europe and received training in technology, qua lity and safety issues. Knowledge build up is also facilitated by three expatriates (acting General Manager, Foundry Man ager and Machine shop Manager) and by having employees from other kers plants working in Taiyuan. in 2008, an extensive machinery investment program was implemented, with the biggest investment being a cen trifugal spin caster. This technology will allow kers to deliver rolls of various material qualities, with a very high level

I am constantly learning and becoming more and more efficient thanks to a good training program and hard work. I really enjoy my job and it didnt take long for me to feel a strong bond with my colleagues and the company. naturally I want to develop and advance in the company and I know that I have every opportunity to do that.
Xu GuoHua
Deputy Machine shop manager Taiyuan, China

Flora Xie

Area Sales Manager Shanghai, China

the biggest investment in 2008 in the Chinese plant was a centrifugal spin caster. kers can, with the new spin caster, supply high quality rolls of various grades from the plant.

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The kers Group | Annual Report 2008

The kers Group | Annual Report 2008

19

A n i n n OvATi v E C O M PA n y

An effective innovation process and focus on technical service will move kers forward

Tommy nyln Vice president research & Development

kers focus on technical service and customer support will improve the quality of customers' products. Closer collaboration with customers, and more effective management of the innovation process, will raise the quality levels of material and product development even further.
The aim of the research and develop ment work at kers is to maintain the Group's pole position within the indus try. Material and product development is an ongoing process with ever more demanding quality requirements. R&D work is carried out by a project organi zation involving a team of 25 or so at the seven laboratories and elsewhere. A special Research and Development Council, made up of R&D managers within the Group, holds quarterly meet ings to formulate, assess and make decisions on development initiatives. There are two competence centers: one in Sweden, focusing on cast rolls, and one in Belgium, focusing on forged rolls. R&D work can be divided into three areas of activity: Skillsenhancing activities. This involves, for example, investigating the connection between different materials and their properties. Product and processdevelop ment activities. These are based on existing products or a specific requirement from a customer. Strategic activities. A more vision ary and forwardlooking approach that aims to find new production technologies and material.

The main focus is development of exist ing materials, but alternative manufac turing methods and materials are con tinuously being investigated and tested. Refinement of existing materials has moved from lowalloy to highalloy prod ucts. Establishment of high speed steel rolls is continuing; rolls for cold rolling and rolls for the latter stands in a Hot Strip Mill are being developed and will be upgraded shortly.

strengthening technical service

in order to increase the rate of develop ment of new products and strengthen strategic development and the inno vation process, kers plans to focus more on technical matters. improving the direct impact of kers' products on the customers' own levels of quality and productivity requires a more developed support function and closer collabora tion with customers. A technical ser vice function will improve communication with customers and give them greater potential for achieving the right level of skill. This function will also play a central role in tests and modifications by cus tomers.

system for project management

in order to retain its competitiveness, kers needs to maintain its market leading position within quality and pro duct development. One aid for this work is the project and document manage ment system called SPiDER imple mented during the year. SPiDER makes it possible to follow the process for development of new products. The development process is divided into four specific stages pilot study, proto type production, evaluation and launch. The system is documentcontrolled and will stimulate generation of new ideas. it also leads to greater potential for

More effective management of the innovation process strengthens kers competitiveness.

kers is an international company with a rich mix of cultures. speaking French, english and swedish is a real benefit for me working in the cast R&D team. I believe in kers vision underlining the importance of research and development to provide highquality rolls to our customers.
kers Academy
kers Academy is an internal skills center within the Group that was set up in 2008. Employees receive training to ena ble them to address the requirements of the future. The intention is also to offer customers the opportunity to participate in this training concerning new products and materials. This is part of improved technical service for customers.

Jrme Snaneuch
R&D Engineer kers Styckebruk, Sweden

adaptation of products to the specific requirements of each customer. During 2008, new activities were added to the system and a number were launched on the market. Additional new projects are awaiting launch in 2009.

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Q UA LiT y, S A FE T y A n D En v i RO n M En T

Increased focus on safety work

A change in focus to a more deliberate strategy for work involving safety issues is visible in the kers organization. The objectives for 2008 were achieved and the objectives for 2009 have been set even higher.
stefan lind Vice president Global production support

Sound and standardized processes will raise quality to a very high level.

ove larsson Manager Quality, safety and environment

Focus on quality, safety and environmen tal aspects are all crucial for success. in 2008, kers focused more strongly on these areas by establishing a new group wide function Global Production Sup port. Quality and safety work have top priority and the objectives have been set high: to become a world leader in these areas too. Sound and standardized proc esses will raise quality to a very high level. At kers' safety conference 2008 the foundation was laid for intensi fied work to reduce the number of acci dents resulting in lost working hours. kers has decided to use the interna tional measurement system for acci dents. This system measures Lost Time Accidents (LTA), to enable comparison with other companies. The same deci sion forum decided to focus on personal protection equipment and its use. 2007 was used as a base, with the target then set for reducing LTA throughout the Group by 25 percent in 2008, which was fulfilled. In other words, a high target yielded immediate results it was par ticularly evident in terms of eye injuries. Requirements for analyses and action are now being established within the organization and a further 25 percent reduction of LTA is required in 2009. The requirement stipulating use of pro tection equipment now also applies to contractors and visitors. The personal protection equipment for employees and

third-party certified according to the international iSO 9001 quality standard. Work to create a common quality sys tem for the kers Group is continuing. An agreement has been signed with a third party to certify a quality manage ment system that will be in full opera tion by 2010. Major quality improvements have been made during the year with regard to work on centrifugally cast rolls. Reject costs have been halved for these products thanks to a new stand ardized working method. Work on improving quality within this area also resulted in positive improvements within the environmental field. Improved qual ity has, among other things, produced a substantial reduction in the need to eliminate defects by lancing. The lanc ing operation generates discharge of metalliferous material into the air.

environmental audit at all production units

During the year, kers engaged an environmental consulting firm with whom kers conducted thorough docu mented environmental audits. The find ings will result in improvement activities at the different sites. The EU's new chemical legislation REACH has given rise to intensified efforts within the Group. Work is ongo ing to ensure that all factories in Europe fulfill, and continue to fulfill, future requirements within the framework of REACH. The annual risk audit, ascertained that further improvements had been made in the area of risk minimization.

visitors has also been strictly specified, as has the means of determining usage compliance.

Cultural shift
The reporting system for incidents and accidents was launched in 2007 and has been further improved in the past year. More and more incidents are being reported. A cultural shift in the safety aspects is starting to evolve through out the Group and has resulted in a

changed attitude among employees. Safety efforts must permeate work at all levels in the organization, from Group management to individual employees in the office or on the shop floor. In order to constantly improve safety, the work of standardizing safety work will continue.

I like the challenging and fast paced atmosphere in the company that allows me to help improve the safety and health of all the workers here at kers.
Milica Petrovich
Safety Manager Avonmore, PA, USA

Improvement in quality yields environmental gains

Quality work is governed by a group wide policy. Each unit in the Group is

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Anders ruth executive Vice president & CFo

Jacques Cugnon Group Business Controller

Income statement Consolidated

Working for a company that has been producing rolls for 200 years makes me proud and respectful of all the knowledge, experience and professional skill that exist in the company. there is an open atmosphere, strong commitment and desire to progress. Working in logistics, which is my passion, makes it a pleasure to come to work each day. I have interesting assignments involving numerous contacts both internally and externally. All this combined makes kers an excellent workplace.
Mikael Andersson
Master planner kers Styckebruk, Sweden Amount in sek thousand 2008 operating income net sales Change in inventories of work in progress and finished goods Capitalized work in progress Other operating income operating expenses Raw materials and consumables Goods for resale Other external costs Personnel costs Depreciation of tangible and intangible assets Other operating expenses Operating profit Result from financial items interest income 4 997 4 997 interest expense Net currency fluctuations Result after financial items Extraordinary items* Tax on profit for the year Change in deferred tax Minority share of the profit for the year neT proFIT 57 715 -47 605 -105 320 277 683 78 874 -28 307 99 359 3 721 273 582 3 845 3 845 51 640 5 098 -46 542 260 859 23 300 -56 424 3 806 -2 970 174 359 1 413 651 163 969 869 864 122 120 363 9 578 -3 377 746 378 006 1 174 176 2 557 870 595 798 293 109 120 29 456 -2 984 197 303 556 3 591 555 54 216 16 870 93 111 3 755 752 3 195 465 19 773 18 936 53 579 3 287 753 2007

* One time cost excluded for comparability reason

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Balance sheet Consolidated

Amount in sek thousand 2 0 0 8 -12 - 31 AsseTs Fixed assets Intangible assets Licences and similar rights Goodwill Tangible assets Land and buildings Machinery and equipment Construction in progress and advance payment for tangible assets Financial assets Receivables from Group companies Other securities held as fixed assets Other longterm receivables Total fixed assets Current assets Inventories Raw materials and consumables Work in progress Finished products and goods for resale Advances to suppliers Current receivables Accounts receivable trade Receivables from Group companies Other receivables Prepaid expenses and accrued income 717 045 62 317 41 617 29 303 850 282 Cash and bank balances Total current assets TOTal asseTs 174 007 1 949 039 2 926 992 713 017 335 90 595 24 514 828 461 60 130 1 618 026 2 361 689 263 123 579 188 57 571 24 868 924 750 205 032 482 201 35 914 6 288 729 435 1 159 127 622 128 781 977 953 28 216 1 004 27 468 56 688 743 663 145 314 614 476 76 060 835 850 115 833 545 105 13 080 674 018 1 383 11 939 13 322 1 671 11 286 12 957 2 0 0 7-12 - 31 eQuITy AnD lIABIlITIes equity Restricted equity Share capital (1 400 000 shares) Restricted reserves/statutory reserves Non-restricted equity Non-restricted reserves/profit brought forward Shareholders contribution Profit for the year Total equity Minority interest provisions Provisions for pensions and similar commitments Provisions for taxation Provisions for structural costs Other provisions Total provisions liabilities Long-term liabilities Liabilities to credit institutions Liabilities to Group companies Other liabilities Total long-term liabilities Current liabilities Liabilities to credit institutions Advance payments from customers Accounts payable trade Liabilities to Group companies income tax liabilities Other liabilities Accrued expenses and deferred income Total current liabilities ToTAl eQuITy AnD lIABIlITIes 107 723 66 273 389 365 741 6 695 108 016 199 245 878 058 2 926 992 235 486 64 167 343 991 22 563 8 032 136 991 178 560 989 790 2 361 689 688 168 81 603 769 771 178 051 250 000 26 657 454 708 221 795 19 101 34 436 6 588 281 920 193 751 15 535 32 958 6 568 248 812 294 114 273 582 567 696 922 405 74 838 142 823 174 359 317 182 606 785 61 594 140 000 214 709 354 709 140 000 149 603 289 603 Amount in sek thousand 2 0 0 8 -12 - 31 2 0 0 7-12 - 31

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Board of Directors

Group executive Management

CHRiSTER GyBERG Chairman Born in 1947 Education: Chalmers University of Technology, MSc in Engineering Member of the board since 2008

MARTin ivERT Board member Born in 1948 Education: Royal institute of Technology, Stockholm, MSc in Metallurgy Member of the board since 2008

BEnGT MAUnSBACH Board member Born in 1968 Education: Stockholm School of Economics, MSc in Economics and Business Administration Member of the board since 2008

BEnGT niLSSOn president & Ceo Born in 1961 Education: Royal institute of Technology, Stockholm, MSc in Engineering Physics Employed in kers since 2007

AnDERS RUTH executive Vice president & CFo Born in 1960 Education: Stockholm University, BSc in Business Administration Employed in kers since 2008

LARS SKLD Board member Born in 1950 Education: University of Stockholm, Master of law Member of the board since 2007

FREDRiK STRMHOLM Board member Born in 1965 Education: Stockholm School of Economics, MSc in Economics and Business Administration Member of the board since 2008

AnDERS ULLBERG Board member Born in 1946 Education: Stockholm School of Economics, MSc in Economics and Business Administration Member of the board since 2008

iAn MCWHiRTER executive Vice president Corporate Development Born in 1974 Education: McGill University, Montreal, Master of Business Administration (MBA) Employed in kers since 2008

ULF GyLLEnHOLM senior Vice president Marketing & sales Born in 1944 Education: Lund University, BSc in Business Admini stration Employed in kers since 2008

JACQUES CUGnOn Group Business Controller Born in 1968 Education: Fucam in Mons, Belgium. MSc in Economics, Degree in accounting and management Employed in kers since 2007

JOHAn BLOMQUiST Deputy Board member Born in 1978 Education: Stockholm School of Economics, MSc in Economics and Business Administration Member of the board since 2008

PETER nORLinDH Deputy Board member Born in 1946 Education: Stockholm School of Economics, MSc in Economics and Business Administration Member of the board since 2002

leGAl sTruCTure: kers AB is a Swedish company with its registered office in Strngns, registration number 556153-4792. In July 2008 kers AB was acquired by kers Holding AB, which is a Swedish company owned by Altor Fund II GP Ltd (85%) with its registered office in Jersey and by STC Interfinans AB (15%).

TOM ADAMS Division Manager Cast rolls America Born in 1957 Education: Pennsylvania State University, BSc in Metallurgy Employed in kers since 1983

KERSTin KOnRADSSOn Division Manager Cast rolls europe Born in 1967 Education: Royal institute of Technology, Stockholm, MSc in Metallurgy Employed in kers since 2007

PHiLiPPE BELLO Division Manager Forged rolls Born in 1960 Education: Ecole Polytechnique Paris and Ecole des Mines de Paris, MSc Employed in kers since 2008

MiRAn REBERniK Division Manager specialty rolls Born in 1961 Education: University of Economics Employed in kers since 2004

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kers Group World wide

Sponsorship for innovation For us, its important for the kers Group to be associated with enterprise, innovation and the desire to keep up with the competition. By focusing on young players, kers Hockey is taking an approach that is in perfect accord with the major challenges facing kers as a company.
Bengt Nilsson
President & CEO

Head Office
Sweden kers Styckebruk

Head office in sweden

The kers Group Head office is situated in kers Styckebruk, Sweden. kers has sales offices all over the world, altogether in eight countries. The kers Group organization has a divisional structure based on the various product segments. The four divisions are: Cast Rolls America Cast Rolls Europe Forged Rolls Specialty Rolls

kers is a professional company and the brand name kers is very strong in the industry. I am very proud to be part of a company that has good quality products. For me, as a manager in this international company, kers provides leadership training and other career development opportunities which strongly make me feel that I contribute to the development of the company. this makes me grow also as an individual.
Lisa Liu
General Manager, Shanghai, China

sales Offices
Belgium Brazil China France Slovenia Sweden UK USA Liege Piracicaba Shanghai Fraisses Ravne kers Styckebruk vale of Glamorgan Avonmore, PA

Manufacturing plants on three continents

Cast rolls and forged rolls are manufactured in Sweden at two separate facilities. Forged rolls are made in Slovenia. Cast rolls, forged rolls, bars and ingots are manufactured in France and Belgium. Cast rolls and additional equipment are made in the US. The kers joint venture in China, the Shanxi kers TiSCO Roll Co Ltd, manufactures cast rolls.

Manufacturing sites
Belgium China France Liege Taiyuan Berlaimont Fraisses Thionville Sedan Ravne kers Styckebruk Sderfors Avonmore, PA Hyde Park, PA Pleasantville, PA

Slovenia Sweden USA

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Contact information
h e A D o FF I C e
kers AB SE 647 83 kers Styckebruk SWEDEn Phone: +46 159 321 00 contact@akersrolls.com

D i v i s i o n Fo r g e d r o l l s
DiviSiOn HEAD OFFiCE kers France, Thionville Chemin du Leidt B.P. 10200 FR57104 Thionville FR AnCE Phone: +33 3 82 82 23 00 kers France, Berlaimont 17, Chemin de Hayzettes B.P. 20010 FR59145 Berlaimont FR AnCE Phone: +33 3 27 53 66 00 kers Belgium S.A. 40, rue de la Barrire BE 4100 Seraing BELGiUM Phone: +32 4 33 88 110

sAles oFFICes Americas

Avonmore USA 400 Railroad Avenue Avonmore, PA 15618 USA Phone: +1 724 697 45 33 kers Brazil Ltda Rua Treza de Maio, 768 Sala 131 BR13400 902 Piracicaba BR A ZiL Phone: +55 19 3301 7112

DIVIsIons Division Cast rolls America

DiviSiOn HEAD OFFiCE kers national Roll Company 400 Railroad Avenue Avonmore, PA 15618 USA Phone: +1 724 697 45 33 Hyde Park Foundry 326 First Avenue Hyde Park, PA. 15641 USA Phone: +1 724 842 1941 vertical Seal Company R.D. 1 P.O. Box 147 Pleasantville, PA 16341 USA Phone: +1 814 589 7031 (7621)

Asia
kers AB Shanghai Representative office Room 38123813 nanzheng Plaza 580 nanjing Road W (west) Shanghai 200041 CHinA Phone: +86 21 6267 14169 kers Rolls Trading (Shanghai) Co. Ltd Room 38123813 nanzheng Plaza 580 nanjing Road W (west) Shanghai 200041 CHinA Phone: +86 21 6267 14169

Division specialt y rolls

DiviSiOn HEAD OFFiCE kers valji Ravne d.o.o. Koroka c. 14 Si2390 Ravne na Korokem SLOvEniA Phone: +386 2 87 07 846 kers France, Fraisses 20, Rue de la Gare B.P. 2 FR 42490 Fraisses FR AnCE Phone: +33 4 77 40 49 05 kers Specialty Rolls AB Box 103 SE 815 04 Sder fors SWEDEn Phone: +46 293 174 50

Division Cast rolls europe

DiviSiOn HEAD OFFiCE kers Sweden AB SE 647 83 kers Styckebruk SWEDEn Phone: +46 159 321 00 kers France, Sedan 80, Avenue de la Marne B.P. 70311 FR 08201 Sedan FR AnCE Phone: +33 3 24 22 34 00

europe
Fraisses, France 20, Rue de la Gare B.P. 2 FR 42490 Fraisses FR AnCE Phone: +33 4 77 40 49 00 Liege, Belgium 40, rue de la Barrire BE 4100 Seraing BELGiUM Phone: +32 4 33 88 110 Ravne, Slovenia Koroka c.14 Si2390 Ravne na Korokem SLOvEniA Phone: +386 2 87 07 846 kers Styckebruk, Sweden SE 647 83 kers Styckebruk SWEDEn Phone: +46 159 321 00 kers UK Ltd Suite G8, The Business Centre Cardiff House, Cardiff Road GBvale of Glamorgan CF63 2AW UniTED KinGDOM Phone: +44 1446 731263

JoInT VenTure
Shanxi kers TiSCO Roll Co. Ltd. no. 2 JianCaoPing Taiyuan Shanxi Post Code: 030003 P.R. CHinA Phone: +86 351 3131696

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