Haldex provides proprietary and innovative technology solutions that improve safety, the environment and vehicle dynamics to the global vehicle industry within specific niches.

Innovative Vehicle Technology

AnnuAl RepoRt 2008

08

Contents

Direction and Strategy PageHighlights of 2008 1Report from the Ceo 2Strategic orientation 4Research and development 8the vehicle market 10

Haldex divisionsCommercial Vehicle Systems 12Hydraulic Systems 16traction Systems 20Garphyttan Wire 24

Haldex in the societyHuman Resources 26Social responsibility 27environment 28

Consolidated and Parent Company Financial Statements

Directors’ report 30Consolidated income statement 34Consolidated balance sheet 35Changes in Group equity 36Consolidated cash flow statement 37notes Group 38parent company income statement 56parent company balance sheet 57Changes in parent Company equity 58parent Company cash flow statement 58notes parent Company 59Audit Report 63

Corporate GovernanceCorporate Governance Report 64Board of Directors and Auditors 70executive Committee 71

OtherHaldex share 72Five-year summary and quarterly review 74Definitions 75Addresses 76

FinanCial inFOrmatiOn in 2009 February 20, 2009Year-end Report 2008 march 2009Annual Report 2008 april 16, 2009Annual General Meeting april 24, 2009Interim report January 1 to March 31, 2009 July 17, 2009Interim report January 1 to June 30, 2009 October 23, 2009Interim report January 1 to September 30, 2009 Year-end and interim reports are published in Swedish and english and can be downloaded from the Haldex website www.haldex.com. the Annual Report is publis-hed in Swedish and english on the Haldex website. annual General meeting 2009Haldex’s 2009 Annual General Meeting will be held at 4 p.m. Cet on thursday, April 16, 2009, at the IVA Conference Center, Grev turegatan 16, Stockholm. Participation in 2009 annual General meetingShareholders who wish to participate in the Annual General Meeting must be registered in the VpC AB share register no later than Wednesday, April 8, 2009. notifica-tion must be made no later than noon on Wednesday, April 8, 2009, to Haldex AB, Box 7200, 103 88 Stockholm, or by telephone to +46 (0)8-545 049 50, or by e-mail to info@haldex.com. Guide to reading the annual reportHaldex is a Swedish company, subject to Swedish laws. All values are expressed in Swedish kronor unless otherwise indicated. Millions of kronor are abbreviated as SeK m. Figures in parentheses refer to 2007. Data concerning markets and the competitive situation represent Haldex’s own assessments unless a specific source is identified. these assessments are based on the best and most recently available factual documentation from published sources in the vehicle industry.

D

MissionHaldex provides proprietary and innovative technology solutions that improve safety, the environment and vehicle dynamics to the global vehicle industry within specific niches.

We strengthen our competitiveness and develop long-term customer relationships through products that offer high performance and low total costs for the customer throughout the prod-uct’s service life, ethical business practices and commitment to long-term partnerships.

VisionHaldex will be the global vehicle industry’s first choice as a long-term partner.

We will contribute to social development by pro-viding vehicle technology that satisfies our cus-tomers and society. By staying on the cutting edge of technology and developing skilled and moti-vated employees, we will also achieve profitable growth.

Values• Customerfirst• Respectfortheindividual• Eliminationofwaste

strategyThe Group should focus on areas in which Haldex can achieve a strong market position based on innovative and leading products with the aim of creating a platform for sustainable growth and healthy profitability.

This strategy includes evaluating structural opportunities in order to create competitive units with favorable prospects. The following strategic initiatives are also being pursued in order to increase profitability and secure growth:

• Create growth and improve our competitivecapabilities by developing and commercializ-ing new products

• Creategrowthbysharplystrengtheningposi-tions in new markets, primarily through deter-minedexpansioninChina,India,BrazilandRussia

• Reducepurchasingcosts,inpartbycontinuingto increase the share of purchases from low-cost countries

• Improve the cost structure by increasing theshare of production in low-cost countries

• Improve productivity and quality throughintensified use of Haldex Way, our concept for management and process improvement

• Develop employee competencies, strengthenthe corporate culture and increase the focus on leadership

• Acquire companies and establish programs ofcooperation that are consistent with the strategic direction

• Nichestrategy–safety,environmentandvehicledynamics

MarketEuropeaccountedfor53%ofGroupsales,NorthAmericafor38%andremainingmarketsfor9%in2008.ThemarketsinSouthAmericaandAsia,particularly China, are showing robust growth,and their importance to the Group is increasing rapidly.

Legislation focusing on traffic safety, the envi-ronment and vehicle dynamics, combined with demands for continuous cost rationalization mea-sures, is the driving force for product development in today’s automotive industry. Demand is alsodriven by the increase in vehicle production world-wide.Haldexhasaglobalmarketpresence,with23productionplants inSweden,Germany,theUK,Hungary,theUS,Mexico,Brazil,IndiaandChina.

the Group in brief

net sales by region 2008 net sales by customer segment 2008

net sales by division 2008

South America, 3%

North America, 38%

Europe, 53%

Asia and MiddleEast, 6%

Traction Systems, 12%

Garphyttan Wire,13%

CommercialVehicle Systems, 50%

Hydraulic Systems, 25%

Other, 3%

Engines, 20%

Heavy vehicles, 58%

Light vehicles,12%

Industrial vehicles, 7%

HalDex DiVisions

CoMMeRCIAl VeHICle SYSteMS (CVS)

During 2008, Haldex reached an agreement with Suzuki Metal Industry Co. to divest its division Garphyttan Wire. the transaction is expected to be completed during the period April to June 2009.

D HAlDeX 2008

Net sales, share of Group total

Employees, averageshare of Group totalOperating income*Operations Market share

CoMMerCial VeHiCle systeMs;Develops and manufactures brake sys-tems for heavy trucks, trailers and buses. the product offering covers all primary components and subsystems included in complete air brake systems. operations are divided into five business units: Actu-ators, Air Management, Brake Controls, Foundation Brake and Friction products.

HyDrauliC systeMs; Develops and manufactures gear and georotor pumps, hydraulic power packs and high density power systems; technology for diesel engines, i.e. pumps for lubricating oil, coolants and diesel fuel, and technology for reducing emissions of exhaust gases from engines. Hydraulic lifting systems and drive systems for industrial vehicles and trucks are also supplied.

HalDex Group

traCtion systeMs; Develops and manufactures electronically controllable systems for all-wheel-drive systems for cars, known as AWD systems. the system software can be customized to meet each carmaker’s particular desires in terms of driving characteristics and traction.

20–30%SeK 2,095 m

SeK 4,234 m

50%

25%

12%

SeK 1,021 m

net sales, Group total

employees, averageGroup total

operating income, Group total*

SeK 8,403 m

50%

15%

2,335

2,856

48%

39%

6%

339

6,004SeK 250 m

Haldex market share of the market served with its current product program is about 15%. the market share is sub-stantially higher in individual product areas.

Hydraulic is a niche player with about 20% of the market share in its market niches. Business unit engines is market leader for oil, fuel and water pumps in north America and the rest of the world. Haldex’s global market share in these sec-tors is slightly more than 30%, and just over 40% for oil pumps in north America.

Haldex is a market leader in controlla-ble AWD systems. the market share in europe exceeds 50%.

* excluding restructuring costs, one-off items and amortization of acquisition-related surplus values. operating income amounted to SeK 92 m (289).

GarpHyttan wire; Develops and manufactures advanced spring wire from various alloys for use mainly in combustion engines and transmissions. the main applications are valve springs, transmission springs, piston rings and springs for fuel injection systems.

net sales amounted to SeK 1,053 m in 2008.

operating income amounted to SeK 59 m in 2008.

Garphyttan had 474 employees in 2008.

the market share of the global market for oil-hardened valve spring wire is about one-third, which gives Garphyttan Wire a leading global position in this product area.

SeK 4 m

SeK 146 m

SeK 41 m

1HAlDeX 2008 Highlights of 2008

Highlights of 2008

Key figures 3 years 2008 2007 2006

Net sales, SEK m 8,403 7,940 7,890

Operating income* 250 339 403

Earnings after tax, SEK m –43 141 310

Earnings per share, SEK –1.92 6.24 13.96

Operating margin*, % 3.0 4.4 5.3

Proposed dividend, SEK – 4.50 4.50

Return on capital employed, % 2.4 8.3 11.5

Equity/assets ratio, % 29 37 40

Cash flow from operations, SEK m 857 312 402

Investments, SEK m 392 453 409

Average number of employees 6,004 5,518 4,683

* excluding restructuring costs, one-off items and amortization of acquisition-related surplus values. operating income amounted to SeK 92 m (289).

SeK 8,403m

Sales totaled SEK 8,403 m (7,940). Adjusted for currency exchange rates, sales rose 6%. Order intake totaled SEK 7,923 m (8,098). After adjustments for currency exchange rates, the decrease was 3%

SeK –43mEarnings after tax amounted to SEK –43 m, (141). Earnings per share amounted to SEK –1.92 (6.24)

SeK 250mOperating income* and operating margin* amounted to SEK 250 m (339) and 3.0% (4.4) respectively

SeK 857mCash flow from operating activities was strong in the period amounting to SEK 857 m (312)

April 1 Haldex completed the acquisition of Concentric on April 1

SeK 800m

An agreement was reached with Suzuki Metal Industry to divest the Garphyttan Wire division. The purchase price is estimated to SEK 800 m on a cash and debt free basis

2 HAlDeX 2008report from the Ceo

lower costs and greater efficiency create strong position when business conditions recoverHaldex endured a challenging and strategically critical year in 2008. the rapid decline in demand during the second half of the year was met by expanded cost-rationalization programs and improvements in operating efficiency. the Group implemented its renewed strategy and strengthened its structure with the completion of the Concentric acquisition and divestment of Garphyttan wire. Haldex is now a more focused company, with a better structure and cost level, competitive products and solu-tions to meet the recovery when it occurs.

2008will godown inhistory as a year of extremes.After favorabledevelopment during the first half of the year, demand declined sharply in the second half. It was one of theworst periods the automotiveindustry has experienced in a very long time, as reflected clearly in our full-year earnings and the results of our competitors. • SalestotaledSEK8,403m(7,940).Afteradjustmentsforchanges

incurrencyexchangerates,salesrose6%.OrderbookingsamountedtoSEK7,923m(8,098),down3%aftercurrencyadjustments.

• Operatingincome*amountedtoSEK250m(339)andtheoperat-ingmargin*was3.0%(4.3).

• EarningsaftertaxamountedtoSEK–43m(141).EarningspershareamountedtoSEK–1.92(6.24).

• CashflowfromoperatingactivitiesdevelopedstronglyandtotaledSEK857m(312),astrengthfactorinthesedifficulttimes.

Comprehensive cost-reduction programGiventhesebackgroundconditions,wedecidedinautumn2008tomakefurtheradjustmentsinourcoststructureandincreaseourproductioneffi-ciency to meet the economic decline. These cost-reduction programs call forpersonnelcutbacksthatwillaffect1,500employeesfrommid-2008throughmid-2009,ofwhom1,000hadleftthecompanybeforeyear-end.Thetotalreductioninpersonnelcorrespondsto25%ofourworkforce.ThepositiveimpactonearningsisestimatedatSEK425mperyear.

The programs will create savings in all divisions which will strengthen the Group structure and reduce working capital. We are closing several production plants and distribution units while increasing the efficiency of our production processes and the way we manage our operating capital. CostsfortheprogramsareestimatedatSEK150m,ofwhichSEK85mwaschargedagainstearningsduringthefourthquarterandtheremainder,SEK65m,willbechargedagainstearningsinthefirstquarterof2009.

We have been working actively with cash-management programs andhave reducedworking capital by 50%,whichhas resulted in astrengthening of our cash flow.

Themeasures were necessary adjustments to the rapid economicdeclineduringthesecondhalfof2008and,combinedwithmoreeffec-tive capital management, yielded favorable effects on our clearly improved cash flow. However, this also means that we are improving our potential to derive even greater benefits from our strategic structural mea-sures when demand starts to rise.

Adjustingthecoststructureandadaptingtheworkforcetoalowerlevelofdemandisalwaysverypainful.Asinallsuchsituations,thediffi-culttimeshaveentailedhardworkandmajoreffortsonthepartofouremployees. Iwould like toexpressmygratitudefor thecontributions

made and the loyalty shown by Haldex employees both those who have already left the Group and those who remain.

Focusing the businessHaldex has excellent potential to create value for its stakeholders based on the company’s expertise in vehicle technology that improves safety, the environment and driving characteristics, reflecting some of the global economy’s most important trends. With profitability as the primary pri-ority, Haldex is working on strategies to change the Group’s structure and focus on areas where we can achieve internal synergies and a sustainable market position based on innovative and leading products that provide the best potential for continued business growth and higher profitability.

ThefirststepwastheacquisitionofConcentric,whichwasfinalizedinApril2008.TheintegrationofConcentrichasprogressedextremelywell, and we are achieving cost savings and offensive synergies in prod-uctdevelopmentandmarketing,inlinewithexpectations.The“NewHydraulicsSystems”willbeoneofthedieselenginemarket’s largestsuppliers of technologies and products that reduce emissions and fuel consumption,whicharecustomerrequirementsthatprovidehealthyglobalgrowthpotential.Inviewofthecurrentmarketconditions,wesee opportunities for strong growth with favorable profitability.

ThesecondstagewasthesaleofGarphyttanWiretoSuzukiMetalforSEK800monadebt-freebasis,atransactionthatwillbefinalizedinApril–June2009.Garphyttanhasaverystrongglobalpositioninitsniche,spring wire for engines and transmissions used in the automotive industry. Inourjudgment,however,thesynergieswithotherareasoftheHaldexGroup’s business activities were not strong enough, and Garphyttan has a betterfuturenowaspartoftheglobalspringwirespecialistSuzuki.

The divestment of Garphyttan enabled us to reduce Haldex’s net debttoSEK1,535m,proforma,asperDecember31,2008.WealsoexpecttorealizeacapitalgainofaboutSEK400m.

Accordingly,Haldex’sfinancialpositionwillbe strengthenedandwewillbeabletorepaythebridgefinancingweraisedtoacquireCon-centric. After renegotiating our syndicated loan, which matures in2012,combinedwithprivateplacement loanswithvarious termsofmaturitythroughDecember2011,Haldexhassecuredastablefinanc-ing base. Lower investment requirements after the establishment ofnew business units in low-cost countries during recent years and our ongoing efficiency enhancement programs will contribute favorably to the Group’s cash flow development.

positioned for profitable growthLiketheindustrialsectoringeneral,weexpectatroublesome2009.Themarket outlook has seldom been more difficult to forecast. We have some security, however, in knowing that our skills, product development and products are favorably positioned to meet the long-term demand trend and generate profitable growth, efforts that are now gaining support from the actions we have taken to reduce costs and improve our operating efficiency.

Abriefreviewofbusinessprospectsforourvariousdivisionsshowsthe following:

CVS:AlthoughsignificanteffortshavebeenmadeoverthepasttwoyearstoimproveCVS’sstructureandreducecosts,thesewerenotsufficientto offset the exceptionally sharp decline in volume and higher raw material

* excluding restructuring costs, nonrecurring items and amortization of acquisition- related surplus values. operating income amounted to SeK 92 m (289).

3HAlDeX 2008 report from the Ceo

costsduring2008.However,wehavecompletedtherestructuringprogramin the Friction unit and we are now able to see positive results from ratio-nalizationmeasuresimplementedoverthepastfewyears.CombinedwiththeprogramofmeasurestoconsolidateEuropeandistributionoperationsinasingleunitandtheclosureoftheproductionplantinRedditch,UK,aswellaspriceadjustmentsandlowerrawmaterialprices,wewillbeposi-tionedfavorablywhendemandstartstoriseagain.Investmentsintheprod-uct development of brake and air suspension systems are now starting to generate market successes, and we have several new concepts in the launch phase that will further strengthen our market position.

Hydraulic Systems:Ourcost-reductionprogramsarealsoyieldingeffectsinthisarea,andprojectedsynergygainstotalingasmuchasSEK70mannually fromthe integrationofConcentric arebeing realized.WiththeexceptionoftheChinesemarket,wearenowtheglobalmarketleader for oil, fuel and water pumps for the diesel engine market, with goodpotentialforcontinuedsuccess.StrengthenedbyanewgenerationofthesuccessfulAlfdexconcept,andabroaderlaunchofVarivent,wehave two leading product technologies to meet the increasingly stringent environmental demands being imposed on our customers. We are con-tinuing to work on development of a new technology for electronic con-trolofhydraulic systemsdesigned toprovidemajor improvements inengine fuel economy. With a better cost base and lower raw material prices,the“NewHydraulicSystems”concepthasgoodpotentialtogrowwith strong profitability when demand recovers and starts to increase.

Traction Systems: Haldex technology for all-wheel drive has gone from strength to strength, and we are now the leading source of product development and the leading supplier of electronically controllable systems,alsoknownasAWDsystems.Thiswasconfirmedin2008byan order from the manufacturer of one of the world’s most prestigious sports cars,with deliveries scheduled to begin in 2010, and anotherorderforaEuropeanmanufacturer’snewpassengercarplatform,withdeliveriesbeginningin2011.Thefutureofall-wheeldriveissecure,par-ticularly in view of growing safety demands. Haldex has a highly promi-nent position, with prototypes for the next generation that are now

beingtestedbytwomajorcarmanufacturers.Wearealsoconductingseveralresearchprojects,includingsolutionsforhybridvehicles,whichprovide exciting potential in existing and new areas of technology.

Market outlook for 2009Ithasseldombeenmoredifficulttoforecastfuturebusinesstrendsthanit is now during this winter. We do not expect any brightening of the demandtrendduringthefirsthalfyearof2009.Inthelargeflowsys-tem that is the automotive industry, inventories are being reduced in all areas, thereby impacting new order bookings. When this process has beencompleted,therewillbesomepotentialforarecovery.Inthelong-term perspective, there is virtually no doubt that vehicle transportation comprises a growth segment of an increasingly globalized economy, in which more and more countries want to, and will, benefit from more jobsandimprovedwelfaregeneratedthroughthedistributionofinter-national labor. There are also strong indications that more stringent demands will be imposed in terms of environmental and safety consid-erations, areas of particular importance to Haldex.

Positive aspects of the economic situation include falling energy and raw material prices, lower capital costs and the highly comprehensive economic stimulus packages that are now being launched in most coun-tries.Ourownintensiveworkeffortstoreducecostsandimproveoper-atingefficiencywillalsoyieldfavorableeffects.Asaresult,Haldexwillbe well positioned and highly competitive when the market recovers.

Stockholm,March2009

JoakimOlssonCEOandPresident

«In the long term perspective, there is no

doubt that vehicle transportation

comprises a growth segment of an

increasingly globalized economy.»

4 HAlDeX 2008strategic orientation

Mission, vision, strategies and objectives

strategiesThe Group should focus on areas in which Hal-dex can achieve a strong market position based on innovative and leading products with the aim of creating a platform for sustainable growth and healthy profitability. This strategy includes evaluating structural opportunities in order to create competitive units with favorable pros-pects. The following strategic initiatives are also being pursued in order to increase profitability and secure growth:• Productdevelopment• Strongerpositionsinnewmarkets• Reducedpurchasingcosts• Increasedproductioninlow-costcountries• Improvedproductivity

– Haldex Way• Developmentofemployeecompetencies,

strengthening of the corporate culture and increased focus on management

• Strategicacquisitions• Nichestrategy–safety,environmentand

vehicle dynamics

Profitability has the highest priority in the Group’s strategy. In parallel, continued robust growth is an important prerequisite for success. Haldex offers proprietary vehicle technology solutions that meet three customer require-ments, safety, environment and vehicle

dynamics. These customer requirements represent trends in our business environment that drive development in the vehicle industry and enable Haldex to outperform the vehicle market as a whole in terms of growth combined with healthy profitability.

objectivesHaldex shall create value for the shareholders by focusing on competence, stable growth and increased profitability in a sustainable manner.

The goal will be achieved through a dis-tinct customer focus, growth in niche sectors offering higher growth potential than the automotive market in general and deter-mined strategies for cost savings and greater efficiency.

Financial objectivesHaldex has two overall objectives:• 15%returnoncapitalemployed• 6%annualgrowth

the secondary goals are:• Operatingmarginof7%• Capitalturnoverrateof2.5

MissionHaldex provides proprietary and innovative technology solutions that improve safety, the environment and vehicle dynamics to the global vehicle industry within specific niches.

We strengthen our competitiveness and create long-term customer relations through highly skilled employees, high-performance products, low total costs for the customer throughout the product’s service life, ethical business practices and a commitment to long-term partnerships.

VisionHaldex will be the global vehicle industry’s first choice as a long-term partner.

We shall contribute to social improvements by providing vehicle technology that satisfies both customers and society. We shall also achieve profitable growth by staying at the cutting edge of technology and developing skilled and motivated employees.

Values• Customerfirst• Respectfortheindividual• Eliminationofwaste

safety, environment and vehicle dynamicsThe Haldex Group offers proprietary vehicle technology solutions that meet threeprimarycustomer requirements: safety, environmentandvehicledynamics.Thesecustomerrequirementsrepresenttrendsinourbusiness environment that drive development in the vehicle industry and enable Haldex to outperform the vehicle market as a whole in terms of growth.

The direction of demand is governed by such factors as increasingly stringent safety and environmental requirements from legislators,reflecting global consumer opinion that is becoming progressively pro-nounced. Growth opportunities are strengthened further by the impor-tance of vehicle dynamics in positioning and differentiating between vehicle manufacturer brands. With Haldex’s brake systems, all-wheel drive systems, hydraulic systems and engine products, the Group is able tooffertechnicalsolutionsofthehighestqualitytotheworld’sleading vehicle manufacturers.

Inaccordancewith thecompany’svisionofbeinga reliable, long-term primary choice, our products are often developed in close coopera-tionwithcustomerstomeettheirspecificrequirementsandapplications. Haldex creates value for the world’s leading vehicle manufacturers, which provides opportunities for continued strong growth and expansion.

optimizing the Group structureTo achieve sustainable growth, healthy profitability and increased share-holder value, Haldex focuses on areas in which the Group can secure a strong market position based on innovative market-leading products. The core business is conducted within three divisions: CommercialVehicle Systems, which is positioning itself for continued growththrough ongoing efficiency-enhancement and rationalization programs, Hydraulic Systems, whose growth is mainly generated through thedevelopment and launch of new technologies that satisfy future demands arisingfromenvironmentallegislation,andTractionSystems,aglobaltechnology leader in a segment characterized by high growth.

AsafeatureoftheGroupstrategy,Haldexcontinuouslyevaluatesitsoperations and a variety of structural opportunities for strengthening the competitiveness of its various units. These could take the form of cooperation with other companies, supplementary acquisitions ordivestments.TheacquisitionofConcentricduring2008wasaninitialstep in Haldex’s strategic plan for optimizing the Group structure and creatingastrongHydraulicSystemsDivision.Anothersteptowardsamore focused business was taken towards the end of the year when an agreementwasenteredwithSuzukiMetalconcerningthedivestmentoftheGarphyttanWireDivision.

5HAlDeX 2008

Growth:

• Niche strategy for increased growth, through a focus on products with higher growth potential than for the vehicle market as a whole. For Haldex, this involves products that improve safety, the environment and vehicle dynamics.

• Increased competitiveness through product development is a central element in Haldex’s strategy. This involves both new product development and efforts to create new applications for our existing products.

• Strengthening positions in new markets is essential for growth. This will be achieved through goal-oriented expansion, primarily in China, but also in other countries such as India, Brazil, Russia and countries in Eastern Europe.

• Haldex continuously analyzes opportunities for strategic company acquisi-tions,whilesimultaneouslylaunchingotherformsofcooperation.Developingnew technologies and more rapidly establishing positions in new markets are key goals in Haldex’s acquisition strategy.

profitability:

• The cost structure is being improved by means of structural and efficiency- enhancing measures. An increasing share of production is being located in low-cost countries, thus reducing costs and bringing important parts of pro-duction closer to our strategic markets and customers.

• In order to increase profitability, Haldex strives to reduce purchasing costs, mainly by increasing the proportion of procurements from low-cost countries.

• Productivity is being improved through continued implementation and devel-opment of the Haldex Way management system.

• The organization’s efficiency is being improved through increased competen-cies and more distinct lines of control and responsibility.

• Making sure that large development projects are profitable. • SynergiesinthenewHydraulicsDivision.• Expanded cost reduction program.

strategic orientation

Hydraulics and engine components

DaewooBus,Daimler,DongfengMotor,Eicher,Ford,FirstAutoWorks, Freightliner, General Motors, Hino, Hyundai, Isuzu, Iveco, Kamaz, MAN, Oshkosh, Paccar, Renault Trucks, Scania, TATA, Volkswagen, Volvo.

trucks and busses

Axles and trailers

Forklift trucks

Industrial vehicles

tailgate lifting devices and bogie axles

passenger cars

products forproduct areas Haldex largest customers

Ford (Ford,Volvo), Land Rover, General Motors (SAAB, Opel, Buick, Cadillac), Volkswagen (Audi, Bugatti, SEAT, Skoda, VW).

Caterpillar,Cummins,DAF,Daimler,DetroitDiesel,Deutz,Iveco,JCB,JohnDeere,Scania,Volvo,TataCummins.

Behrens,Bär,Dautel,D’Hollandia,Maxon,Scania,Sorensen,Zepro, Volvo.

Agco,Bobcat,CaseNewHolland,Caterpillar,JohnDeere,Doosan,Dynapac,Genie,Grove,JCB,JLG,Komatsu,Liebherr,O&K, Pinguely & Haulotte, Manitowoc, Skyjack, Terex, Vögele, Weyhausen, Volvo.

Atlet, Crown, Jungheinrich, Linde (Still, OM Pimespo), NACCO (Hyster, Yale), Rocla, Toyota (BT, Raymond, Prime Mover).

ArvinMeritor,BendixSpicer,Bosch,BPW,CICM,Dana,Gigant,GreatDane,Guerra&Facchini,Hendrickson,Jindo,Kögel, Krone, Randon, SAF, Schmitz, Stoughton, TRW, Utility, Wabash.

engines

Heavy vehicles

industrial vehicles

strategies for growth and profitabilityProfitabilityhasthehighestpriorityintheGroup’sstrategy.Inparallel,continuedrobustgrowthisanimportantprerequisiteforsuccess.Toachieveitsfinancialobjectivesforgrowthandprofitability,Haldexappliesthefollowingstrategies:

Brake systems

awD-systems

6 HAlDeX 2008strategic orientation

positioned for growthHaldex is well positioned to meet the demands of the global vehicle industry.

Haldex’s mission and strategic orientation position the Group for growth. Asia, Eastern Europe and South America aremarkets withmajorrequirementsandcharacterizedbyrobustgrowth.IncountriessuchasChinaandIndia,thepaceofsocialdevelopmentiscurrentlyrapid.Atthesametime,climateissuesandotherchallengesareplacinggreater demands on all of us to assume a global responsibility for reduc-ing energy consumption and achieving a better and safer environment. Inparallelwithgreaterglobalcommerce,which isdriving increasedtransport requirements, theWesternWorld’s infrastructure is beingexpanded and upgraded. For Haldex, this trend is creating strong driv-ing forces for business growth.

We develop and deliver products that improve safety, the environ-ment and the dynamics of vehicles used in the transport and infrastruc-turesectors.Intheworld’snewandexpansivemarkets,investmentsinthesesectorsarevitalforgrowthandsocialwelfare.Intraditionalindus-trialized countries, the transport and vehicle sectors must assume a greater responsibilityforimprovingtheenvironmentandincreasingsafety.Asaresult of Haldex’s expertise in the form of technologies for satisfying the demands deriving from future legislation and the driving forces underly-ing improved fuel economy and increased safety, the Group is extremely well positioned to meet the demands of the global vehicle industry.

• Globalpresenceandworld-leadingcustomersHaldex has a global presence and its customers include world-leading vehicle manufacturers, which is a strategic strength. The Group has pro-ductionoperationsdistributedamong23productionplants andninedevelopmentunitsinNorthAmerica,SouthAmerica,EuropeandAsia.

We are favorably positioned and able to offer proprietary products thatfocusontheenvironment,safetyandvehicledynamics.Allofthesefeatures and characteristics are strategically important to our customers

and provide considerable growth potential. Haldex is positioned on the cutting edge of technology in all areas, but without being an inventor. We develop and commercialize innovations, often in partnership with our customers, toprovidemaximumcustomervalue.Servingworld-leadingcustomersinallproductareassubjectsthecompanytoconsider-able demands, while also signifying recognition of Haldex as a leading global manufacturer and market driver within its market segments.

• Productdevelopmentandworld-leadingproductsProduct development is a key driving force for organic growth and is a decisive success factor for Haldex. The Group specializes in transforming innovationsintoprofitable,world-leadingproductsinitsniches.Invest-ments in product development have increased steadily and led to a pio-neering contribution to the vehicle industry’s technological advancement in all-wheel drive and disc brakes and in cleaning and increasing the effi-ciency of engines and hydraulics.

In2008,developmentcostsaccountedforabout4%ofsales.Prod-uct development is a key factor in Haldex’s strategy for being able to offer products in high-growth niches of the global vehicle market. Animportantprerequisiteistheabilitytodeveloptechnicalsolutionsthatsatisfycustomerrequirementsarisingseveralyearsintothefuture,while having the product planning that facilitates efficient and profit-able sale of new products. With its model for innovative product devel-opment, Haldex will be able to offer a series of new and attractive prod-ucts to the market in the years ahead.

• CompetenciesofmanagersandotheremployeesContinuouslyoperatingattheleadingedgeoftechnologicaldevelop-ment and having world-leading customers exposes the competencies of both individual employees and the organization as a whole to stringent

0

4

8

12

16

20

0100

Target 15%

%

02 03 04 05 06 07 08

12.1

5.8 6.06.8

12.8 12.311.5

8.3

2.4

return on capital employed

To better reflect the conditions in Haldex’s markets and the long-term nature of its business, financial objectives are expressed as average values over a business cycle.

the Group’s overall objectives are:• return on capital employed of 15%• annual growth of 6%

the Group also has the following secondary goals:• profit margin of 7%• capital turnover rate of 2.5

The objectives apply to the Group as a whole. Targets for the various business areas may differ depending on capital structure, degree of refinement or other business- related conditions. The return on capital employed has been less than 15% in the past five years. Efficiency efforts to strengthen Haldex’s profitability remain one of management’s main priorities.

Financial objectives

7HAlDeX 2008 strategic orientation

«For Haldex, the world’s mega trends

are creating strong driving forces for business growth.»

0

1

2

3

4

5

6

7

8

0100

Target 7%

%

02 03 04 05 06 07 08

3.0

4.3

5.15.5

5.1

3.93.5

2.9

5.2

profit margin*

–10

–5

0

5

10

15

20

25

0100

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Capital turnover rate

requirements.Basedontheskillsandeffortsofitsemployees,Haldexaims to develop a high-performance, world-class organization that con-tinuously strives to improve operations in accordance with the internal managementsystem,HaldexWay.Determiningfactorsarehowwellthis work is organized and ensuring that each employee is given oppor-tunities to utilize his or her full potential.

ManagementandHRworkisgovernedbythefollowingaims:• Tocontinuouslydevelopourability.Byconstantlyraisingthecom-

petency level of the organization and creating conditions that enable us to remain innovative and by continuously learning and improv-ing our operations, we generate a distinct competitive edge over our competitors.

• Tocontinuouslyimproveasmanagers.Byincreasingourabilitytomanage people and the organization, in both the short and the long term and in a generally more complex business, conditions are cre-ated for Haldex to become a high-performance company.

• Tostrengthenourcorporateculture.Bydevelopingastrongcorporateculture that encourages performance and responsibility, we create an attractive workplace for our employees and conditions for contin-uous improvements in our operations and earnings.

This can only be achieved through the contribution of each employee in the organization and when each individual:• canactindependently,makedecisionsandactonthebasisofhisor

her ability and in accordance with the company’s norms and values.• ispositivelycommittedtoandparticipatesinthedevelopmentof

his or her work and has the capabilities to interact with others for the benefit of both the employee and the company.

• ProductivityandHaldexWayInordertocapitalizeonitsexcellentgrowthpotential,Haldexmustimprove is cost-effectiveness and increase its productivity. This work is conducted within the framework of the overall management and pro-cess improvement system, Haldex Way.

Haldex Way focuses on customer satisfaction and the achievement of world-class production. Haldex Way is based on the lean production philosophy, and theobjective is to create a continuous link inflowsbetween customers, subcontractors, production and product develop-ment. Haldex Way is an overall management philosophy for the entire valuechain,includingproducts,informationandfuturerequirements.

Haldex Way creates a shared direction based on active management and a uniform culture, while simultaneously facilitating tangible changes and improvements in the Group’s operations.

The concept for Haldex Way is based on three fundamental values:• Customerfirst• Respectfortheindividual• Eliminationofwaste

Customerrequirementsarethecontrollingfactorforthesevalues.Ourcustomers’needsformtheplatformforwhatweproduce–motivatedemployees are a basic prerequisite for the production of qualitativeproducts–andwestrengthenourcompetitivenessbyeliminatingallforms ofwaste.ManagementwithinHaldexmust gohand-in-handwith the principles of Haldex Way and serve in a manner that provides support, leadership and development.

* excluding restructuring costs, one-off items and amortization of acquisition-related surplus values.

8 HAlDeX 2008research and development

new innovative products generate growthHaldex’s technical solutions for improved safety, environment and vehicle dynamics are based on customer requirements and requests.

ResearchanddevelopmentrepresentafundamentalstrategyforachievingHaldex’slong-termgoalofprofitablegrowth.Incooperationwithcustom-ers, Haldex specializes in developing and commercializing innovations into world-leading products in niches that enhance the vehicles’ performance in termsoftheenvironment,safetyandvehicledynamics.In2008,invest-mentsinproductdevelopmenttotaled4%ofconsolidatedsales.

The basis for research and development is in-depth knowledge of cus-tomerrequirements,ahighleveloftechnicalexpertiseandextensiveknowl-edgeof factors affecting thebusiness environment.R&Dwork is con-ducted in collaboration with customers and partners, which include world-leading vehicle manufacturers and sub- suppliers to the vehicle industry.

The main driving forces for product development in the vehicle industry are legislation aimed at increased traffic safety, satisfying inten-sified environmental requirements, improved vehicle dynamics andreductions in fuel consumption, combined with demand for continu-ous cost- rationalization. Products that satisfy these more rigorous demandsarealsoadjudgedtogeneratesignificantlyhighergrowththanthe vehicle market in general, which provides Haldex with favourable prospects for increased value generation.

Product development activities are conducted in each division. Haldex’s specialist expertise is its ability to industrialize innovations, that is, develop ideas from the concept stage to products and industrial production, and then adapting them to the customer’s production and use in the market.

Haldexsatisfiestheuniquerequirementsofeachcustomerbasedonplatformsdesigns,whichrequiresolidknowledgeofthecustomer’sprod-uct planning and the correct position in the pro duct development cycle. Inparallelwithproprietaryproductdevelopment,Haldexalsoacquiresconcepts and innovations that are then refined for cost-effective volume production.

Cooperation within research and developmentHaldexcooperatescloselywithanumberofEuropeanuniversitiesandcolleges. Research is conducted in cooperationwith theUniversity ofTechnologyinLuleå,Sweden.Haldexalsoengagesinprogramsofcooper-ation with Chalmers Institute ofTechnology inGothenburg and theRoyalInstituteofTechnology(KTH)inStockholm,bothinSweden,theUniversityofDresdeninGermanyandCambridgeUniversityintheUK.

During2008,HaldextogetherwithKTH,anotherSwedishvehiclesupplierandaSwedishvehiclemanufacturerjointlyreceivedsupportfromtheSwedishFoundationforStrategicResearchviatheProViking2program.Thepurposeoftheprojectisforuniversitiesandindustryto cooperate with the aim of improving development methods for mechatronics design.

TheProgramforAutomotiveResearch(PFF)isconductingaGreenCarresearchprojecttodevelopmoreenvironmentallycompatiblevehicles.Haldex contributes knowledge and the experience gained through its devel-opmentofAlfdexandVarivent.Withinthisproject,Haldexisalsocooper-atingwiththeFacultyofEngineeringatLundUniversity,withtheaimofoptimizingthelifeandfunctionofAWDsystems.

products and functions that enhance vehicle safety generate growth exceeding that of the vehicle market as a whole. this trend is being driven by increas-ing demand from customers and new legislation aimed at improving traffic safety. Haldex adopts a proactive approach and represents innovation in the field of brake technology for trucks and trailers, while advancing development in cooperation with customers.

For enhanced safety in pas-senger cars, Haldex has devel-oped an electronic differential slip based on its all-wheel drive system – Haldex XWD. together with Haldex couplings, this electronically controlled mod-

ule is integrated into the AWD system for enhanced stability when maneuvering at high speeds. Haldex XWD provides increased safety by offering complete integration of this with the brake and stability systems.

BraKe anD air suspensionIn the vehicle trailer segment, Haldex currently occupies a leading position as a supplier of brake and air suspension systems. In cooperation with Europe’s leading trailer manufacturers, Haldex has implemented improvements to the EB+ (Gen2)

In recent years, Haldex has pur-sued a strategy of meeting and exceeding society’s increasingly stringent environ mental requirements and the Group now offers a portfolio of competitive products that contribute to more efficient emission control and superior fuel economy. Some of these products are already available for series production in the market, while others are at various stages of development.

VariaBle Flow puMps Since Haldex’s technologies are fully developed for the next generation of engines, the Group’s various prod-ucts can provide improvements in terms of performance, efficiency and

Haldex is one of the world’s leading suppliers of all-wheel drive (AWD) systems. the first generation of Haldex’s AWD coupling was introduced in 1998 for Audi tt and Volkswagen Golf. Subsequently, the devel-opment of new generations has continued and the fourth gen-eration was launched in 2008.

Although the mechanical components in Haldex’s all-wheel drive system are fundamentally the same for the various cars, vehicle dynamics can be customized through a variety of programming and control systems. the combina-tion of mechanics and electron-ics – mechatronics – provides considerable flexibility, while

Haldex’s modular approach reduces costs for vehicle manufacturers.

In order to broaden the product portfolio, a system with a controllable differential slip has been developed, which improves the vehicle’s traction and stability when maneuver-ing at high speeds.

Generation i – 1998The first Haldex coupling comprised a wet multiple disc clutch integrated in the rear axle.

Cars equipped with Generation i:Audi A3 TT, VW Golf, Bora, Sharan, Beetle, Seat Leon, Alhambra, Skoda Octavia

saFety

enVironMent

VeHiCle DynaMiCs

9HAlDeX 2008 research and development

electronic brake system that provide improved functionality and superior system integration.

In addition to brake adjustment, the system also features electronic stability control (ESC), intelligent control of lift axles (ILAS) and a new product generation for raising/ lowering trailer chassis (COLAS+), which also includes a roll-on roll-off function for optimal adaptation and safety in connection with, for example, ferry transports. The system also offers Reset To Ride, Haldex’s patented comfort and safety function for automatic repositioning of the chassis level after loading and unloading.

BraKe By wire To meet the demands placed on tomorrow’s brake systems, including further improvements to brake performance and vehicle dynamics, Haldex has developed brake- by-wire systems, which are completely electronic brake systems for trucks and trailers that feature electromechanical

brakes. This means that

each wheel is fitted with a

brake that is intelli-gently regulated by an

electric motor, replacing today’s compressed-air brakes.

The signal to apply or release the brakes is transferred electrically from the driver’s pedal to the wheel end.

With electromagnetic brakes, the braking distance for heavy trucks is shortened by an average of 15% as a result of a more rapid response and enhanced control, thereby contributing to increased traffic safety.

Other advantages include lower energy consumption compared with current systems and more efficient energy recovery when braking with hybrid vehicles.

trailer rolloVer staBilityIn 2008 Haldex announced the addition of the 2nd Generation Trailer Rollover Stability (TRS) System. The system, built on Haldex’s newest 4S/2M ABS platform provides the next genera-tion of high performance braking along with roll stability safety technology. TRS is designed for one to three or more axle trailers using an air suspension. The system delivers superior braking performance by adjusting for the trailer condi-tions during normal and ABS braking events as well as to intervene with active braking if conditions indicate a rollover is imminent.

emissions, as required by Euro 6 and regulations beyond EPA 10. In addition to normal exhaust emissions, the more stringent legislation for engines includes other types of emissions, such as crankcase gases.

By combining Haldex’s variable flow pumps for oil and water, fuel savings exceeding 4% can be generated. The pumps adapt the flow of fluid to the vehicle’s requirements, thus limiting the energy required for operating the pumps. As a result, both CO2 emissions and fuel consumption are reduced, providing significant benefits for both trucks and passenger cars.

VariVent The environmental benefits offered by Varivent are similar. The EGR (Exhaust Gas Recirculation) is an established method of reducing nitrous oxide emissions and its efficiency is enhanced by Varivent, which uses variable throat technology

to pump exhaust gases more efficiently. This, in turn, means that less energy is wasted in pump-ing gas through the EGR circuit and so reduces fuel consumption and CO2 emissions.

Extensive engine testing has confirmed fuel savings of 4% for heavy trucks. The technology is particularly suitable for turbo charging and high EGR (Exhaust Gas Recirculation) flows and can be adapted for individual engine turbocharging and EGR strategies. Naturally, the trend towards reduced fuel consumption also applies to gasoline-powered cars. In terms of volume, the engines of the future will be smaller but will generate the same horsepower as current engines. This will be achieved by means of high boost pressures and applying other turbo- strategies and here Varivent has a major contri bution to make.

alFDex The Alfdex system offers the market a highly efficient method for separating oil and particu-late matter from ventilation gases in the crank-cases of diesel engines, also known as crankcase gases. Alfdex is a joint venture based on Alfa Laval’s expertise in centrifugal separation and Haldex’s position as a supplier to the global vehicle industry.

During2008,anewgenerationoftheAlfdexsystem was launched, which is up to four times as effective and can handle up to three times the amount of crankcase gases as compared with the current model.

The system uses centrifugal technology to remove particles down to 0.1 g/h or lower in normal driving conditions. With a rotational speed of 7,000–8,000 RPM, particles and oil mist are separated from the gas and returned to the oil sump.

Generation ii – 2002The second-generation Haldex coupling was equipped with more intelligent software and new valve technology for faster reaction.

Cars equipped with Generation ii:Audi A3, TT, Bugatti Veyron, Ford Freestyle, 500, Mercury Montego, Seat Altea, FreetrackerSkoda Octavia, VW Golf, Passat, Multivan, Volvo S40, V50, S60, V70, XC70, S80, XC90

Generation iii – 2004The third generation received more pressure from an electric pump in connection with start, which eliminated wheel spin and in turn improved vehicle dynamics and off-road driving.

Cars equipped with Generation iii:Land Rover Freelander, Volvo S60, V70, XC70, S80, XC90

Generation iV & xwD– 2007/2008The faster and lighter Generation IV can also be combined with an additional coupling that con-trols the torque between the left and right rear wheels–HaldexXWD Cars equipped with Generation iV:Audi A3, TTSkoda Octavia, Superb, YetiVW Golf, Passat, TiguanLand Rover FreelanderVolvo S60, XC60, V70, XC70, S80, XC90

Cars equipped with Haldex xwD:Saab9-3XWD,OpelInsigniaBuick Lacrosse, Cadillac SRX

Generation V The development of a fifth generation is under way. Estimated production start: 2012.

10 HAlDeX 2008Vehicle Market

Haldex’s marketProduction of heavy trucks and trailers is an indicator of trends in the Haldex market for brake systems. However, several important variations often give rise to a different trend in the market served by Haldex, compared with the vehicle market in general: • theaftermarketaccountsforabout40%of

Haldex sales in this business sector. Sincefluctuations in the aftermarket are normally not as volatile as changes in the production of trucks and trailers, the aftermarket has a stabilizing effect on Haldex sales during periods of both economic growth and decline.

• themarketservedbyHaldex is larger fortrucks than for trailers, since trucks are equippedwithcertainbrakeproductsthatare not included in trailers.

• themarkets inEuropeandNorthAmericadifferinseveralrespects.InEurope,forexam-ple,discbrakesareinstalledinabout75%ofall new trucks. The corresponding figure in NorthAmericaislessthan5%.Drumbrakescontinue to dominate this market.

Taking all these factors into account, growth in the Haldex market for brake systems declined about7%duringtheyear(atunchangedsalesprices).

For other business activities, demand is linked more strongly to factors other than

truckproduction. Industrial vehicle produc-tionisakeyfactorforHydraulicSystems,asisproduction of construction machinery, fork-lift trucks and, to some extent, trucks.

DemandinTractionSystemsisimpacted,naturally, by the production of four-wheel-drive vehicles, but also to a large extent by the rate at which simple systems are replaced by moresophisticatedadjustablesystems.

trends and forcesInadditiontothenumberofvehiclesproduced,Haldex’s market is also affected by changes in vehicle design resulting from new customer demandsandrequirementsmandatedby law-makers. These market trends and driving forces represent the foundation for Haldex’s focus and production.

safetyBrake systems and four-wheel drive are key elements in terms of vehicle safety. Today’s increased demand is being met more than ade-quatelybyproductsdevelopedbyHaldex inthese areas.

environmental awarenessHaldex has several products with strong envi-ronmental profiles, such as Alfdex, whichremoves oil particles from crankcase gases in diesel engines, and Varivent, which makes itpossible to reduce nitrogen oxide emissions

from diesel engines in a manner that also enables low fuel consumption.

Driving characteristicsDrivingcharacteristics andvehicledynamicsare becoming increasingly important compet-itive tools and differentiation factors for vehi-cle manufacturers. Four-wheel drive and electronic brake systems are key components in the development of products that match the driving characteristics of different custom-ersandrequirements.

Other trends that affect Haldex includeefforts by vehicle manufacturers to produce lighter vehicles, in order to reduce fuel con-sumption, for example. Accordingly, lowerproduct weight is an important goal in Haldex’s product development work.

In markets outside Europe and NorthAmerica, demand for western technology isgrowing, which is driven by the markets them-selves and new legislation, particularly in large marketssuchasIndiaandChina.Asaresult,demand for Haldex products in these markets is also expected to grow more rapidly than overall vehicle production.

Intotal,thetrendstowardimprovedsafety,environmental characteristics and vehicle dynamics are expected to generate more rapid growth in Haldex’s market compared with the general vehicle market. These expectations are also supported by development in new,

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� North America � South America� Europe Global� Asia

truck production trailer production air brake wheel ends

Market trends and forces

11HAlDeX 2008 Vehicle Market

emergingmarkets inAsia,where demand foradvanced products and technology is increasing constantly.

Market 2008*trucks and trailersThefirsthalfof2008showedfavorablesalesgrowth.Thiswasfollowedbyauniquelyrapiddrop during the second half of the year in Haldex’smajormarketsinEuropeandNorthAmerica.Themarketslowdownwasparticu-larlyrapidduringNovemberandDecember,when the global financial crisis was followed by a serious downturn in the economy.

Global production of heavy trucks increased 10%in2008comparedwiththeprecedingyear.Duringthefourthquarter,productiondeclined13%comparedwiththecorrespondingperiodin2007.

ProductionofheavytrucksinNorthAmer-icadeclinedin2008from212,000vehiclesto203,000,down4%comparedwith2007.InEurope,productionofheavytrucksincreased8%comparedwith2007,andthenumberofvehicles produced was 600,000. However, productiondeclined14%during the fourthquarter, compared with the correspondingperiodin2007.

Globalproductionoftrailersdeclined13%compared with the preceding year.

The weaker economy also impacted the marketfortrailersinNorthAmerica.Produc-

tion was down 34%, compared with 2007.The number of trailers produced totaled about 168,000in2008.

InEurope,theproductionoftrailerswas4%lower than in the preceding year. Total produc-tion amounted to 340,000 units. Productionduringthefourthquarterdeclined27%,com-paredwiththeyear-earlierquarter.

The aftermarket for brake systems accounts forabout40%ofsalesinvoicedbytheCom-mercialVehiclesSystemsDivision.Theafter-marketintheUSwasstableduringthefirstsixmonths of 2008, but showed some declineduring the fourth quarter, mainly due toadjustments of inventory levels. In Europe,volume sales in the aftermarket declined com-paredwith2007,duetostrictercreditregula-tionsandextendedinventoryadjustments.

Construction machineryThe global market for construction machinery remainedstrongthroughthethirdquarterof2008,butwasimpactedstronglybytheeco-nomic slowdown in the fourth quarter,althoughnotasmuchinNorthAmericaasinEurope.The decline in North America wasabout10%,comparedwithslightlymorethan10%inEurope.

Productionwas downmore than 10% inNorthAmericaduringthefourthquarterandmorethan20%inEurope,comparedwiththefourthquarterof2007.

Forklift trucksProduction of forklift trucks in the NorthAmericanmarketdeclined20%during2008,comparedwith2007.Duringthefourthquar-ter,theNorthAmericanmarketshrankmorethan40%comparedwiththefourthquarterof2007.

Themarket for forklift trucks in Europedeclinedabout10%in2008.Fourth-quarterproductionwasabout20%lowerthanintheyear-earlierquarter.

passenger carsGlobal production of passenger cars declined 3%in2008,comparedwith2007.ProductioninNorthAmericawas down 16%, comparedwithadeclineof4%inEurope.

Duringthefourthquarter,productioninNorth America was down 25%, comparedwiththefourthquarterof2007,andproduc-tioninEuropedeclined24%.

* All information about trucks and trailers (except for trailers in europe) and light vehicles are based on JD power Statistics Q4, 2008.

12 HAlDeX 2008Division: Commercial Vehicle systems

Commercial Vehicle Systems

operations/productsCommercial Vehicle Systems develops and manufactures brake systems for heavy trucks, trailers and buses. The product portfolio comprises all main components and sub-systems included in a complete air brake system. Operations are conducted in five business units: Actuators, Air Management, Brake Controls, Foundation Brake and Friction Products.• actuators manufactures brake cylinders that convert energy in the form of compressed air to the mechani-

cal movement required to activate the wheel brakes.• air Management develops and manufactures products to produce and dehumidify compressed air in

brake systems, such as compressors, air dehumidifiers and air purifiers, as well as air suspension systems.• Brake Controls manufactures products for regulation of compressed air in brake systems, such as valves

and electronically regulated subsystems (ABS, ESP, EBS).• Foundation Brake develops and produces the wheel brake products that provide the actual braking effect,

such as disc brakes, automatic brake adjusters for drum brakes and electronic sensor systems for indicating wear on brake surfaces.

• Friction products sells brake linings for drum brakes for light, medium and heavy trucks.

Inaddition,theDivisionconductsbrake-reconditioningoperationsintheNorthAmericanaftermarket.

Manufacturing occurs in Brazil, India, China, Mexico, the UK, Sweden, Germany, Hungary and the US.

Goals/strategiesTo enhance profitability, increase the portion of sales to truck manufacturers and grow in such emerging geographic markets as Eastern Europe and Asia.

Market sharesThe share of the market that can be served with Haldex’s current product program amounts to about 15%. In individual product areas, Haldex has a significantly higher market share.

CompetitorsThe principal competitors are Knorr Bremse and Wabco. These two companies have complete product portfolios and, like Haldex, operate globally. An additional competitor is Arvin Meritor within certain product areas.

strategy• Increasingprofitabilitythroughimprovementsinoperationsandsupplychainmanagement.• Successfullycommercializingdiscbrakes.• Maintaininggloballeadershipinautomaticbrakeadjusters.• BusinessdevelopmentactivityinAsiatocapitalizeonmarketgrowth.• FullyexploitingthecompetitiveedgeprovidedbyHaldex’sstrongpositioninABS,AirSuspension

and Control Valves for trailers.• Refiningelectroniccontrolproductsbyintegratingadditionalfunctionalitytomeetfuture

requirements concerning braking function and diagnostics.• Buildontraditionalaftermarketstrengths.

•net sales seK 4,234 m

•operating income seK 4 m

•number of employees 2,856

13HAlDeX 2008 Division: Commerial Vehicle systems

S-ABA – Automatic brake adjuster

ModulAir – Air distribution

S-ABA – Automatic brake adjuster

IlAS/e – electronic lift axle system

Air compressor

elS – electronically regulated air suspension

trailer Control Module

Jay longbottomDivisionmanagerCommercialVehicleSystems

»The action program to improve productivity and profitability continued during 2008. Actions were taken to optimize the

production structure, in order to position the division closer to customers and to reduce the cost of logistics.«

ModulX™ – Disc brake

ConSep – Air cleaning system

ModulD™ – twin disc brake

ttM/trailer telematic module

eB+ electronic brake system

Spring brake actuator

Info centre – diagnostic tool

Colas+ Raise/lower valve

trailer Rollover Stability

14 HAlDeX 2008Division: Commercial Vehicle systems

improvement work within Commercial Vehicle systems (CVs) continued, with extensive structural measures imple-mented during 2008 to create a competi-tive operation. the work was intensified in pace with the strongly declining market trend at the end of the year.

The comprehensive change to generate growth and profitability in 2007 continued during2008.Thefocuswasonoptimizingstructure,production and logistics, and creating a prod-uct portfolio with strong earnings potential. The following are notable examples of actions taken to improve competitiveness and profit-ability:• Theoperationsfordrumbrakeliningwithin

the Friction Products business unit at the plantinPrattville,Alabama,werediscontin-ued and outsourced to subcontractors.

• TheproductionofdiscbrakeliningwithinFriction Products was divested. The opera-tionshadannualsalesofSEK100m.

• Aspart of theGroup’s cost reductionpro-gram, a decision was made to consolidate the division’sEuropeandistributionoperations.Inventories and logistics functions will beconcentrated from four units in different countries to a joint warehouse inWeyers-heim, France.

• A decision was also taken to relocate allmanufacturing and distribution at the plantinRedditch,UK,toanotherplantinthe Group.

• The market decline forced the division toadjustitsexpenditure,resultinginpersonnelreductions, which will primarily affect plants inEurope.Inaddition,severalmeasureswereimplemented to cut costs, such as shorter work weeks, fewer consulting hours and pro-duction stoppages.

• Theproductionofbrakeactuatorswasrelo-catedfromtheplantinIola,USA,toMexico.

Market trend in 2008Themarkettrendin2008wasdramatic,withthe first half of the year characterized by a con-tinuation of the multiyear rising trend. How-ever, this was followed by a uniquely rapiddropduringthesecondhalfinHaldex’smajormarketsinNorthAmericaandEurope.

Following strong sales inEurope and lowbutstablegrowthinNorthAmericainthefirsthalf of the year, the sales trend slowed rapidly

duringthethirdandfourthquarterswhentheglobal financial crisis was followed by a sharp economic decline that intensified towards the end of the year.

The normally stable aftermarket activities, whichrepresentapproximately40%ofCVSsales, were also impacted to a certain extent.

north americaUntilJuly,truckproductioninNorthAmericawas at a low but stable level, compared with 2007. Sales began todeclineduring the latterpart of the year due to the weak conditions in the USeconomy.OnlythemajorhaulersinNorthAmerica continued to replace old equipmentwith new. Full-year truck production decreased 4%,comparedwith2007.

Trailer production also continued to decline duringtheyear.Uptomid-year,nearly1,000haulersinNorthAmericahaddeclaredbank-ruptcy or left the market. Total trailer produc-tiondecreased34%comparedwith2007.

TheaftermarketinNorthAmericawassta-ble during the first half of the year, but a decline wasreported in the fourthquarter,primarilyduetoinventoryadjustments.

europeFavorable growth was reported for truck pro-ductioninEuropeduringthefirsthalfof2008.Aroundmid-year,theorderbacklogfortruckmanufacturers started to decline somewhat and byAugustdeliverytimeshadbeencutfrom12to six months. The financial turmoil and credit restrictions, resulted in customers being forced to abstain from investing in new trucks. Towards the end of the year, several manufac-turers were forced to implement production standstills. The total market for trucks grew by 8%during2008,comparedwith2007.

Trailer manufacturing reported favorable growthinEuropeuptomidyearwhenadeclineindemandbecameevidentinGermany,theUK,SpainandItaly.Ascustomerscancelledalreadyplaced trailer orders, several manufacturers were compelledtodiscontinueproductionandadjustinventories to adapt to the lower demand. The production decrease became evident in both CentralandEasternEurope.ThedeclineintheEuropeanmarketfortrailerstotaled4%during2008,themajorityinthelasthalfoftheyear.

TheaftermarketinEuropedeclinedinvol-umecomparedwith2007,duetocreditrestric-tionsandthesubsequentinventoryadjustments.

latin america and asiaIn Latin America, demand remained strongduringmostoftheyear.InBrazil,themarketforheavytrucksgrew26%,supportedbyastrongtrend in the mining and agricultural sectors.

DemandinChinawashealthyduringtheyear and the country will soon become the world’s single largest market for heavy trucks. The shift from light and medium-heavy trucks to heavy vehicles is occurring in line with increasing transport needs and improved infra-structure. Production of heavy trucks rose by 13%in2008.

IntheIndianmarket,registrationsincreasedup to August 31, but declined significantlytowards the end of the year.

Haldex in the marketHaldexismarketleaderintheEuropeantrailersegment comprising brake and air-suspension systems, ranked first within air-spring valves and secondwithinEBSsystems.Thepositionamongthe three largest German trailer manufacturers, Schmitz, Krone and Kögel, was strengthenedduring the year.

In the European market, a strong trendtowards an increase in system integration is in progress. This will strengthen the Haldex prod-ucts that can be controlled electrically, such as brake and spring systems, which can largely be centralized to a few products.

Inresponsetothistrend,Haldex,incoop-erationwithEurope’sleadingtrailermanufac-turers, has implemented improvements to its electronicbrakesystem,EB+.

One example is the EBS system, ECO-tronic,whichwaslaunchedin2008.BasedonEB+Gen2,thesystemwasdevelopedjointlybyHaldexandtheGermancompany,BPW(Ber-gischeAchsen),whichisEurope’slargestmanu-facturer of trailer axles. The cooperation between Haldex and BPW will continue within the framework of electronic brake system and chassis control.

Another example of a Haldex productdeveloped to cope with the increasing need for system integration is ModulAir, a module-based product program for compressed-air treatment and air distribution for trucks and buses. Based on theModulAir platform, aninitial application was introduced at selected customers inNorthAmerica,wherethevol-umewillsuccessivelyincreaseduring2009.IntheEuropeanmarket,ajointlaunchwithone

15HAlDeX 2008 Division: Commerial Vehicle systems

2008: Continued focus on cost competitiveness

Key data 2008 2007

Net sales 4,234 4,529

Operating income1) 2) 4 159

Operating income1) –92 109

Operating margin1) 2), % 0 3.5

Operating margin1), % –2.2 2.4

Assets 2,546 2,845

Liabilities 641 672

Return on capital employed3), % –3.9 –4.9

Investments 232 259

Depreciation 160 140

Number of employees3) 2,856 3,149

net sales by region 2008

Asia and Middle East, 6%

South America, 5%

North America, 44%

Europe, 45%

net sales

SEK m

2004 2005 2006 2007 20080

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sales and earnings• sales declined by SEK 295 m, compared with 2007, to SEK 4,234 m (4,529). Sales in the European

market were strong during the first half year 2008, which limited the effect of the sales decrease in NorthAmerica.Duringthesecondhalf,especiallyinthefourthquarter,demanddroppedsignificantlyin Europe, both in the truck and trailer segment.

In Europe, sales declined to SEK 1,938 m (2,058), while sales in North America decreased to SEK 1,852 m (2,022). Currency adjustes sales decreased by 8% and 6% in Europe and North America respectively.

• operating income for 2008, excluding restructuring cost and write down of assets, amounted to SEK 4 m (159). The weak market in North America and the significant drop in demand in Europe in the fourthquarter,especiallyduringNovemberandDecember,whenHaldexcustomersshutdownproduc-tion for 3 to 5 weeks, in combination with high raw material cost during the year, had a highly adversed impact on earnings.

improvement measures• Theactionprogramtoimproveproductivityandprofitabilitycontinuedduring2008.Actionswere

taken to optimize the production structure, in order to position the division closer to customers and to reduce the cost of logistics. A large part of the program involved making improvements in production within the framework of the Haldex Way efficiency-enhancement program.

Key events in 2008• RestructuringoftheFrictionProductsbusinessunitanddecisionaboutconsolidationoftheEuropean

distribution operations into one joint warehouse in France.• CooperationwithBPWtodeveloptheEBSECOtronicsystem.• IntensifiedworkonimprovingoperationsviaHaldexWayandSixSigma.• SuccessfullaunchesofILASEValveandincreasedknowledgeofthesuspensionproductlineinNorth

America.• GrowthinTransitandGovernmentmarketsdespiteaweakeconomy.• InitiatefleettrialsforModulAirinNorthAmericanmarket.

Focus in 2009• Continuedworktoimproveearningsinvolvingquality,reducedcostsandincreaseddeliveryprecision.• Leanmanagement.• Focusedgrowththroughvalueaddedsuspensionandbrakecontrolproducts.• IntensifiedworkinvolvingHaldexWayandSixSigma.

ofthemajortruckmanufacturers isplannedfor2011.

Haldex notedmarket successes inNorthAmericaduringtheyearwhenseveralmanu-facturers of axles, special vehicles and trailers selected Haldex products as standard features in their vehicles.

HeilTrailerofNorthAmericaselectedtheHaldexTRSsystem(TrailerRollStability)asstandard equipment. Heil Trailer Interna-tional is the world’s largest manufacturer of tank trailers.

Haldex also supplemented its offering in theNorthAmericanmarketwithitsTRSsys-tem with the ILAS-E air spring valve.Thismonitors the position of the lifting axle on the trailer using electrical control.

The Group also defended its strong and global leading position for automatic brake adjusters when the operations secured addi-tionalordersin2008.

research and developmentTheCVSDivisionhasatotaloffourdevelop-mentcentersinEuropeandtheUS.Duringthe year, a competency center was also estab-lishedinIndia.

HaldexhasdevelopedModulX,amodularsystem of compressed-air-based disc brakes that can be adapted to various needs. For the cus-tomer, this means simpler adaptation and lower maintenance costs. For Haldex, it means more efficient development, since several of the mod-ules can be used in future generations of disc-brakesystems.Inparallelwiththedevelopmentof new product varieties, extensive work is in progress to optimize product family costs.

Alsounderwayisthedevelopmentofafuturebrake system for trailer trucks and trailers, known as brake-by-wire technology. The principle involves replacing the existing compressed-air system with brakes that use electro-mechanic application and control. The system offers con-siderablyshorterbrakingdistances–15%shorterthan with EBS – and better vehicle stability.Work on the system will continue in coopera-tionwithEuropeanvehiclemanufacturersandwill also include improved vehicle dynamics.

To satisfy legislation concerning vehicle sta-bility and shorter braking distances, the devel-opment of ABS/EBS will continue, as willimprovement of product properties for existing platforms,aswellasnewsystemsfortheNorthAmericanandChinesemarkets.

1) Reclassification of financial income from Other operating income to Financial items

2) Excluding restructuring costs, one-off items and amortization of acquisition-related surplus values

3) Rolling 12 months

16 HAlDeX 2008Division: Hydraulic systems

Hydraulic Systems

Goal/strategiesTo offer customers added value in the form of high service levels and system solutions. To be the technology leader, particularly in terms of the environment and energy efficiency. To remain supplier of choice, as the clear market leader.

Market sharesHydraulic is a niche player with approximately 20% of the market share in its market niches. Engines is market leader for oil, fuel and water pumps in North America and the rest of the world. Haldex’s global market share in these sectors is slightly more than 30%, and just over 40% for oil pumps in North America.

CustomersHydraulics is primarily a supplier to manufacturers of construction machinery, such as Caterpillar, Volvo Construction Equipment, JCB, Terex, Atlas Copco and CNH (19% of sales), forklifts, such as Still, Linde, BT, Nacco (16%), and tail lifts, such as Zepro, Bär, Maxxon and Sörensen. Engines’ largest customers are engine manufacturers,forexample,Cummins,DeutzandPerkins,andlargetruckmanufacturers,suchasIVECO,Volvo, Scania and Caterpillar, which produce diesel engines for their own trucks and construction machinery.

CompetitorsHydraulics’largestcompetitorsareBosch,Rexroth,ParkerHannifin,EatonandSauerDanfoss. Engines is a global manufacturer with a number of regional companies as competitors.

operations/productsHydraulicSystemsDivisionconductsoperationsintwobusinessunits,HydraulicsandEngines.• Hydraulics offers a broad product range of both gear and gerotor pumps together with hydraulic power

packs and high density power systems for a wide range of industrial vehicle and diesel engine installations, hydraulic pumps, particularly gear pumps and power systems. The applications include hydraulic lifts and drives systems for truck and construction machinery applications.

• engines is market leader within pump technology for diesel engines. The pumps are used to pump lubricating oil, coolants and diesel fuel. The engines are used in trucks, buses, construction machinery, agricultural machinery and off-highway machinery. With the two proprietary products Alfdex (joint venture with Alfa Laval) and Varivent, Haldex has unique technology for coping with demands for lower emissions of harmful exhaust gases from engines.

Manufacturing occurs in the UK, India, China, Sweden, Germany and the US.

strategy• Toincreasesalesthroughnewproductofferingsthatfocusonenvironmentaltechnology.• ToensuresynergiesintheintegrationofConcentric,whichwasacquiredin2008.• TodeveloptheoperationsinIndiaandChina.• TopursuetheEMShydraulichybriddrivetoasuccessfulserialproduction.

•net sales seK 2,095 m

•operating income seK 146 m

•number of employees 2,335

17HAlDeX 2008 Division: Hydraulic systems

ian DuganDivisionmanagerHydraulicSystems

»The combination of Concentric’s strong global position in its market segment and Haldex’s expertise and engine-technology products results in an expanded and highly

competitive offering.«

18 HAlDeX 2008Division: Hydraulic systems

the acquisition of Concentric created a strong hydraulics division with global pres-ence, established positions in growth mar-kets and attractive products in the areas of emission reduction and fuel efficiency.

InApril2008,HaldexacquiredConcentricoftheUK,aleadingglobalsupplierofoil,waterand fuel pumps for medium and large diesel engines. Concentric was consolidated fromthe second quarter of 2008 and integratedintotheHaldexHydraulicSystemsDivision,which was simultaneously reorganized to include a hydraulics and engine operation. Theacquisitionwasthefirststepinthestrat-egy to optimize Haldex’s Group structure.

The reasons underlying the acquisitionwere the strong global driving forces in the form of legislation that is continuously sharp-eningrequirementsforthevehicleindustryinterms of environmental impact and lower fuel consumption. Haldex responds to these requirements by pursuing distinct strategiesfor the development of vehicle-technology solutions to improve safety, the environment andvehicledynamics,whichrequireproprie-tary development of new technologies and the acquisition of companies with competitivetechnologies.

The combination of Concentric’s strongglobal position in its market segment and Haldex’s expertise and engine-technology prod-ucts results in an expanded and highly competi-tive offering to the diesel-engine market, which is increasingly demanding more efficient and environment-friendly products. The acquisi-tion makes Haldex the global market leader in oil, fuel and water pumps, with a global market shareofslightlymorethan30%.

Haldex’s new product portfolio for pumps cangeneratefuelsavingsof5–10%.Custom-ers benefit from the two companies’ strong focus on leading-edge technology, particularly in terms of environmental improvements and greater engine efficiency. The Group recently signed long-term delivery agreements with three large USandseveralEuropeansubsupplierstointer-national vehicle manufacturers.

TheacquisitionofConcentricisgeneratingsynergieswithinproduction,purchasing,R&Dand technology and are contributing to the transferofexpertiseandknow-how.Costsyner-giesareestimatedatapproximatelySEK70m

annually and are expected to be generated within three to four years. The integration has progressed more rapidly than planned. To date, synergies have been achieved through more effi-cient production and improved supplier arrangements. Revenue synergies from, forexample, cross sales comprise an additional opportunity for the new operations.

With strong strategies and an attractive productportfolio,thedivisioniswellequippedto satisfy demands from the business world and customers, and will constitute a competitive operation when the global economy recovers.

Market trend 2008Duringtheyear,demandconditionsdeclinedsuccessively as the international financial crisis in the autumn was followed by an increasingly rapid global economic decline.

InNorthAmerica,demand in themarketsegments inwhichHaldex is active (with theexceptionofagriculturalmachinery)wasweakduringthefirstsixmonthsof2008,asaresultofcredit restrictions and the resulting decline in residential construction. When the crisis in the financial sector expanded in the second half year of2008,demanddeclinedfurtherinlinewithacontinuing erosion of confidence in the econ-omy. In Haldex’s market segments in NorthAmerica,productiondeclinedby30%.

ThefirstsignsofaweakeningoftheEuro-pean market were noted when a number of countries increased their interest rates around mid-year.Declining demand led to inventoryaccumulation followed by sales from inventory by many of Haldex’s client companies, a situa-tionthatcontinuedintothefourthquarter.Dur-ing the autumn, the demand situation deterio-rated further when the financial crisis deepened and was followed by rapid economic decline. Duringthefourthquarter,year-on-yeardemandinEuropefellbyapproximately40%.

The drastic market decline resulted in many Haldex customers in North AmericaandEuropereducingorentirelyclosingdowntheir production for three to four weeks at the end of the year.

Haldex in the marketThe rapidly changing demand situation during thesecondhalfoftheyearrequiredanadapta-tion of production volumes and cost rationaliza-tions.AspartoftheHaldexGroup’scostreduc-

tion program, a reduction in the number of employeesweremadeattheDivision’splantsinNorthAmerica,EuropeandAsiaduring2008.

Although themarketwill beweak in theshort-term, the long-term assessment is that the need for infrastructure investments in the future will be considerable, since this is a prior-itized area for the major stimulus packageslaunched by governments throughout the world during the autumn and winter of 2008/2009.Inaddition,manynationalecon-omies are prioritizing measures to reduce the transport sector’s impact on the environment, which indicates that the long-term demand for Haldex expertise and products is favorable.

The focus on environmental efforts includes legislation aimed at reducing emis-sions, as exemplified by crankcase gases in die-sel engines.Such legislationalreadyexists inKoreaandJapan,whiletheNorthAmericanmarket received similar demands when “EPA07”cameintoforceinJanuary2007.InEurope, the new Euro Six regulations areplannedtocomeintoeffectin2013.

InajointventurewithAlfaLaval,HaldexhasdevelopedAlfdex, auniqueandworld-leadingsystem for highly efficient removal of oil drops and soot particles from ventilation air in crank-cases.Since2005,severaloftheworld’sleadingtruck and engine manufacturers have chosen the Alfdexsystem,includingScania,Volvo,Renault,Mack, Mercedes-Benz, Freightliner, WesternStar,SterlingTrucksandNavistar.

InSeptember2008,HaldexlaunchedanewAlfdexgeneration,whichisuptofourtimesasefficient as the earlier model. The new genera-tion can handle up to three times more crank-case gases.

Varivent is another example of a Haldexproduct developed to cope with future more stringent legislation aimed at reducing emission levels. The system reduces emissions of nitrogen oxides from diesel engines, while simultaneously reducingfuelconsumption.Severalmajordieselenginemanufacturers have testedVarivent ontheir engine platforms and, in 2008, gasolineengine manufacturers began to show interest in the system.

TheDivision’s business unit for hydraulicproducts has developed a new concept within hydraulic transmission, in the form of a point-of-use actuator, which is one step further in the integration between Haldex’s hydraulic compo-

19HAlDeX 2008 Division: Hydraulic systems

2008: technology leader-ship in emission reduction and fuel efficiency

Key data 2008 2007

Net sales 2,095 1,467

Operating income1) 2) 146 86

Operating income1) 105 86

Operating margin1) 2), % 7.0 5.8

Operating margin1), % 5.0 5.8

Assets 2,028 781

Liabilities 628 265

Return on capital employed3), % 8.2 16.6

Investments 88 89

Depreciation 74 58

Number of employees3) 2,335 1,591

net sales

sales and earnings• sales amounted to SEK 2,095 m (1,467). Adjusted for acquisitions and currency-exchange movements,

sales were flat compared with 2007. Concentric’s sales amounted to SEK 606 m.• Excludingrestructuringcostsandamortizationofacquisition-relatedsurplusvalues,operating

income and the operating margin amounted to SEK 146 m (86) and 7.0% (5.8), respectively. Concen-tric‘s contribution to operating income amounted to SEK 82 m excluding amortization of acquisition-related surplus values, amounting to SEK 31 m, and expenses related to the company’s integration.

improvement measures• WorktoimprovetheDivision’sprofitabilityandcashflowwasintensifiedduringtheyear,withafocus

on reducing inventory levels and accounts receivable. Actions to further improve product quality and production efficiency continued during 2008, primarily at the US production plant in Rockford, Illinois.

Key events in 2008 • AcquisitionandintegrationofConcentric• LaunchofthenewAlfdexgeneration• Productionrationalization• Increasedfocusonimprovedprofitabilityandcashflow

Focus in 2009• Continuetoreducecostinlinewithactivity• Workingcapitalreductionandcashmanagement• Variableflow,energyefficiencypumps• Hydraulichybriddrive

nents and customers’ products. The actuator integrates an electric engine, hydraulic pump, electronics, oil tank and cylinders into a single unit, resulting in lower purchasing and admin-istration costs for the customer. The product was launched at the end of the year and serial productioncancommencein2010.

In Asia, the Division is established withproductionandsalesinIndiaandChina.TheproductionplantinPune,India,hasbeenpro-ducingoilandwaterpumpssince2005.Dur-ing the year, production capacity was doubled to cope with the growing need for pumps in Indiaandfortheexportmarket.

research and developmentElectricdieselpumpsrepresentthelateststepinfuel-transferpumptechnology.Sincetheiroperation is independent of the engine, many benefits are generated, such as more flexible positioning in the engine compartment, supe-rior starting features and controllable fuel sup-ply.Aleadingenginemanufactureriscurrentlytesting Haldex prototypes for a number of dif-ferent applications.

Anewgenerationofhydraulicpumpswascompleted in 2008 andwill be launched inearly2009.

The promising development of new tech-nology for electronic control of hydraulic sys-tems,EMS,continuedduringtheyear.EMStechnology combines hydraulics and electron-ics to provide improved efficiency and lower energy consumption. The technology creates opportunities for hydraulic hybrid vehicles. Amajorbenefitofahydraulicvehicle is thepossibility to save and reuse a much larger share of the energy that is otherwise lost when the vehicle brakes, while utilizing potential energy during load movements.

Haldex’sEMStechnologyisuniqueinthatitcan utilize, store and reuse both rotary and lin-ear energy, which could result in fuel savings up to30–40%.Thetechnologyisparticularlysuit-able for special purpose trucks and construction machinery and allows opportunities for significantenginedownsizingand/orincreasedvehicle capability.

net sales by region 2008

Asia and Middle East, 9%

South America, 1%

North America, 50%

Europe, 40%

SEK m

2004 2005 2006 2007 20080

500

1,000

1,500

2,000

2,500

operating income

SEK m

2004 2005 2006 2007 20080

30

60

90

120

150

1) Reclassification of financial income from Other operating income to Financial items

2) Excluding restructuring costs, one-off items and amortization of acquisition-related surplus values

3) Rolling 12 months

20 HAlDeX 2008Division: traction systems

traction Systems

Goals/strategiesHaldex aims to strengthen its position in the North American market and broaden its customer base with a long-termviewofachievingapositionofglobalmarketleadershipincontrollableAWDsystemsthroughaggressive product development and reduced costs.

Market sharesHaldexisamarketleaderincontrollableAWDsystems.In2008,themarketshareinEuropeexceeded 50%.

CustomersCustomers include such carmakers as Ford, Volvo and Landrover, the Volkswagen Group with its brands Audi, VW, Seat, Skoda and Bugatti, and General Motors with its global midsize car platform, which includes SAAB, Cadillac, Buick and Opel. The systems are used in regular cars, SUVs and crossover vehicles, which are a combi-nation of regular station wagons and SUVs. The Volvo XC60 is an example of a vehicle in this category. Haldex AWDsystemsareusedinallofVolvo’sAWDmodels.

CompetitorsHaldex’s principal competitors are BorgWarner, GKN, Magna Power Train and JTEKT.

Haldex’s key competitive advantages are the excellent controllability and reliability of its systems and its highly developed expertise in vehicle dynamics, meaning the ability to give a car the driving characteristics that the customers desires.

operations/productsTractionSystemsproduceselectronicallycontrollablesystemsforfour-wheeldrivencars,knownasAWD systems. Because these systems are controllable, they can interact better with other subsystems in the car. The system software can be customized to meet each carmaker’s particular wishes in terms of vehicle dynamics and traction.

Production takes place in Landskrona, Sweden, and Irapuato, Mexico. The Haldex operation in Hungary engages in some preassembly, spare parts production and low-volume production.

strategyTheDivision’sstrategiesareto:• meetthemarket’srequirementsforcost-effectivesolutionsandpremiumproductsbasedonthemodularity

inherent in Haldex’s solutions. • strengthenpositionsintheNorthAmericanmarketand,inthelongterm,secureapositionastheglobal

leaderincontrollableAWDsystems.Tofacilitatetheseefforts,newproductionlineswereinstalledinLands-krona, Sweden, and the new plant in Irapuato, Mexico, in 2008.

• reducecostsbyincreasingpurchasesfromlow-costcountries,combinedwithtechnologicalimprovementsofproducts and production.

• strengthenourpositionasthetechnologyleaderincontrollableAWDsystemsthroughcontinuedaggressiveinvestments in product development.

•net sales seK 1,021 m

•operating income seK 41 m

•number of employees 339

21HAlDeX 2008 Division: traction systems

ulf ahlénDivisionmanagerTractionSystems

»Inthelong-term,themarketoutlookforAWDsystemsisexpected to remain favorable. The trend towards smaller

and more fuel- efficient vehicles will also continue.«

22 HAlDeX 2008Division: traction systems

establishing the production unit in Mexico laid the foundation for a strong position in the north american market and a broadened customer base to strengthen the position as global market leader within controllable awD systems. sales growth in 2008 was favorable, despite a weak market.

Haldex in the marketAlthough the underlying market did notdevelopasexpectedin2008,HaldexTractionSystems Division reported healthy full-yearsales growth, totaling 20%.Thedivisionwasable to maintain its position in the tough mar-ket because several customers introduced new car models during the year, which generated additional business for Haldex. Ford Kuga,VolvoXC60andOpelInsigniaweresomeofthenewcarmodelslaunchedin2008.

Sales success for VWTiguan also had apositiveimpactonvolumeforamajorportionof the year. The division did not experience a noticeable decline in volume until the final two months of the year.

InJanuary,aneworderwasannouncedforanAWDsystemforVolkswagen,thusexpand-ingapreviousorderplacedin2004.Theadd-onorder was for a system based on the fourth gen-eration of Haldex’s coupling and was valued at EUR8M.ProductionoccursinLandskrona,Sweden,anddeliveriescommencedduringthesecond half of the year.

Production and delivery of the all-wheel-drivesystemforthenewVolvoXC60andOpelInsigniacarmodelscommencedduringthesec-ond half of the year.

Later in the year, Haldex received further confirmation of its leading market position when theEuropeanmanufacturerofoneoftheworld’s

most exclusive sports cars announced that it had selectedHaldextosupplyAWDsystems.Deliv-eryisscheduledtocommencein2010.

Attheendoftheyear,Haldexwasnomi-nated by an existing customer as supplier of an AWDsystem for anewplatform,withpro-ductionstartscheduledfor2011.Haldex’sAWDsystemisnowfoundinseveralfuel-efficient carmodels, such as FordKugaandseveraloftheVWGroup’smodels.

A strategically important event was theopening of a new plant inMexico, which ismanufacturing the most recent generation of the AWD system and electronic differentialbrakes.TheplantislocatedinIrapuatointhestateofGuanajuato,closetotheplantsofothervehicle manufacturers and subsuppliers for deliveriestoanumberofGeneralMotor’splat-forms. These are global operators and comprise severalofGeneralMotors’carmodelswithman-ufacturing worldwide. The plant represents a foothold for the Traction Systems Division’scontinuedexpansionandgrowthinNorthandCentralAmerica.

Furthermore, two new production lines were installed in the manufacturing unit in Landskrona,Sweden.

Market trend in 2008The industry’s focus on such long-term issues as fuel economy, the environment and climate issues was further intensified due to the impact of rising energy prices during the first half of the year. The need for more fuel-efficient vehi-cles with superior environmental perfor-mance, in particular lower carbon dioxide emissions, will increase as a result of a number of political decisions taken during the year for the international coordination of more strin-gent climate goals.

The first indications that the international credit crisis was beginning to have an impact on the demand trend in the vehicle industry appeared atmid-year 2008. Financing diffi-culties for companies and households had a negativeimpactondemand.Duringthesec-ond half of the year, the situation was aggra-vated and the decline in vehicle sales began to accelerate.Severalofthemajormanufacturersreduced their production volumes to adapt to the weaker market conditions. Towards the endoftheyear,thesituationformajorUScarmanufacturersdevelopedintoacrisisrequir-ing public financial support.

Inthe long-term, themarketoutlookforAWDsystemsisexpectedtoremainfavorable.The trend is toequipmorecarmodelswithAWD systems, such as in the crossover seg-mentandinsmallercarmodels.Inaddition,simple AWD systems are being replaced byelectronically controllable systems through continuous technical upgrading.

The trend towards smaller and more fuel- efficient vehicles will also continue, even in the North American market, where the trend ismoving from large rear-wheel drive cars to smaller, front-wheel drive models.

InEurope,thetrendtowardsfuel-efficient,smallercarshasbeenclearforseveralyears.Itis estimated that the trend in this market will also move towards smaller cars but with the same functionality as existing products, as exemplified by the sales success for VWTiguanandFordKuga.

This trend benefitsHaldex,whoseAWDsystem is now available in many fuel-efficient car models.

The lead time for developing a complete AWDsysteminanewcarmodelisnormallyabout threeyears.Thedevelopmentprojects

During2008,Haldexreceivedtheprestigious European Automotive Chassis Product Innovation Award for its all-wheel-drive system. The award is presented by the UK analyst company, Frost & Sullivan, to companies that have demon-strated excellent and pioneering technological product develop-ment within their various industries.

23HAlDeX 2008 Division: traction systems

2008: preparing for future growth

Key data 2008 2007

Net sales 1,021 848

Operating income1) 2) 41 49

Operating income1) 38 49

Operating margin1) 2), % 4.0 5.8

Operating margin1), % 3.7 5.8

Assets 369 433

Liabilities 231 258

Return on capital employed3), % 16.9 21.3

Investments 60 95

Depreciation 52 40

Number of employees3) 339 296

net sales

involving the next generation, are creating the conditions for Haldex to continue capturing marketsharesalsoduring2010–2015.

ThroughtheinvestmentsmadeinMexico,the foundation is being laid for an increase in marketsharesintheNorthAmericanmarket.

The market for AWD systems is highlycompetitive and, to meet this challenge, Haldex’s product development initiatives and purchasing from low-cost countries will con-tinue, with a long-term aim of increasing the currentproportionfrom30to45%.

research and developmentPrototypeinstallationsofHaldex’sGenerationVAWDsystemfortwodifferentcarmakersweretestedduring2008.ThedevelopmentofGener-ation V commenced in 2006 in cooperationwith a car manufacturer, with the aim of con-tinuing tomeet future customer requirementsfor cost-effectiveAWD systems. Production isexpectedtobeginin2012.

Haldex is at the leading-edge of develop-ment of systems for AWD. To meet futurecustomer requirements, several research proj-ects are being conducted in cooperation with technicalcollegesanduniversities.Theobjec-tive is to build expertise in existing and new areas of technology.

To monitor developments within hybrid technology, a researchprojecthasbeen initi-atedincooperationwiththeFacultyofEngi-neeringatLundUniversity,Sweden,andwitha number of car manufacturers. The aim is to use the new technology to develop competitive futureAWDsolutionsforhybridvehicles.

sales and earnings• sales rose 20% to SEK 1,021 m (848), which was a lower increase than planned. The increase in sales

was mainly related to increased volumes to Landrover, the new VW model, Tiguan, for which deliveries started during the second half of 2007 and Ford Kuga for which deliveries started in 2008.

• operating incomeamountedtoSEK41m(49).ThesharpdecreaseinvolumeinDecemberduetoproductionshutdowns,ledtoalossinDecember,whichaffectedoperatingincomeinthefourthquarter.

improvement measures• Atthedivision’splantsinLandskrona,Sweden,andIrapuato,Mexico,extensiveworkwasconducted

on the installation of three new assembly lines during the year. The full impact of these efforts was not achieved until the second half of the year.

• Amajorimprovementprogram,whichhadbeeninprogressforoneandahalfyearsattheplant in Hungary, was completed in 2008 and resulted in significantly increased productivity. The plant assemblesproductsforseveraldivisions,althoughprimarilyforTractionSystemsDivision.

Key events in 2008 • SeriesproductionofXWDtoOpelInsignia.• SeriesproductiontoVWCaddyandVolvoXC60.• OrderfromanexclusiveEuropeansports-carmanufacturer.AdditionalorderfromVW.• OpeningofthenewproductionunitinMexicoformanufacturingAWDsystemsfor

the North American market.• Productionofthetwomillionthcoupling.• InternationalawardforproductinnovationfollowingthelaunchoftheXWD.• Newproductgeneration(GenIV)introducedtoallcustomers.

Focus in 2009 • IncreasedproductionvolumesattheplantinMexicowhenthenewBuickLacrosse

and Cadillac BRX car models from General Motors are introduced.• Investmentinbusinessdevelopmentwithaparticularfocusonnewcustomers.• SeriesdevelopmentofGenerationVaimedat2012launch.• SupplierdevelopmentinNorthAmericaandAsia.• CostrationalizationattheLandskronaunit.

net sales by region 2008

North America, 4%

Europe, 96%

SEK m

2004 2005 2006 2007 20080

200

400

600

800

1,000

1,200

operating income

SEK m

2004 2005 2006 2007 20080

10

20

30

40

50

1) Reclassification of financial income from Other operating income to Financial items

2) Excluding restructuring costs, one-off items and amortization of acquisition-related surplus values

3) Rolling 12 months

24 HAlDeX 2008Division: Garphyttan wire

Garphyttan Wire

Jan pietersDivisionmanagerGarphyttanWire

»Garphyttan Wire now has a strong, established platform for future growth in the Chinese market.«

Market sharesHaldex has a world-leading position in the product area for oil-tempered valve spring wire, with a global market share of approximately one third.

CustomersThecustomersareprimarilyspringmanufacturerswithspecialistexpertiseinthevehicleindustry.TheDivisionalso engages in small-scale production of springs for in-house use, including valve springs for Swedish engine manufacturers and specialty springs for Haldex’s brake products.

CompetitorsThe primary competitors are Suzuki, Suncall, Kiswire, American Spring Wire and Tokusen.

activities/productsGarphyttan Wire manufactures advanced spring wire from various alloys for use mainly in combustion engines and transmissions, where demands for quality and performance are meticulous.

The main applications are valve springs, transmission springs, piston springs and springs for fuel injection systems.

Since extremely pure steel is needed as the basic material for producing spring wire that meets the customers’ stringentrequirements,veryclosecooperationwithsteelsuppliersisessential.ThecoreoftheDivision’sexpertiseconsists of creating product characteristics that ensure trouble-free end use in the form of springs that have at least the same total service life as the particular vehicle. Our proven ability to achieve a level of stability that always meets these requirements gives us a key competitive edge.

In addition to oil-tempered valve spring wire, production includes a significant proportion of stainless steel specialty spring wire, as well as profiles and flat wire for applications in the vehicle industry and the energy and environmental areas.

Production is conducted in China, Sweden and the US.

•net sales seK 1,053 m

•operating income seK 59 m

•number of employees 474

at the end of 2008, Haldex signed an agreement to sell Garphyttan wire to the Japanese group suzuki Metal industry. the divestment was part of the Haldex Group’s continued strategy of streamlining its busi-ness to strengthen long-term growth while maintaining favorable profitability.

InconnectionwithitsacquisitionofConcen-tric earlier in the year, Haldex announced that an assessment of structural opportunities to optimizeGroupstructurewasunderway.Oneresult of the assessment was the decision to divest Garphyttan Wire to focus the Group’s operations on areas where Haldex can achieve internal synergies and a sustainable market position on the basis of innovative, leading products.

OnDecember25, 2008,Haldex enteredinto an agreement to sell Garphyttan Wire to SuzukiMetal Industry, a Japanesemanufac-turer of steel wire. The purchase price was esti-matedatSEK800monadebt-freebasis.Thetransaction is expected to be completed dur-ingtheperiodApriltoJune2009,whenthefinal purchase price will be confirmed.

Asaresultofthedivestment,Haldex’sproforma net debt, as at December 31, 2008,decreasedtoSEK1,535m.Itisestimatedthatthe transaction will result in a capital gain of approximatelySEK400m.

In addition to customary conditions, thetransactionisconditionaluponSuzukiMetalobtaining a binding agreement regarding the financing of the transaction, regulatory approval and that no significant adverse changes occur that have a material and dispro-portionate effect on Garphyttan Wire com-pared with comparable companies in the industry.

Market trend in 2008During the first half of 2008, demand for Garphyttan Wire’s products was very strong, particularlyinEurope.

Beginninginthesecondquarter,weakeningdemandwasnotedintheUS,whileothermar-kets remainedstrong.Extremeprice increases

25HAlDeX 2008 Division: Garphyttan wire

for iron ore and coking coal resulted in high price increases for steel wire, Garphyttan Wire’s principal raw material. Before the expected price increases for steel wire and wire had become effective, some stockpiling of inventory took place in the second quarter, leading tosomewhat weaker demand in the early part of thethirdquarter.

The international financial crisis caused extensive global uncertainty after the summer, leading to a considerable decline in demand beginning in October. During the fourthquarter, someof theorderbacklogwas can-celled and order intake was extremely low, leading to a sharp decline in sales, above all in NovemberandDecember.

The earnings trend was very strong from January to September, but during the finalquarteritwasreversedtoasignificantloss.

TheproductionfacilityinSuzhou,China,experiencedapositivetrendin2008.AstrongvolumetrendfromJanuarytoSeptembercon-tributed to a favorable operating profit for 2008.Productivityandqualityalsodevelopedvery well. Garphyttan Wire now has a strong, established platform for future growth in the Chinesemarket.

improvement measures In 2008, efforts to stabilize and enhance theefficiency of processes and to improve control over the supply chain from supplier to customer contributed to a significant upswing in the yield from material and delivery reliability at the facilityinGarphyttan,comparedwith2007.

At the production facility in Suzhou,China, the favorable volume trend led to apositive productivity trend, and the level of qualityanddeliveryreliabilityremainedveryhigh.EffortstoimproveplanningsystemsattheUSplantinSouthBendresultedinsub-stantially higher delivery reliability during the year, and the unit maintained a high level of inventory turnover.

Key data 2008 2007

Net sales 1,053 1,095

Operating income1) 2) 59 45

Operating income1) 56 45

Operating margin1) 2), % 5.6 4.1

Operating margin1), % 5.3 4.1

Assets 556 650

Liabilities 169 221

Return on capital employed3), % 12.6 9.9

Investments 21 20

Depreciation 43 44

Number of employees3) 474 482

net sales

net sales by region 2008

Asia and Middle East, 5%

South America, 5%

North America, 22%

Europe, 68%

SEK m

2004 2005 2006 2007 20080

200

400

600

800

1,000

1,200

operating income

SEK m

2004 2005 2006 2007 20080

20

40

60

80

100

sales and earnings• sales decreased by 4%, compared to previous year, to SEK 1,053 m (1,095). In the fourth quarter,

sales decreased 39% year-on-year adjusted for currency-exchange movements.• Duetothesteepdownturninsales,alossofSEK29m,excludingrestructuringcosts,wasposted

in the fourth quarter bringing the operating income to SEK 59 m (45) in 2008.

improvement measures• Effortstostabilizeandenchancetheefficiencyofprocessesandtoimprovecontroloverthesupply

change were made.

Key events in 2008• AgreementwithSuzukiMetalIndustrytodivestGarphyttanWire• ISO14001certificationinChina• ContinuedeffortstoimprovequalityandprocessesintheGarphyttanfacility• Improvedcontrolofthesupplychainfromsuppliertocustomer

1) Reclassification of financial income from Other operating income to Financial items

2) Excluding restructuring costs, one-off items and amortization of acquisition-related surplus values

3) Rolling 12 months

26 HAlDeX 2008Haldex in the society

through the contribution of our people …For companies and employees throughout the world,2008andearly2009wereachallengingtime.Despiterapidandextensivechangesinthebusiness environment, Haldex’s long-term pro-cess of global expansion continued, and its oper-ations are becoming increasingly multi faceted.

The Group’s success is based on the compe-tenciesandabilitiesofitsemployees.Ingoodtimes and bad, Haldex strives continuously to develop its workplaces around the world to attractthebestemployees.Creatingsuchattrac-tive workplaces is a high priority for Haldex.

Employees in different countries, withdiverse cultural backgrounds, must be able to work together well to create added value for the company and for customers. This in turn increases the demands on employees and on the organization’s performance readiness.

In recent years, Haldex has intensified itsHumanResources efforts. In 2006, the com-pany implemented an action plan aimed at the following:• improvingleadershipqualities• establishingacandidatepoolfortopman-

agement positions• creatingastrongcorporateculturecharac-

terized by personal responsibility and an ability to change

• developingacompensationstructurethatsupports performance

• successfullyimplementingHaldexWay

In2007and2008,theplanwasrefinedandalong-term strategy for the Group’s human resources efforts was prepared. This strategy was in turn broken down into the following areas of focus:• Competencedevelopment• Management&leadershipcapabilities• Haldexculture

Within these three areas, key ratios were defined, targets established for all Haldex units and action

plansprepared.In2008,Haldexfocusedonreal-izing the action plans, and a long list of initiatives was implemented to support the units’ work in these areas.

A dominant focus for human resourceswork in all parts of the Group was to manage theimpactoftherecessionthatbeganin2008.Measureswereconcentratedonrapidlyreduc-ing the Group’s expenses. This included such actions as temporary production halts and a reductioninworkinghours.Inaddition,alargenumber of temporary and insourced employees were asked to leave the Group late in the year. These initiatives were followed by programs to reduce the number of permanent employees throughout the world, which were imple-mentedlocallyatunits.Cooperationwithlocaltrade unions and work councils worked excep-tionally well, and Haldex’s employees showed great loyalty to the company.

Haldex’sHRstrategywasappliedasauni-fying theme during the tough cutbacks. The Group placed great emphasis on precision and consideration in the methods used to carry out the cutbacks, so that a stronger company could be created. Accordingly, a consistentfocus on performance, competence and clear leadership was pursued.

young professional programDespite the cutbacks, Haldex plans to con-tinuetorecruitforthefuturein2009.Duringthe year, the Group’s efforts will include the establishment of a Young Professional Program for the recruitment and introduction of a small groupofhighlyqualifiedemployeeswhowillbe recruited directly after they graduate.

Haldex Management reviewAkeyfeatureoftheGroup’sHRefforts istheprogram established by Haldex to evaluate the divisions’ management teams, assess the future need for management competency and evaluate

the management potential currently available in the company. The main purpose of the program, whichiscalledHaldexManagementReview,istoguaranteethe long-termsupplyofqualifiedpersonnel, both at corporate and unit level.

The aim of the program is to identify and initiateaseriesofdevelopmentefforts.In2008,several tangible programs and tools were launched to support the work of the units as theyimplementedthepersonnelstrategy.Atoolfor long-term resource planning was launched as a key feature of the personnel efforts of all units. The tool allows Haldex’s various organiza-tional units to prepare analyses and action plans to match personnel structure, competencies and organization with the company’s development needs.

personnel surveyAGroup-wide,Internet-basedpersonnelsur-vey was established. The survey allows all parts of the Group to monitor the organization’s performance readiness frequently and withrapid response times.

Haldex international executive programThe Group’s HR development efforts aremainly implemented at the local level, close to employeesandoperations.Asacomplementto these efforts and to reinforce the Group’s leadership competency, Haldex operates a numberofjointleadershipdevelopmentpro-grams and courses. These are offered in such areas as Leadership, Change Management,FinancialManagementandValue-BasedSell-ing. Haldex also offers a longer generalist pro-gram,theHaldexInternationalExecutivePro-gram, an international leadership develop-ment program whose purpose is to support the development of future top executives at Haldex.

27HAlDeX 2008 Haldex in the society

Social responsibility

A couple of years ago,Haldex introduced asocial policy in the Group. The work focused on implementing the policy as part of the existing procedures and guidelines.

The policy has permeated the company, is well received and is now part of several of the Group’s procedures, policies and programs. For example, it is included as part of the intro-ductiontoallnewemployees.Itisalsointe-grated into the company’s purchasing manual. However, implementation work is still on-going, with continued focus on developing and executing action plans.

Haldex’ssocialpolicyisbasedontheUN’sUniversalDeclarationonHumanRights,theUNGlobalCompact initiative, the Interna-tionalLaborOrganization’s(ILO)basicprin-ciples on labor law and theOECD’s guide-lines for multinational companies.

Haldex in societyContribute to improvements in economic,environmental and social conditions through an open dialogue with relevant interest groups in the communities where Haldex operates.

Human rightsSupport and respect theprotectionof inter-nationally decreed human rights.

Child laborEnsurethatminorsareprotectedinasatisfac-tory manner and, as a basic principle, refrain from hiring children or supporting child labor unless it occurs in government-approved pro-grams for young people, such as apprentice training.

Freedom of contractEnsurethatallemployeesacceptpositionsofemployment in the company of their own free will.

Health and safetyOffer a safe work environment at all work-places and introduce measures to prevent acci-dents andwork-related injuriesbyminimiz-ing all work-environment risks to the extent possible.

equal opportunitiesOffer all employees equal opportunities,refrain from discriminating on the basis of ethnic or national origin, religion, caste, hand-icap, gender, age, sexual orientation, affiliation with trade unions or membership of political organizations.

suppliersUse appropriate methods to evaluate andchoose suppliers based on their ability to meet the requirements of Haldex’s social policiesand other social principles, and document theircontinuousfulfillmentoftheserequire-ments.

Business ethicsApply high standards in terms of business ethics and integrity, and support the efforts of national and international organizations to establish and maintain strict ethical standards for all companies.

In the city of Nashik in northwest India, Haldex is known as a socially responsible company that contributes to the economy of the region while improving the quality of life of its own employees and the sur-rounding community. At its plant in Nashik, located approximately 200 km outside Bombay, Haldex India manufactures brake adjusters and anti-lock braking systems.

Pai Ganesh, Chief Operating Officer of Haldex India, recruits quali-fied and educated employees from many regions in India. These employees, who in many cases live far from their home towns, are offered housing in Nashik and provided with other basic needs, such as food and medicine, whenever necessary. Special emphasis is placed on creating job opportunities for women.

Haldex India also supports schools and institutions in the nearby area, including a school in a village outside Nashik, where many children live under challenging financial conditions. The company supports the school by distributing books and other study materials to its 115 pupils. Haldex India has also financed a tank that holds fresh water for the school.

Haldex India’s commitment also includes caring for the basic needs of people affected by natural disasters, such as drought or flooding in the region. In August 2008, Bihar, one of the states in Northern India, experienced flooding, which left people homeless. In addition, many inhabitants required medical care, food and shelter. All of the employees of Haldex India responded to this cause by contributing the equivalent of one day’s salary, as a part of their social responsibility.

taKinG Care in inDia

28 HAlDeX 2008environment

Haldex products help customers to comply with increasingly stringent environmental legislation. the product portfolio strengthens the Haldex brand, while environmental activities result in continuously improved performance.

Distinct environmental value at the user levelHaldex’s business concept includes a focus on products that improve the environment. During 2008, the UK company Concentric wasacquired,providingtheGroupwithinnovativevariable-flowoil,waterand fuel pumps, which improve energy efficiency and reduce energy consumption.OtherproductsincludedintheHaldexcustomeroffer-ing also generate distinct environmental benefits, such as Varivent,which recirculates exhaust gases in diesel engines, thus reducing fuel consumption and emissions of nitrogen oxides.Another example isAlfdex,asystemfortheseparationofoilparticlesincrankcaseventila-tion air in diesel engines, also known as crankcase gases. The crankcases in diesel-operated truck engines normally emit between six and nine liters of oilmist per 1,000 hours.WithAlfdex, these emissions arereduced to nearly zero.

Incombination,Haldex’sproductportfolio,whichcomprisesvariableflowpumpsforoil,waterandfuelfordieselengines,Alfdex,Variventandelectricfuelfeedpumpscouldentailfuelsavingsofupto10%.

environmental work supported by Haldex’s valuesOneoftheGroup’sfundamentalvaluesistheeliminationofallwaste,which in the field of environmental efforts ensures effective resource husbandry. Based on a lifecycle perspective, the total environmental load is investigated and improvement work focuses on the various phases of the production, use and recycling of the company’s products. Initsbusinessoperations,Haldexstrivesto:• utilizenaturalresourcesascarefullyaspossible• reduce theenvironmental impactby furtherdevelopingproducts

and manufacturing processes• designproductswithaviewtoefficientrecycling

systematic work yields resultsThevastmajorityofHaldex’sproductionplantshaveenvironmentalmanagementsystemsthatareISO14001certified.Attheendof2008,86%ofthetotalnumberofplantswerecertified,including80%oftheplantsinMexico,SouthAmerica,ChinaandIndia.AllHaldexfacili-tiesareeithersubjecttolicensingrequirementsorregulatedundertheenvironmental lawsof thecountrywhere theyare located.Allunitshave the requisite licenses andagreements, andalsomeet the estab-lishedreportingandinspectionrequirements.

Akeyfeatureofenvironmentaleffortsisreducingenergyconsump-tion and the emissions this gives rise to, which is in line with Haldex Way. Each plant establishes improvement goals and continuouslyexamines and measures greenhouse gases in accordance with the guide-linesspecifiedintheWorldResourceInstitute’sGreenhouseGasProto-col(GHG).In2008,Haldexreduceditsemissionsby11%,intermsofCO2 in relation to every SEKmof sales.The calculation has beenadjustedtotakeintoaccountthedivestmentofbrakeliningoperationsandtheacquisitionofConcentric.EmissionsofCO2 from Haldex’s operations(Scope1and2emissionsaccordingtotheGHGProtocol)werereducedby6.4%,oratotalof55,865metrictons.Intotal,CO2 emissionsamountedto67,702metrictons,adecreaseof6.2%.

High ratings for environmental efforts Folksam’slatestClimateIndexranksHaldexasbestinitsindustryandthirdbestinSwedeninreportingitsenvironmentalimpact.TheCli-mate Index, which provides a quantitative measure of the climateeffects resulting from the production of listed companies, bases its assessmentontheCarbonDisclosureProject(CDP),aninternationalsurvey.

Folksam’sindexforResponsibleEnterprisein2008alsogaveHaldexgood rankings for its environmental efforts, with an especially high rating for its environmental management.

Haldex products generate environmental value for customers

29HAlDeX 2008 Financial reports – contents

Financial reports – contents

DIReCtoRS’ RepoRt 30

Sales and operating income 30

Acquisitions and restructuring 31

Cost-reduction program 31

Earnings 31

Cash flow 32

Investments 32

Product development 32

Financial position 32

Profitability 32

Risks, uncertainties and financial risks 32

Environmental impact 32

Guidelines for remuneration 32

Future trends 33

Parent Company 33

Events after the balance-sheet date 33

ConSolIDAteD InCoMe StAteMent 34

ConSolIDAteD BAlAnCe SHeet 35

CHAnGeS In GRoup eQuItY 36

ConSolIDAteD CASH FloW StAteMent 37

noteS GRoup 38

Note 1 General information 38

Note 2 Summary of important accounting principles 38

Note 3 Risks & Risk management 41

Note 4 Important estimations and assumptions 44

Note 5 Segment reporting 44

Note 6 Costs distributed by type 45

Note 7 Average number of employees 46

Note 8 Salaries and other remuneration 46

Note 9 Information on Remuneration of executive committee 47

Note 10 Auditing fees 48

Note11 Depreciation 48

Note 12 Taxes 48

Note 13 Intangible assets 49

Note 14 Tangible fixed assets 50

Note 15 Operational leases 50

Note 16 Deferredincometax 51

Note17 Derivativeinstruments 51

Note 18 Inventories 52

Note 19 Other current receivables 52

Note 20 Cash and cash equivalents 52

Note 21 Assets and liabilities held for sale 52

Note 22 Long-term interest-bearing liabilities 52

Note 23 Pensions and similar obligations 53

Note 24 Other provisions 55

Note 25 Current liabilities 55

Note 26 Corporate acquisitions 55

Note 27 Related-party transactions 55

pARent CoMpAnY InCoMe StAteMent 56

pARent CoMpAnY BAlAnCe SHeet 57

CHAnGeS In pARent CoMpAnY eQuItY 58

pARent CoMpAnY CASH FloW StAteMent 58

noteS pARent CoMpAnY 59

Note 1 General information 59

Note 2 Summary of important accounting principles 59

Note 3 Average number of employees and sickness absence 59

Note 4 Salaries and other remuneration 59

Note 5 Auditing fees 60

Note6 Depreciation 60

Note 7 Interest income and interest expenses 60

Note 8 Tangible fixed assets 60

Note 9 Shares and participations 60

Note 10 Long-term receivables 61

Note 11 Other current receivables 61

Note12 Derivateinstruments 61

Note 13 Cash and cash equivalents 61

Note 14 Untaxed reserves 61

Note 15 Taxes 61

Note 16 Pensions and similar obligations 61

Note 17 Long-term interest-bearing liabilities 62

Note 18 Other current liabilities 62

Note 19 Contingent liabilities and collateral pledged 62

AuDIt RepoRt 63

30 HAlDeX 2008Directors’ report

Directors’ Report TheBoardofDirectorsandPresidentofHaldexAB(publ),Corp.Reg.No.556010-1155,herebyissuetheAnnualReportandConsolidatedFinancialStatementsfor2008.

Haldex offers innovative proprietary solutions to the global vehicle industry. The main focus is on products related to vehicle dynamics, safety and the environment.

HaldexABistheParentCompanyoftheHaldexGroup.Thecompanymainly conducts corporate functions, including the central finance function.

Amountsarestatedinmillionsofkronor(SEKm),unlessotherwiseindicated.Amounts inparentheses refer tofigures for theprecedingyear.“Haldex”referstotheHaldexGroup,meaningHaldexABanditssubsidiaries.

operations during the yearsales and operating incomeDuringthefirsthalfof2008,thedemandtrendinEuropewasstrongwhile theNorthAmericanmarket remainedweak inalmostall seg-ments.Duringthesecondhalfof theyear, thedemandtrendweak-ened.Thedeclinebeganduringthethirdquarterandcontinuedatanintensifiedrateduringthefourthquarter,especiallyduringNovemberandDecemberwhenmanyofHaldex’scustomersshutdowntheirpro-duction for three tofiveweeks.All segmentswere affected, and themajordeclinewasrelatedtotheEuropeanmarket.

ConsolidatednetsalesamountedtoSEK8,403m(7,940).Innomi-naltermsandwhenadjustedforcurrency-exchangemovements,netsalesrose6%,duemainlytotheacquisitionofConcentric.Organicgrowth,adjustedforcurrency-exchangemovements,declined2%,withEuropedeclining3%andNorthAmericadeclining2%.

TheGroup’soperatingincomeamountedtoSEK92m(289).TheGroup’s operating income, excluding restructuring cost, one-off items and amortization of acquisition-related surplus value, amounted toSEK250m(339).Therapiddeteriorationinmarketconditionsduringthe fourth quarter and the resulting decrease in sales had a sharplyadverse impact on operating income.

OperatingincomewithinCommercialVehicleSystems,excluding

restructuring cost andwritedownof assets, amounted toSEK4m(159).Theoperatingmargin,excludingrestructuringcosts,declinedfrom3.5%to0%.

TheweakconditionsintheNorthAmericanmarketandthesharplyreduceddemandinEuropeduringthefourthquarter,particularlyinNovember and December when Haldex’s customers suspended production for three to five weeks, in combination with high prices for raw materials, had a severely adverse impact on earnings.

SalesdeclinedSEK295mtoSEK4,234m(4,529)comparedwiththe preceding year.

SalesintheEuropeanmarketwerestrongduringthefirsthalfoftheyear,whichlimitedtheimpactofthesalesdeclineinNorthAmerica.Duringthesecondhalfoftheyear,primarilyduringthefourthquarter,demanddecreasedsignificantlyinEurope,inboththetruckandthetrailersegments.Theaftermarket,whichaccountedforabout40%ofCVS’stotalsales,wasalsoaffectedtosomeextent.

InEurope,salesdeclinedtoSEK1,938m(2,058),whilesalesinNorth America dropped to SEK 1,852 m (2,022). Adjusted forcurrency-exchangemovements,salesdeclined8%inEuropeand6%inNorthAmerica.

The program in the disc brake market continued during the period. The cost-reduction program proceeded and cost improvement versus the precedingquarterwasachieved.Duetothehigherrawmaterialcostsduring the year and the reduced volume during the second half of the year, thenegativeimpactonearningsfor2008wasaboutthesameasintheprecedingyear(approx.SEK100m).Inthefuture,agradualimprove-mentisexpected.Incommonwithothermajorprojects,thediscbrakeprojectisbeingreviewedcontinuouslytosecurevaluegeneration.

IntheHydraulicSystemsdivision,operatingincomeandtheoperatingmargin,excludingrestructuringcostandamortizationofacquisition-relatedsurplusvalue,amountedtoSEK146m(86)and7%(5.8),respectively.

Concentric,thecompanythatwasacquiredin2008andhasbeenconsolidatedsinceApril1,contributedSEK82mtooperatingincome,excluding amortization of acquisition-related surplus value of SEK31mandcostsconnectedtothecompany’sintegration.

equity/assets ratio and debt-to-equity ratio Cash flow and self-financing rate

0

30

60

90

120

150

20082007200620052004

%

Debt-to-equity ratio Equity/assets ratio

–200

–100

0

100

200

300

400

500

SEK m %

Self-financing rate, %Cash flow, SEK m

–100

–50

0

50

100

150

200

250

20082007200620052004

31HAlDeX 2008 Directors’ report

SalesamountedtoSEK2,095m(1,467).Adjustedforacquisitionsand currency-exchange movements, sales were unchanged compared withtheprecedingyear.Concentric’ssalesamountedtoSEK606m.

OperatingincomeintheGarphyttanWiredivisionamountedtoSEK59m(45).Salesdeclined4%toSEK1,053m(1,095).Inthefourthquarter,salesdecreasedby39%yearoveryearcurrencyadjusted.

Theoperatingmarginwas10.0%duringtheperiodJanuarytoSep-tember.Duetothesharplyreducedsales,alossofSEK29m,excludingrestructuringcosts,wasreportedduringthefourthquarter.

OperatingincomeintheTractionSystemsdivisionamountedtoSEK41m(49).Salesincreased20%toSEK1,021m(848),whichwasalowerrisethanplanned.ThesharpdownturninvolumeduringDecember,duetoproductionstoppages,gaverisetoalossinDecember,whichhadanadverseimpactonoperatingincomeduringthefourthquarter.

The increase in sales was primarily attributable to higher volumes resultingfromdeliveriestoLandroverandVW’snewmodel,Tiguan,whichstartedinthesecondhalfof2007andtoFordKuga,whichcom-mencedduring2008.

acquisitions and restructuringOnDecember25,2008,HaldexreachedanagreementwithSuzukiMetal IndustryCo, a Japanesemanufacturer of steelwire products,concerning the divestment of the Garphyttan Wire division. The cash purchaseprice is estimatedatSEK800monadebt-freebasis.ThetransactionisexpectedtobecompletedduringtheperiodApriltoJune2009whenthefinalpurchasepricewillbeconfirmed.HaldexalsocompletedtheacquisitionofConcentric,aworld-leadingsupplier of oil, water and fuel pumps for large and medium-sized diesel enginesfortrucksandconstructionequipment.

RestructuringoftheFrictionProductsbusinessunit,whichmanu-factures and sells pads for disc brakes and linings for drum brakes in NorthAmerica,wascompleted in2008.Aspartof therestructuringprogram, production of drum brake linings was outsourced and the disc brake lining business was sold. The latter business had annual sales of

approximatelySEK100m.TheFrictionProductsbusinessunitreportedalossofaboutSEK25m.

Cost-reduction programDuringthethirdquarterof2008,Haldexlaunchedacostreductionprogram involving all divisions that included a decrease in the number ofemployeesbyabout700bymid2009.

Duringthefourthquarter,additionalactionsweretakeninordertoadapttothe lowerdemand,andthereductioninthenumberof jobs represents a reduction in the number of employees by approximately 1,500(frommid-2008tomid-2009).Theexpandedprogramincludesstructuralmeasures,suchasconsolidationofCVS’sEuropeandistribu-tion operations by concentrating warehouses and logistics functions from fourunitsindifferentcountriestoajointdistributioncenter,andthedis-continuation of all manufacturing and distribution operations at the plantinRedditch,UK.

ThecostoftheprogramisestimatedatapproximatelySEK150m,ofwhichSEK85mwasexpensedin2008.Theremainingcostswillbeexpensedduringthefirstquarterof2009.

TotalannualsavingsareestimatedataboutSEK425m.The cost-reduction program will be evaluated continuously and

adjustedtofacilitateanychangesindemand.

earningsConsolidatedearningsbeforetaxtotaledSEK–55m(222).Financial net amounted to SEK –147 m (67). Financial expensesincreasedduring2008,primarilyduetofinancingoftheacquisitionofConcentricandhigher interest rates.Earningsafter tax totaledSEK–43m(141).AtaxrevenueofSEK12m(charge:81)wasrecognizedin2008,asaresultofavaluationoftax-losscarryforwardsvaluedatthetax rates applicable in the countries concerned.

The operating margin, excluding restructuring cost, one-off items andamortizationof acquisition-related surplus value,declined from4.3%intheprecedingyearto3.0%.Thereturnoncapitalemployedwas2.4%(8.3).

product development costs investments

275

300

325

350

375

400

20082007200620052004

SEK m

200

275

350

425

500

20082007200620052004

SEK m

32 HAlDeX 2008Directors’ report

Cash flowCashflowfromoperatingactivitiesamountedtoSEK857m(312)andcashflowafternetinvestmentstoSEK465m(–141).Thestrongcashflow was attributable to the good working capital performance in com-binationwithlowersalesvolumes,enablingareductionbySEK576m(–152)toSEK758m,includingthesaleofcertainaccountsreceivabletotalingaboutSEK170m.

investmentsTheGroup’snetinvestmentsamountedtoSEK392m(453),ofwhichcapitalizeddevelopmentcostsaccountedforSEK60m.Investmentshaveprimarilybeenmadeinproductionequipment.

product developmentEveryyear,substantial investmentsindevelopmentprojectsaremadewithin the Group to ensure the creation of market-leading products and to strengthen market positions. This development work comprises the creation of completely new products, both in-house and in some cases in cooperation with partners, and updates of existing product solutions. Groupdevelopmentcostsduringfiscalyear2008totaledSEK339m(335),ofwhichSEK60m(66)wascapitalized.AtDecember31,2008,capitalizeddevelopmentcostsamountedtoSEK282m(241),ofwhichthelargestsingleitem,thedisc-brakeproject,accountedforSEK53m.

Financial positionTheGroup’snetdebtamountedtoSEK2,335m(1,600).CashandcashequivalentsamountedtoSEK431m(182).Atyear-end,grantedbutasyetunutilizedcreditlimitstotaledaboutSEK1,217m.

Interest-bearingliabilitiesamountedtoSEK2,766m(1,782),includ-ingpensionliabilitiesofSEK440m.Haldex’sprincipalsourceoffinancingisasyndicatedrevolvingcreditfacilityofUSD250m,maturingin2012.Atpresent,alargepartofthefacilityisunutilized.Accordingtothetermsof the agreement with the creditors, certain key rations must be fulfilled. Haldexdidnotfulfilltheseattheendof2008.ThetermswererenegotiatedinFebruary2009andHaldexhasthussecureditsneedoffinancing.

Inadditiontotherevolvingcreditfacility,Haldex’ssourcesoffinanc-ingcompriseaprivateplacementstotalingSEK600m,abridgingloanofGBP65mfortheacquisitionofConcentricandothershort-termfacilities. The bridging loan has been extended and now matures on August31,2009.Theloanwillberepaidbythecashconsiderationfromthe divestiture of the Wire division. Two of the private placements total-ingSEK250mmatureinMayandJune2009,respectively.

Shareholders’equityamountedtoSEK1,823m(1,871),resultinginanequity-assetsratioof29%(37).

Share capital at year-end amounted to SEK111m (111), dividedamong21,919,730shares.Holdingsofownsharesatyear-endtotaled376,470.Allshares,withtheexceptionoftreasuryshares,carryonevoteeachandprovideequalentitlementtotheCompany’sassetsandearnings.

Lossfortheyearreducedshareholders’equitybySEK–43m.EquityisalsodecreasedwithdividendpaymentstotalingSEK99m.TranslationdifferencesrelatedtoforeignnetassetsincreasedequitywithSEK143.The change in fair market value of derivatives in the hedging reserve decreasedbySEK53mandimpactedequityinacorrespondingamount.Thederivativespertaintoprojectedfuturedeliveriesofgoods,andtheresultsarerecognizedintheIncomeStatementasdeliveriesaremade,atwhichtimetheunrealizedresultistransferredfromequity.

profitabilityThereturnoncapitalemployedwas2.4%(8.3).

TheGroup’sprofitabilitytargetisa15%returnoncapitalemployed,averaged over a complete business cycle.

Thecapitalturnoverratewas2.2(2.2).Thereturnonequitydecreasedfrom7.3%tominus2.3%.

risks, uncertainties and financial risksAcompletepresentationofrelevantrisksanduncertaintiesisprovidedinNote3.

environmental impactTheGroup is engaged through four Swedish subsidiaries in businessactivitiesthataresubjecttolicenserequirementspursuanttotheSwedishEnvironmentalCode.TheGroup’sSwedishoperationsthataresubjecttolicense and reporting requirements impact the natural environmentmainlythroughtwosubsidiaries,HaldexBrakeProductsABandHaldexGarphyttanAB.Thesecompaniesareinvolvedinsurface-treatmentandthe painting of brake systems for highway vehicles as well as the produc-tion of specialty wire from steel alloys, activities that mainly impact the natural environment in terms of air and water emissions and noise. For additionalinformationconcerningtheenvironment,seepage28.

Guidelines concerning adoption of guidelines for remuneration of senior executivesIncommonwith themotion submitted to the2008AnnualGeneralMeeting,theBoardofDirectorsproposesthatthefollowingguidelinesapplyfortheperioduptothe2010AnnualGeneralMeeting.

RemunerationofthePresidentandCEOandotherseniorexecu-tives shall consist of a well-balanced combination of fixed salary, annual bonus, long-term incentive programs, pension and other benefits and conditions concerning termination of employment/severance pay-ment. The total remuneration shall be competitive in the market and based on performance. The fixed remuneration shall be determined individually and based on each individual’s responsibility, role, compe-tence and position. The annual bonus shall be based on outcomes of predetermined financial and individual objectives and not exceed30–50%of thefixedannual salary. Inexceptional situations, specialremuneration may be paid to attract and retain key competence or to induce individuals to move to new places of service or accept new posi-tions.Suchremunerationmaynotbepaidoutforperiodsexceeding36monthsandmaynotexceedtheequivalentoftwicetheremunerationtheexecutivewouldotherwisehavereceived.TheBoardofDirectorsmayproposethattheGeneralMeetingresolveonlong-termincentiveprograms. Pension benefits shall be based on defined-contribution plansand(forSwedishcitizens)shallprovideentitlementtopensionatage65.Uponterminationofemploymentbythecompany,thenoticeperiodforthePresidentandCEOis12monthsandforotherseniorexecutivessixmonths.Inaddition,whenenteringintonewemploy-ment contracts, agreement may be made on severance pay not exceed-ingtheequivalentof12months’fixedsalary.TheBoardshallbeenti-tled to depart from the guidelines if there are specific reasons for doing so in individual cases.

The company’s application of the guidelinesTheBoardofDirectorsutilizedit’srightstomakeanexceptionfromtheguidelinesasaconsequenceoftheassumptionoftermsofemploy-mentinconnectionwiththeacquisitionofacompanyduringthepastyear.Accordingly,therighttoavariableremunerationincrement,themaximumpermissiblelevelofwhichis80percentoffixedsalary,wasincluded in the employment terms of one of the company’s senior exec-utives.Thisexceedsthemaximumlevelof50percentoffixedsalaryspecified in the guidelines, that apply to the other senior executives.

Inaccordancewiththeguidelines,decisionshavebeentakenconcern-ing extra remuneration for a number of Haldex’s senior executives, and thePresidentandCEO,whichisestimatedtototalSEK1,560k(whereofSEK780kconcernthePresidentandCEO).ThisextraremunerationislinkedtothedivestmentoftheWireDivisionandwillbedisbursedwhen this transaction has been finalized.

33HAlDeX 2008 Directors’ report

net sales by division and region

SeK m 2008 2007 nominal, % Currency adjusted, %

Commercial Vehicle Systems 4,234 4,529 –7 –6

Hydraulic Systems 2,095 1,467 43 46

Garphyttan Wire 1,053 1,095 –4 –4

Traction Systems 1,021 848 20 20

Haldex Group 8,403 7,940 6 6

North America 3,189 2,997 6 9

Europe 4,423 4,255 4 3

Asia and Middle East 510 443 15 14

South America 281 245 15 12

Haldex Group 8,403 7,940 6 6

investments by division

SeK m 2008 2007 nominal, % Currency adjusted, %

Commercial Vehicle Systems 232 259 –10 –10

Hydraulic Systems 88 89 –1 1

Garphyttan Wire 21 20 5 5

Traction Systems 60 95 –37 –37

Haldex Group 402 463 –13 –12

Depreciation by division

SeK m 2008 2007 nominal, % Currency adjusted, %

Commercial Vehicle Systems 160 140 14 16

Hydraulic Systems 74 58 28 29

Garphyttan Wire 43 44 –2 –2

Traction Systems 52 40 30 30

Haldex Group 329 281 17 18

Distribution of earnings

As stated in the parent Company Balance Sheet, the Annual General Meeting has the following funds at its disposal

Profit brought forward 445

net income for the year 332

777

the board of Directors and the president propose the following distribution of earnings:

Dividendtotheshareholders –

to be carried forward 777

Historically, paid bonus remuneration has corresponded to about half of the maximum bonus levels.

For further information on remuneration of senior executives, refer toNote9.

Future trendsIn addition to thenumberof vehiclesproduced,Haldex’smarket isaffectedbyrequirementsfromcustomersandlegislators.Theserequire-ments will create trends and driving forces, such as an increased empha-sis on safety and environmental awareness, combined with the ever- increasing importance of vehicle dynamics.

OthertrendsthataffectHaldexarevehiclemanufacturers’endeav-orstobuildlightervehicles inordertoreducefuelconsumption.InmarketsoutsideEuropeandNorthAmerica,adistincttrendtowardsincreased demand for western technologies is noticeable. This applies particularlytolargemarkets,suchasIndiaandChina.

Onthewhole, the trends involvingsafety,environmentalaspectsand vehicle dynamics are resulting in expectations that Haldex’s market willgrowfasterthanthevehiclemarketingeneral.Otherindicationsof

this include developments in rapidly growing, emerging markets in Asia, where demand for leading-edge products and technologies isincreasing continuously.

parent Company TheGroup’sparentcompany,HaldexAB,carriesoutthemainofficefunctions, including the central financial function.

In2008,HaldexABreportedanegativeoperating incomeofSEK34m(–40),butearningsbeforechangesinallocationsreserveandtaxesamountedtoSEK265m(201).Including,dividendsfromgroupcompa-niesofSEK373m(117),groupcontributionofSEK35m(117)andafinancialnetofSEK–109m(7).During2008,thecompany’snetinvest-mentsanddivestments in sharesandparticipationsamounted toSEK619m.Cashandcashequivalentsatyear-endwereSEK178m(44).

events after the balance-sheet dateAfterthecloseof2008,renegotiationsofanumberoftheGroup’sloansbegan. The negotiations are still in progress and relate to loans totaling approximatelySEK400m.

34 HAlDeX 2008Group

Consolidated income statement2008 2007

Amounts in SeK m

note

Continuing operations

Discontinuing operations

Haldex

Continuing operations

Discontinuing operations

Haldex

Net sales 7,337 1,066 8,403 6,829 1,111 7,940

Cost of goods sold 11 –5,772 –843 –6,615 –5,309 –882 –6,191

Gross income 1,565 223 1,788 1,520 229 1,749

Selling expenses 11 –643 –93 –736 –634 –112 –746

Administrative expenses 11 –622 –66 –688 –481 –44 –525

Product development costs 11 –271 –14 –285 –218 –15 –233

Other operating income and expenses 12 1 13 44 0 44

operating income 41 51 92 231 58 289

Interest income 5 1 6 7 3 10

Interest expense –122 –3 –125 –69 –3 –72

Other financial items –27 –1 –28 –3 –2 –5

earnings before tax –103 48 –55 166 56 222

Taxes 12 17 –5 12 –74 –7 –81

net income for the year –86 43 –43 92 49 141

Attributable to:

Parent Company shareholders –87 – –44 88 – 137

Minority interests 1 – 1 4 – 4

141

Earnings per share before dilution, SEK –3:92 – –1:92 3:97 – 6:24

Earnings per share after dilution, SEK –3:92 – –1:92 3:97 – 6:24

Dividendpershare,SEK – – – 4:50 – 4:50

Average number of shares, thousands 21,920 – 21,920 21,980 – 21,980

35HAlDeX 2008 Group

Consolidated balance sheetAmounts in SeK m note 2008 2007

assets

Fixed assets

Intangible fixed assets 13 1,761 711

Tangible fixed assets 14 1,315 1,501

Financial fixed assets

Deferredtaxassets 16 143 112

Long-term receivables 31 30

total fixed assets 3,250 2,354

Inventories 18 940 1,055

Current receivables

Accounts receivable from customers 770 1,189

Other current receivables 19 278 282

Derivativeinstruments 17 45 20

Cash and cash equivalents 20 431 182

total current assets 2,464 2,728

Assets held for sale 21 576 –

total assets 6,290 5,082

sHareHolDers’ eQuity anD liaBilities

equity

Share capital 111 111

Capital contributions 455 455

Other reserves 88 –3

Retained earnings 1,151 1,294

Attributable to Parent Company shareholders 1,805 1,857

Minority interests 18 14

total equity 1,823 1,871

long-term liabilities

Long-term interest-bearing liabilities 22 1,097 1,293

Pensions and similar obligations 23 396 334

Deferredtaxes 16 84 90

Other long-term liabilities 30 24

total long-term liabilities 1,607 1,741

Current liabilities

Short-term loans 1,229 155

Debtstosuppliers 769 842

Derivativeinstruments 17 99 22

Other provisions 24 127 76

Other current liabilities 25 341 375

total current liabilities 2,565 1,470

Liabilities held for sale 21 295 –

total equity and liabilities 6,290 5,082

Collateral pledged None None

Contingent liabilities 10 13

36 HAlDeX 2008Group

Changes in Group equityAttributable to Parent Company shareholders

Share capital

Capital contribution

other reserves

Retained earnings

Subtotal

Minority interest

total

opening balance at January 1, 2007 111 455 72 1,256 1,894 4 1,898

Income-statement items recognized directly in equity

Change in hedging reserve, after tax –19 –19 –19

Hedges of net investments 13 13 13

Translation difference –45 –45 0 –45

net items recognized directly in equity – – –51 – –51 0 –51

Net income for the year

Net income for 2007 137 137 4 141

total revenues and costs – – –51 137 86 4 90

Transactions with shareholders

Increase in minority share of equity – 7 7

Repurchase of shares –24 –24 –24

DividendspaidtoownersoftheParentCompany –99 –99 –99

Dividendspaidtominorityshareholdersinsubsidiaries – –1 –1

Closing balance, December 31, 2007 111 455 –3 1,294 1,857 14 1,871

opening balance, January 1, 2008 111 455 –3 1,294 1,857 14 1,871

Income-statement items recognized directly in equity

Change in hedging reserve, after tax –53 –53 –53

Hedging of net investment –39 –39 –39

Translation difference 183 183 –1 182

net items recognized directly in equity – – 91 – 91 –1 90

Net income for the year

Net income for 2008 –44 –44 1 –43

total revenues and costs – – 91 –44 47 0 47

Transactions with shareholders

Increase in minority share of equity 4 4

Repurchase of shares

DividendspaidtoownersoftheParentCompany –99 –99 –99

Dividendspaidtominorityshareholdersinsubsidiaries

Closing balance, December 31, 2008 111 455 88 1,151 1,805 18 1,823

other reserves include hedging reserves and exchange rate differences:

Hedging reserve

exchange–rate differences

Opening balance at January 1, 2007 36 –57

Change during the year –19 –32

Closing balance at December 31, 2007 17 –89

Opening balance at January 1, 2008 17 –89

Change during the year –53 143

Closing balance at December 31, 2008 –36 54

37HAlDeX 2008 Group

Consolidated cash flow statementAmounts in SeK m 2008 2007

Cash Flow from operating activities

Operating income1), 2) 92 289

Reversal of depreciation, amortization and impairment losses 392 300

Interest paid1) –143 –66

Capital gain on sale of shares in subsidiaries 1 –

Taxes paid –61 –59

Cash flow from operating activities before changes in working capital 281 464

Change in working capital

Current receivables 22 –108

Inventories 142 –133

Opearating liabilities 412 89

Change in working capital 576 –152

Cash flow from operating activities3) 857 312

Cash flow from investments

Net investments –392 –453

Acquisitions –554 –49

Sale of shares in subsidiaries 4 –

Cash flow from investments4) –942 –502

Cash flow from financing

DividendtoHaldexAB’sshareholders –99 –99

Dividendtominorityshareholders – –1

Buyback of own shares – –24

Change in loans 409 249

Change in long-term receivables 15 –9

Cash flow from financing5) 325 116

Change in cash and bank assets, excl. exchange-rate difference 240 –74

Cash and bank assets, opening balance 182 250

Exchange-rate difference in cash and bank assets 9 6

Cash and bank assets, closing balance 431 182

1) Reclassification of financial income from other operating income to Financial items.2) the operating income from continuing operations of the Haldex group was SeK 41 (231) and from discontinued operations SeK 51 (58). 3) Cash flow from operating activities from continuing operations of the Haldex group was SeK 730 (260) and from discontinued operations 127 (52).4) Cash flow from investments from continuing operations of the Haldex group was SeK –922 (–484) and from discontinued operations –20 (–18).5) Cash flow from financing activities from continuing operations of the Haldex group was SeK 325 (116) and from discontinued operations – (–).

38 HAlDeX 2008notes Group

notes Groupnote 1 General information

HaldexAB (ParentCompany)and its subsidiariesbuild theHaldexGroup. Haldex supplies proprietary and innovative solutions developed in-house to the global vehicle industry. The main focus is on products related to vehicle dynamics, safety and the environment.

HaldexAB (publ),Corp.Reg.No. 556010-1155, is a registered limited liability corporationwith its registered office in Stockholm,Sweden.The address of theHeadOffice isHaldex AB, Box 7200,SE-10388Stockholm.

HaldexABislistedontheOMXExchangeinStockholm,MidCap.

note 2 Summary of important accounting principles

TheConsolidatedFinancialStatementswereprepared inaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbyEU.Inaddition,theSwedishAnnualAccountsActandtheSwedishFinancial Accounting Standards Council RFR 1.1 “SupplementaryaccountingregulationsforGroups”wereapplied.

TheParentCompany’sfunctioncurrencyisSwedishkronor(SEK),whichisalsothereportingcurrencyfortheParentCompanyandtheGroup.ThismeansthatthefinancialreportsarepresentedinSEK.AllamountsarerecognizedinSEKmunlessotherwiseindicated.

Assetsandliabilitiesarerecognizedinaccordancewiththeacquisi-tion value method, apart from certain financial assets and liabilities that are recognized at fair value.

The income statement has been prepared in functional format in accordancewithIAS1,whichreflectstheinternalreportingandpro-videsanaccuratepictureoftheCompany’sincome.

2.1 Consolidated financial statementssubsidiariesTheConsolidatedFinancialStatementsincludetheParentCompanyandthosecompaniesinwhichtheParentCompanydirectlyorindirectlyownsmorethan50%ofthevotingrightsorexertscontrollinginfluenceinsomeother way. The subsidiaries are included in the Group as of the day the controllinginfluenceistransferredtotheGroup.Divestedcompaniesareincluded in the Group’s consolidated accounts up to and including the date of sale.Companies acquired during the year are included in theGroup’sconsolidatedaccountsasofthedateofacquisition.TheminorityshareofequityisrecognizedasaseparatelineitemunderEquity.

The Consolidated Financial Statements were prepared using thepurchase method. This means that the subsidiaries’ assets and liabilities arerecognizedattheirfairvalueonthedayofacquisitionbasedonanacquisition analysis. In the analysis, the acquisition value of share-holdings or operations is established, as if the fair value on the date of acquisitionofacquiredidentifiableassetsandassumedliabilitiesandcontingentliabilities.Theacquisitionvalueofsharesinsubsidiariesoroperations comprises the fair value on the date of transfer of assets, accruingorassumedliabilitiesandissuedequityinstrumentsprovided

aspaymentfortheacquirednetassets,aswellastransactioncoststhataredirectlyattributabletotheacquisition.Ifthepurchasepriceforthesharesexceedsthefairvalueoftheacquirednetassets,thedifferenceisrecordedasgoodwill.Ifthepurchasepricefallsbelowthefairvalueofthe acquired net assets, the difference is recognized directly in theincome statement.

Intra-Grouptransactions,balancesheetitemsandunrealizedgainsand losses from intra-Group transactions are eliminated.

AlfdexAB,inwhichHaldexandAlfaLavalown50%each,iscon-solidated in accordance with the proportional method.

2.2 translation of foreign currencyThe functional currency for the Haldex Group and the presentation currencyisSwedishkronor(SEK).

transactions and balance sheet itemsTransactions in foreign currency are translated into SEK using theexchange rates from thedayof the transaction.Exchangegains andlosses resulting from these transactions and the translation of monetary assets and liabilities at the closing rate are recognized in the consoli-dated income statement exchange rate gains or losses from transactions thatfulfilltherequirementsforhedgeaccountingarerecognizedunderEquity.

subsidiariesThebalancesheetsandincomestatementsofnon-Swedishsubsidiariesare translated by translating assets and liabilities at the closing rate and income and expenses at the average rate during the year. Translation differences resulting from the translation of foreign subsidiaries’ net assets at different rates on the opening and the closing dates are recog-nizeddirectlyinthetranslationreservesinEquity.

Exchangeratedifferencesonloansandothercurrencyinstrumentsthat are recognized as hedges for net investments in foreign currency arerecognizeddirectlyinthetranslationreservesinEquity.

2.3 revenue reportingIncome from the sale of goods and services is recognizedwhen thegoods/servicesaredeliveredinaccordancewiththetermsofdeliverywith the customer, as soon as the principal rights and rights associated withownershipareadjudgedtohavebeentransferredtothepurchaser.The income is reported at fair value and, where applicable, is reduced by the value of discounts granted and returned goods. Income fordevelopmentprojectsisrecognizedprogressivelyinpacewiththerateof completion, assuming that the financial outcome of the develop-mentassignmentcanbecalculatedreliably(percentage-of-completionprofitrecognition).Thecompletionrateisdeterminedonthebasisofoutlaid expenses in relation to total estimated costs for the assignment.

Intra-Grouptransactionsareeliminated.

2.4 leasingLeasing is classified in the consolidated financial statements as either financial leasing or operational leasing, depending on whether the Companyretainsalltherisksandbenefitsassociatedwithownershipof

39HAlDeX 2008 notes Group

theunderlyingasset.Arequirementforthereportingoffinancialleas-ing is that the fixed asset be posted as an asset item in the balance sheet and that the leasing obligation be recognized as a liability in the balance sheet. Fixed assets are depreciated according to plan over their useful life, while lease payments are recognized as interest expenses and amor-tizationofdebt.Noassetorliabilityitemsarerecognizedinthebalancesheet in the case of operational leasing.

The leasing fee is expensed in the income statement on a straight-line basis over the term of the lease.

2.5 tangible fixed assetsTangiblefixedassetsconsistofbuildings(offices,factories,warehouses),land and land improvements, machines, tools and installations. These assetsarevaluedattheiracquisitioncostlessscheduleddepreciation.Scheduleddepreciationisbasedontheacquisitionvalueandestimatedeconomiclifeoftheassets.Buildingsaredepreciatedover25–50years.Machinery and equipment are usually depreciated over 3–10 years,while heavier machinery, such as furnaces, has an economic life of 20 years. Land is not depreciated. The assets’ residual values and useful livesarereassessedeveryclosingdayandadjustedifneeded.

2.6 intangible assetsproduct developmentAccording to IAS 38, product development costs are recognized asintangible fixed assets when the following criteria are met: it is likely that the asset will result in future financial benefits to the company; the purchase value can be calculated reliably; the company intends to finish the asset and has technical and financial resources to complete its devel-opment. The documentary basis for capitalizing product development costs can consist of business plans, budgets or the company’s forecasts of future results. The purchase value is the sum of the expenses accruing from the point in time the intangible asset fulfills the above criteria. Intangibleassetsarerecognizedastheiracquisitionvaluelessaccumu-lated depreciation from the completion date plus any impairment losses. Amortization begins when the asset becomes usable and isapplied in line with the estimated useful life and in relation to the finan-cial benefits that are expected to be generated by the product develop-ment. The useful life is not normally assessed as exceeding five years.

licenses and patentsLicensesandpatentsarerecognizedatacquisitioncostlessaccumulateddepreciationandanyimpairmentlosses.Straight-linedepreciationisappliedovertheexpectedusefullife(3–15years).

software and it systemsAcquiredsoftwarelicensesandcostsfordevelopmentofsoftwarethatare expected to generate future financial benefits for the Group for more than three years are capitalized and amortized over the expected usefullife(3–5years).

GoodwillGoodwillistheamountthattheacquisitioncostforanassetexceedstheasset’sfairvalue.Goodwillinconjunctionwiththeacquisitionofasubsidiary is recognized at an intangible asset.

Goodwillisnotamortizedbuttestedannuallyduringthethirdquar-tertoidentifyanyneedtoimpairtheassetandisrecognizedatacquisi-tion cost less accumulated impairment losses.

2.7 Financial instrumentsThe Group classifies its financial instruments in the following catego-ries: financial assets valued at fair value through profit or loss, loans and receivables, financial instruments held to maturity and financial assets available for sale. The classifications are based on the purpose of the

acquiredinstrument.Managementdeterminestheclassificationoftheinstruments when they are first recognized and reassess the classi fication ateachreportingevent.Duringthefiscalyear,theGrouphadfinancialinstruments belonging to financial assets measured at fair value through profit or loss, as well as loans and receivables.

Financial assets measured at fair value through profit or loss This category has two sub-categories: financial assets held for trading and assets that from the very beginning are attributed to the category mea-suredatfairvaluethroughprofitorloss.Afinancialassetisclassifiedinthiscategoryifithasbeenacquiredprimarilywithaviewtobeingresoldin the near future or if this classification is determined by company man-agement.Derivative instruments are also categorizedasbeingheld forsale, assuming that they have not been identified as hedging instruments.

loans and receivablesLoans and receivables are non-derivative financial assets with estab-lished or determinable payments that are not listed on an active mar-ket. They occur when the Group supplies money, products or services directly to the customer without intending to trade the resulting claim. They are included in current assets, with the exception of items with duedatesmorethan12monthsaftertheclosingday,whichareclassi-fied as fixed assets.

reporting derivative instrumentsDerivative instruments are recognized in thebalance sheet asof thetrade date and are measured at fair value, both initially and during sub-sequent revaluations.Themethodused for recognizing theprofitorloss arising at every revaluation occasion depends on whether the deriv-ative has been identified as a hedging instrument and, if this is the case, the nature of the hedged item. The Group identifies certain derivatives aseither:1)hedgingofthefairvalueofassetsorliabilities;2)hedgingofforecastflows(cashflowhedging)or3)hedgingofnetinvestmentinaforeignoperation.Toqualifyforhedgeaccounting,certaindocumen-tationisrequiredconcerningthehedginginstrumentanditsrelationtothe hedged item. The Group also documents goals and strategies for risk management and hedging measures, as well as an assessment of the hedging relationship’s effectiveness in terms of countering changes in fair value or cash flow for hedged items, both when the hedging is first enteredintoandsubsequentlyonanongoingbasis.

Fair value hedgesChangesinfairvalueofderivativesthatareclassifiedasfairvaluehedgesand fulfill the conditions for hedge accounting are recognized in the income statement with the changes in the fair value of the asset or liability that caused the hedged risk.

Cash flow hedgingCashflowhedgingisappliedforfutureflowsfromsales.Theportionofchanges in the value of derivatives that satisfy the conditions for hedge accountingisrecognizeddirectlyinshareholders’equity.Theineffec-tive portion of profit or loss is recognized directly in the income state-ment, among financial items. The unrealized profit or loss that is accu-mulatedinequityisreversedandrecognizedintheincomestatementwhenthehedgeditemaffectsprofitorloss(forexample,whenthefore-castsalethathasbeenhedgedactuallyoccurs).

If a derivative instrument no longer meets the requirements forhedge accounting, is sold or terminated, what remains is any accumu-latedprofitorlossinequity,whichisrecognizedintheincomestate-ment at the same time as the forecast transaction is finally recognized in the income statement. When a forecast transaction is no longer expectedtooccur,theaccumulatedprofitorlossrecognizedinequityisimmediately transferred to the income statement.

40 HAlDeX 2008notes Group

Hedging of net investmentsAccumulatedgains/lossesfromre-evaluationofhedgesofnetinvest-ments that fulfill the conditions for hedge accounting are recognized underEquity.Whenoperationsaredivested,theaccumulatedeffectsaretransferredtotheIncomeStatementandaffecttheCompany’snetprofit/lossfromthedivestment.

Calculation of fair valueFair value of financial instruments that are traded on an active market (forexample,publiclyquotedderivativeinstruments,financialassetsthatareheldfortradeandfinancialassetsthatareheldforsale)isbasedonthequotedmarketrateontheclosingday.ThequotedmarketratesusedfortheCompany’sfinancialassetsaretheactualbidprices;quotedmarket rates used for financial liabilities are the actual asked prices. The instrumentsheldbytheGrouparetraded100%inanactivemarket.

2.8 inventoriesInventoriesarevaluedat the lowestof theacquisitioncost inaccor-dance with the first-in first-out principle and the net realizable value.

The cost of finished goods and work in progress comprises raw mate-rials, direct labor, other direct costs and related production overheads (basedonnormaloperatingcapacity).

2.9 accounts receivable from customersAfter individual valuation, receivables are valued in the amounts inwhich they are expected to be paid.

2.10 Cash and cash equivalentsCashandcashequivalentsincludescash,cashinbanks,othershort-term investments that fall due in less than three months and bank over-draft facilities. Bank over draft facilities are recognized in the balance sheet as borrowing under current liabilities.

2.11 receivables and liabilitiesReceivablesandliabilitiesinforeigncurrenciesarevaluedattheyear-endrate.Exchangegainsandlossespertainingtooperationalcurrencyflowsare recognized in operating income. Current and long-term interest-bearing liabilities are recognized in the balance sheet to amortized cost.

2.12 provisionsProvisions are recognized in the balance sheet when the Group has future obligations resulting from an event that is likely to result in expenses that can be reasonably estimated. Provisions for restructuring costs are recognized when the Group has presented a plan for carrying out the measures and the plan has been communicated to all affected parties.

2.13 employee benefitsThe Group has both defined-benefit and defined-contribution pension plans.Administrationishandledbyathirdpartyate.g.afundmanage-ment company, an insurance company, or a bank. The plans are fee- financed and the financing is recognized in the income statement. The size of the fee is dependent on actuarial estimations that are made once a year.

Defined-benefitplansstatewhichamountanemployeecanexpectto receive after retirement and is calculated from factors such as age, work life and future salary. The actual debt, net any plan assets and non-reportedactuarialgains/losses,isrecognizedinthebalancesheet.

Defined-contribution plans include mainly retirement pensions,disability pensions and family pensions, and a defined contribution normally expressed as a percentage of current salary, is paid to a sepa-rate legal entity. The employee is responsible for the risk inherent in these plans and the Group does not have any further obligations if the fund’sassetsfallinvalue.Nodebtisrecognizedinthebalancesheet.

The debt reported in the balance sheet pertaining to defined-benefit pension plans is the present value of the defined-benefit obligation on theclosingdaylessthefairvalueoftheplanassets,adjustedfornon-reportedactuarialgains/losses.Defined-benefitpensionobligationsarecalculatedannuallybyindependentactuariesusingtheprojectedunitcredit method. The present value of the obligations is determined through discontinuation of the estimated future cash flow.

Actuarial gains/losses from experience-based adjustments andchangesinactuarialassumptionsexceedingthehigherof10%ofthevalueoftheplanassetsand10%ofthedefined-benefitobligation,isrecognized as an expense or revenue over the employees’ average remainingworklifeinaccordancewiththe“corridormethod”.Accord-ingly,nodebtisrecognizedinthebalancesheet.Swedishgroupcompa-niesapplyUFR4whichmeansthattaxonpensioncostiscalculatedonthedifferencebetweenpensioncost inaccordancewith IAS19andpension cost determind in accordance with local regulations.

2.14 taxesIncometaxesconsistofcurrenttaxanddeferredtax.Incometaxesarereported in the income statement, apart from when underlying trans-actionsarerecognizeddirectlyinequity,wherebytherelatedtaxeffectmustalsoberecognizedinequity.

Current tax is the tax tobepaidor received for the currentyearbasedoncurrenttaxrates.Adjustmentofcurrenttaxattributabletoprevious periods is also included here.

Deferredtaxiscalculatedonthebasisofthetemporarydifferencesbetween the recognized and tax-assessment value of assets and liabili-ties. The valuation of deferred tax is based on the recognized amounts forassetsandliabilitiesthatareexpectedtobesoldorsettled.Avalua-tion is performed based on the tax rates and tax regulations that have beendecidedorannouncedatyear-end.Deferredtaxassetspertainingto loss carry forwards are recognized insofar as it is probable that the losses will be used to offset future tax.

2.15 Cash flow statementTheCashFlowStatementispreparedusingtheindirectmethod.Thismeansthattheoperatingincomeisadjustedfortransactionsthatdonotentail receipts or disbursements during the period, and for any income and expenses referable to cash flows for investing or financing activities.

2.16 Government assistanceGovernmentassistanceconnectedtotheacquisitionoffixedassetshasreducedtheacquisitionvalueoftheparticularassets.Thismeansthattheassethasbeenrecognizedatanetacquisitionvalue,onwhichthesize of depreciation has been based.

2.17 Discontinued operationsOnDecember25,Haldex reachedanagreementwithSuzukiMetalIndustryCoLtd,aJapanesemanufacturerofsteelwire, todivest itsdivision Garphyttan Wire.

Haldex year-end report has therefore been prepared according to the IFRS5Non-currentAssetsHeldforSaleandDiscontinuedOperations.The consolidated income statement separates continued and discontin-uedoperations.Intheconsolidatedbalancesheet,assetsandliabilitiesheld for sale is broke out and reported on separate lines.

Itisnotpossibletocomparethefigurespresentedforthediscon-tinued operations with the figures presented for the Garphyttan Wire division since the divisional figures include different group allocations.

2.18 introduction of new accounting principlesWhenpreparingtheconsolidatedfinancialstatementsatDecember31,2008,alargenumberofstandardsandstatementsofinterpretationhadbeen published that have yet to become effective. Because of the large

41HAlDeX 2008 notes Group

number of changes the focus has been to give a preliminary assessment of the standards and statements that could have an impact on Haldex AB’sfinancialreports.

ias 1 revised – presentation of financial reportsTherevisedstandardofIAS1willbecomeeffectivefromJanuary1,2009. The revised standard will require all non-owner changes inequity,incomeandexpenses,tobeshowninaseparateperformancestatement. The current assessment is that the amendment of this stan-dard will result in changes in the presentation format and in designa-tions in the consolidated financial statements.

iFrs 2 amendment – share-based paymentThisamendmentwillbeappliedasofJanuary1,2009.Theamendmentaffects the definition of vesting conditions and introduces a new concept, “non-vestingconditions”(conditionsthatarenotdefinedasvestingcon-ditions).Thestandardstatesthat“non-vestingconditions”mustbecon-sideredwhenassessingthefairvalueofequityinstruments.HaldexABhasoptionprogramswithelementsof“non-vestingconditions.”Theimpactof the amendment of this standard is not expected to be considerable.

iFrs 3 revised – Business CombinationsThisamendmentwillaffectthereportingoffutureacquisitions,inpartin terms of the reporting of transaction costs, any conditional purchase considerationsandsuccessiveacquisitions.TheGroupwillapplythestandardasofthefiscalyearthatstartsonJanuary1,2010.Theamend-mentwillnothaveanyimpactonpreviousacquisitionsbutwillimpactthe consolidated financial statements in respect of future transactions. TheIFRS3(revised)stillundergoingtheEU’sapprovalprocessand,ifapproved,willbeappliedasofJuly1,2010.

iFrs 8 – operating segmentsIFRS8replacesIAS14andistobeappliedasofJanuary1,2009.Thenewstandardrequiresthatsegmentreportingbepresentedonthebasisof company management’s perspective. The current estimation is that the new standard will not affect the consolidated financial statements toanymajorextent,sincebothinternalandexternalreportingisbasedprimarilyontheGroup’soperatingsegments(divisions)andsecond-arily on the Group’s geographical markets.

ias 23 amendment – Borrowing CostsThisamendmenthasbeenapprovedandwillbeappliedasofJanuary1,2009.The amendment requires that borrowing costs that are directlyattributable to the purchase, design or production of an asset that will take considerable time to complete for use or sale must be capitalized as part of the acquisition value acquisition of the asset.The alternative allowingimmediateexpensingofborrowingcostswillberemoved.Atpresent,theamendmentofIAS23doesnotaffectconsolidatedfinancialstatementsbecause the Group has no borrowing costs that can be capitalized.

ias 27 revised – Consolidated and separate Financial statementsThe revised standard entails, for example, that earnings attributable to minority shareholders must always be recognized, even if the minority share is negative, that transactions with minority shareholders must alwaysberecognizedinequityand,intheeventthattheParentlosescontrolling influence, any remaining share must be revalued at fair value.TherevisedstandardofIAS27willaffecttheconsolidatedfinan-cialstatements.However,ithasyettobeapprovedbytheEUand,ifitis,itwillnotbeapplieduntilJuly1,2010.

ias 36 amendment – impairment of assetsFair value less costs to sell is calculated on the basis of discounted cash flows,disclosuresequivalenttothoseforvalue-inusecalculationshould

bemade.Thegroupwillapplytherequireddisclosureswhereapplica-bleforimpairmenttestsfromJanuary1,2009.

ias 38 amendment – intangible assetsTheamendmentdeletesthewordingthatstatesthatthereis“rarely,ifever”support of use a method that results in lower rate of amortization than the straight-line method. The amendment will not have an impact on the group as all intangible assets are amortized using the straight-line method.

iFriC 14, ias 19 – the limit on a defined benefit asset, minimum funding requirements and their interactionIFRIC14providesguidancewhendeterminingthelimitationstipulatedinIAS19fortheamountofasurplusthatmaybereportedasanasset.Italsoexplainshowpensionassetsand/orliabilitiescanbeaffectedbystatutoryorcontractualrequirementsforminimumfinancing.TheinterpretationwillbeappliedbytheGroupfrom1January2009.Atpresent,however,itisnotestimatedtohaveanymajorimpactontheGroup’sfinancialposition.

note 3 Risks & Risk management

3.1 operational risksMarket risks Haldex is mainly active in the markets for trucks, trailers, construction machineryandcars.Demandforthecompany’sproductsisdependenton demand for transportation, which is in turn driven by increases in global trading, infrastructure construction, increased traffic safety awareness, environmental and safety legislation, as well as economic growth on the particular continent.

Haldex’smaingeographicalmarketsareNorthAmericaandEurope,buttheGroupisalsoactiveintheAsianandSouthAmericanmarkets.Marketrisksarehandledinthestrategyprocess,whichencompassesallGroup units. The Board participates in this process and makes deci-sions concerning the Group’s strategy and direction.

CustomersSinceHaldexisactiveinseveraldifferentmarketsegments,itsdepen-dence on individual customers is limited. However, a loss of a customer oramajorcontractcouldhaveamajorimpactonanindividualdivision.

price trendPrice pressure is a natural feature in the competitive market in which Haldex is active. To manage this, Haldex focuses continuously on reducing its costs and increasing the value it provides to customers by developing new products and technologies.

raw materials pricesThe Group depends on a number of raw materials and intermediates. Haldex has defined its exposure to raw materials in terms of both the Group’s own purchasing of raw materials and of Haldex’s sub-suppliers’ purchasing of raw materials. Exposure* is greatest towards variousgradesofsteel,whereannualvolumesamounttoapproximatelySEK1,400m,ofwhichwirerodaccountsforaboutSEK500m.AnnualexposuretoaluminumandcastironamountstoaboutSEK180mandSEK130m,respectively.TheGroupalsohassomeexposuretocopper.

To limit the risk of an adverse impact on earnings, a process is launched to some extent introducing price clauses for raw materials in customer agreements.Incaseswherewehavenotnegotiatedpriceclauses,Haldexto large extent renegotiate agreements in the event that the price trend for raw materials has resulted in a considerable increase in costs. To a large extent, the short-term effects of price increases for raw materials are limited by the fact that price agreements with the Group’s raw materials suppliers extend over an average period of six months.

* Based on purchases 2008, including Concentric 12 months.

42 HAlDeX 2008notes Group

productionDamagetoproductionplants,caused,forexample,byfirecouldhaveanadverse impact in the form of direct damage to property and of business disruption that impedes the potential to live up to commitments to cus-tomers. This in turn could result in customers choosing other suppliers.

Because Haldex has production at several plants for a particular productline,ithasthepotentialtoreducetheconsequencesofsuchbusiness disruption by increasing production at other plants. However, this normally results in additional costs.

Haldex is continuously developing various damage-prevention mea-sures.TheGrouphasadequateinsurancecoveragainstbothbusinessdisruption and damage to property.

product developmentRequirements from users and legislators for increased safety andimproved environmental and vehicle dynamics are resulting in increaseddemandfortheproductsprovidedbyHaldex.Accordingly,itis essential that the Group continuously develop new products or improve existing products that satisfy this demand so that markets shares are not lost to competitors.

Consequently,akeypartofHaldex’sstrategyinvolvesdevelopingnewproducts in those areas that the Group regards as important for contin-uedgrowthand/orfordefendingmarketshares.In2008,theGroup’sexpenditureforproductdevelopmentamountedto4.0%ofsales(4.2).

The development of new products always entails the risk that a product launch will fail for some reason. Because the Group capitalizes costs for majorproductdevelopmentprojects,afailedlaunchwouldgiverisetoanimpairmentrequirement.TheGroup’scapitalizedinvestmentsinproductdevelopmentamountedtoSEK282m(241)atDecember31,2008.AnimpairmentlossofSEK5mwastakenduring2008,seenote4.

patentsThe risks pertain in part to cases whereby competitors infringe on the Group’s patents and in part to cases where Haldex accidentally infringes upon the patents held by competing companies. The risk of the market-ing of unlicensed copies of the Group’s products has increase din recent years,particularlyintheAsianmarkets.Tominimizetheserisks,thepat-ent situation is thoroughly monitored on a continuous basis. Haldex’s own innovations are protected by patents to the extent possible.

Complaints, product recalls and product liabilityHaldex is exposed to complaints in the event that the Group’s products failtofunctionthewaytheyshould.Insuchcases,theGroupisobligedto rectify or replace the defective products.

Recallspertaintocaseswhereanentireproductionseriesoralargepart has to be recalled from customers in order to rectify deficiencies. This occurs occasionally in the vehicle industry. The Group has no insurance covering recalls. The assessment is that the cost of such insur-ance would not be proportionate to the risk covered by the insurance. Haldexhashistoricallynotbeenaffectedbyanymajorrecallsofprod-ucts. There is always a risk that our customers demand that suppliers cover costs in addition to replacing the product, such as the cost of dis-mounting, assembly and other ancillary costs. To the extent possible, Haldex endeavors to be exempted from such liability.

Ifaproductcausesdamagetoapersonorproperty,theGroupcouldbe liable to pay damages. Haldex is insured against such product liabil-ity.Inthepastdecade,nomajorproductliabilityclaimshaveoccurred.

In2008,costsforcomplaintsandproductrecallscorrespondedto1.3%(1.1)oftotalsales.

Haldex endeavors to minimize its risks in respect of complaints, prod-uct recalls and product liability by means of comprehensive long-term testsinthedevelopmentprocessandthroughqualitycontrolsandchecksin theproductionprocess.With the aimof improving thequalityof

products and processes, Haldex also works in cooperation with customers to achieve optimal results.

Human capital riskItisoffundamentalimportancetothecompanyintheshortandthelong-term perspective that favorable conditions are created in the Group to attract and retain skilled employees and managers. To achieve this,theGroup’sHReffortsfocusonthreemainareas:skillsdevelop-ment, development of leadership and management efforts and a strengthened corporate culture.

AseriesofGroup-wideprocesseshavebeenimplementedinthesethree areas, in order, for example, to assess performance and identify and develop skills and potential, salaries and rewards, thus ensuring consistent management of personnel-related matters and minimizing human capital risks.

3.2 Financial risksTheGroupisexposedtofinancialriskssuchasmarket,credit,liquidityandfinancing risks. To reduce the impact of these risks, Haldex works in accor-dance with a policy that regulates their management. This policy has been adoptedbyHaldex’sBoardofDirectors.Follow-upandcontroloccurscontinuously in each particular company and at the corporate level.

exchange rate risksThrough its international operations, Haldex is exposed to exchange raterisks.Exchangeratechangesaffecttheconsolidatedincomestate-ment and balance sheet in part in the form of transaction risks and in part translation risks.

Transaction risksThe Group’s net flows of payments in foreign currencies give rise to transaction risk. The value of net flows in foreign currencies totaled in 2008approximatelySEK870m(885).ThecurrencyflowswiththelargestimpactonearningsaretheinflowsofUSDandEURintoSEK.Anexchangeratedifferenceof10%betweenEURandSEKaffectstheGroup’searningsbyapproximatelySEK43m(43),andbetweenUSDandSEKbysomeSEK10m(12),aftertax.

Inaccordancewiththecurrentfinancepolicy,70%ofanticipatednet flows for the estimated volumes for the forthcoming 12-monthperiodarehedged,withapermissibledeviationof+/–10%.AtDecem-ber31,2008,77%(72)werehedgedviaderivativeinstruments.TheGroup’s finance policy governs which types of derivative instruments can be used for hedging purposes as well as counterparties with whom contractscanbesigned.Currencyforwardcontractswereusedin2008to hedge invoiced and forecasted currency flows. AtDecember 31,thesecontractshadavalueofSEK531mnet(545).Theyhadanega-tivemarketvalueofSEK69m(neg.4).

In special cases, the Boardmay decide that currency flows needhedgingoverlongertimehorizons.In2006,hedgingwasusedtocoverforecast inflows during 2009–2010 in a nominal amount of SEK155matDecember31,2008.Atthesamedate,thesehadanaccruedpositivevalueofSEK0.4m.

outstanding currency contracts at December 31, 2008

SeK m nominal amount

uSD net Sold

euR net Sold

other net Sold

Year of maturity 2009 183 490 31

Average rate 7.49 9.64 –

Hedging of flows >12 months 39 – –

Average rate 7.78 – –

Translation risksThenetassets (i.e.equity)of thenon-Swedishsubsidiaries representinvestments in foreign currencieswhich,when translated intoSEK,

43HAlDeX 2008 notes Group

giverisetoatranslationdifference.Initsfinancepolicy,theGrouphasestablished a framework for how the translation exposure that arises shall be managed in order to control the translation differences’ impact on the Group’s capital structure. The finance policy stipulates that the Group’s net debt shall be distributed in proportion to the capital employed per currency. Wherever necessary, this goal can be achieved by raising loans in the various currencies used by the subsidiaries.

Gainsandlossesonsuchloansthatareadjudgedaseffectivehedgingoftranslationdifferencesarerecognizeddirectlyinshareholders’equity,whilegainsand losseson loans thatcannotbeadjudgedaseffectivehedging are recognized in the income statement as a financial item.

In2008,thevalueoftheGroup’snetassets,meaningthedifferencebetweencapitalemployedandnetdebt,totaledSEK1,823m(1,871)and was distributed among the following currencies:

2008 2007

SEK 85 300

USD 723 834

EUR 293 233

GBP 336 128

Other 386 376

Thisdistributionwasachievedin2008throughloanofUSD28m(44)andin2008throughaloaninGBPof29m(0),whichweredesignatedas hedges of net investments, in foreign subsidiaries.

interest rate riskInterestrateriskistheriskthatchangesintheinterestratelevelwillhaveanegativeimpactonGroupearnings.SincetheGrouphasnosignificantholdings of interest-bearing assets, revenues and cash flow from operating activities are, in all significant respects, independent of changes in market interest rates. The Group’s interest rate risk arises through its borrowing. Accordingtothefinancepolicy,theaveragefixedinteresttermmustbebetween1and12months.Theriskmustalsobespreadovertimesothatinterest on a lesser part of the total debt is renegotiated at the same time. ThroughtheacquisitionofConcentric,interest-rateswapsintheamountUSD8.2mandGBP13.7mweretakenover.Thesematurein2009andhadamarketvalueofSEK–4matyear-end2008.Theaveragefixedinter-esttermasofyear-end2008wastwomonths,meaningthatmostoftheGroup’sfinancialliabilitiesweresubjecttovariableinterest;inotherwords,thattheinterestratewillberesetwithinoneyear.AsofDecember31,2008,SEK2,051m(1,118)oftheloanliabilitywassubjecttoanaveragevariableinterestrateof3.87%(5.06).Aonepercentagepointchangeintheinterest rate affects the cost of the Group’s borrowing by approximately SEK16m(10)aftertax.

Credit riskCreditriskiswhenapartyinatransactioncannotfulfilltheirobliga-tions and thereby creates a loss for the other party.

The risk that customers will default on payment for delivered prod-ucts is minimized by conducting thorough control reviews of new cus-tomers and following up with payment behavior reviews of existing customers, according to the Group’s finance policy. The Group’s accountsreceivabletotaledSEK832m(1,189)onDecember31andtheamounts that are expected to be paid are recognized. Haldex customers are primarily vehicle manufacturers, other system and component pro-ducers and aftermarket distributors within the vehicle industry. The geographic distribution of receivables from customers corresponds to a large extent to the division of sales per region.No single customerrepresentsmorethan5%(6)ofsales.TheGroup’scustomerlossesnor-mallytotallessthan0.1%ofsales.

accounts receivable

Due but not impaired 2008 2007

1–30 days 63 93

30–60 days 14 22

>60 days 7 14

Theyear’snetcostfordoubtfulaccountsreceivableamountedtoSEK3m(12).

the provision for doubtful receivables was changed as follows:

provision for doubtful receivables 2008 2007

Provision on January 1 30 18

Provision for anticipated losses –3 21

Confirmed losses –2 –3

Reversal of provision 6 –6

Exchange-rate effect 2 0

ProvisiononDecember31 33 30

The credit risk associated with financial assets is managed in accordance with the finance policy. The risk is minimized through such measures as limiting investments to interest-bearing instruments with lower risk and highliquiditybyusingminimumcreditratingsandbylimitingthemax-imumamountthatcanbeinvestedinanygivencounterparty.Aframe-work agreement is signed with most counterparties for right of set-off to further reduce risks. The credit risk in foreign currency and interest rate contracts corresponds to their positive market value, i.e. potential gains on these contracts. The credit risk for foreign exchange contracts was SEK16m(16)atDecember31.ThecorrespondingriskforinvestmentsincreditinstitutionswasSEK430m(182),withouttakingpossibleoff-setting opportunities into account.

Financing riskThe Group’s financing risk is the risk that an excessive portion of Haldex’s liabilities fall due for payment within a limited period of time when financingisexpensiveand/orinshortsupply.Thisriskisreducedbyastip-ulation in the finance policy stating that the total liability must have a remaining maturity of at least two years and that the maturities in the bor-rowingportfoliomustbespreadoutoverseveralyears.OnDecember31,2008,62%(72)ofborrowinghadamaturitylongerthantwoyears.Thematuritystructurewasasfollows:200938%,20104%,20115%and201253%.

liquidity riskLiquidityrisk,meaningtherisktheGroup’scapitalrequirementswillnotbemet,islimitedbyholdingsufficientcashandcashequivalentsand granted but unused credit facilities that can be utilized without qualifications.Thegoalaccordingtothefinancepolicyisthatcashandcashequivalentsandavailablecreditfacilitiesmusttotalatleast5%ofnetsales.ThesefundstotaledSEK1,647m(1,344)atyear-end2008,whichcorrespondsto20%(17)ofnetsales.

Haldex’s main sources of financing December 31, 2008, nominal value (millions)

2008 2007

Syndicated loan USD250 USD250

Bond loans SEK 600 USD600

Bridge loan GBP 65 –

Capital riskTheGroup’sobjectiveinrespectofthecapitalstructureistosecureHaldex’sability to continue to conduct its operations so that it can generate a return for shareholders and value for other stakeholders and in order to maintain an optimal capital structure so that the cost of capital can be reduced.

44 HAlDeX 2008

To manage the capital structure, the Group could change the dividend paid to the shareholders, repay capital to the shareholders, issue new shares or sell assets in order to reduce debt.

note 4 Important estimations and assumptions

The Consolidated Financial Statements contain estimations andassumptions about the future. These are based on both historical expe-rience and expectations for the future. The areas with the highest risk forfutureadjustmentsofcarryingamountsarementionedbelow.

GoodwillWith the implementation of IFRS 3 goodwill are not amortized,instead tested for impairment both annually and when there is an indi-cationofadecreaseinvalue.IFRS3wasintroducedJanuary1,2005and the impact on the profit can be considerable for the Haldex group if the profitability goes down.

During2008theGroup’sgoodwillhasbeentestedfor impairment.The impairment test on goodwill is carried out on a divisional level (CommercialVehicleSystemsandHydraulicSystems),whichisthecash-generating unit that is expected to benefit from the goodwill. The test is performed by discounting future cash flows and thus calculating the value inuse.Calculatedvalueinusehasbeenplacedinrelationtoandtestedagainst carrying amounts for the two divisions’ goodwill. Haldex net sale and return has historically a very strong correlation to the number of pro-duced units of trucks and trailers. Future cash flow is therefore calculated on the basis of official market data for future production of trucks and trailers, consideration is also taken for Haldex historical financial perfor-mance and future benefits from current improvement programs.

When discounting expected future cash flows, a weighted average cost ofcapitalaftertax(WACC)isused,currently11%.Theweightedaver-age cost of capital has been calculated on the basis of the following assumptions:Risk-free interest rate:Ten-yearSwedishgovernmentbondrate.Markets risk premium:5%.Beta:EstablishedbetavalueforHaldex.Interest expense: Has been calculated as a weighted interest rate on the basis of the Group’s financing structure in various currencies, and tak-ing a loan premium into account.Tax rate:Accordingtothetaxrateapplyinginthespecificcountry.

Theimpairmenttestsperformedin2008didnotrevealanyneedtoimpairgoodwill.A1%changeinthediscountrateora10%decreaseof cash flow does not change the outcome of the assessment.

Development projectsHaldexcapitalizecostsconcerningdevelopmentprojects.Thesecapi-talizeddevelopmentprojects are tested for impairment each year orwhen there is an indication of decrease in value. The tests are based on futurepredictionofrevenueandcorrespondingproductioncosts.Incase the future volumes, prices or costs diverge negatively from the pre-dictions, an impairment loss may arise.

DevelopmentprojectsareconsideredtobeanormalpartofHaldexbusiness. Generally impairment tests are carried out with the same assumptions(i.e.WACC)astheimpairmenttestongoodwill.However,individualriskassessmentpointoutdifferentrisksinthedifferentproj-ectswhytheWACCisadjustedtoconsidertheestimatedriskineachindividual project. Development projects considered a higher risk istestedwithahigherWACCthanaprojectwithaconsideredlowerrisk.AnimpairmentlossofSEK5misbookedintheincomestatementin

2008asaresultofperformedimpairmenttest.A1%change inthediscountrateora10%decreaseofcashflowdoesnotchangetheout-come of the assessment. However, under the prevailing market condi-tions the uncertainty concerning forecast future cash flow is naturally greater than usual.

income taxesTheGrouppaystaxinmanydifferentcountries.DetailedcalculationsoffuturetaxobligationsarecompletedforeachtaxobjectwithintheGroup. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that where initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

warranty reservesThe Group continuously assesses the value of the reserves in relation to theestimatedneed.Thewarrantyreserverepresented0.9%(0.7)ofnetsalesasofDecember31,2008.

pensionsThe pension liabilities reported in the balance sheet are actuary- estimated and are based on annual assumptions. These assumptions are describedinNote23.A0.25%averagechangeintheutilizeddiscountrate affects the present value of the Group’s pension obligations by approximatelySEK68m.

note 5 Segment reporting

SegmentreportingiscompiledfortheGroup’sdivisionsandgeograph-icalareas.SincetheGroup’soperationsarefolloweduponthebasisofthe divisions’ earnings, this should be viewed as the primary basis for division. The segment’s earnings, assets and liabilities include items that are directly attributable to the particular segment, as well as items that can be allocated to the segments in a reasonable and reliable manner.

The assets and liabilities that have not been allocated to the segments are deferred tax assets and deferred tax liabilities, as well as financial investments, financial receivables and financial liabilities.

Market-basedpricinghasbeenappliedforintra-Grouptransactions.

DivisionsDivisionsaretheGroup’sprimarysegment.TheGroupcomprisesthefollowing divisions:Commercial Vehicle Systems –develops,manufactures and sellsbrakesystems for heavy vehicles, trailers and buses.Hydraulic Systems–develops,manufacturesandsellshydraulicliftingsystems and drive systems for industrial vehicles, and tail-lifts for trucks and personal lifts.Garphyttan Wire – manufactures state-of-the-art specialty spring wiremade of various alloys for use primarily in combustion engines and trans-missions,wherethedemandsforqualityandperformancearemeticulous.Traction Systems –manufacturesAWDsystems,which are electroni-cally controllable systems for four-wheel-drive vehicles.

Geographical areasGeographical areas are the Group’s secondary segment. The customers’ location serves as the foundation for sales per segment.

Information pertaining to the segments’ assets and investments during the period are based on geographical areas grouped in accor-dance with where the assets are located.

45HAlDeX 2008 notes Group

Cont. note 5 segment reporting

SeK m

Full year 2008

Full year 2007

Full year 2008

Full year 2007

Commercial Vehicle systems Hydraulic systems

Net sales 4,234 4,529 Net sales 2,095 1,467

Operating income* 4 159 Operating income* 146 86

Operating income –92 109 Operating income 105 86

Operating margin*, % 0.0 3.5 Operating margin*, % 7.0 5.8

Operating margin, % –2.2 2.4 Operating margin, % 5.0 5.8

Assets 2,546 2,845 Assets 2,028 781

Liabilities 641 672 Liabilities 628 265

Return on capital employed**, % –3.9 4.9 Return on capital employed**, % 8.2 16.6

Investments 232 259 Investments 88 89

Depreciation 160 140 Depreciation 74 58

No. of employees ** 2,856 3,149 No. of employees** 2,335 1,591

Garphyttan wire traction systems

Net sales 1,053 1,095 Net sales 1,021 848

Operating income* 59 45 Operating income* 41 49

Operating income 56 45 Operating income 38 49

Operating margin*, % 5.6 4.1 Operating margin*, % 4.0 5.8

Operating margin, % 5.3 4.1 Operating margin, % 3.7 5.8

Assets 556 650 Assets 369 433

Liabilities 169 221 Liabilities 231 258

Return on capital employed**, % 12.6 9.9 Return on capital employed**, % 16.9 21.3

Investments 21 20 Investments 60 95

Depreciation 43 44 Depreciation 52 40

No. of employees** 474 482 No. of employees** 339 296

unallocated Group

Net sales – – Net sales 8,403 7,940

Operating income* – – Operating income* 250 339

Operating income – – Operating income 92 289

Operating margin*, % – – Operating margin*, % 3.0 4.3

Operating margin, % – – Operating margin, % 1.1 3.6

Assets 792 372 Assets 6,290 5,082

Liabilities 2,799 1,796 Liabilities 4,467 3,211

Return on capital employed**, % – – Return on capital employed**, % 2.4 8.3

Investments – – Investments 402 463

Depreciation – – Depreciation 329 281

No. of employees** – – No. of employees** 6,004 5,518

* excluding restructuring costs, one-off items and amortization of acquisition-related surplus values** Rolling 12 months

Breakdown by geographic area

2008

north America

europe

Asia and the Middle east

South America

Group

Net sales 3,189 4,423 510 281 8,403

Assets 1,775 3,634 732 149 6,290

Investments 94 243 11 54 402

2007

north America

europe

Asia and the Middle east

South America

Group

Net sales 2,997 4,255 443 245 7,940

Assets 1,262 3,190 490 140 5,082

Investments 94 302 58 9 463

note 6 Costs distributed by type

2008 2007

Directmaterialcosts –4,573 –4,204

Personnel costs –2,040 –1,965

Depreciation –360 –281

Other operating costs –1,338 –1,201

total operating costs –8,311 –7,651

46 HAlDeX 2008notes Group

note 7 Average number of employees

Women

Men

total 2008

Women

Men

total 2007

Sweden 262 1,018 1,280 256 993 1,249

USA 501 1,140 1,641 571 1,196 1,767

China 379 825 1,204 322 663 985

Germany 64 356 420 67 335 402

Mexico 53 160 213 55 201 256

Hungary 99 88 187 98 104 202

Great Britain 75 363 438 77 114 191

Brazil 40 138 178 38 122 160

India 19 234 253 48 81 129

France 19 48 67 22 37 59

Canada 9 19 28 6 22 28

Italy 9 19 28 8 18 26

Poland 4 13 17 4 13 17

Spain 9 8 17 6 10 16

Austria 6 9 15 3 11 14

South Korea 1 8 9 2 6 8

Belgium 2 4 6 2 4 6

Russia – 3 3 – 3 3

1,551 4,453 6,004 1,585 3,933 5,518

note 8 Salaries and other remuneration

2008Salaries and

remuneration

of which Board of Directors, president and other senior executives

Social security costs

of which, pension costs

Sweden 433 18 213 50

USA 495 6 168 6

China 51 5 0 0

Germany 170 6 70 10

Mexico 14 1 7 0

Hungary 21 1 6 0

Great Britain 77 6 11 4

Brazil 14 2 11 0

India 4 1 0 0

France 24 1 13 0

Canada 7 0 3 0

Italy 10 0 4 4

Poland 3 0 0 0

Spain 4 0 1 0

Austria 7 0 2 0

South Korea 4 0 1 1

Belgium 5 0 0 0

Russia 1 0 0 0

1,343 47 510 75

TheBoardofDirectors,Presidentandotherseniorexecutivescomprised31people(27).VariableremunerationtothePresidentandotherseniorexecutivesamountedtoSEK7m(5).PensioncostsforthePresidentandotherseniorexecutivesaccountedSEK8m(8)ofthegruop’stotal pension costs.

Forfurtherinformationconcerningwages,salariesandremuneration,refertoNote9oftheGroup’snotesandNote4oftheParentcompany’snotes.

47HAlDeX 2008 notes Group

Cont. note 8 salaries and other remuneration

2007

Salaries and

remuneration

of which Board of Directors, president and other senior executives

Social

security costs

of which,

pension costs

Sweden 430 18 246 52

USA 525 3 185 9

China 28 2 9 0

Germany 161 5 73 6

Mexico 16 0 7 0

Hungary 15 1 5 0

Great Britain 76 3 19 8

Brazil 13 2 10 0

India 5 0 0 0

France 25 3 10 0

Canada 8 0 4 1

Italy 10 0 4 3

Poland 2 0 0 0

Spain 5 0 1 0

Austria 7 2 3 1

South Korea 4 1 1 0

Belgium 4 0 0 0

Russia 0 0 0 0

1,334 40 577 80

note 9 Information on Remuneration of executive committee

2008 2007

Amounts in SeK ’000

Basic salary/Director fees

Variable remuneration

pension

Basic salary/ Director fees

Variable remuneration

pension

Board of Directors (7 members, of whom 2 women) 1,925 – – 1,650 – –

Lars-Göran Moberg (Chairman) 525 – – 175 – –

DrReinerBeutel(tookofficein2008) 300 – – – – –

Anders Böös 175 – – 200 – –

Arne Karlsson 225 – – 250 – –

Caroline Sundewall 275 – – 200 – –

Anders Thelin 200 – – 150 – –

Cecila Vieweg 225 – – 200 – –

Sune Karlsson (retired in 2008) – – – 475 – –

president

Joakim Olsson 4,000 1,260 795 3,740 764 766

other senior executives (Group Management) (6 people, of whom 0 women) 12,500 3,030 3,050 11,300 2,000 2,900

serevance payInadditiontoamutualperiodofnoticeof12months,thePresidentisentitledtoservancepaycorrespondingto12months’salaryifnoticeisserved by the company.

If notice is served by the President, servance pay cannot bedemanded.FormembersoftheGroupManagement,servancepayisprovided in accordance with the guidelines established by the Board of Directorsforremunerationofseniorexecutives,seeDirectors’Report,page32.

incentive programTheAnnualGeneralMeeting resolved inApril2007 to introduce along-term performance-based incentive program under which senior executives and key personnel would be allotted employee stock options on condition that the participants become shareholders by making

their own investment in Haldex shares in the stock market.Eachshareaquiredinthemarketprovidesentitlement,freeofcharge,to an allotment of ten employee stock options, whereby each option providesentitlementtotheacquisitionofoneHaldexshare.Acondi-tion for allotment is that Haldex’s pretax income has increased in rela-tiontotheprecedingfiscalyearbymorethan7%.Maximumallotmentoccurs on condition that pretax income has increased in relation to the precedingfiscalyearby20%ormore.

Employeestockoptionsareissuedinthreeseriesand,inaccordancewithdecisionsbytheBoardofDirectors,willbeallottedduring2008,2009and2010.

Noallotmentofthe2008or2009optionswilloccuronthebasisofthe company’s earnings outcome.

For detailed information about the program, reference is made to Haldex’s website, www.haldex.com.

48 HAlDeX 2008notes Group

note 10 Auditing fees

2008 2007

PricewaterhouseCoopers

Audit assignments 8 7

Other assignments 4 3

12 10

note 11 Depreciation

2008 2007

Cost of goods sold 243 221

Selling costs 9 7

Administrative costs 40 32

Product development costs 37 21

329 281

note 12 taxes

2008 2007

Current tax on profits for the year –62 –57

Adjustments in respect of prior years 5 –2

total current tax –57 –59

Deferredtaxrelatedtotemporarydifferences 5 4

Change in value of deferred tax in loss carry forward 65 –26

Impact of change in Swedish tax rate –1 –

total deferred tax 69 –22

total income tax 12 –81

The tax on the group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:

Reconciliation of effective tax rate 2008 2007

Earnings before tax –55 221

Tax at applicable tax rate in Sweden 28% 28%

Differencesintaxratesofdifferentcountriesofoperation –2% 2%

Non-deductible expenses –13% 3%

Non-taxable revenues 13% –1%

Tax attributable to prior years 9% 1%

Remeasurement of deferred tax, change in Swedish tax rate –1% –

Revaluation of deferred tax expense in subsidiaries –12% 3%

reported effective tax rate 22% 36%

AsperJanuary1,2009,theSwedishcorporatetaxratewillchangefrom28%to26,3%.Asaresultofthechangedeferredtaxbalanceshavebeenremeasured. The net effect from the remeasurement of the deferred taxes has not had any material impact on the group’s total tax.

Theincometaxcharged/creditedtoequityduringtheyearisasfollows:

2008 2007

Deferredtax:

Hedging reserve 19 7

Hedges of net investments 14 –5

33 2

49HAlDeX 2008 notes Group

note 13 Intangible assets

At January 1, 2007 Goodwill patents and other intangible assets

Capitalized development costs total

Acquisition value 414 66 197 677

Accumulated depreciation – –40 –16 –56

Carrying amount 414 26 181 621

January 1–December 31, 2007

Opening carrying amount 414 26 181 621

Exchange rate differences –6 1 –2 –7

Investments – 8 66 74

Corporate acquisitions 17 17 – 34

Sales/scrappage – –2 – –2

Depreciation – –5 –4 –9

Carrying amount 425 45 241 711

At December 31, 2007

Acquisition value 425 88 266 779

Accumulated depreciation – –43 –25 –68

Carrying amount 425 45 241 711

January 1–December 31 2008

Opening carrying amount 425 45 241 711

Exchange rate differences –20 –15 7 –28

Investments – 4 60 64

Corporate acquisitions (note 26) 562 511 – 1,073

Sales/scrappage – – – –

Depreciation – –9 –21 –30

Write-down – – –5 –5

Amortization on acquisition-related surplus values – –24 – –24

Closing carrying amount 967 512 282 1,761

At December 31, 2008

Acquisition value 967 595 335 1,897

Accumulated depreciation – –59 –48 –107

Accumulated write-down – – –5 –5

Accumulated amortization on acquisition-related surplus values – –24 – –24

Carrying amount 967 512 282 1,761

Impairment testing of goodwill 2008 2007

Commercial Vehicle Systems 402 398

Hydraulic Systems 565 27

967 425

NogoodwillisattributabletotheTractionSystemsandGarphyttanWiredivisions.

50 HAlDeX 2008notes Group

note 14 tangible fixed assets

As per January 1, 2007 Buildingsland and land improvements

Machinery and other

technological investments

equipment, tools and installations

Construction in progress and advances to

suppliers total

Acquisition value 408 49 2,170 758 130 3,515

Cumulative depreciation –204 –6 –1,351 –548 0 –2,109

Book value 204 43 819 210 130 1,406

January 1–December 31, 2007

Opening book value 204 43 819 210 130 1,406

Exchange rate difference –5 –1 –10 –2 0 –18

Investments 15 4 252 59 51 381

Corporate acquisitions 22 – 16 – – 38

Sales/discards –4 –1 –21 –6 –2 –34

Depreciation –18 –1 –181 –72 0 –272

Book value 214 44 875 189 179 1,501

As per December 31, 2007

Acquisition value 428 51 2,396 775 179 3,829

Cumulative depreciation –214 –7 –1,521 –586 0 –2,328

Book value 214 44 875 189 179 1,501

January 1–December 31, 2008

Opening book value 214 44 875 189 179 1,501

Exchange rate difference 23 1 75 23 25 145

Investments 20 0 268 78 –24 342

Corporate acquisitions (note 26) 1 – 65 10 –15 61

Sales/discards –32 – –44 –5 –4 –85

Depreciation –17 –1 –206 –75 – –299

Write-down – – –21 – –6 –27

Assets held for sale (note 21) –15 –1 –280 –18 –11 –325

Book value 194 43 732 202 144 1,315

As per December 31, 2008

Acquisition value 436 53 2,904 946 161 4,500

Accumulated depreciation –227 –9 –1,871 –726 – –2,833

Accumulated write-down – – –21 – –6 –27

Assets held for sale (note 21) –15 –1 –280 –18 –11 –325

Book value 194 43 732 202 144 1,315

note 15 operational leases

the group’s operational lease contracts fall due as follows:

premises

Machinery and other equipment

total

2009 51 25 76

2010–2013 168 54 222

2014 and beyond 190 8 198

Expensedleasingfeesduring2008totaledSEK86m(91).

51HAlDeX 2008 notes Group

note 16 Deferred income tax

Deferredincometaxassetsandliabilitiesareoffsetwhenthereisalegallyenforcable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

The gross movement on deferred income tax account is as follows:

2008 2007

At 1 January 22 44

Income statement charge (note 12) 69 –22

Acquisition of subsidiary (note 27) –113 –3

Tax charged directly to equity (note 12) 33 2

Re-classification from current taxes –30 –

Exchange differences 22 1

Assets held for sale (note 21) –4 –

Liabilities held for sale (note 21) 60 –

at 31 December 59 22

Deferredincometaxassetsandliabilities,withouttakingintoconsiderationtotheoffsettingofbalanceswithinthesametaxjurisdiction,isasfollows:

Assets liabilities net

2008 2007 2008 2007 2008 2007

Tax loss carry-forwards 194 137 194 137

Tangible fixed assets 105 67 –105 –67

Intangible assets 26 25 78 62 –52 –37

Provisions 33 15 33 15

Tax allocation reserves 69 92 –69 –92

Pension and similar obligations 84 48 84 48

Acquisition related surplus values 128 –128

Other 46 35 17 46 18

Assets/Liabilities held for sale (note 21) –4 – –60 – 56 –

net deferred tax assets/tax liability 379 260 320 238 59 22

Deferredincometaxassetsarerecognizedfortaxlosscarry-forwardstotheextentthattherealizationoftherelatedtaxbenefitthroughfuture taxable profits is probable.

Allrecognizedtaxlosscarry-forwardshaveanexpirydayexceedingtenyears.

note 17 Derivative instruments

2008 2007

Assets liabilities Assets liabilities

Short-term

Interest rate swaps – 4 – –

Forward exchange contracts – cash flow hedges 9 75 12 10

Forward exchange contracts – at fair value through profit or loss 1 5 4 4

Currency swaps – at fair value through profit or loss 35 25 4 8

Assets/Liabilities held for sale (note 21) – –10 – –

45 99 20 22

Equitygainsandlossesinshort-termcurrencyforwardcontractswillbetransferedtotheincomestatementatdifferentpointsduring2009.

Hedging of net investments in foreign operationsPartsoftheGroup’sborrowinginUSDandGBPisidentifiedashedgingofnetassets(seeexchange-raterisks,onpage42–43).

AtDecember31,2008,theamortiziedcost/bookvalueofthisborrowingwasSEK539m(284).Exchange-ratelossesduringtheyear,amountingtoSEK39m(+13)aftertaxontranslationintoSEKonthebalancesheetdate,arerecognized

inOtherreserveswithinshareholders’equity.

52 HAlDeX 2008notes Group

note 18 Inventories

2008 2007

Raw materials 582 572

Semi-manufactured products 103 136

Finished products 420 347

Assets held for sale (note 21) –165 –

940 1,055

note 19 other current receivables

2008 2007

Tax receivables 63 28

Prepaid expenses and accrued income

Rents and insurance 19 18

Accrued income 52 57

Other prepaid expenses 63 63

Other current receivables 101 116

Assets held for sale (note 21) –20 –

278 282

note 20 Cash and cash equivalents

2008 2007

Bank accounts and cash 425 178

Bank certificates and special loans 6 4

431 182

note 21 Assets and liabilities held for sale

Assets held for sale

Tangible fixed assets 325

Deferredtaxassets 4

Inventories 165

Accounts receivables from customers 62

Other current receivables 20

total assets held for sale 576

liabilities held for sale

Pension and similiar obligations 44

Deferredtaxes 60

Debtstosuppliers 71

Derivativeinstruments 10

Other provisions 3

Other current liabilities 107

total liabilities held for sale 295

note 22 long-term interest-bearing liabilities

2008 2007

Multicurrency Revolving Credit Facility 720 649

Bond loans 350 600

Other promissory notes and secured loans 20 4

Capitalized financial rental agreements – 32

Financial leasing 7 8

total 1,097 1,293

Cont. note 22 long-term interest-bearing liabilities

Maturity structure, years

total 0–1 1–3 3–5 >5 years Average rate

SEK 620 – 350 270 – 3.4

GBP 7 – 7 – – 7.8

EUR 109 – – 109 – 5.4

USD 341 – – 341 – 2.3

INR 15 – 12 3 – 14.3

BRL 5 – 4 1 – 9.8

total, seK 1,097 0 373 724 – 3.3

Calculated interest 103 36 56 11 – –

total 1,200 36 429 735 – –

BecauseloansunderMulticurrencyRevolvingCreditFacilityandBondloansaresubjectstoafixedinteresttermof3–6months,thefairvaluescorresponds to the carrying amounts.

Availableunusedcreditfacilitiesatyear-endtotaledSEK1,217m(1,162).Calculatedinterestcomprisesthecounter-valueinSEKbasedonexchangeratesatDecember31,2008andthecurrentinterestratesontheliability.

53HAlDeX 2008 notes Group

note 23 pensions and similar obligations

pension liabilities in the balance sheet 2008 2007

FPG/PRI-pensions 146 128

Defined-benefithealthcarebenefits 42 35

Other defined-benefit plans 252 171

440* 334

* Including liabilities held for sale of SeK 44 m (note 21)

Haldexhasdefined-benefitplansforpensionsforcertainunitsinSweden,Germany,France,GreatBritainandUSA.Thepensionsundertheseplansarebasedmainlyonfinalsalary.Contribution-basedplansarealsofoundinthesecountries.SubsidiariesinothercountrieswithintheGroupusemainlycontribution-basedplans.NetactuariallossesonpensionobligationsandplanassetsdeclinedduringtheyearbySEK18mandatyear-endtotaled1%(4)ofthepresent

valueofthepensionobligations.ThereturnonplanassetsrecognizedintheincomestatementtotaledSEK68m,whiletheactualreturnwasSEK–93m.Theplanassetsconsistprimarilyofshares,interest-bearingsecuritiesandsharesinmutualfunds.

Group 2008 2007

Pensionobliagations,fundedplans,presentvalueasofDecember31 1,167 487

Planassets,fairvalueasofDecember31 –1,023 –431

total 144 56

Pensionobligations,unfundedplans,presentvaluesasofDecember31 312 312

Unreported actuarial gains (+), losses (–) –16 –34

net liability in the balance sheet 440 334

total pension costs

Group 2008 2007

Pensions vested during the period –29 –45

Interest on obligations –78 –38

Expected return on plan assets 68 30

Amortization of unreported actuarial gains (+), losses (–) 0 –4

pension costs, defined-benefit plans –39 –57

Pension costs, defined-contribution plans –46 –35

total pension costs –85 –92

pension obligations

Group 2008 2007

Opening balance 799 818

Acquired pension liability 804 –

Pensions vested during the period 29 45

Interest on obligation 78 38

Benefit paid –59 –23

Unreported actuarial gains (+), losses (–), pension obligations –182 –60

Exchange rate differences 10 –19

pension obligations, current value 1,479 799

plan assets

Group 2008 2007

Opening balance 431 407

Acquired plan assets 698 –

Expected return on plan assets 68 30

Contributions from employers 53 36

Disbursementofpensionpayments –49 –17

Unreported actuarial gains (+), losses (–), plan assets –161 –11

Exchange rate differences –17 –14

plan assets, fair value 1,023 431

54 HAlDeX 2008notes Group

Cont. note 23 pensions and similar obligations

reconciliation of interest-bearing pension liabilities

Group 2008 2007

Opening balance, pension liablities (net) 334 319

Acquired pension liability (note 26) 106 –

Pension costs 39 57

Benefits paid –59 –23

Contributions from employers –53 –36

Compensation from plan assets 49 17

Exchange rate difference 24 0

according to balance sheet 440 334

actuarial assumptions

percent Sweden Germany France Great Britain uSA

Discountrate,January1 4.50 5.65 5.65 5.95 6.25

Discountrate,December31 3.75 6.25 6.50 6.85 5.80

Expected return on plan assets 4.80 4.80 – 6.80–7.00 8.00

Expected salary increase 3.00 3.00 3.00 3.50 3.80

Expected inflation 2.00 2.00 2.00 2.70 2.50

experience-based change in unrecognized actuarial gains (+)/losses (–)

Group 2008 2007 2006 2005

Present value of defined benefit obligations 1,479 799 818 841

Plan assets 1,023 431 407 373

Surplus (+)/deficit (–) –456 –368 –411 –468

Experience-based adjustment of obligation –19 4 –8 –15

Experience-based adjustment of plan assets –161 –11 13 34

Theinformationprovidedwillbeexpandedgraduallyoveraperiodoffiveyears.Thetransitionalrulesstatethatsuchexpansiondoesnotrequireinformationonperiodspriortothecomparativeyear.Thismeansthatacompletefive-yearperiodwillbeincludedintheannualreportfor2009.

Whatismeantbyexperience-basedadjustmentsofobligationsisanydeviationfromthebasicassumptionsmadeinthecalculationofthepen-sion obligation. This could, for example, pertain to changes in expectations concerning employee turnover, premature retirement, pay increases and length of life.

Whatismeantbyexperience-basedadjustmentsofplanassetsisanydiscrepancybetweentheexpectedreturnandtherealreturnontheplanassets.

55HAlDeX 2008 notes Group

note 24 other provisions

Warranty

reserves

Restruct -uring

reserves total

opening balance January 1, 2008 52 24 76

Provisions 107 112 219

Reversals 0 – 0

Requisitions –92 –80 –172

Translation differences 6 1 7

Liabilities held for sale (note 21) –3 – –3

December 31, 2008 70 57 127

note 25 Current liabilities

2008 2007

Tax liabilities 40 49

Accrued expenses

Personnel costs 226 209

Other accrued expenses 75 15

Other current liabilities 107 102

Liabilities held for sale (note 21) –107 –

341 375

note 26 Corporate acquisitions

ConcentricOnApril1,HaldexcompletedtheacquisitionofConcentric.Thepur-chaseconsiderationtotaledGBP75m,excludingpensionobligationsand financed through raising new loans. The cash consideration was reducedwiththenetofloansandcashintheacquiredcompany.Thecompany’s intangible assets, net of deferred tax, amounted to SEK930m,whichcomprisedgoodwillintheamountofSEK562m,otherassetstotalingSEK511m,includingcustomerrelations,technologyandbrands,andadeferredtaxliabilityofSEK143m.Theassets,exceptgoodwill, are amortized over the different assets estimated service life. AmortizationoftheseassetsamountedtoSEK24mduringtheperiod.Inaddition,nonrecurringexpensestotalingSEK7mduringtheyearpertainingtoacquiredprofitsininventories.

Concentrichasbeen consolidated into theGroup’s income state-ment andbalance sheet sinceApril 1, 2008.Since thenConcentriccontributedtothenetsalesbySEK606mandtotheoperatingincomebySEK82m,excludingamortizationof acquisition related surplusvalues.

information about acquired net assetsThe acquisition analysis is established in accordance with currentaccountingstandard,IFRS3.

preliminary acquisition calculation

purchase consideration:

– Cash paid 573

– Costs directly connected to the acquisition 47

total purchase consideration 620

Fair value of acquired net assets 58

Goodwill 562

assets and liabilities at april 1, 2008 due to the acquisition were as follows:

Fair value

Acquired carrying amount

Intangible assets 511 –

Value of customer relationships 318 –

Value of brands 112 –

Value of technology 81 –

Tangible fixed assets 61 61

Deferredtaxes 34 27

Inventories 93 87

Accounts receivable and other receivables 151 151

Cash and cash equivalents 66 66

Pension liabilities –106 –83

Long-term loans –369 –369

Deferredtaxes –147 –2

Accounts payable and other liabilities –236 –236

net assets 58 –298

Goodwill 562

total purchase consideration 620

Cash paid 620

Acquired Cash and Cash Equivalents –66

the Group’s change in Cash and Cash equivalents 554

note 27 Related party transactions

TheParentCompanyisarelatedpartytoitssubsidiaries.Transactionswithsubsidiariesoccuroncommercialmarketterms.RemunerationtoseniorexecutivesispresentedinNote9.

56 HAlDeX 2008parent Company

Amount in SeK m note 2008 2007

Net sales 49 43

Administrative costs 6 –83 –83

operating income –34 –40

DividendsfromGroupcompanies 373 117

Group contribution 35 117

Interest income 7 87 66

Interest expenses 7 –127 –83

Other financial items –69 24

earnings before tax 265 201

Change in allocations reserve 14 57 –7

Taxes 15 10 –13

net income for the year 332 181

parent Company income statement

57HAlDeX 2008 parent Company

parent Company balance sheetAmounts in SeK m note 2008 2007

assets

Fixed assets

Tangible fixed assets 8 4 3

Financial fixed assets

Shares and participations 9 2,380 1,761

Long-term receivables 10 24 15

total fixed assets 2,408 1,779

Current assets

Account receivables from subsidiaries 1,876 1,335

Other current receivables 11 50 26

Derivativeinstruments 12 147 47

Cash and cash equivalents 13 178 44

total current assets 2,251 1,452

total assets 4,659 3,231

sHareHolDers’ eQuity anD liaBilities

equity

Restricted equity

Share capital 111 111

Restricted reserves 455 455

Unrestricted equity

Retained earnings 445 363

Net income for the year 332 181

total equity 1,343 1,110

Untaxed reserves 14 131 188

provisions

Pensions and similar obligations 16 11 13

Other provisions 9 11

total provisions 20 24

long-term liabilities

Long-term interest-bearing liabilities 17 1,070 1,249

Debtstosubsidiaries 141 5

total long-term liabilities 1,211 1,254

Current liabilities

Debtstosuppliers 9 5

Debtstosubsidiaries 794 582

Short-term interest-bearing liabilities 981 –

Derivativeinstruments 12 149 45

Other current liabilities 18 21 23

total current liabilities 1,954 655

total equity and liabilities 4,659 3,231

Collateral pledged None None

Contingent liabilities 19 548 378

58 HAlDeX 2008parent company

parent Company cash flow statement

Changes in parent Company equity Restricted equity unrestricted equity

Amounts in SeK m

Share capital

Statutory reserve

Retained earnings

total

opening balance at January 1, 2007 111 455 501 1,067

Net income for the year – – 181 181

Dividend – – –99 –99

Repurchase of shares – – –24 –24

Group contribution granted – – –15 –15

Closing balance at December 31, 2007 111 455 544 1,110

opening balance at January 1, 2008 111 455 544 1,110

Net income for the year – – 332 332

Dividend – – –99 –99

Closing balance at December 31, 2008 111 455 777 1,343

Amounts in SeK m 2008 2007

Cash flow from operations

Income after financial items 229 84

Adjustment for non-cash items –3 6

Taxes paid –17 –29

Cash flow from operations before change in working capital 209 61

Change in working capital

Current receivables –611 10

Operating liabilities 454 –94

Change in working capital –157 –84

Cash flow from operations 52 –23

Cash flow from investments

Investments in fixed assets –2 –2

Investments in shares and participations –619 –49

Cash flow from investments –621 –51

Cash flow from financing

Dividendtoshareholders –99 –99

Repurchase of own shares – –24

Interest-bearing liabilities 802 131

Cash flow from financing 703 8

Change in cash and cash equivalents 134 –66

Cash and cash equivalents at beginning of year 44 110

Cash and cash equivalents at year-end 178 44

59HAlDeX 2008 notes parent Company

notes parent Companynote 1 General information

HaldexABis theParentCompany intheHaldexGroup.Themainoffice functions, including the central financial function, are carried outwithintheParentCompany.

HaldexAB (publ),Corp.Reg.No. 556010-1155, is a registered limited liability corporationwith its registered office in Stockholm,Sweden.The address of theHeadOffice isHaldex AB, Box 7200,SE-10388Stockholm.

HaldexsharesaretradedontheMidCaplistattheStockholmStockExchange.

note 2 Summary of important accounting principles

TheAnnualReport for theParentCompanywasprepared inaccor-dancewiththeSwedishAnnualAccountsActandtheSwedishFinan-cial Accounting Standard Council’s Recommendation RFR 2.1 –Financialreportingforlegalentities.AccordingtotherulesstatedinRFR2.1,theParentCompany,intheannualreportforthelegalentity,mustapplyallEU-approvedIFRSandstatementstotheextentpossi-blewithintheframeworkoftheAnnualAccountsAct,andtakingintoaccount the relationship between reporting and taxation. This recom-mendationspecifiestheexceptionsfromIFRSthatarepermissibleandthe necessary supplementary information.

TheParentCompany’s accountingprinciples correspond to thosefor the Group with the exceptions listed below.

2.1 pensions and similar obligationsHaldexABhasdefined-benefitpensionplansanddefined-contributionpensionplans.InaccordancewithRR32.37,theActontheSafeguard-ing ofPensionCommitments and the SwedishFinancial SupervisoryAuthoritycontain rules that entail reporting fordefined-benefitplansotherthanstatedinIAS19.Foratax-deductionrighttobepermissible,therequirementsisthatActontheSafeguardingofPensionCommit-ments’rulesmustbeapplied,whichmeansthattherulesofIAS19fordefined-benefitplansneednotbeappliedinthelegalentity.Inthelegal

entity,therulesofFARSRS’saccountingrecommendation,RedR4,areapplied,inaccordancewithActontheSafeguardingofPensionCom-mitmentsandtheSwedishFinancialSupervisoryAuthority’sregulations.For defined-benefit pension plans, the current value is reported as a lia-bilityintheBalanceSheet,basedonactuarialcalculations.Thechangeinthe liability is carried in the income statement. For defined-contribution pension plans, fees paid to pension institutions are expensed in the income statement a current account basis.

Pension obligations are recognized at fair value and are based on annualactuarialcalculations.Changeinthepensionliabilitiesarerec-ognizedintheIncomeStatement.EndowmentinsuranceisreportedatmarketvalueunderFinancialfixedassetsandOtherprovisions.Thecost is recognized on an ongoing basis in the income statement.

Inaddition,thecompanyhaspensioncommitmentsthataresecuredthrough two pension foundations. The assets and thereby the liabilities for these obligations are handled by a third party and are not reported in the balance sheet. The calculated cost for providing the insurance is recognized in the income statement.

2.2 Deferred taxesTaxlegislationinSwedenandcertainothercountriesallowsfordeferralof tax payments through transfers to untaxed reserves. The Parent Companyhastaxallocationreservesthataretransferredfortaxationatthe most six years after the year of allocation.

Inaddition,deferredtaxesarecalculatedfortemporarydifferencesbetween reported income and expense items and fiscal values.

note 3 Average number of employees and sickness absence

Average number of employees Women Men

2008 total Women Men

2007 total

Sweden 5 13 18 4 13 17

total sickness absence 2008 (2007)

Women

Men

Age <29

Age

30–49

Age >50

total

Total sickness absence, % – 0.1 (0.0) – 0.6 (0.0) – 0.4 (0.0)

of which > 60 days – – – – – –

note 4 Salaries and other remuneration

2008 2007

Salaries and

remuner- ation

of which Board of Directors,

president and other senior executives

Social

security costs

of which pension

costs

Salaries and

remuner- ation

of which Board of Directors,

president and other senior executives

Social security costs

of which pension

costs

Sweden 23 12 13 6 19 10 13 6

TheBoardofDirectorsconsistsofsevenmembers(7);forinformationontheindividualremunerationpaidtothemandthePresident,refertonote9ontheconsolidatedfinancialstatements.Remunerationtootherseniorexecutives,twopeople(2)amountedtoSEK4m(4),ofwhichvariableremunerationamountedSEK1m(1).PensionpaymentsforotherseniorexecutivesaccountedforSEK1m(1)oftotalpensioncosts.

60 HAlDeX 2008notes parent Company

note 9 Shares and participations

Shares in subsidiaries Corp. Reg. no Reg´d. office participations % 2008 2007

Haldex Brake Prod AB 556068-2758 Landskrona 127,000 100 142 142

Haldex Garphyttan AB 556030-2886 Örebro 150,000 100 47 47

Haldex Hydraulics AB 556105-8941 Örkelljunga 30,000 100 22 22

Haldex Traction AB 556040-2736 Landskrona 3,501 100 7 7

Haldex Halmstad AB 556053-6780 Halmstad 30,000 100 4 4

Haldex GmbH Germany 100 106 106

Haldex Vehicle Products Co Ltd China 100 – –

Haldex Europé S.A France 418,119 100 42 42

Haldex Ltd Canada 100 0 0

Haldex do Brasil Indústria e Comércio Ltda. Brazil 185,099 100 6 6

Haldex Sp.z o.o. Poland 30,000 100 3 3

Haldex N.V. Belgium 4,035 100 1 1

Haldex Int Trading Co Ltd China 100 0 0

Haldex Italia Srl Italy 10,400 100 0 0

Haldex Korea Ltd South Korea 79,046 100 0 0

Haldex Financial Services Holding AB 556633-6136 Stockholm 1,000 100 0 0

Haldex Hungary Kft Hungary 100 74 74

Haldex Wien Ges mbH Austria 100 7 7

Haldex India Ltd India 60 7 7

JSB Hesselman AB 556546-1844 Stockholm 1,000 100 992 992

OOO Haldex Rus Russia 100 0 0

Haldex Holding AB 556560-8220 Stockholm 23,079,394 100 165 165

Haldex Hydraulics Hong Kong Hong Kong 100 49 49

Haldex Garphyttan Hong Kong Hong Kong 97.1 85 87

Concentric Plc UK 100 621 –

2,380 1,761

note 5 Auditing fees

2008 2007

PricewaterhouseCoopers AB

Audit assignments 2 1

Other assignments 1 1

3 2

note 6 Depreciation

2008 2007

Administrative costs 2 1

2 1

note 7 Interest income and interest expenses

2008 2007

Interest income

External interest income 2 4

Interest income from Group companies 85 62

total 87 66

Interest expense

External interest expenses –111 –66

Interest expenses to Group companies –16 –17

total –127 –83

note 8 tangible fixed assets

January 1–December 31, 2007

Opening carrying amount 2

Investments 2

Depreciation –1

Closing carrying amount 3

at December 31, 2007

Acquisition value 6

Accumulated depreciation –3

Carrying amount 3

January 1–December 31, 2008

Opening carrying amount 3

Investments 3

Depreciation –2

Closing carrying amount 4

at December 31, 2007

Acquisition value 9

Accumulated depreciation –5

Carrying amount 4

61HAlDeX 2008 notes parent Company

Cont. note 9 shares and participations

Shares in subsidiaries Corp. Reg. no Reg´d. office participations % 2008 2007

associated companies

Alfdex 556647-7278 Tumba 50 0 0

Change in shares and participations

Anglo Scandinavian Aircraft Leasing KB 48 4,8 0 0

Altra Technologies Inc. 1.000.000 18.1 0 0

Swedish Aircraft Two KB 10 10 0 0

Change in shares and participations

opening balance Acquisition Reclassifications Divestments Closing balance

2008 1,761 621 – –2 2,380

2007 1,757 49 –45 – 1,761

During2008,100%ofConcentricwasacquired.Duringtheyear2.9%oftheSharesinHaldexGarphyttanHongKongweresold.

JSB Hesselman AB is the parent company of the wholly ownedEnglishsubsidiaryHaldexLtdandtheU.S.subsidiaryHaldexInc.

HaldexLtd.istheparentcompanyforthewhollyownedEnglishsub-sidiaryHaldexBrakeProductsLtd.andtheSpanishsubsidiaryHaldexEspañaSA.

Haldex Inc. is the holding company for the wholly owned U.S.subsidiariesHaldexBrakeCorp,HaldexBrakeProductsCorp,Haldex

GarphyttanCorp.,HaldexHydraulicsCorp.andtheMexicansubsidiaryHaldexdeMexicoS.A.DeC.V.

Haldex GmbH is the holding company for the wholly owned Ger-man subsidiaries Haldex Brake Products GmbH, Haldex Garphyttan GmbH and Haldex Hydraulics GmbH.

HaldexdoBrasilIndústriaeComércioLtda.istheparentcompanyofthewhollyownedBraziliansubsidiaryFabricaBrasileiradeFreiosS.A.

note 10 long-term receivables

2008 2007

Deferredtaxassets 15 4

Other long-term receivables 9 11

24 15

note 11 other current receivables

2008 2007

Tax assets 36 19

Prepaid expenses

Rents and insurances 6 1

Other prepaid expenses 2 3

Other current receivables 6 3

50 26

note 12 Derivative instruments

2008 2007

Assets liabilities Assets liabilities

Short-term

Forward exchange contracts – at fair value through profit or loss 122 122 40 40

Currency swaps – at fair value through profit or loss 25 27 7 5

147 149 47 45

Gains and losses from current currency forward contracts and currency swaps are reconized on a ongoing basis in the income statement.

note 13 Cash and cash equivalents

2008 2007

Cash and bank balances 178 44

Bank certificates and special loans – –

178 44

note 14 untaxed reserves

2008 2007

Opening balance 188 181

Reversals during the year –57 –7

Provisions during the year – 14

Closing balance 131 188

note 15 taxes

2008 2007

Current tax expense for year – –13

Deferredtaxrelatedtotemporarydifferences 10 –

10 –13

note 16 pensions and similar obligations Pension obligations attributable to defined-benefit plans

2008 2007

Pensions vested during the period –2 –3

Interest on obligtion –1 –

total pension cost –3 –3

62 HAlDeX 2008notes parent Company

Cont. note 16 pensions and similar obligationsReconciliation of interest-bearing pension liabilities

2008 2007

Opening balance, pension liablities 13 10

Benefits paid –5 –

Pension costs 3 3

according to balance sheet 11 13

Cont. note 17 long-term interest-bearing liabilities

Maturity structure, years

liabilities total 0–1 1–3 3–5 >5 years Average rate

SEK 620 – 350 270 – 3.4

EUR 109 – – 109 – 5.4

USD 341 – – 341 – 2.3

total 1,070 0 350 720 0 3.3

Calculated interest 103 35 57 11 –

total 1,173 35 407 731 0

BecauseloansunderMulticurrencyRevolvingCreditFacilityandBondloansaresubjectstoafixedinteresttermof3–6months,thefairvaluescorresponds to the carrying amounts.

Availableunusedcreditfacilitiesatyear-endtotaledSEK1,217m(1,162).Calculatedinterestcomprisesthecounter-valueinSEKbasedonexchangeratesatDecember31,2008andthecurrentinterestratesontheliability.

note 18 other current liabilities

2008 2007

Accrued expenses

Personnel costs 11 9

Other accrued expenses 10 12

Other current liabilities – 2

21 23

note 19 Contingent liabilities and collateral pledged

2008 2007

Sureties and guarantees for subsidiaries 548 378

note 17 long-term interest-bearing liabilities

2008 2007

Multicurrency Revolving Credit Facility 720 649

Bond loans 350 600

total 1,070 1,249

TheBoardofDirectorsandthePresidentandCEOcertifythat theannualfinancial reporthasbeenprepared inaccordancewithgenerallyaccepted accounting principles and that the consolidated accounts have been prepared in accordance with the international set of accounting stan-dardsreferredtoinRegulation(EC)No1606/2002oftheEuropeanParliamentandoftheCouncilof19July2002ontheapplicationofinterna-tionalaccountingstandards,andgiveatrueandfairviewofthepositionandprofitorlossoftheCompanyandtheGroup,andthatthemanage-mentreportfortheCompanyandfortheGroupgivesafairreviewofthedevelopmentandperformanceofthebusiness,positionandprofitorlossoftheCompanyandtheGroup,anddescribestheprincipalrisksanduncertaintiesthattheCompanyandthecompaniesintheGroupface.

Stockholm,March23,2009

Lars-GöranMoberg,Chairman of the Board

ReinerBeutel AndersBöös ArneKarlsson CarolineSundewall Board member Board member Board member Board member

AndersThelin CeciliaVieweg BjörnCederlund JonasEsbjörnsson Board member Board member Board member Board member

JoakimOlsson,President & CEO

OurauditreportwasissuedonMarch23,2009.

MichaelBengtsson LiselottStenudd Authorized Public Accountant Authorized Public Accountant PricewaterhouseCoopersAB PricewaterhouseCoopersAB

63HAlDeX 2008 audit report

Audit reportto the annual General Meeting of Haldex aB (publ)Corporate identity number 556010-1155

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors andthemanagingdirectorofHaldexABfortheyear2008.TheCom-pany’s annual accounts and the consolidated accounts are included in the printedversiononpages30–62.Theboardofdirectorsandthemanag-ing director are responsible for these accounts and the administration oftheCompanyaswellasfortheapplicationoftheAnnualAccountsActwhenpreparingtheannualaccountsandtheapplicationoffinan-cialreportingstandardsIFRSsasadoptedbytheEUandtheAnnualAccountsActwhenpreparingtheconsolidatedaccounts.Ourrespon-sibility is to express an opinion on the annual accounts, the consoli-dated financial accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards inSweden.Those standards require thatweplanand perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstate-ment.Anauditincludesexamining,onatestbasis,evidencesupport-ingtheamountsanddisclosuresintheaccounts.Anauditalsoincludesassessing the accounting principles used and their application by the board of directors and the managing director and significant estimates made by the board of directors and managing director when preparing

the annual accounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidatedaccounts.Asabasisforouropinionconcerningdischargefrom liability, we examined significant decisions, actions taken and cir-cumstances of the company in order to be able to determine the liabil-ity, if any, to the company of any board member or the managing direc-torhas,inanyotherway,actedincontraventionoftheCompaniesAct,theAnnualAccountsActortheArticlesofAssociation.Webelievethatour audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the AnnualAccountsAct andgive a true and fair viewof the company’sfinancial position and results of operations in accordance with generally acceptedaccountingprincipals inSweden.Theconsolidatedaccountshave been prepared in accordance with international financial reporting standardsIFRSsasadoptedbytheEUandtheAnnualAccountsActandgive a true and fait view of the group’s financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company and the group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Stockholm,March23,2009

MichaelBengtsson LiselottStenudd Authorized Public Accountant Authorized Public Accountant PricewaterhouseCoopersAB PricewaterhouseCoopersAB

64 HAlDeX 2008Corporate Governance report

Corporate Governance ReportHaldex complies with no exceptions to the swedish Code of Corporate Governance – hereinafter called “the Code” – and prepares a Corporate Governance report in accordance with the Code. the Corporate Governance report is unaudited.

Corporate governance in HaldexHaldexisapubliclytradedSwedishlimitedliabilitycompany.Responsi-bility for the governance and control of the Haldex Group is divided amongtheshareholders,theBoardofDirectors,itsselectedcommitteesandthePresident,inaccordancewiththeSwedishCompaniesAct,appli-cableregulationsforpubliclytradedcompanies(includingtheSwedishCodeofCorporateGovernance),otherrelevantlawsandregulations,Hal-dex’sArticlesofAssociationandtheinternalrulesoftheBoardofDirec-tors.AnoverviewofHaldexCorporateGovernanceisillustratedbelow.

For information about Haldex shareholders, refer to a specific section onpage72.

annual General Meeting 2008 The2008AnnualGeneralMeetingwasheldonTuesday,April15inStockholm.SuneKarlsson,ChairmanoftheBoard,waselectedChair-manoftheAnnualGeneralMeeting,asproposedbytheNominationCommittee.

TheAnnualGeneralMeetingresolvedthat:• InaccordancewiththeBoardofDirectors’proposaltopaydividend

ofSEK4.50persharefor2007(unchangeddividend).• TheBoardshallcomprisesevenmemberswithnodeputies.TheMeet-

ingre-electedLars-GöranMoberg,ArneKarlsson,CarolineSundewall,CeciliaVieweg,AndersThelinandAndersBöös.DrReinerBeutelwerenewlyelected.Lars-GöranMobergwaselectedChairmanandDrReinerBeutelViceChairmanoftheBoard.

• FeesfortheBoardofDirectorsshallbepaidtotalingSEK1,925,000includingfeesforcommitteework,ofwhichSEK450,000pertainsto theChairman,SEK300,000 to theViceChairmanandSEK175,000 to otherBoardmemberswho arenot employedby theCompany.Feestoauditorswillbepaidasinvoiced.

• TheBoardwasauthorized,duringtheperioduptothenextordinaryAnnualGeneralMeeting,toacquire/repurchaseupto10%ofallsharesintheCompany.Suchtreasurysharesmaybeusedfortransferincon-nectionwithpossiblefutureacquisitionsandtocovercostsforthelong-termincentiveprogramLTI2007.

Theresolutionspassedby theMeetingarepresented in theminutesfrom the 2008 Annual General Meeting, which are available at www.haldex.com.

appointment of the nomination Committee for the 2009 annual General MeetingThe2008AnnualGeneralMeetingresolvedthattheNominationCom-mitteeforthe2009AnnualGeneralMeetingshallhavefourmembers,representing each of the four largest shareholders in terms of voting rights. The names of these four representatives, and the names of the shareholders that they represent, must be disclosed at least six months before the Annual General Meeting and be based on shareholdingsimmediately prior to such disclosure. The assignment of such members will cease when a newNominationCommittee has been appointed.Assuming that themembers donot agree to an alternative course ofaction, the member representing the largest shareholder in terms of vot-ingrightsshallbeappointedchairmanoftheNominationCommittee.

ThecompositionoftheNominationCommitteewasdisclosedthroughapressreleaseandonHaldex’swebsiteonOctober16,2008.Followingownership changes that occurred at the end of the year, the composition of

Haldex shareholders

annual General Meeting

Board of Directors

president

executive Committee

nomination Committee

Haldex auditors

remuneration Committee

audit Committee

Haldex control structure

65HAlDeX 2008 Corporate Governance report

theNominationCommitteechanged,asdisclosedthroughapressreleaseandonHaldex’swebsiteonFebruary13,2009.TheNominationCommit-teeaheadofthe2009AnnualGeneralMeetingcomprisesrepresentativesofthethreelargestandtheseventhlargestshareholders,jointlyrepresent-ing20.74%ofthevotingrights.

Stefan Dahlbo, Investment ABÖresund,Tomas Ramsälv, OdinFonder,CarlRosén,SecondAPFundandBjörnCederlund,Unionencomprise the Nomination Committee prior to the 2009 HaldexAnnualGeneralMeeting.

TheNominationCommittee’sassignmentsincludepreparationandpresentationofproposalsfortheelectionofChairmanoftheGeneralMeeting,membersoftheBoardofDirectors,ChairmanoftheBoardofDirectors,auditorsandproposalsfordecisionsregardingremunera-tiontotheBoardofDirectorsandfeestotheauditors.

The company’s shareholders have the opportunity to raise comments and suggestions with theNominationCommittee via the instructionslistedonthecompany’swebsite.OncetheproposalsthatfallundertheresponsibilityoftheNominationCommitteearefinalized,theyarepre-sentedinthenotificationtotheAnnualGeneralMeetingandonHaldex’swebsite,www.haldex.com.AnaccountoftheproceduresfollowedbytheNominationCommitteeisalsopublishedonthewebpage.TheNomina-tionCommitteewillpresentitsproposalsandreportitsactivitiesattheAnnualGeneralMeeting2009.ShareholderswishingtomakeproposalstotheNominationCommitteemaydosobye-mail.

AddressesareavailableonHaldexwebsiteundertheheadingsInvest-ors–CorporateGovernance–AnnualGeneralMeeting–2009AnnualGeneralMeeting.

the Board of DirectorsChairman of the BoardTheAnnualGeneralMeeting2008electedLars-GöranMobergasChair-manuntilthe2009AnnualGeneralMeeting.Lars-GöranMoberghasbeenaMemberoftheHaldexBoardsince2007.

TheChairmandirectstheBoard’sactivities,promotesefficiencyintheseactivities,ensuresthattheyareconductedinaccordancewiththeSwedishCompaniesActandotherapplicablelawsandregulationsandensuresthattheresolutionsoftheBoardareimplemented.TheChairmanensuresthattheBoardmembersreceivetherequirededucationandisresponsibleforevaluatingtheBoard’sactivitiesandsharingtheevaluationswiththeNom-inationCommittee.TheChairmanproposestheagendaforBoardmeet-ingsinconsultationwiththePresident.TheChairmanhasregularcommu-nication with the President, relays opinions from the shareholders to other Board members and acts as spokesperson on behalf of the Board.

TheChairmanalsorepresentsavitallinktotheNominationCom-mittee and reports the results of the year’s evaluation of Board work to theNominationCommittee.

Members of the Board TheBoardofDirectorsconsistsofsevenmemberselectedbytheAnnualGeneralMeeting.Therearenodeputymembers.The2008AnnualGen-eralMeeting electedLars-GöranMoberg,ReinerBeutel,AndersBöös,ArneKarlsson,CarolineSundewall,AndersThelinandCeciliaViewegasmembers. None of the representatives for Group Management are

currently members of the Board. However, the President makes regular reportstotheBoardandtheGroup’sCFOservesastheBoard’ssecretary.OthersalariedemployeesparticipateinBoardmeetingsinconnectionwithpresentationsofparticularissues.Inadditiontotheelectedmembers,theBoard consists of two employee representatives and two deputy representa-tives appointed by the employees.

TheBoardmembersarepresentedintheAnnualReport,page70.The table below shows remuneration to Board members, attendance at Board meetings and committee participation.

independenceTheNasdaqOMXNordicExchangeandtheSwedishCodeforCorporateGovernancestatethatthemajorityoftheBoard’smembersshouldbeinde-pendentinrelationtothecompanyanditsGroupManagementandthatat least two of the independent members must be independent in relation to the company’s largest shareholders. The Board of Haldex is deemed to havefulfilledthisrequirementsinceallBoardmembersareindependentinrelation to Haldex, its management and Haldex’s largest shareholders.

Board activities 2008TheBoardofDirectorsheldastatutorymeetingimmediatelyfollowingtheAnnualGeneralMeeting.

During2008,theBoardmet17times.TheBoardvisitedanumberoftheGroup’ssubsidiariesindifferentconstellationsduring2008togaindeeper insight into the Group’s operations.

The Board’s activities during the year included the following:• January/February–Financialaccounts,AnnualReport,meetingswith

auditors, evaluation of the President’s administration.• Spring/autumn – Establishment of the Board of Director’s work

procedures and the instructions for the President, as well as strategic and organizational issues, long-term investment plans

• November/December–Financepolicy,budgetreview.Timeschedulefor forthcoming year.

Comprehensive information about Corporate Governance at Haldex is available on the www.haldex.com website:

• ArticlesofAssociation• InformationaboutAnnualGeneralMeeting o Time and place o Registration procedure for participation o Registration procedure for reporting business to be

addressed by the Annual General Meeting o Notice convening the Meeting o Agenda o Minutes o President’s address• InformationabouttheNominationCommittee o Summary o Contact details• TheMembersoftheBoard(updatedcontinuouslyinterms

of changes that occur during the year)• MembersofExecutiveManagement(updatedcontinuously

in terms of changes that occur during the year)• Precedingyear’scorporategovernancereports

66 HAlDeX 2008Corporate Governance report

Inconnectionwiththespring’sstrategyreviews,thevariousdivisionmanagers are given an opportunity for a more in-depth presentation of their operations.

Board committeesCompensation CommitteeTheBoardappointsfromamongitsmembersaCompensationCom-mittee to formulate issues concerning remuneration. The members of theCompensationCommitteeareappointedannuallyatthestatutoryBoardmeetingimmediatelyfollowingtheAnnualGeneralMeeting.

TheCompensationCommitteeissuestotheBoardproposalscon-cerningthePresident’ssalaryandotheremploymentterms.TheCom-pensationCommitteeshallalsoestablishthesalaryandotheremploy-menttermsfortheothermembersofGroupManagement.

PriortoeachAnnualGeneralMeeting,theCompensationCommit-tee shall also assist the Board in preparing a motion concerning guide-lines for the remuneration of senior executives for the forthcoming year. The purpose of these guidelines shall be to determine the salary and other employment terms in respect of the President and other senior executives of the company.

During 2008, Lars-Göran Moberg, Anders Thelin and CeciliaViewegweremembersoftheCommittee.CeciliaViewegwasitsChair-man.TheCommitteeheld7meetingsduringtheyear.TheChairmanoftheCompensationCommitteewaspaidafeeofSEK50,000andthemembersreceivedafeeofSEK25,000each.

audit CommitteeTheBoardofDirectorsappointsfromitsmembersanAuditCommit-tee that formulates issues concerning accounting, financial reporting, auditingandinternalcontrol.ThemembersoftheAuditCommitteeare appointed annually at the statutory Board meeting immediately fol-lowingtheAnnualGeneralMeeting.

The Audit Committee is responsible for the preparation of theBoard’s activities by a system for auditing, internal control and risk managementthatfulfillstherequirementsofapplicablelawsandregu-lations and for ensuring that this system promotes operational efficiency, generates accurate accounting documents and provides reli-ablefinancialinformation.TheCommitteereviewstheprinciplesforaccounting and financial control and the auditors’ work and establishes

guidelines for the procurement of services other than auditing from the Company’sauditors.TheCommitteemeetsregularlywiththeauditorsduringtheyeartodiscussauditreportsandauditplans.TheCommit-tee is responsible for the evaluation of the auditors’ work and the audi-tors’efficiency,qualifications,feesandindependence.TheAuditCom-mitteemustalsoassisttheNominationCommitteewithproposalsforpotentialauditors.TheCommitteealsoassistsHaldexmanagementindetermining how identified risks will be handled in order to ensure good internal control and risk management.

During2008,itsmemberswereLars-GöranMoberg,ArneKarls-sonandCarolineSundewall.CarolineSundewallwastheCommittee’sChairman.TheCommitteeheld6meetingsduring2008.TheChair-manoftheAuditCommitteereceivedafeeofSEK100,000andmem-bersreceivedafeeofSEK50,000.

evaluation of Board activities in 2008Annual evaluationsareconductedof theBoard’s collectivework.TheChairmanisevaluatedonhisabilitytoprepareandleadtheBoardactivi-ties and his ability to motivate and cooperate with the President. The evaluation of the Board’s activities as a whole is conducted via an internal reviewofitsactivities.Theresultoftheevaluationprocessfor2008wasdiscussedinconjunctionwiththeBoardmeetinginDecember2008.

remuneration to the Board of DirectorsInaccordancewiththeresolutionfromthe2008AnnualGeneralMeet-ing,directorfeesshalltotalSEK1,925,000,includingremunerationforcommitteeparticipation.AllremunerationtotheBoardcomprisesfixedpaymentsanddoesnotcontainanyvariableparts.InaccordancewiththeresolutionoftheGeneralMeeting,theChairmanoftheBoardreceivedSEK450,000,theViceChairmanoftheBoardreceivedSEK300,000andtheotherBoardmembersreceivedSEK175,000each.FeesforatotalofSEK300,000werepaidforcommitteeparticipationandweredividedamongtheCommitteemembersinthemannershowninthetablebelow.

auditorsauditors’ assignmentThe auditors follow an audit schedule that was set in consultation with theAuditCommittee.Inconnectionwiththeaudit,theauditorsshallreporttheirobservationstoGroupManagementforreconciliationand

Board of Directors during 2008

name

Board member since

nationality

Board meetings

Compensation Committee

Audit Committee

Board fees

Committee fees

Lars-Göran Moberg 2007 Swedish 17 6 5 450,000 75,000

Reiner Beutel* 2008 German 8 300,000

Anders Böös 2007 Swedish 17 1 175,000

Sune Carlsson** 2004 Swedish 8 2

Arne Karlsson 2003 Swedish 15 5 175,000 50,000

Caroline Sundewall 2003 Swedish 17 6 175,000 100,000

Anders Thelin 2007 Swedish 15 3 175,000 25,000

Cecilia Vieweg 2000 Swedish 15 7 175,000 50,000

* elected to the Board at the Annual General Meeting on April 15, 2008 ** Retired from the Board at the Annual General Meeting on April 15, 2008

67HAlDeX 2008 Corporate Governance report

thentotheAuditCommittee.ThereporttotheAuditCommitteetakesplace after the conclusion of the audit of the administration and the review of the hard-close accounts and after the Annual Report isadopted. TheBoardofDirectorsasawholemeetswiththeauditorsonceayear,during the February Board meeting where the auditors report their obser-vationsdirectlytotheBoardofDirectorspartlywithoutthepresenceofGroupManagement.Finally, the auditors participate in theAnnualGeneralMeetingandbrieflydescribetheirauditingworkandsumma-rizefortheshareholderstherecommendationsintheAuditor’sReport.

auditors 2008TheAnnualGeneralMeeting elects two ordinary auditors and two deputy auditors for a period of three to four years at a time.

Atthe2007AnnualGeneralMeeting,AuthorizedPublicAccountantsLiselottStenuddandMichaelBengtssonfromPricewaterhouseCoopersABwereelectedas auditorsuntil the2010AnnualGeneralMeeting.AuthorizedPublicAccountantsChristineRankin-JohanssonandRonnieEkmanwerenewlyelectedasdeputyauditors.

LiselottStenuddhasbeenanAuthorizedPublicAccountantsince1986,andistheelectedauditorofsuchcompaniesasSinterCastAB,EltelAB,theSwedishCargoteccompaniesandDiamydMedicalAB.MichaelBengtssonhasbeenanAuthorizedPublicAccountant since1988,and is theelectedauditorof suchcompaniesasEnea,Onoff,Perstorp Holding AB and Morphic Technologies. Neither LiselottStenuddnorMichaelBengtssonhasassignmentsinothercompaniesthat are associated with Haldex’s largest owners or President.

Between2004and2008,theauditorshadextraassignmentsoutsidethe scope of the ordinary audit. These assignments included consultations in tax and accounting issues and other company issues. These assignments arenotconsideredtobeinviolationoftheCode’sregulations.

Group ManagementMembers of executive CommitteeInadditiontothePresident,Haldex’sExecutiveCommitteecomprisesthemanagersofeachdivision,theCFOandtheExecutiveVicePresidentHuman Resources.The Presidentmanages the Company within theframeworkestablishedbytheBoardofDirectors.ThePresidentisrespon-siblefortheleadershipanddevelopmentoftheCompany.ThePresident,inconsultationwiththeChairmanoftheBoard,preparesandformulatesobjective,detailedandrelevantinformationaldocumentsandthedocu-mentary basis for the Board meetings, presents the agenda items and explainsproposedresolutions.ThePresidentleadstheworkoftheExecu-

tiveCommitteeandmakesdecisionsinconsultationwithotherseniorexecutives.TheExecutiveCommitteemeton6occasionsin2008.

remuneration of senior executivesOnanannualbasis,theAnnualGeneralMeetingestablishesguidelinesfor determining the remuneration to be paid to the President and other seniorexecutivesof thecompany, includingHeadsofDivisionsandGroupStaffunits.TheBoardanditsCompensationCommitteedecide,basedontheguidelinesadoptedbytheMeeting,onthedesignofremu-neration systems and the size of structures for the remuneration of senior executives.

remuneration of the presidentIn2008,theBoardofDirector’sCompensationCommitteepreparedissues related to remuneration of the President, with decisions made by the Board. The President receives a fixed salary and a variable salary. The variable salary is based on a target bonus that is established annually.

Inadditiontoareciprocaltwelve-monthperiodofnotice,thePresi-dent will, in the event of termination of employment by the company, receiveseverancepayequivalenttotwelvemonths’salary.Intheeventof resignation by the President, no severance pay may be claimed.

The President’s pension benefits are premium-based and consist of an ITPschemeandanannualprovisionfor25%offixedsalaryexceeding20“basicamounts”(basefigureforSwedishsocialsecurity).Retirementageis65.

other senior executives According to Guidelines for remuneration to Senior Executives asresolvedbytheAnnualGeneralMeeting,thePresident,inconsultationwith the Board’sCompensationCommittee, prepares remunerationissues concerning the ExecutiveCommittee and divisionalmanage-ment,whicharesubjecttoresolutionbytheAnnualGeneralMeeting.Remunerationconsistsofafixedandvariablepart.Thevariablepartisbased on goals established by the President and the CompensationCommitteeonayearlybasisandmayamountto30–50%ofthefixedannualsalary.AllmembersoftheExecutiveCommitteehavearecipro-cal six-month period of notice and, in the event of termination of employmentbythecompany,willreceiveseverancepayequivalenttobetween12and24months’salary.Thepensionbenefitsareregulatedinpensionplansadaptedtolocalpracticeinthecountriesinquestion,withtheretirementagestartingat65.

SeeNote9foramoredetaileddescriptionoftheremunerationofthePresidentandothermembersoftheExecutiveCommittee.

68 HAlDeX 2008Corporate Governance report

Board of Directors’ report regarding internal controlInternal controlwithinHaldex is a process that is regulated by theBoardofDirectorsandtheAuditCommitteeandperformedbythePresidentandGroupManagement.Itisdesignedtoensurethattotheextent possible Haldex’s reporting is appropriate and reliable and that the company complies with applicable legislation and regulations. The process is based on a control environment that provides structure for other parts of the process, including risk assessment, control activities, information,communicationandfollow-ups.Itisbasedontheframe-workforinternalcontrolpublishedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).

AccordingtotheSwedishCompaniesActandtheSwedishCodeofCorporateGovernance,theBoardofDirectorsisresponsibleforinternalcontrol.ThisreportwaspreparedinaccordancewithSections3.7.2and3.7.3oftheSwedishCodeofCorporateGovernanceandisthuslimitedto a description of Haldex’s internal control with regard to financial report-ing. This report is not a part of the formal annual report documents.

TheBoardofDirectors’reportoninternalcontrolregardingfinan-cial reporting has not been examined by the company’s auditors.

TheBoardofDirectorsmonitorsandensuresthequalityofexternalfinancial reporting in the manner documented in the working proce-durefortheBoardofDirectors,theinstructionsforthePresidentandthe Group’s financial policy.

ItistheresponsibilityofthePresidenttogetherwiththeCFOtoreviewandquality-assureallexternalfinancialreporting,suchasinterimreports,year-end reports, annual reports, press releases containing financial infor-mationandpresentationmaterialinconjunctionwithmeetingswiththemedia, the owners and financial institutions. The President presents all interimreports,year-endreportsandannualreportstotheBoardofDirec-tors for review. The reports are then approved and published by the Board ofDirectors.TheBoardofDirectorsisresponsibleforensuringthatthecompany’s financial reports are prepared according to law, accounting standardsandotherrequirementsconcerninglistedcompanies.

TheBoardofDirectors’instructionsforthePresidentalsoincluderequirementsthattheBoardofDirectorsmustbecontinuouslypro-vided with internal summary reports on financial matters. These reports, which must include income statements, balance sheets, valua-tionissues,assessments,forecasts,anychangesandtheirconsequences,possible changes of accounting rules, legal matters and disputes, are reviewed by the Audit Committee and thereafter submitted to theBoardofDirectors.WithregardtotheBoardofDirectors’communi-cation with the company’s auditors, see below.

Control environmentTheBoardofDirectorshasadoptedanumberofcontroldocumentsfor the company’s internal control and governance.

Within the Board of Directors, there is an Audit Committeeconsisting of three Board members elected by the Annual General

Meeting:ArneKarlsson.Lars-GöranMobergandCarolineSundewall.TheAuditCommittee,whichpreparesmattersfortheBoardofDirec-tors, considers issues concerning the internal control process, follows up reporting issues and discusses accounting principles and the conse-quencesofchangesoftheseprinciples.Furthermore,theAuditCom-mittee maintains regular contact with the external auditors. The com-mittee is responsible for evaluating auditing work and the auditors’ effi-ciency,qualifications, feesand independence. Inaddition, theAuditCommittee must assist the Nomination Committee in nominatingauditors and procuring their services.

risk assessmentHaldex’s risk assessment with respect to financial reporting, meaning the identification and evaluation of the principal risks in terms of finan-cial reporting in the Group’s companies, divisions and processes, provides the foundation for risk management. The risks may be man-agedbyacceptingtherisksorbyreducingoreliminatingthem,subjectto the controls and control levels within the framework established by theBoardofDirectors,theAuditCommittee,thePresidentandGroupmanagement.

Control activitiesWork to enhance internal control activities and governance continued during the year. The main focus of this work was on documentation of the financial processes and evaluation and improvement of existing controls.

information and communicationThe company has a system for information and communication that is intended to result in complete and correct financial reporting. The company has a reporting system in which all Group companies report monthly according to an established format and to fixed accounting principles.Inconjunctionwithreporting,thereportingunitsperformrisk assessments and decide on the need for any provisions. The central finance department produces reports from the Group-wide system, which is structured according to the Group’s established reporting for-mat. Responsible managers and controllers at various levels in theGroup have access to the information in this system relating to their area of responsibility.

The company’s financial reporting is followed up continuously, in part by business management at various levels in the company and in part by the finance organization and controllers in the various divisions andbusinessunits.Follow-upstakeplaceeachmonthinconjunctionwith reporting and consist of both analysis and reviews by the relevant controllers and meetings between the relevant business managers and thereportingunits.TheCEOandtheCFOhavemonthlymeetingswithdivisionalmanagersanddivisionalcontrollers.Atthesemeetings,the division’s income statement, balance sheet, cash flow statement and other financial key data are discussed.

69HAlDeX 2008 Corporate Governance report

Follow-upsThe Audit Committee communicates constantly with the company’sexternalauditorsandtheCFO,bothatandbetweenmeetings.TheBoardofDirectorsreceivesamonthlyreportonbusinessdevelopment.Moredetailed reporting is provided primarily by the President at all Board meet-ings.TheBoardofDirectorsconstantlyassessestherisksrelatingtofinan-cialreportingbasedonsignificantandqualitativefactors.

Eachyear,theBoardofDirectorsevaluatestheneedtoestablishaspecial internalaudit function.In2008,theBoarddidnotconsider

this necessary. The Board considered that internal control is primarily exercised by:• operativemanagersatvariouslevels,• localandcentralfinancefunctionsand• throughGroupmanagement’ssupervisorycontrol.

Duetothis,incombinationwiththecompany’ssize,theBoardofDirectorscurrentlydoesnotconsideritfinanciallydefensibletoestab-lish yet another function.

70 HAlDeX 2008Board and executive

Board of Directors and Auditors

lars-Göran Moberg* Chairman of the BoardBorn 1943. Member since 2007. Elected Chairman 2008.M.Sc. ME.

Previously President of Volvo Powertrain Corporation and Senior Vice President Technology and member of Volvo’s Group Management. Previously active within AB Bofors, President of VME Industries Sweden AB and President of Volvo Car Component Corporation.

Member of the Board of Volvo Aero AB, Volvo Construction Equipment Corporation, Cross Country Systems ABandDeutzAG.

Shareholding: 2,000

reiner Beutel* DeputyChairmanBorn 1959. Elected 2008.MBAandPhD.

Consultant for a number of leading private equity companies. Former CEO of Scheffenacker AG. Previously held several senior executive positions within Bosch Gmbh, such as EVP for corporate planning, CEO of Bosch Power Tool in the US and CFO of Bosch TelecomandCommunicationDivision.

Chairman of the Board of Mirror Controls Int.

Member of the Board of KUKA AG.

Shareholding: 1,000

anders Böös* Born 1964. Elected 2007.

Previously President of Hagströmer & QvibergABandDrottAB.Chairmanofthe Board of Industrial and Financial Systems IFS AB and Cision AB.

Member of the Board of Investment AB Latour, Niscayah AB and East Capital Baltic Property Fund AB.

Shareholding: 0

arne Karlsson* Born 1944. Member since 2003.M.Sc. Economics.

Has held several executive positions in Scania both in Sweden and abroad. Most recently responsible for Commer-cial Systems, Scania AB, London and Executive Vice President Scania AB.

Chairman of the Board and Board member of a number of companies in the Scania Group.

Shareholding: 1,000 Caroline sundewall* Born 1958. Member of the Board since 2003.M.Sc. Economics.

Has worked at Chase Manhattan Bank and Handelsbanken, and as stock exchange and business columnist at DagensIndustri(businessdaily),Affärs-världen (business weekly) and Finan-stidningen (business daily), and as busi-ness controller at Ratos (private equity company), and manager of the busi-ness editorial staff and stock exchange columnistatSydsvenskaDagbladet.Since 2001, independent consultant at Caroline Sundewall AB.

Member of the Board of Ahlsell AB (chairman of the audit committee) Aktiemarknadsbolagens Förening, Electrolux (member of the audit com-mittee), Lifco AB, Pågengruppen AB, and TeliaSonera (chairman of the audit committee).

Shareholding: 1,500 via Caroline Sundewall AB.

anders thelin* Born 1950. Member of the Board since 2007.M.Sc. ME.

President of Sandvik Tooling AB since 2000. Member of Sandvik’s Group Management. Previously held several senior executive positions within Sandvik, such as President of Sandvik Coromant.

Chairman of the Board and Board member of a number of companies in the Sandvik Group.

Shareholding: 0

Cecilia Vieweg* Born 1955. Member of the Board since 2000.Lawyer.

Head of Group Legal Affairs, Immate-rial Rights and Risk Management, AB Electrolux since 1999. Previously part-owner of two law firms and General Counsel at Volvo Cars.

Chairman of the Board of Equinox, Inc. Board member of Electrolux North America Inc. and other companies in the Electrolux Group, as well as the Stockholm Chamber of Commerce’s Arbitration Tribunal.

Shareholding: 500

Björn CederlundBorn 1942. Member since 1994.Represents the Federation of Salaried Employees in Industry and Services in the Haldex Group.

Shareholding: 0

Jonas esbjörnssonBorn 1974. Member since 2008. Represents IF Metall in the Haldex Group.

Shareholding: 0

Deputy members:

ulrika GranbergBorn1967.Deputymembersince2007.Represents the Federation of Salaried Employees in Industry and Services in the Haldex Group.

Shareholding: 0

stefan atterlingBorn1971.Deputymembersince2006.

Represents the Trade Union Confeder-ation in the Haldex Group.

Shareholding: 0

Auditors:PricewaterhouseCoopers AB

liselott stenuddAuthorized Public Accountant.Company auditor since 2006.

Assignments: Eltel AB, SinterCast AB, the Swedish Cargotec companies and DiamydMedicalAB.

Michael Bengtsson Authorized Public Accountant.Company auditor since 2007.

Assignments: Enea, Onoff, Perstorp Holding AB and Morphic Technologies

* Independent in relation to the com-pany, Group Management and largest shareholders.

Lars-Göran Moberg Reiner Beutel Anders Böös Arne Karlsson Caroline Sundewall

Anders Thelin Cecilia Vieweg Björn Cederlund Jonas Esbjörnsson

71HAlDeX 2008 Board and executive

executive Committee

Joakim olssonPresident and CEO Born 1965. Employed since 2005.M.Sc.MEandMBA,INSEAD.

Has held several executive positions in ABB. Most recently country manager in Brazil, before this global manager for the Power Transformers business area.

Shareholding: 2,000 shares and 50,000 call options

ulf ahlénDivisionmanagerTractionSystems.Born 1948. Employed since 1998.

Upper Secondary Economics Major.Has held several executive positions in Volvo Cars. Most recently with total responsibility for car production.

Shareholding: 1,000 shares and 3,430 call options

ian DuganDivisionmanagerHydraulicSystems

Born 1956. Employed since 2008.

C. Eng. MIMechE.

Has headed a number of engineering businesses in both listed and private equity environments, most recently as CEO of Concentric Plc and prior to that, ran Alstom’s UK based Train Renovation, Service and Manufactur-ing business.

Shareholding: 1,000 shares

per ericsonExecutive Vice President Human Resources

Born 1963. Employed since 2006.Forest engineer, UC Forestry Studies. Studies in Change Management in Organizations and Social Systems.

Has held several executive positions in Stora Enso, most recently as Executive Vice President Human Resources.

Shareholding: 1,000 shares

stefan JohanssonChief Financial Officer (CFO)

Born 1958. Employed since 2005.

M.Sc. Economics.

Has held positions as CFO within both listed and private equity companies, mostrecentlyatDuni.

Shareholding: 5,100 shares

Jay C. longbottomDivisionmanagerCommercialVehiclesSystems

Born 1953. Employed since 2002.

BA, MBA.

Has held several senior executive positions within SKF involving placement in both North America and Europe.

Shareholding: 1,500 shares

Jan pietersDivisionmanagerGarphyttanWire

Born 1957. Employed since 2007.

M.Sc. Economics.

Has held several senior executive positions within Avesta Sandvik Tube and AST, most recently as president of Fagersta Stainless.

Haldex has reached an agreement with Suzuki Metal Industry Co. to divest its division Garphyttan Wire. The transaction is expected to be com-pleted during the period April to June 2009 and, in this connection, Jan Pie-ters will leave the Haldex Group.

Shareholding: 1,000 shares

IanDugan StefanJohansson PerEricson JoakimOlsson UlfAhlén JayC.Longbottom JanPieters

Shareholdings as of March 20, 2009.

72 HAlDeX 2008Haldex share

Haldex shareThe share capital inHaldex AB totals SEK 111m, represented by22,296,220shares.Eachshareconfersonevotingrightandallsharescarry equal entitlement todividends.Haldexhasbeen listedon theNasdaqOMXStockholmStockExchangesince1960.ThecompanyiscurrentlyincludedinthelistofMidCapcompanies,underthetickersymbolHLDX.Atradinglotisoneshare.

price trends and tradingTheOMXS (OMX Stockholm index) declined 42% in 2008.TheOMX Stockholm Industrial Index (industrial goods and services),whichincludestheHaldexshare,declined47%.

ThepriceoftheHaldexsharedeclined77%duringtheyear,closingatSEK26:50(113.50)onDecember30,2008.Theyear’shighestshareprice,SEK122.25,waspostedonMay12,whiletheyear’slowestshareprice,SEK21.20wasnotedonDecember23.Totalmarketcapitaliza-tionatyear-endwasSEK595,3m(2,530.6).

Theaveragedailytradingvolumewas55,895shares(38,044).Atotalof14.1millionshares(25.9)weretradedfortheentireyear.Thesharestradedcorrespondedto63%(116)ofthetotalnumberofshares.

Beta valueBeta value is a risk ratio that indicates the fluctuation of a stock com-pared with that of the stock exchange as a whole. The beta value for the Haldex share at year-end, as calculated over 48 months, was 1.58(1.24), whichmeans the price of theHaldex share fluctuated 58%more than the market average.

incentive programThe2007AnnualGeneralMeetingresolvedtointroducealong-termperformance-based incentive program under which senior executives and key personnel were allotted employee stock options on condition

that the participants became shareholders through their own invest-mentinHaldexsharesinthemarketplace.Eachshareacquiredinthemarketplaceprovidesentitlementtotheallotment,freeofcharge,of10employee stock options, whereby each option provides entitlement to theacquisitionofoneHaldexshare.

Another condition for allotment is thatHaldex’spretax incomehasincreasedbymorethan7%inrelationtheprecedingfiscalyear.Maximumallotmentoccursonconditionthatpretaxincomehasincreasedby20%ormore in relation to the preceding fiscal year. The employee stock options will be issued in three series and be allotted in accordance with decisions madebytheBoardduring2008,2009and2010,respectively.Noallot-mentoccurredin2008,andnoallotmentofthe2009optionswilloccur.

shareholdersThenumberofHaldexshareholdersincreased2%during2008,total-ing8,576(8,382)atyear-end.Swedishownershiprosefrom54%to69%atyear-end2008.SwedishInstitutionsaccountedforabout42%ofownership(42).

Dividend policyTheCompany’sunrestrictedreservescanbedistributedtotheshare-holders in the form of stock dividends and buybacks. When determin-ingthedividendpaidtoshareholders,theBoardofDirectorstakesintoaccounttheCompany’sfuturegrowthopportunities,investmentneedsand financial situation. The aim is for dividends and buybacks of own shares to correspond to at least one-third of the Group’s after-tax profit over the course of a business cycle.

Forthe2008fiscalyear,theBoardofDirectorsproposesthatnodividend will be paid, in order to strengthen the company’s financial position, considering the current market and the company’s financial engagements.

2004 2005 2006 2007 200825

50

100

150

200

250

300SEK

No. of sharestraded, thousands

Haldex OMX Stockholm_PISX20 Industrials_PI

1,000

2,000

3,000

4,000

© NASDAQ OMX2008Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

No. of sharestraded, thousands

Haldex OMX Stockholm_PISX20 Industrials_PI

© NASDAQ OMX

SEK

200 400 600 8001,0001,2001,400

20

40

60

80

100

120

Haldex share price trend, 2008 Haldex share price trend, 2004–2008

73HAlDeX 2008 Haldex share

Data per share

2008 2007 2006 2005 2004

Earnings, SEK –1.92 6.24 13.96 12.19 9.50

Dividend,SEK – 4.50 4.50 4.00 3.00

Market price at year-end, SEK 26.70 113.50 163.50 158.00 116.50

Equity, SEK 83.15 85.36 86.02 85.64 64.60

EBIT multiple 12 12 11 11 14

P/E ratio neg 18 12 13 12

Payout ratio, % – 72 32 33 32

Dividendyield,% – 4.0 2.8 2.5 2.6

Total return, % –76 –28 6 38 16

Market price/equity, % 32 133 190 184 180

shareholders and number of shares

2008 2007 2006 2005 2004

Number of shareholders 8,576 8,382 10,305 11,654 14,099

Average number of shares1) 21,920 21,980 22,065 22,065 22,065

Number of shares at year-end1) 21,920 21,920 22,065 22,065 22,065

1) thousands

ownership structure, December 30, 2008

Shareholding

no. of shareholders

no.of shares

percent of total

1–500 6,804 1,075,189 4.82

501–1,000 911 766,664 3.44

1,001–5,000 621 1,438,073 6.45

5,001–10,000 89 680,554 3.05

10,001–15,000 30 373,726 1.68

15,001–20,000 19 339,004 1.52

20,001– 102 17,623,010 79.04

total 8,576 22,296,220 100.00

ten largest shareholders, February 28, 2009

name

no. of Shares

percent of votes and capital

Öresund, Investment AB 1,440,534 6.46

Second AP Fund 1,243,290 5.58

Odin Fonder 1,131,119 5.07

Afa Försäkring 1,000,000 4.49

DanskeCapitalSverigeAB 921,518 4.13

Dub-Non-ResidentDomesticRates 816,891 3.66

Confederation of Swedish Enterprise 800,000 3.59

Unionen 769,900 3.45

SEB Private Bank S.A., NQI 737,100 3.31

Skandia fonder 609,691 2.73

total ten largest shareholders 9,470,043 42.20%

Total other shareholders 12,449,707 56.11%

Haldex AB – treasury shares 376,470 1.69%

total 22,296,220 100.00%

ownership structure, December 30, 2008 Geographic distribution of ownership

Swedish private persons, 13%

Foreign owners, 31%

Swedish financialcompanies, 31%

Swedish social insurance funds, 7%

Other, 13%

Swedish county councils and municipalities, 5%

Other countries, 31% Sweden, 69%

read more: www.haldex.com/en/investors/the_share/

74 HAlDeX 2008

Five-year summary and quarterly reviewMulti-year review 2008 2007 2006 2005 2004

Order intake, SEK m 7,923 8,098 7,883 7,592 6,923

Net sales, SEK m 8,403 7,940 7,890 7,486 6,759

Share of net sales outside Sweden, % 91 90 91 89 89

Exports from Sweden, SEK m 1,714 1,598 2,001 1,834 1,651

Operating income, excl. non-recurring items, SEK m 250 339 403 411 346

Operating income, SEK m 92 289 374 383 346

Earnings before tax, excl. non-recurring items, SEK m 195 272 315 341 290

Earnings before tax, SEK m –55 222 315 370 290

Profit margin, excl. non-recurring items, % 3.0 4.3 5.1 5.5 5.1

Profit margin, % 1.1 3.6 4.8 5.1 5.1

Interest coverage ratio, multiple 0.7 3.7 5.2 7.9 5.6

Return on capital employed, % 2.4 8.3 11.5 12.3 12.8

Return on equity, % –2.3 7.3 16.6 15.9 14.8

Return on total assets, % 1.6 5.8 7.9 8.9 9.3

Total assets, SEK m 6,290 5,082 4,733 4,662 3,934

Capital turnover rate 2.20 2.20 2.34 2.36 2.46

Equity, SEK m 1,823 1,871 1,898 1,890 1,425

Equity/assets ratio, % 29 37 40 40 36

Net debt, SEK m 2,335 1,600 1,254 1,241 1,171

Debt/equityratio,% 128 85 66 66 82

Cash flow, SEK m 465 –141 –7 139 –36

Investments, SEK m 402 463 420 357 313

Product development costs, SEK m 339 335 349 343 321

Average no of employees 6,004 5,518 4,683 4,606 4,317

– of whom, outside Sweden 4,724 4,269 3,516 3,454 3,218

Quarterly data, seK m 2008 2007

Q1 Q2 Q3 Q4 Full year Q1 Q2 Q3 Q4 Full year

Net sales 2,131 2,342 2,066 1,864 8,403 2,060 2,030 1,895 1,955 7,940

Cost of goods sold –1,635 –1,815 –1,624 –1,541 –6,615 –1,591 –1,568 –1,505 –1,527 –6,191

Gross earnings 496 527 442 323 1,788 469 462 390 428 1,749

23.3% 22.5% 21.4% 17.3% 21.3% 22.8% 22.8% 20.6% 21.9% 22.0%

Sales, administrative & prod. development costs –392 –415 –370 –532 –1,709 –391 –382 –337 –394 –1,504

Other operating income & expenses 8 –2 7 0 13 9 12 10 13 44

Operating income 112 110 79 –209 92 87 92 63 47 289

Financial income and expense –19 –35 –40 –53 –147 –17 –14 –21 –15 –67

Earnings before tax 93 76 39 –262 –55 70 78 42 32 222

Taxes –30 –23 –13 78 12 –23 –28 –5 –25 –81

Earnings for the period 63 52 26 –184 –43 47 50 37 7 141

of which minority interests 0 0 0 1 1 1 0 2 1 4

Earnings per share, SEK 2.85 2.35 1.22 –8.34 –1.92 2.12 2.24 1.61 0.27 6.24

Operating margin, %1) 5.3 5.3 4.2 –4.0 3.0 4.2 4.5 3.3 4.9 4.3

Operating margin,% 5.3 4.7 3.8 –11.2 1.1 4.2 4.5 3.3 2.3 3.6

Cash-flow after net investments 52 263 52 98 465 –72 –88 –126 145 –141

Return on capital employed,%2) 8.9 8.9 8.9 2.4 2.4 10.4 10.3 9.6 8.3 8.3

Return on equity,%2) 8.1 8.4 7.9 –2.3 –2.3 15.0 14.7 13.9 7.3 7.3

Equity/assets ratio,% 36 28 29 29 29 40 37 37 37 37

Investments 79 100 98 125 402 94 109 103 157 463

R&D,% 4.3 3.8 3.6 4.5 4.0 4.4 4.2 4.1 4.2 4.2

Number of employees2) 5,747 6,107 6,121 6,004 6,004 4,702 4,997 5,263 5,519 5,519

1) excluding restructuring costs, one-off items and amortization on surplus values2) Rolling 12 months

75HAlDeX 2008

Capital turnover rateNetsalesdividedbyaveragetotalassetslessnon-interest- bearing liabilities.

Debt/equity ratioNetdebtasapercentageofshareholders’equity.

Direct yieldDividenddividedbymarketpriceatyear-end.

earnings per shareNetincomefortheyeardividedbyaveragenumberofshares.

eBit multipleMarketvalueatyear-endplusnetdebtdividedbyoperatingincome.

equity/assets ratioShareholders’equityasapercentageoftotalassets.

Gross marginGross profit, i.e. net sales less cost of goods sold, as a percentage of net sales.

interest coverage ratioOperatingincomeplusinterestincomedividedbyinterestexpenses.

net debtInterest-bearingdebtlessliquidassets.

operating marginOperatingincomeasapercentageofnetsales.

p/e ratioMarketpriceatyear-enddividedbyearningspershare.

payout ratioDividenddividedbyearningspershare.

profit marginOperatingincomeplusinterestincomeasapercentage of net sales.

r&D, %Costsforresearchanddevelopmentasapercentageofnetsales.

return on capital employedOperatingincomeplusinterestincomeasapercentageofaveragetotalassets less non-interest-bearing liabilities.

return on equityNetincomefortheyearasapercentageofshareholders’equityon average.

return on total assetsOperatingincomeplusinterestincomeasapercentageofaveragetotalassets.

self-financing rateCashflowfromoperationsasapercentageofnetinvestmentsexclud-ingacquisitions.

total returnMarketpriceatyear-end,includingdividend,dividedbymarketpriceat beginning of year.

abbreviationsaBaAutomotiveBrakeAdjuster.

aBsAntilockBrakeSystem.

aDBAirDiscBrake.

awDAllWheelDrive.

CVsCommercialVehicleSystems

eBsElectronicBrakeSystem.

eMBElectronicMechanical(Disc)Brake.

espElectronicStabilityProtocol.

FBFFabrica Brasileira de Freios.

ModulairAirdryerproductrangewithmodulardesign.

tCMTrailerControlModule.

ttMTrailerControlModule.

Definitions

76 HAlDeX 2008addresses

Addresses

austriaHaldex wien Ges.m.b.H.Carlbergergasse 38/Top 13AT - 1230 WienTel: +43 (0)1 8 69 27 97Fax: +43 (0)1 8 69 27 97 27E-Mail: info.AT@Haldex.com

Belgium Haldex n.V./s.a.Molenstraat 5 Bus 1BE - 9860 Balegem (Ghent)Tel: +32 (0)9 363 90 00Fax: +32 (0)9 363 90 09E-Mail: info.BE@Haldex.com

BrazilHaldex do Brasil ind. e Com. ltdaRua Carlos Pinto Alves 29Jardim AeroportoBR - 04630-030 São Paulo – SPTel: +55 11 2135-5000Fax: +55 (0)11 5034 9515E-Mail: info.BR@Haldex.com

Haldex do Brasil ind. e Com. ltdaRua Anequirá, 167CordovilBR - 212 15-440 Rio de Janeiro - RJTel: +55 (0)21 2139 5000Fax: +55 (0)21 2139 5004E-Mail: info.BR@Haldex.com

Haldex do Brasil ind. e Com. ltdaEstrada Antônio Soldatelli, 2310BR - 95270-000 Flores da Cunha - SPTel: +55 (0)54 3297 3530Fax: +55 (0)54 3297 3548E-Mail: info.BR@Haldex.com

CanadaHaldex ltd.525SouthgateDrive,Unit1CA - Guelph, Ontario N1G 3W6Tel: +1 (0)519 826 7723Fax: +1 (0)519 826 9497E-Mail: info.CA@Haldex.com

ChinaHaldex Concentric (suzhou) Co. ltd.47DongJingIndustrialParkDongFuRoadLoufeng EastSIP, SuzhouJiangsu Province PRC 215123Tel: +86 (0)512 62653502E-Mail: general@concentric-pumps.com.cn

Haldex international trading Co. ltd.16 A-H, Zhao Feng World Trade BuildingNo. 369 Jiang Su RoadShanghaiPRC 200050Tel: +86 (0)21 5240 0338 Fax: +86 (0)21 5240 0177E-Mail: info.CN@Haldex.com

Haldex Vehicle products (suzhou) Co. ltd.6# Long-Pu RoadSIP, SuzhouJiangsu ProvincePRC 215123Tel: +86 (0)512 8765 6068Fax: +86 (0)512 8765 6066

Haldex Hydraulics (Qingzhou) Co. ltd.1789#ShiDaiYiRoadQingzhouEconomicDevelopmentZoneShandong ProvincePRC 262500Tel: +86 (0)536 329 5789Fax: +86 (0)536 329 5818

FranceHaldex europe sas30, rue du RiedWeyersheimFR - 67728 Hoerdt CedexTel: +33 (0)3 88 68 22 00Fax: +33 (0)3 88 68 22 09E-Mail: info.EUR@Haldex.com

Haldex Hydraulics France30, rue du Ried Weyersheim FR - 67728 Hoerdt CedexTel: +33 (0)3 88 68 22 00Fax: +33 (0)3 88 68 22 09E-Mail: info.EUR@Haldex.com

GermanyHaldex Brake products GmbHMittelgewannweg 27DE-69123HeidelbergPostfach 10 25 60DE-69015HeidelbergTel: +49 (0)6221 7030Fax: +49 (0)6221 703400E-Mail:info.DE@Haldex.com

Haldex Garphyttan GmbHNeumannstrasse 2Postfach 10 25 41DE-40016DüsseldorfTel: +49 (0)211 92 30 40Fax: +49 (0)211 23 65 17E-Mail: info@hgde.haldex.com

Haldex Hydraulics GmbHSeligenweg 12DE-95028HofPostfach 15 07DE-95014HofTel: +49 (0)9281 8950Fax: +49 (0)9281 87133E-Mail: info.hydraulics.eu@haldex.com

HungaryHaldex Hungary KftDòzsaGyörgyut93HU - 2255 SzentlörinckátaTel: +36 (0)29 631 300Fax: +36 (0)29 631 301E-Mail: info.HU@Haldex.com

indiaHaldex Concentric pumps (india) pvt ltdGat No 26/1, 27 & 28 (Part)Off Pune-Nagar RoadLonikand, PO LonikandTaluka: HaveliIN - Pune 412 216Tel: +91 20 66 14 2300Fax: +91 20 66 14 2301E-Mail: general@concentric.co.in

Haldex india limitedB71,MIDC,AMBADIN - Nashik 422 010Tel: +91 (0)253 2380094Fax: +91 (0)253 2380729E-Mail: info.IN@Haldex.com

Haldex india limited (Coo office)S-304, LBS Marg, Mulund (W),IN - Mumbai – 400080Tel: +91 (0)22 25645453

italyHaldex italia srl.Via Trento Trieste 116/118IT - 20046 Biassono (MI)Tel: +39 039 47 17 02Fax: +39 039 27 54 309E-Mail: info.IT@Haldex.com

KoreaHaldex Korea ltd.ACE Hitech City #2-305, 54-66, Mullae-dong 3-ga Youngdeungpo-guKR - Seoul 150-972Tel: +82 (0)2 2636 7545-7Fax: +82 (0)2 2636 7548E-Mail: info.KR@Haldex.com

Mexico Haldex de Mexico s.a. De C.V.Blvd. Pote Carlos Salinas de Gorari KM 7.5Apartado Postal 108MX - Apodaca, N.L. C.P. 66600 (Monterrey)Tel: +52 (0)81 8156 9500Fax: +52 (0)81 8313 7090

Haldex products de MéxicoCalleRíoDanubionº303Parque Tecnoindustrial Castro del RíoMX - 36810, Irapuato, Gto.Tel: +52 462 606 7501Fax: +52 462 636 0612

polandHaldex sp. z. o.o.Ul. Wodna 2KowalePL - 46-320 PraszkaTel: +48 (0)34 350 11 00Fax: +48 (0)34 350 11 11E-Mail: info.PL@Haldex.com

77addresses

russiaooo “HalDex rus” Warszawskoe shosse 17, building 2RU - 117 105 MoscowTel: + 7 495 747 59 56Fax: +7 495 786 39 70E-Mail: info.RU@Haldex.com

spainHaldex españa s.a.Poligono Industrial « Can Volart »C/Garbi n° 6, nave 3-5Carretera C-17 Km 15.5ES - 08150 Parets del Valles (Barcelona)Tel: +34 (0)93 573 10 30Fax: +34 (0)93 573 07 28E-Mail: info.ES@Haldex.com

swedenHaldex aBHeadquartersBiblioteksgatan 11Box 7200SE - 103 88 StockholmTel: +46 (0)8-545 049 50Fax: +46 (0)8-678 89 40E-Mail: info@Haldex.com

Haldex Brake products aBInstrumentgatan 15Box 501SE - 261 24 LandskronaTel: +46 (0)418-47 60 00Fax: +46 (0)418-47 60 01E-Mail: info.SE@Haldex.com

Haldex Hydraulics aBRingvägen 3SE - 280 40 Skånes FagerhultTel: +46 (0)433-324 00Fax: +46 (0)433-305 46E-Mail: info.hydraulics.eu@haldex.com

Haldex Hydraulics aBBox 511Nymärsta Gränd 6SE - 195 25 MärstaTel: +46 (0)8-591288 50Fax: +46 (0)8-591288 60Mob: +46 (0)70-51897 33 E-Mail: info.hydraulics.eu@haldex.com

Haldex traction aBInstrumentgatan 15Box 505SE - 261 24 LandskronaTel: +46 (0)418-47 60 00Fax: +46 (0)418-47 60 01E-Mail: info.traction.se@haldex.com

Haldex Garphyttan aBBruksvägen 3SE - 719 80 GarphyttanTel: +46 (0)19-29 51 00Fax: +46 (0)19-29 51 01E-Mail: info.wire.se@haldex.com

Haldex Brake products aBTelematicsFörrådsvägen 18SE - 141 46 HuddingeTel: +46 (0)8-756 42 40Fax: +46 (0)8-756 42 38E-Mail: Paul.woolford@Haldex.com

uKHaldex Hydraulic systems Division3 The ArchwayRadford RoadAlvechurchBirminghamGB-B487LDTel: +44 (0)121 445 6545Fax: +44 (0)121 445 7780

Haldex Concentric pumps ltdUnit 10, Gravelly ParkTyburn RoadErdingtonBirminghamGB - B24 8HWTel: +44 (0)121 327 2081Fax: +44 (0)121 327 6187E-Mail: general@concentric-pumps.co.uk

Haldex ltd.Hilton RoadAycliffe Industrial ParkNewtonAycliffeCo.DurhamGB-DL56SXTel: +44 (0)1325 310 110Fax: +44 (0)1325 311 834E-Mail: info.GBAy@Haldex.com

Haldex Brake products ltd.MoonsMoatDriveMoons Moat NorthRedditch, Worcestershire GB - B 98 9HATel: +44 (0)1527 499 499Fax: +44 (0)1527 499 500E-Mail: info.GBRe@Haldex.com

usaHaldex Brake products Corp.10930 North Pomona AvenueUS - Kansas City, MO 64153Tel: +1 (0)816 891 2470Fax: +1 (0)816 891 9447E-Mail: info.US@Haldex.com

air Management10930 North Pomona AvenueUS - Kansas City, MO 64153Tel: +1 (0)816 891 2470Fax: +1 (0)816 891 9447

air Management 1811-B-Hayes RoadUS - Grand Haven, MI 49417Tel: +1 (0)616 846 4447Fax: +1 (0)616 846 3123

Braking Controls2702 North State StreetUS - Iola, KS 66749Tel: +1 (0)620 365 6911Fax: +1 (0)620 365 5275

Foundation Brake2400N.E.CoronadoDriveUS – Grain Valley, MO 64029Tel: +1 (0)816 229 7582Fax: +1 (0)816 224 7090

Friction products10715NWAirworldDriveUS - Kansas City, MO 64153Tel: +1 (0)816 891 2470Fax: +1 (0)816 880 9766

remanufacturing 5334 Highway 221 SouthPO Box 1129US - Marion, NC 28752Tel: +1 (0)828 652 9308Fax: +1 (0)828 652 7487

Haldex Garphyttan Corp.4404 Nimtz ParkwayUS - South Bend, IN 46628Tel: +1 (0)574 232 8800Fax: +1 (0)574 232 2565

Haldex Hydraulics Corp.2222 15th StreetUS - Rockford, IL 61104-7313Tel: +1 (0)815 398 4400Toll Free: +1 (0)800 572 7867 Fax: +1 (0)815 398 5977E-Mail: info.hydraulics.us@haldex.com

Haldex Hydraulics Corp.214 James Farm RoadUS - Statesville, NC 28625Tel: +1 (0)704 873 2587Fax: +1 (0)704 878 0530E-Mail: info.hydraulics.us@haldex.com

Haldex Concentric inc800 Hollywood AvenueUS – Itasca, IL 60143-1353Tel: +1 630 773 3355Fax: +1 630 773 1119E-Mail: general@concentricinc.com

Haldex traction systemsDetroitOffice44712 Helm StreetUS - Plymouth, MI 48170Tel: +1 (0)737 734 0435Fax: +1 (0)737 734 0436E-Mail: info.traction.se@haldex.com

production: Haldex in cooperation with n3 Kommunikation. print: elanders Gummesons. photo: Victor Brott, Anders eliasson, Magnus Fond, lisa Wikstrand, Svante Örnberg and others. Illustrations: RCB2.

HAlDeX 2008

www.haldex.com