LEAX Group in Latvia Jan Geier, Vice President “The day we stop getting better is the day we stop being good“

LEAX Group 275 MSEK turn over 250 Employees

LEAX Group Mission We are a leading service provider of mechanical and electromechanical solutions for –Commercial Vehicles & Automotive –Electromechanical & Power generation –Construction and Mining industries We provide –Flexible machining –Assembly and testing of subsystems –Services in Quality, Environmental & Business solutions We focus on –Customer satisfaction –Innovative business solutions –Technical know how –Agile processes –Lean enterprise –Empowered employees

Our products Shafts Gears Rock Drill Components Pre assembled products

Köping Västerås Riga

History – LEAX Group Started in MSEK 1992 Acquisitions in 1995 och 2000 ISO/TS 2003 Average growth 35 %

Markets and Customers Customer segments –Automotive & CVS –Electromechanical industry & Power generation –Construction & Mining industry Markets –Sweden, Europe, Japan, USA “Client- Co-operation ” –One stop shopping –Design support

LEAX Baltix

History – LEAX Baltix 1998 Analysis of production capacity in Baltic States First supplier audits and test orders 2001 Founding of SIA LEAX Baltix Trading and Consultancy 2002 First serial volume contracts Purchase of land and building (12000m2 / 2700m2) First employments of production personnel 2003 Own production starts

Reasons for investment Global sourcing from our customers –China/India –Eastern Europe Extensive price pressure (Problems finding skilled work force in Sweden) Very small local market

Latvia Big differences in salaries –Management % –Workers % High growth, especially in Riga region Recruitment of production personnel has been fairly easy Management is a key issue

Latvian Culture Corruption exists, but has not been a problem for us –Choose your partners “Russian” business culture –A lost generation –Quotations –Pricing Financing and banks

Method ”Compatible” work shop Purchase of machines in Sweden Start up of production in Sweden –Latvian personnel in Köping (work permits!) Swedish management Sales (and customer contact) from Sweden

LEAX Baltix Trading center Machining Manual assembly

Owner structure LEAX Group66,5 % Swedfund24,5 % Local partners 9,0 % Swedfund was contacted to provide external risk capital to make a faster expansion possible

LEAX Baltix – Present situation Rapid growth Profitable since September 2003 Several new orders taken and quotation backlog is impressive

LEAX Baltix – Facts & Figures Forecast 2005 –Turn over70 MSEK –Profit 5 MSEK –No of employees65-70 Plan 2008 –Turn over –Profit –No of employees

Reasons why we have succeeded Good planning Training of all personnel in Sweden Persistent management Integration of core values and local cultures (Swedish vs. Latvian) Management skills in language “Problem solving ability”

Expansion i Riga Business Park with attractive location