SinterCast2010Annual Report

2010Annual Report 2

Contents

Table of Contents2 SinterCastinBrief3 TheBusinessModel&TheFiveWaves4 CEOMessage5 MarketDevelopment7 GlobalPresence8 SinterCastHistory9 ProductOffering10 TheSinterCastBoardandAuditor11 TheSinterCastManagement12 Directors’Report16 IncomeStatement&StatementofComprehensiveIncome

17 CashflowStatement18 BalanceSheet–Group

19 StatementofChangesinEquity–Group20 BalanceSheet–ParentCompany21 StatementofChangesinEquity–ParentCompany22 AccountingPolicies25 AccountingNotestotheFinancialStatements37 Signatures38 AuditReport39 CorporateGovernanceReport201043 TheBoardofDirectors’ReportonInternalControl44 Auditor’sReportontheCorporateGovernanceReport45 HistoricalSummary–Group46 SinterCastShare48 ImportantDates

SinterCastsuppliesprocesscontrolsolutionsandknow-howforthereliablehighvolumeproductionofCompactedGraphiteIron(CGI),ahigh-strengthengineeredmaterialthatimprovestheefficiencyofcomponentsusedinpassengervehicle,commercialvehicleandindustrialpowerapplications.TheSinterCasttechnologymeasuresandcontrolsthemolten ironbefore it iscast intomoulds,reducingscrapandensuringcost-effectiveCGIseriesproduction.

SinterCast has been at the forefront of CGI product development and series production since 1992. These efforts haveestablished SinterCast as a trusted supplier to the foundry and automotive industries. Building on the foundation provided bythe current seriesproduction,SinterCastwill continue topromotenewCGI applications in order to increase theoverallmarketopportunity.Inparallel,SinterCastwilldevelopnewproductsandservicestobroadenanddeepenitsexistingcustomerrelations.SinterCastwillalsoinvestigatenewproductdevelopmentopportunitiesbeyondthecoreCGImarketinordertoincreaselong-termshareholdervalue.

Compacted Graphite Ironisaformofcastironthatprovidesatleast75%highertensilestrength,45%higherstiffnessandapproximatelydoublethefatiguestrengthofconventionalgreycast ironandaluminium.ThepropertiesofCGIallowdesignengineerstoimproveperformance,fueleconomyanddurabilitywhilereducingweight,noiseandemissions.TheSinterCastprocessis used for the production of a variety of other CGI components including cylinder blocks and heads, bedplates, turbochargerhousings,exhaustmanifolds,clutchcomponentsandlargeenginecastingsfortheindustrialpowersector.

Market Penetration grew significantly during 2010, with three new installation commitments and a 118% year-on-yearincreaseinseriesproduction.During2010,theSinterCasttechnologywasusedtosupporttheproductionofmorethantwomillionCGIcastingsat15foundriesin10countriesaroundtheworld.Theend-usersofSinterCast-CGIcomponentsincludeAstonMartin,Audi, Caterpillar, Chrysler, DAF Trucks, Ford, Ford-Otosan, General Electric Transportation Systems, General Motors, Hyundai,Jaguar, Kia, Land Rover, MAN, Navistar, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering, Toyota, VMMotori,Volkswagen,VolvoandWaukeshaEngine.

Environmental Benefits are achieved when using the SinterCast technology. The accuracy of the SinterCast processenablesfoundriestoproducecastingsmoreefficientlyandtoreducescraprates.ForeveryonemillionEngineEquivalents,each1%reduction inscrapor1% improvement inmouldyieldprovides theequivalentsavingsof2,500tonnesofCO2peryear.TheSinterCastprocessalsoenablestheproductionofsmallerandmore fuelefficientengines, thusreducingboth fuelconsumptionandCO2emissions.

Notes:ThisdocumentisanunofficialtranslationoftheofficialSwedishAnnualReport Pages12–48conformtoIFRS(InternationalFinancialReportingStandards)

SinterC

ast in Brief

2010Annual Report 3

Business M

odel

The Five W

aves Strateg

y

Wave 1V-diesels in Europe

Annualised year-end production: 265,000 Engine Equivalents (13,250 tonnes)Series production for: Audi, Jaguar Land Rover, PSA Peugeot-Citroën, Porsche, Volkswagen and VM MotoriSinterCast-CGI Components: 6 cylinder blocks available in 20 vehicles and 8 brands (2.7~4.2 Litres)Outlook: Stable sector with some growth opportunity as market continues to recover

Wave 2 Commercial Vehicles

Annualised year-end production: 370,000 Engine Equivalents (18,500 tonnes)Series production for: DAF, Ford-Otosan, Hyundai, Navistar and MANSinterCast-CGI Components: 11 cylinder blocks and 6 cylinder heads (3.9~12.9 Litres)Outlook: Near-term and long-term global growth opportunity

Wave 3 In-line Diesels in Europe

Current status: Limited product development underwayOutlook: Long-term potential depends on performance demands, downsizing and emissions requirements.

Potential for initial programme decisions in the near-term (<5 year) period

Wave 4 Diesels Beyond Europe

Annualised year-end production: 360,000 Engine Equivalents (18,000 tonnes)Series production for: Ford, Hyundai, KiaSinterCast-CGI Components: 2 cylinder blocks available in 7 vehicles and 3 brands (3.0 & 6.7 Litres)Outlook: Growth opportunity depends primarily on diesel acceptance in North America

Wave 5 Petrol Engines

Current status: Product development underway in parallel with downsizingConsiderable motorsport experience

Outlook: Potential application for highly charged and/or direct injection petrol or ethanol engines Potential for initial programme decisions in the near-term (<5 year) period

Other Growth OpportunitiesCylinder Heads – Diesel Passenger Vehicles

Current status: Initial product developmentOutlook: Long-term potential for mid-range (4~7 litre) diesels.

No significant production opportunity in the near-term (<5 year) period

Automotive – Non Block & Head

Annualised year-end production: 155,000 Engine Equivalents (7,750 tonnes)Series production for: Audi, Ford, Renault and VolkswagenSinterCast-CGI Components: Exhaust manifolds, turbocharger housings and clutch components Outlook: Growth opportunity, including new installations

Non-Automotive (Industrial Power)

Annualised year-end production: 40,000 Engine Equivalents (2,000 tonnes)Series Production for: Federal Mogul, General Electric, Rolls-Royce, Volvo and Waukesha EngineSinterCast-CGI components: Available in marine, locomotive and stationary power generating applicationsOutlook: Near-term and long-term global growth opportunity

Business Model SinterCastsellsorleasestheSystem3000hardware,leasestheprocesscontrolsoftware,sellsthesamplingconsumables,andcharges a running Production Fee for each tonne of CGI castings produced using the SinterCast technology. Revenue is alsoderivedfromspareparts,customerservice,fieldtrialsandsalesoftestpieces.Theindividualcomponentsofthebusinessmodelaredescribedasfollows:

• System 3000 Hardware Platform: The System 3000 can be configured to suit the layout andprocess flow of any foundry. Typical sales prices are €300,000~500,000 for the full System 3000and €50,000~100,000 for the Mini-System 3000, depending on the configuration and installationrequirements.Forleasedsystems,thetypicalleaseperiodissevenyears,butthedurationcanvary.

• Process Control Software: The software applies the metallurgical know-how and provides theoperating logic for theSystem3000hardware.SinterCastchargesanAnnualSoftwareLicenceFeeandretainsownershipofthesoftware.

• Sampling Consumables: The consumables consist of the Sampling Cup and the ThermocouplePair.OneSamplingCupisconsumedwitheachmeasurement.TheThermocouplePairisre-usedfor150~200measurements.OneSinterCastmeasurementisrequiredforeachproductionladle.

•Production Fee:Arunningfeeisleviedforeachtonneofshippedcastings,basedontheas-cast(pre-machined)weight.Thereare20EngineEquivalents(50kgeach)pertonne.

•Technical Support:Engineeringserviceforproductdevelopment,newinstallationsandcalibrations,metallurgicalconsultancy,andongoingcustomerservice.

Thetotalrunningfees(samplingconsumablesplusProductionFee)dependontheladlesizeandthecasting yield. For a typical cylinder block production, the current running fees provide a revenue ofapproximately€40~50pertonneofcastings,equivalently,€2.00~2.50foreach50kgEngineEquivalent.TheSinterCastbusinessmodelishighlyscalable,allowingprofitabilitytoriseastheinstalledbasegrowsandasmoreproductsenterseriesproduction.

The Five Waves Strategy Introduced in 2002, the Five Waves strategy continues to provide the basis for how the Company views the overall marketdevelopment.TheannualisedproductionstatusforeachoftheFiveWaves,basedonyear-endproductionrates,issummarisedinthefollowingtable:

System 3000

Sampling Cup

2010Annual Report 4

CE

O M

essage

CEO MessageForayearthatstartedonrelativelythinicefortheglobalfoundryand automotive industries, 2010 finished better than mostcompanies expected, and was a particularly strong year forSinterCast.

ForSinterCast,2010beganwithseriesproductionatarateof550,000EngineEquivalents,approximately25%belowthepre-downturnhighof750,000EngineEquivalentssetinSeptember2008. However, series production increased in 11 out of 12months during 2010 and, by September, we had passed the‘millionmilestone’ for the first time inourhistory.Thegrowingproductionwasprimarilydrivenbythecontinuedramp-upoftheFord6.7litreV8engineinNorthAmericaandbytheproductionof turbocharger housings and exhaust manifolds in China.However, production was also buoyed by the announcementofsixnewseriesproductionprogrammesduring theyear: theNavistar 6.4 litre V8 cylinder block in March; the Land Rover4.4 litre V8 cylinder block in June; the VM Motori 3.0 litre V6cylinder block in September; and, three commercial vehiclecylinder heads for Hyundai in December. By year-end, seriesproduction finishedatanannualised rateof1.2millionEngineEquivalents,providinga118%year-on-yearincreaseanda60%increaserelativetothepre-downturnhigh.Thepositivegrowthof2010couldalsobeseenby the88% increase inSamplingCupshipments, the97%growth in revenue,positiveP&Landcashflow results and, most importantly, SinterCast’s first everproposalforadividendtoitsshareholders.

Beyond series production, 2010 also finished as a strongyear for new installations. Following the Mini-System 3000installationatFirstAutomobileWorksinChinaduringFebruary,SinterCast finishedtheyearwith two installationcommitmentsinDecember.ThefirstwasforafullSystem3000atDaedongMetals in Korea and the second was for the activation of aconsigned back-up system at Dashiang Precision in China,allowing Dashiang to expand CGI production to a secondmouldingline.Theseinstallationsprovideda160%year-on-yearincrease in installation revenueandservedas thebasis foranalmostfour-foldincreaseinaccountsreceivableatyear-end,toSEK11.6million.

The overall awareness of CGI continues to grow throughoutthe automotive industry. CGI has effectively become thestandard material for passenger vehicle V-type diesel enginecylinderblocksand themomentumhascontinued to increaseforcommercialvehiclecylinderblocksandheads.Since2007,

SinterCasthassupportedthe launchof17commercialvehiclecomponents into series production, and this sector continuestoprovidethelargestgrowthopportunityforCGI.AlthoughCGIhas not yet had any significant breakthroughs for passengervehicle petrol engines or in-line diesel engines, the trendtoward downsizing and increased performance provides newopportunitiesandweremainoptimisticinthepotentialoftheseapplications. At present, SinterCast’s production activities arewell balanced with 50-55% of the production for passengervehicle cylinder blocks, 30-35% for commercial vehicles,and 15-20% for products such as exhaust components andindustrialpowerapplications.

One of the main opportunities for SinterCast is to bridge thedivide between the OEMs that embrace CGI and those whodonotyetuseCGI.Inourexperience,everycompanythathasspecifiedaCGIenginehashadapositiveexperienceandhasmovedon todevelopmoreCGI engines. Ford,Audi,Hyundaiand Navistar are particularly good examples, with seven,six, five and three CGI engines respectively. We will grow asthese and other pro-CGI OEMs continue to expand their CGIline-ups, andwewill alsocontinueour efforts todevelopCGIopportunities with new manufacturers. This includes the off-road construction, agriculture and marine industries, and alsothe commercial vehicle sector in developing markets such asChinaandIndia.SinterCasthasestablishedcredibleproductionreferencesinAsiaandhasarespectedpresenceintheregion.Wewill continue to focusonAsiaduring2011,withparticularemphasisonChina.

NorthAmericaalsoprovidesgrowthopportunitiesforSinterCast,bothforpassengervehiclesandcommercialvehicles.Althoughthemediaandgovernment focus is clearly onhybrid vehiclesandelectrification,thediesel‘takerate’isactuallythreetofourtimeshigherwhenvehiclesareavailablewithhybridanddieselengineoptions.Indeed,dieseltakeratesintheUSin2010wereapproximately 30% for cars and 60% for pick-ups, resultingin a diesel penetration that is remarkably similar to Europe.Consumer preference is guided by the on-cost comparedto gasoline vehicles, which averages USD 1,900 for dieselsand USD 4,300 for hybrids, and by driving flexibility. Despitethis positive penetration, the North American OEMs remainundecided about the future of diesel engines in the pick-upsector, and this is an application that SinterCast continues topromote,both through itsmembership in theUSCoalition forAdvanced Diesel Cars and through direct contact with theOEMs.

From thin ice to strong finish, 2010 was a good year forSinterCast.Withpositivecashflowandstrong liquidity,wearenow able to be more pro-active in the market, adding salesresourcesandsupportingnewproductdevelopmenttoincreasethemarketopportunityandtoenhanceSinterCast’stechnologyandbrand.Welookforwardtonewinstallationsandnewseriesproduction launches in 2011, and above all, to rewarding ourshareholdersfortheirconfidenceandsupport.

DrSteveDawsonPresident&CEO

2010Annual Report 5

Market D

evelopm

ent

Market Development Theglobal economic downturn hasbeen themost significantfactor influencing the recent development of the automotiveand foundry industries. It is therefore helpful to evaluateSinterCast’s market development with reference to the onsetof the downturn in mid-2008, as shown in Figure 1. In termsof Engine Equivalents, Figure 1 illustrates the development ofSinterCast’sannualisedseriesproductionforfivefullyears,from2006to2010,withseparatetrendlinesfortheprogrammesthatstartedproductionbeforeandafterSeptember2008.

Prior to September 2008, SinterCast enjoyed steady growth,primarily derived from the start of production of eight newcommercialvehicleengineprogrammesduring2007.However,with the onset of the economic downturn, series productiondecreasedsharplyandstabilisedat the2006production levelofapproximately400,000EngineEquivalentsduringmid-2009.Since June 2009, the total production volume has increasedeveryquarter,providing2010annualisedyear-endproductionof1.2millionEngineEquivalents,a118%year-on-yeargrowthandanincreaseof60%relativetothepre-downturnhighof750,000EngineEquivalentsestablishedinSeptember2008.

Figure 1 clearly shows that, although there has been somerecoveryinthevolumeoftheprogrammesthatstartedproductionbefore the downturn, most of SinterCast’s recent growth hasbeen derived from the newer programmes. The programmesthatstartedproductionbeforeSeptember2008haveprovidedfour consecutive quarters of increasing production, but thevolume remains approximately 35% below the pre-downturnhigh.Therecoveryofthepre-downturnprogrammeshasbeenpredominantlybuoyedbystrongproductionoftheAudiandFordV6cylinderblocks,buthinderedbya relativelyweak recoveryof theEuropeancommercial vehicleprogrammes. Incontrast,theprogrammesthathavestartedproductionsinceSeptember2008 have provided six consecutive quarters of growth and,since early-2010, have exceeded the contribution of the olderprogrammes,eventhoughthenewerprogrammesonlyaccountfor15ofSinterCast’s46seriesproductioncomponents.

The Fives Waves

SinterCast continues to view the overall market development

in terms of the Five Waves strategy that was first introducedin 2002. The Five Waves are presented in terms of the maintypesofenginesfoundintheautomotivesectorandthetypesofvehiclesthattheenginesareusedin.TheFivewavesinclude:V-diesel passenger vehicle engines in Europe; commercialvehicle engines; In-line passenger vehicle diesel engines;V-diesel passenger vehicle engines outside of Europe; and,petrol engines. In addition to these categories, SinterCastalso supports series production and product development ofautomotivecomponentsotherthancylinderblocksandheads,suchasbedplates,exhaustandclutchcomponents,andlargeindustrialpowercastingsformarine,locomotiveandstationarypowerapplications.TheseactivitiesareviewedseparatelyfromtheFiveWaves.Foreachtypeofproduct,SinterCastpresentsthe production volume in terms of Engine Equivalents, whereeachEngineEquivalentisdefinedtoweigh50kg.Accordingly,there are 20 Engine Equivalents per tonne of castings. ThedevelopmentofSinterCast’s seriesproduction for eachof themaincategoriesissummarisedinthefollowingtable:

Annualised Year-end Production (thousands of engine equivalents)

SinterCast Wave/Sector 2010 2009 2008 2007

1.V-DieselsinEurope 265 195 280 350

2.CommercialVehicles 370 105 235 100

3.In-LineDiesels 0 0 0 0

4.V-DieselsBeyondEurope 360 140 70 25

5.PetrolEngines 0 0 0 0

AutomotiveNonBlock&Head 155 100 0 0

IndustrialPower 50 10 40 50

Total: 1,200 550 625 525

Production of V-diesel engines for the European passengervehicle market (Wave 1) increased steadily during 2010, butremains approximately 25% below the 2007 year-end level of350,000.VolumeinthefirstwaveisprimarilydeterminedbytheAudi3.0litreV6andtheFord3.0litreV6,whichhasincreasedsignificantlyasa resultof thesalessuccessof theJaguarXF.Thefactthatthefirstwaveproductionremainsbelowthepre-downturn level indicates an opportunity for further growth,particularlyastheVMMotori3.0litreV6enginerampsupduring2011. Series production of commercial vehicle engines hasgrownalmostfour-foldsince2007,inparallelwiththegrowthof

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Figure 1: The production trend shows that the current growth is primarily derived from the programmes that started production after 3Q 2008

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2010Annual Report 62010Annual Report 6

thenumberofSinterCast-CGIcommercialvehiclecomponentsfrom eight to 17 over the same period. Commercial vehiclescontinue to provide a growth opportunity for SinterCast, inEurope,AsiaandtheAmericas.

The fourthwave,passenger vehicleV-dieselsbeyondEurope,hasgrownsignificantlysincetheNorthAmericanlaunchoftheFord 6.7 litre V8 diesel engine in September 2009. The FordprogrammeiscurrentlySinterCast’shighestvolumeproductionprogrammeandisexpectedtocontinuecontributingwithsimilarvolumes.Furthergrowthinthefourthwaverequiresproductioncommitments for new diesel engines, particularly in NorthAmerica,but theplans fordieselengines in lightdutypick-uptrucksremainuncertain.

In addition to the first, second and fourth waves, the trendstoward downsizing, turbocharging and direct injection providefuture opportunities for Compacted Graphite Iron in the thirdand fifth waves. SinterCast continues to support productdevelopment and to promote the merits of CGI compared toconventionalgreycastironandaluminiumforin-linedieselsandpetrolengines.

Beyond the five waves related to the core cylinder block andheadmarket, theongoingproductionofexhaustcomponents,clutch components, and large engine castings for industrialpower applications accounts for approximately 15–20% ofSinterCast’stotalproductionvolume.Theproductionofexhaustcomponents – turbocharger housings, exhaust manifolds andintegratedmanifoldswithturbochargerhousings–hasprovidedapproximately150,000EngineEquivalentsofgrowthsince2007,plus theactivationof anew installationduring2010.Althoughthe long-term trend for these components may move towardaustenitic steel castings, further growth can still be expectedfrom this sector. Production of industrial power componentshas been relatively stagnant since 2007, caused primarily bythereduceddemandforlocomotiveenginesinNorthAmerica.However, additional growth can be expected from this sectorasoff-roadenginesfacenewemissions legislationandrequireperformance upgrades. Together, it is expected that theproduction of automotive components other than cylinderblocks and heads, plus industrial power components, willcontinuetocontributeapproximately15–20%oftheproductionasthetotalvolumeincreases.

Market Penetration

The current global market demand for V-type diesel enginesin passenger vehicles is approximately 800,000 engines peryear. At an assumed average weight of 100 kg per V-typecylinder block, the total market opportunity can be estimatedat approximately 1.6 million Engine Equivalents per year.Accordingly, the total current production of 625,000 EngineEquivalentsinthefirstandthirdwavescorrespondstoamarketpenetrationofapproximately40%forSinterCast-CGI.Likewise,thecurrentglobalmarketdemandforcommercialvehicles(>6tonnecapacity)canbeestimatedatapproximately twomillionunits per year, with approximately half of the volume in thedomestic Chinese market. The range of commercial vehiclesfollows a pyramid-type size distribution where the majority ofvehiclesareinthe4-7litredisplacementrangeandtheheavy-duty (>12 litre) size class represents the smallest number ofvehicles.Assumingaverageweightsof200kg for thecylinderblockand100kgforthecylinderheadoverthiswiderangeof

displacements,thetotalmarketopportunitycanbeestimatedatapproximately12millionEngineEquivalentsperyear,ofwhichapproximatelyfourmillionEngineEquivalentsareaccountedforbyEuropeandNorthAmerica.Accordingly,SinterCast’scurrentproductionof370,000EngineEquivalents in thesecondwavecorrespondstoapenetrationofapproximately3%oftheglobalmarket and approximately 10% of the combined Europeanand North American market. In both the passenger vehicleV-dieselsectorand thecommercialvehiclesector, thecurrentproduction serves to prove the robustness of the SinterCasttechnology while providing further growth opportunities withinthecoremarket.

SinterCast’s market development and penetration can alsobe evaluated in terms of the Tier I foundry customer market.SinterCasthassupportedtheseriesproductionof46differentcomponents,in15foundrieslocatedin10differentcountries.Atpresent, it isbelieved that the46SinterCast-CGIcomponentsaccount formore than two-thirdsof theCGIcomponents thatare produced in compliance with the ISO 16112 internationalstandard for Compacted Graphite Iron. Although SinterCastenjoys global brand recognition and respect as the CGItechnology leader, alternative CGI technologies have beenpresented as the market has developed. SinterCast mustcontinue to develop and promote its products as the mostreliable and cost-effective solution for the production of highqualityCGI.

The installation agreements established with First AutomobileWorks (FAW) inChina andwith theDaedongMetals inKoreaduring2010,plustheactivationoftheback-upSystem2000attheDashiangfoundryinChina, indicaterenewedopportunitiesfor capital expenditure in the foundry industry, and newinstallation negotiations are ongoing. Installations provide anup-frontrevenueinjectionforSinterCastandthereafterbroadentheopportunityforSinterCasttoincreaseitsshareoftheglobalCGImarket.Assuch, installationsrepresentan importantpartof SinterCast’s business. Many of the near-term installationopportunitieswillundoubtedlybeinthepricesensitivemarketsofthedevelopingeconomies,whichpresentachallengefortheSinterCast fee structure and business model. SinterCast hasincreased its sales presence in China to improve its ability toconvey the positive cost-benefit proposition of the SinterCasttechnology.

Alternative Vehicle Technologies

New vehicle technologies, particularly hybrid and electricdrive vehicles,dominate themediaattentionandwill continueto grow in popularity. However, these technologies still havelimited penetration in the overall market. For the vast majorityof vehicles that offer hybrid and diesel powertrain options,thedieseloptioncontinues toenjoyahigher ‘takerate’.Othertechnologies,suchashydrogenornaturalgasfuelledvehiclesremain in relative infancy. Biofuels do not affect SinterCast ineitherdirection,asbiofuelscanequallybeusedinengineswithCGIcomponents.Fortheforeseeablefuture,SinterCastbelievesthat the introductionofalternativepowertrain technologieswillnotsignificantlyaffectSinterCast’smarketdevelopmentandthatthecontinuingtrendtowardhigherperformanceandefficiencyfromsmallerenginepackageswillprovidenewopportunitiesforincreaseduseofCompactedGraphiteIron.

Market D

evelopm

ent

2010Annual Report 7

Glob

al Presence

SinterCast Offices and Representation

Global Customer Base

MotorCastings

ASKChemicals

FordClevelandCastingPlant

InternationalCastingCompany

CaseWesternReserveUniversity

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VolvoPowertrainSKFGrainger&Worrall

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Daedong

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al Custom

er Base

2010Annual Report 8

SinterCast History

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2010Annual Report 9

Prod

uct Offering

Compacted Graphite IronCompacted Graphite Iron is an engineered form of cast iron. It is at least 75%strongerand45%stifferthanthestandardgreycastironandaluminiumalloys.Moreimportantly,CGIprovidesdoublethefatiguestrengthofgreyironanduptofivetimesthefatiguestrengthofaluminiumatelevatedtemperatures.TheimprovedpropertiesofCGIenabledesignengineerstoreducethesizeandweightofcomponents,and/ortoincreaseoperatingloads.CGIisideallysuitedtocomponentsthathavesimultaneousmechanical and thermal loading, such as cylinder blocks and heads, exhaustmanifolds, turbocharger housings and clutch components. CGI provides benefitsfor engines used in passenger vehicles, commercial vehicles, and industrial powerapplicationssuchasmarine,locomotiveandstationarypowergeneration.SinterCasthasestablishedsuccessfulproductionreferencesineachoftheseareas.

System 3000 The System 3000 is available as a fully automated process control system, oras a ‘Mini-System’ (pictured) to support product development and niche volumeproduction.TheSystem3000providesaflexibleanduser-friendlyplatformthatcanbeconfiguredtosuitthelayoutandprocessflowofanyfoundry,includingladleproductionand production from pressurised pouring furnaces. During 2010, the functionalityof the System 3000 was expanded to include collection of series production datafrom the customer foundry equipment andprocesses, includingchemical analyses,temperatures,ladleweightandmouldinglineinformation.ThecompilationofthedataintoasingleinformationsystemprovidescustomerswithimprovedtroubleshootingandtraceabilitybeyondthecoreSinterCastprocess.TheSystem3000provides flexible,robust,accurateandindependentCGIproductdevelopmentandseriesproductionforSinterCast’sfoundrycustomers.

The SinterCast ProcessTheSinterCastprocessbeginswithanaccurateanalysisoftheliquidiron,conductedin thepatentedSinterCastSamplingCup.Basedontheresultof thismeasurement,additional alloying elements (Magnesium and Inoculant) are automatically added toeachladle,inwireform,tooptimisethecompositionoftheironpriortocasting.Duringseries production, the average corrective addition of magnesium is approximately20 grams per tonne. The two-step measure-and-correct control strategy eliminatesprocessvariationandensurescost-effectiveCGIseriesproduction.TheresultsofeachSinterCastanalysisandwirefeedingcanbeautomaticallydownloadedtothefoundryqualitysystemtosatisfyQS9000traceabilityrequirements.

CGI Engine BenefitsCGI enables automotive engines to be 10-20% lighter than conventional cast ironenginesand10-20%shorterthanaluminiumengines.Thereducedlengthmeansthatallofthecomponentsthatspanthelengthoftheenginearealsoshorter,andthereforelighter.ThenetresultisthatfullyassembledCGIenginescaneffectivelybethesameweightasaluminiumengines,andforV-typeengines,CGIdesignscanfrequentlybelighter.CGIalsoallowsfor10-20%increasedspecificperformance(kW/litre),75-100%improveddurability,and5-10%reducedoperatingnoise.ThestrengthandstiffnessofCGImaintainsthedimensionalaccuracyofthecylinderboreandallowsenginestosatisfyemissionslegislationthroughoutthelifeofthevehicle.Comparedtoaluminium,CGI is stronger, creates less CO2 during production, is more recyclable and, lessexpensive.

www.sintercast.com info@sintercast.com

System 3000: Fully automated for high volume series production

Mini-System 3000: Prototypingand niche volume production

Compacted Graphite Iron allows engine designers to improve performance, fuel economy and durability while reducing engine weight, noise and emissions. SinterCast produces a variety of CGI components ranging from 2 kg to 17 tonnes, all using the same proven process control technology. The end-users of SinterCast-CGI components include Aston Martin, Audi, Caterpillar, Chrysler, DAF Trucks, Ford, Ford-Otosan, General Electric Transportation Systems, General Motors, Hyundai, Navistar, Jaguar, Kia, Land Rover, MAN, MAN Diesel, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power Engineering, Toyota, Volkswagen, Volvo and Waukesha Engine. The SinterCast CGI process control technology has been adopted by 24 leading foundries in 11 countries around the world, including Componenta in Turkey, Dashiang in China, Halberg in Germany, Hyundai in Korea, Tupy in Brazil, Volvo in Sweden and the international Teksid group.

SinterCast, the world’s leading provider of process control technology for the reliable high volume production of Compacted Graphite Iron (CGI), launches its third generation technology: System 3000

• Extended thermal analysis measurement capability • Modular hardware to suite any layout and process fl ow • Control solutions for ladle pouring and pouring furnaces • Local customer support in North America, Europe and Asia

• Flexible, robust, accurate and independent CGI series production

Technical CentreSinterCast AB (publ)Kungsgatan 2SE 641 30 KatrineholmSweden

tel: +46 (0)150 794 40fax: +46 (0)150 794 44

Americas SinterCast Inc1755 Park Street, Suite 200Naperville IL 60563USA

tel: +1 630 778 3466fax: +1 630 778 3501

China SinterCast - ChinaSuite 2621, 26/FHong Kong PlazaShanghai 200021China

tel: +86 21 61035888fax: +86 21 61035788

IndiaSinterCast RepresentationArvind Deodhar                                                         A3 - 301, Kohinoor EstatePUNE - 411 003India

tel: +91 9922 509232

Big Enough to Deliver – Small Enough to Care

2010Annual Report 10

The SinterC

ast Board

The SinterCast Board

Ulla-Britt Fräjdin-Hellqvist MSc Eng, Ph, ChairmanStockholm,SwedenBorn1954,Nationality:SwedishMainduties:Fräjdin&HellqvistABOtherBoardduties:CastellumAB,e-manAB,FouriertransformAB,KongsbergAutomotive,ASA(Chairman),RuterDam(Chairman),RymdbolagetAB,StiftelsenförStrategiskforskning(Chairman),StockholmEnvironmentInstitute,TällbergFoundationMemberoftheBoardsince2002No.ofshares:4,998

Aage Figenschou LLM, Vice ChairmanOslo,NorwayBorn1948,Nationality:NorwegianMainduties:MD,AageFigenschouASOtherBoardduties:CamilloEitzen&CoASA,EitzenChemicalASA,ParetoWorldwideShippingASA,Simmons&CoInternationalInc,SagexOilASA(Chairman)andUnisonForsikringASAMemberoftheBoardsince1998No.ofshares:12,748

Andrea Fessler BA, JDHongKong,ChinaBorn1968,Nationality:CanadianMainduties:ExecutiveDirector,PremierePerformancesofHongKongMemberoftheBoardsince2003No.ofshares:6,249

Robert Dover FR Eng, FIED, FRSALondon,UnitedKingdomBorn1945,Nationality:BritishProfessorofIndustrialManufacturing,WarwickUniversityFormerChairmanandCEOofJaguarandLandRover.FormerChairmanandCEOAstonMartinOtherBoardduties:BritishMotorIndustryHeritageTrust(Chairman),JaguarDaimlerHeritageTrust,CambridgeUniversityIMRCAdvisoryBoard(Chairman)andHayesLemmertzMemberoftheBoardsince2004No.ofshares:1,249

Steve Dawson BEng, MASc, PhD, PEng, FIMechELondon,UnitedKingdomBorn1962,Nationality:CanadianMemberoftheBoardsince2007No.ofshares:33,750No.ofwarrants:127,500

Auditor Öhrlings PricewaterhouseCoopers ABAnna-Carin Bjelkeby, Authorised Public AccountantCompanyauditorsince2010.Assignments:ByggmaxGroupAB,TrettiABandVolkswagenGroupSverigeAB

Note:Allinformationasof1March2011.

Aud

itor

2010Annual Report 11

The SinterC

ast Managem

ent

Daphner Uhmeier Finance DirectorRönninge,SwedenBorn1962,BScNationality:SwedishEmployedsince2004*No.ofshares:3,659*No.ofwarrants:17,000

Steve DawsonPresident & CEO

London,UnitedKingdomBorn1962,BEng,MASc,PhD,PEng,FIMechE

Nationality:CanadianEmployedsince1991*No.ofshares:33,750

*No.ofwarrants:127,500

Steve WallaceOperations Director

Rejmyre,SwedenBorn1967

Nationality:BritishEmployedsince2003*No.ofshares:4,984

*No.ofwarrants:17,000

*Asof1March2011.

The SinterCast Management

During 2010, the Navistar 6.4 litre ‘MaxxForceTM 7’ V8 started series production at the Cifunsa foundry in Mexico while the VM Motori 3.0 litre V6 diesel engine, with SinterCast-CGI cylinder block and bedplate, started series production at the Tupy foundry in Brazil.

(courtesy VM Motori)

(courtesy Navistar)

2010Annual Report 12

Directors’ R

eport

Directors’ ReportTheBoardofDirectorsandtheManagingDirectorofSinterCastAB (publ), corporate identity number 556233-6494, herebysubmittheAnnualReportandconsolidatedfinancialstatementsfor2010.SinterCastAB,theparentcompanyoftheSinterCastGroup, is a publicly traded limited liability company with itsregistered office located in Stockholm, Sweden. Throughoutthisreport,theuseofthetermSinterCastshallberegardedasreferringtotheSinterCastGroup.

SinterCast supplies process control solutions and know-howforthereliablehighvolumeproductionofCompactedGraphiteIron (CGI), a high-strength engineered material that improvesthe efficiency of components used in passenger vehicle,commercial vehicle and industrial power applications. TheSinterCast technology measures and controls the molten ironbeforeitiscastintomoulds,reducingscrapandensuringcost-effectiveCGIseriesproduction.

TheSinterCastshareshavebeenlistedsince26April1993andare quoted on the Small Cap segment of the NASDAQ OMXstockexchange,Stockholm.

Swedishshareholdersholdandcontrol78.26%(71.92%)ofthecapitalandvotesinSinterCastAB.Thelargestshareholder,SIXSISAG(Switzerland),controlled12.28%(12.61%)ofthecapitalandvotesasanomineeshareholder.SinterCastABhad3,841(3,748) shareholders on 31 December 2010. The ten largest,of which five were nominee shareholders, controlled 45.92%(47.86%)ofthecapitalandvotes.Asof31December2010,theSinterCastBoard,managementandemployeescontrolled1.0%(0.9%)ofthecapitalandvotes.

Financial StatementsThefollowingpartsoftheAnnualReportarefinancialstatements:Directors’ Report; Income Statement; Cashflow Statement;Balance Sheet and Changes in Equity Capital for both theConsolidated Group and the Parent Company; Accountingpolicies;theNotesandCorporateGovernanceReport.

Financial Summary

RevenueTherevenuefortheSinterCastGrouprelatesprimarilytoincomefrom equipment (sales and leases), series production andengineeringservice.

Revenue Breakdown January-December

(AmountsinSEKmillionifnototherwisestated) 2010 2009

NumberofSamplingCupsshipped 102,650 54,600

Equipment1 6.8 2.6

SeriesProduction2 30.9 15.6

EngineeringService3 1.3 1.7

Other 0.4 0.1

Total 39.4 20.0

1Includesrevenuefromsystemsalesandleasesandsalesofspareparts2Includesrevenuefromproductionfees,consumablesandsoftwarelicencefees3Includesrevenuefromtechnicalsupport,on-sitetrialsandsalesoftestpieces

The January-December 2010 revenue amounted to SEK 39.4million(SEK20.0million).Therevenueincreaseisaresultofthesignificant increase inseriesproduction, includingan increasefrom54,600SamplingCupsin2009to102,650SamplingCupsin 2010, plus invoicing of installations at the Daedong Metalsfoundry in Korea, the Dashiang Precision foundry in China,andat FirstAutomobileWorks foundry inChina. The revenuefromseriesproductionincreasedtoSEK30.9million(SEK15.6million).

ResultsResults Summary January-December

(AmountsinSEKmillionifnototherwisestated) 2010 2009

OperatingResult 7.2 -6.3

Resultfortheperiod 16.5 -2.7

Resultaftertaxpershare(SEK) 2.5 -0.5

TheJanuary-December2010operatingresultofSEK7.2million(SEK-6.3million)wasprimarilydrivenbythehighergrossresultofSEK16.2millioncomparedtothesameperiod2009.ThecostincreaseofSEK2.7millioncomparedtothesameperiod2009is mainly due to higher costs related to increased equipmentsales, travel costs, advisory services, operational exchangelosses and increased R&D costs. The R&D costs have beencreditedbySEK0.4million(SEK0.8million)duetotheactivationof development projects. The result after tax for the January-December2010periodamountedtoSEK16.5million(SEK-2.7million), primarily related to the revaluationof thedeferred taxasset,asdescribedinthesectionentitled“DeferredTaxAsset”.

Deferred Tax AssetSinterCast calculates its estimated future taxable profit fromsecured production orders on a quarterly basis, in order todeterminethevaluationofitsdeferredtaxasset.

Deferred Tax Asset January-December

(AmountsinSEKmillionifnototherwisestated) 2010 2009

Estimatedfuturetaxableprofit 120.4 80.3

Changeincarry-forwardtaxlosstakenintoconsideration 40.1 10.3

Deferredtaxoncarry-forwardtaxlosses 31.7 21.2

Changeindeferredtaxduetotheresultfortheperiod -2.4 -

Deferredtaxasset 29.3 21.2

Changeindeferredtaxoncarry-forwardtaxlosses 10.5 2.7

Changeindeferredtaxduetotheresultfortheperiod -2.4 -

Deferredtaxchangesonincometax 8.1 2.7

SinterCast has reassessed the estimated future taxable profitanddeferredtaxassetcalculationfromsecuredorderstoreflectthecurrentexpectationofprogrammelongevityandthetypicallifecycleforengineprogrammes intheautomotive industry.Asof31December2010,SEK120.4million (SEK80.3million)of

General Electric locomotive engine with SinterCast-CGI cylinder heads(courtesy General Electric)

2010Annual Report 13

Directors’ R

eport

SinterCast’stotalcarried-forwardtaxlosseshavebeenusedasthebasisoftheupdatedcalculation,resultinginSEK31.7million(SEK21.2million)beingcapitalisedasadeferredtaxasset.Duetothepositiveresult fortheperiod,thedeferredtaxassethasbeenreducedbySEK2.4million(SEK0.0million)toSEK29.3million(SEK21.2million).

Employee Stock Option ProgrammeAsof31December2010,thecostoftheemployeestockoptionprogramme2009-2013wascalculatedatatotalamountofSEK3.1million (SEK3.3million),basedonaclosingsharepriceofSEK 51.3 (SEK 50.5). During 2010, SEK 1.5 million (SEK 0.8million)hasbeenaccounted forascosts related to theoptionprogramme.

AnExtraordinaryGeneralMeetingoftheshareholdersapproveda new 2009–2013 employee stock option programme on 20August2009,effectiveon1January2010.Themaximumnumberofstockoptionsallottedwas285,000,withanadditional15,000share warrants being reserved by the Company to cover thesocialcostsassociatedwith theprogramme.Thesubscriptionofsharesviatheoptionswilltakeplaceannuallyoverafouryearperiod,withthesubscriptionpricebeingequivalenttoanannualincreaseof10%oftheaveragevolume-weightedpricepaidforoneSinterCastshareoneachtradingdayduringtheperiod6-19August2009,specifically,SEK36.6.Theannualincreaseoftenpercent corresponds to a 46.5% increase over the four yeartermoftheprogramme.TheprogrammehasamaximumceilingofSEK50peroption.

During December 2010 the first 15% (45,000 options) of theemployee stock options were exercised at SEK 40.3. TheexerciseincreasedthenumberofsharesandvotesinSinterCastby 45,000 to 6,975,653 and resulted in a capital injectionamountingtoSEK1.7million.

Cashflow, Liquidity and Investments The January-December 2010 cashflow result was SEK 15.5million (SEK 15.8 million). The cashflow change of SEK 15.5million compared with the cash position of SEK 24.8 millionat 31 December 2009 is a result of the warrant exerciseprogrammesforshareholders(SEK11.3million)andforthefirst15% of the employee options (SEK 1.7 million), together withthe positive results for the period and an increase of working

capital. It is noted that accounts receivableshas increased toSEK11.6millionon31December2010(SEK3.0million).DuringDecember,theSörmlandSparbankloanintheamountofSEK3.0millionwasextendedforanadditionalthreemonths.

InvestmentsduringtheperiodamountedtoSEK0.7million(SEK1.3million),ofwhichSEK0.4millionrelatestotheactivationofdevelopmentprojects.

Cashflow Summary January-December

(AmountsinSEKmillionifnototherwisestated) 2010 2009

Cashflowfromoperatingactivities 10.4 -3.2

Cashflowfromworkingcapital -7.4 -1.7

Cashflowfrominvestmentactivities -0.5 -0.6

Cashflowfromfinancingactivities 13.0 21.3

Cashflow total 15.5 15.8

Liquidity 40.3 24.8

Investments 0.7 1.3

SinterCasthashistoricallybeenfinancedbyriskcapitalprovidedbyitsshareholdersandhasmanageditsexpensesaccordingtomarketforecasts,resourcerequirements,andregularreviewsofexpendituresinrelationtotheannualbudget.Followingpositivecashflow from operations during 2010, the Board judges thatthelong-termfinancingoftheCompanyissecure,allowingtheCompanytobemorepro-activeinitsoperations.

Risks and Uncertainty FactorsDespite the positive increase in series production, and therenewed opportunities for installations, the main uncertaintyfactorforSinterCastcontinuestobetheoveralltimingoftheCGImarketramp-up.ThisprimarilydependsonOEMdecisionsfornewCGIenginesandothercomponents, theglobaleconomyfornewvehiclesalesandontheindividualsalessuccessofthevehiclesequippedwithSinterCast-CGIcomponents.

Over the past two years, the economic conditions facing theglobal foundry and automotive industries have caused someautomotive OEMs to delay production launches and this hasdirectlyaffectedSinterCast.Althoughtheautomotivemarketisenjoyinga recovery, volumes inSinterCast’scoremarketsarestillsignificantlybelowpre-downturnlevelsandtheSinterCast-CGIprogrammesthatstartedproductionbefore3Q08havestillnotfullyrecovered.WhileSinterCastcontinuestosupportnewproductdevelopmentactivities,andanticipatesnewproductionlaunches and new opportunities for installation revenue, the

DAF 12.9L MX engine with SinterCast-CGI cylinder block and head

MAN D20 & D26 engine with SinterCast-CGI cylinder block

(courtesy DAF)

(courtesy MAN)

2010Annual Report 14

Directors’ R

eport

Board believes that it is still not possible to determine theultimateeffectof theglobal economic recessionor the timingandrateoftheoverallmarketrecovery.

For more information on risks and uncertainty factors pleaseseeNote27.

Market Penetration and CompetitionSinterCast enjoys global brand recognition and respect asthe CGI technology leader and is welcomed by the industryas a reliable and trustworthy partner. However, virtually everycompany encounters competition, and SinterCast is noexception. As the CGI market has developed, some foundrysupplycompanieshaveproposedalternativeCGItechnologies.To SinterCast’s knowledge, these have included Hereaus-Electronite,OxyCast,OCCandNovaCast.ItisalsopossiblethatsomefoundriesmayopttoproduceCGIusingin-housecontrolanddiscipline,butthisisgenerallyjudgedtobecomelesslikelyas product complexity and production volumes increase, andas specification requirements become more rigidly enforcedby the end-users. SinterCast judges that its technology andengineering know-how provides the most reliable and cost-effective solution for the production of high quality CGI.Based on its proven technology, production experience andengineering service, SinterCast will continue to support newCGIdevelopment activities to further increase its shareof theworldCGIproductioncapacity.Withrespecttothedevelopmentofalternativeautomotivetechnologiessuchasbiofuels,hybridsand fuel cells, SinterCast does not expect these to have asignificanteffectontheCompany’scompetitivepositionfortheforeseeablefuture.

Organisation and Human ResourcesThe Group management and sales activities are based atthe headquarter office in London, UK. The Technical CentrebasedinKatrineholm,Swedenisresponsiblefortechnicalandcommercial support of ongoing foundry production activities,product development, production of the control systems andsampling consumables, ISO 9001:2008 quality certification,and finance and administration for the Group. Local supportofcustomeractivities inNorthandSouthAmerica isprovidedbySinterCastInc.,basedinChicago,USA,whilelocalsupportfor the Chinese market is provided by the SinterCast ABShanghai Representative Office. Technical back-up for the

USandChineseoffices isprovidedbytheTechnicalCentre inKatrineholm.

In order to expand SinterCast’s market reach, representationagreements have been established with Ashland CastingSolutions on a global basis, ASD International in Japan,PantechEngineering inAustraliaandwith theSTPC (SwedishTrade Promotion Center) in Korea. Consultancy agreementshavealsobeenestablishedtosupportSinterCast’s localsalesactivitiesinFranceandIndia.Togetherwiththeglobalpresenceof technology partners such as ABP for foundry automation,Grainger & Worrall for rapid prototyping and MAG IndustrialAutomationSystemsformanufacturing,therepresentationandconsultancyagreementsprovideafamiliarandrespectedlocalpresencefortheSinterCasttechnology.

As of 31 December 2010, the Group had 13 (13) employees,two (two) of which were female. On 3 February 2011, DrJincheng Liu, a Chinese citizen and an advisor to the ChinaFoundry Association, joined the company in the capacity ofSales Director – China. Following training at the SinterCastTechnicalCentreinSweden,DrLiuhasbeenpostedinChina.TogetherwithDrXiangFengZhang,GeneralManager–China,basedatSinterCast’srepresentationofficeinShanghai,DrLiuwillincreaseSinterCast’ssalespresenceintheChinesemarket.Furtherrecruitmentwillbephasedwiththedevelopmentoffieldactivities,particularlytheneedtosupportnewinstallations.

TotalabsencefromworkwithintheSinterCastorganisationdueto illnessasapercentageofregularworkingtimeduring2010amountedto0.6%(1.8%during2009).Preventiveactionshavebeenimplementedtocontinuetokeepillnessabsenceonalowlevel.

TheAnnualGeneralMeeting2010decideduponaremunerationpolicy in respect of group management such that the totalremuneration shall be competitive and in line with marketconditions, and provide room for reflection of outstandingachievements.Thebenefitsshallconsistoffixedsalary,possiblevariable remuneration, other customary benefits and pension.These principles have been followed during the year and theBoard will propose to the Annual General Meeting 2011 thatthe basic principles for compensation and other terms ofemployment for group management shall remain essentiallyunchangedforthecomingyear.

Withtheexceptionoftheexerciseofthefirst15%ofthewarrantsinthecurrentEmployeeStockOptionProgramme,nosubstantialtransactionstookplacebetweentheSinterCastandtheBoardandtheManagementduring2010.

R&D and PatentsSinterCast’s Research and Development (R&D) activities arebasedattheTechnicalCentreinKatrineholm,Sweden.Followingthe launchof theSystem3000suiteof technologies in2009,SinterCast’sR&Dfocusedonthebroadeningof itstechnologyduring2010.WithinthecoreCGImarket,SinterCastcontinuedthe development of the control technology for the productionof CGI from pressurised pouring furnaces. The evaluation ofthis technology has primarily taken place at an extended trialinaproduction foundry,and trials remainongoing.SinterCastalso expanded the functionality of the System 3000 during2010 to include data collection from the foundry production

Navistar MaxxforceTM 11 & 13 engine with SinterCast-CGI cylinder block

(courtesy Navistar)

2010Annual Report 15

Directors’ R

eport

process. This includes data such as temperature, chemistryandmoulding lineactivities(pouringtimeandshake-outtime).Thecollecteddatacanbecompiledintoasingledatabaseandmade available to the foundry to improve traceability and toassistwithtroubleshooting.

Beyond the core CGI market, SinterCast continued thedevelopment of thermal analysis for the production of ductileiron during 2010. This development is ongoing and, pendingthe success of the internal development, is intended to bedemonstratedforfieldtrialsandcustomerfeedbackduring2011.DuctileironthermalanalysisproductsexistinthemarkettodayandSinterCast’sintentionistoapplyitsexperiencegainedfromtheCGImarkettointroduceacompetitiveproduct.Theultimatelaunch of a ductile product is contingent upon successfulinternaldevelopmentandmarketacceptance.Atthisstage,theductileironprojectremainsasaninternaldevelopmentactivity.

SinterCastcurrentlyholds12(13)patents.SinterCastcurrentlymaintains59 (63) individualnationalphasepatentsgrantedorpendingworldwide.The12basepatentsaddressSinterCast’smetallurgicaltechnology,theSamplingCup,productapplicationsandmachining.

EnvironmentEnvironmentalbenefitsareachievedwhenusingtheSinterCasttechnology. The accuracy of the SinterCast process enablesfoundries to produce castings more efficiently and to reducescraprates.ForeveryonemillionEngineEquivalents,each1%reduction inscrapor1%improvement inmouldyieldprovidesthe equivalent savings of 2,500 tonnes of CO2 per year. TheSinterCastprocessalsoenablestheproductionofsmallerandmorefuelefficientengines,thusreducingbothfuelconsumptionandCO2emissions.

Corporate Governance ReportTheCorporateGovernanceReport ispresented ina separatesection in the annual report according the Swedish AnnualAccountsAct,chapter68§.

Events after the Balance Sheet DateThefollowingPressReleaseshavebeenissued:

1March2011–ChryslerLaunches2011JeepGrandCherokeewithSinterCast-CGIV6DieselEngine

Therehavebeennosignificanteventssincethebalancesheetdateof31December2010thatcouldmateriallychangethesefinancialstatements.

TheBalanceSheetandthe incomestatementwillbeadoptedat theAnnualGeneralMeetingof theshareholderson19May2011.

Annual General Meeting 2011The Annual General Meeting 2011 will be held at 15:00 on19 May 2011 at The Royal Swedish Academy of EngineeringSciences(IVA),GrevTuregatan16,Stockholm.

Proposals to the Annual General Meeting 2011TheBoardofDirectorsproposethatadividendofSEK0.5(0.0)persharebepaidtoshareholdersdulyregisteredontherecorddate24May,2011,andthattheParentCompanyshallretaintheremainingpartofnon-restrictedequity.

As a basis for the Board’s dividend proposal, the Board ofDirectors´hasmadeanassessmentinaccordancewithChapter18, Section 4 of the Swedish Companies Act of the ParentCompany’sandtheGroup’sneedforfinancialresourcesaswellas the Parent Company’s and the Group’s liquidity, financialposition in other respects and long-term ability to meet theircommitments.TheGroupreportsanequityratioof88.7(85.3)percentandanetcashamountofSEK40.3(24.8)million.TheBoardofDirectors´hasalsoconsideredtheParentCompany´sresultandfinancialpositionandtheGroup’spositioningeneral.In this respect, theBoardofDirectors´has taken intoaccountknowncommitmentsthatmayhaveanimpactonthefinancialpositions of the Parent Company and its subsidiaries. Theproposed dividend does not limit the Group’s ability to makeinvestmentsorraisefunds,anditistheBoard’sassessmentthattheproposeddividendiswell-balancedconsideringthenature,scopeandrisksofthebusinessactivitiesaswellasthecapitalrequirementsfortheParentCompanyandtheGroup.

TheBoardofDirectorsproposethatearningsbedistributedasfollows(SEK):

Amounttobepaidtotheshareholders 3,487,827

AmounttoberetainedbytheParentCompany 53,577,897

Totalnon-restrictedequityoftheParentCompany 57,065,724

TheBoardofDirectorsproposetoadjustthecurrentemployeestockoptionprogrammetogivetheBoardtheoptiontoprovidethesamenetcompensationfromliquidityratherthanhavingtheoptionsexercisedinthestockmarket.

The Board of Directors propose, on an annual basis, to seekshareholderapprovaltoauthoriseasharebuy-backprogramme.

Ford 6.7 litre engine with SinterCast-CGI cylinder block(courtesy Ford)

2010Annual Report 16

Income S

tatement

Statem

ent of Com

prehensive Incom

e

Income Statement

GROUP PARENTCOMPANY

AmountsinSEKmillion NOTE 2010 2009 2010 2009

Revenue 1,10 39.4 20.0 38.5 19.3

Costofgoodssold 3,18 -10.2 -7.0 -10.4 -7.8

Gross result 29.2 13.0 28.1 11.5

Costofsalesandmarketing 3,5,10 -11.3 -10.1 -10.5 -8.9

Costofadministration 3,4,5,10 -5.5 -5.2 -5.5 -5.4

Costofresearch&development 2,3,5,10 -4.5 -3.9 -4.5 -3.8

Otheroperatingincome 11 0.0 0.0 0.0 0.0

Otheroperatingcosts 11 -0.7 -0.1 0.1 -0.1

Operating result 7.2 -6.3 7.7 -6.7

FinancialIncome 12 2.2 1.8 2.2 1.8

FinancialCosts 12 -0.9 -0.9 -0.9 -0.9

Financial net 1.3 0.9 1.3 0.9

Result after financial income and expenses 8.5 -5.4 9.0 -5.8

Incometax 13 8.0 2.7 8.0 2.7

Result for the year for the parent company shareholders 16.5 -2.7 17.0 -3.1

Averagenumberofshares,thousands 26 6,574.5 5,815.1 6,574.5 5,815.1

Earningspershare,SEK 2.5 -0.5 2.6 -0.5

Earningspersharediluted,SEK 2.5 -0.5 2.6 -0.5

Dividend – – – –

Statement of Comprehensive IncomeGROUP PARENTCOMPANY

AmountsinSEKmillion 2010 2009 2010 2009

Results for the period 16.5 -2.7 17.0 -3.1

Other comprehensive income

Translationdifferences,foreignsubsidiaries 0.1 0.0 – –

Other comprehensive income, net of tax 0.0 0.0 17.0 -3.1

Total comprehensive income 16.6 -2.7 17.0 -3.1

Total comprehensive income attributable to:

Equityholderoftheparentcompany 16.6 -2.7 17.0 -3.1

Non-controllinginterests – – – –

2010Annual Report 17

Cashflow

Cashflow Statement

GROUP PARENTCOMPANY

AmountsinSEKmillion Note 2010 2009 2010 2009

Operating activities

Operatingresult 7.2 -6.3 7.7 -6.7

Adjustmentsforitemsnotincludedinthecashflow

Depreciation 14,15 1.1 1.5 1.1 1.5

Other 1.3 1.4 0.6 1.4

Exchangeratedifferences 0.9 0.4 0.5 0.4

Receivedinterest 12 0.1 0.0 0.1 0.0

Paidinterest 12 -0.2 -0.2 -0.2 -0.2

Incometax 0.0 0.0 0.0 0.0

Total cashflow from operating activities before change in working capital

10.4 -3.2 10.1 -3.6

Change in working capital*

Stock 18 0.8 1.2 0.7 2.0

Operatingreceivables 16 -9.7 0.6 -10.4 0.7

Operatingliabilities 19,20,22,23 1.5 -3.5 2.4 -3.6

Total change in working capital -7.4 -1.7 -7.3 -0.9

Cashflow from operating activities 3.0 -4.9 2.8 -4.5

Investing activities

Acquisitionofintangibleassets 14 -0.3 -0.5 -0.3 -0.5

Acquisitionoftangibleassets 15 -0.2 -0.1 -0.2 -0.1

Cashflow from investing activities -0.5 -0.6 -0.5 -0.6

Financing activities

RightsIssue** 11.3 18.3 11.3 18.3

Employeeshareoptionprogramme*** 1.7 - 1.7 -

Bankloan - 3.0 - 3.0

Cashflow from financing activities 13.0 21.3 13.0 21.3

Changeincashandcashequivalents 15.5 15.8 15.3 16.2

Cash–openingbalance 24.8 9.0 24.4 8.2

Cash – closing balance**** 27 40.3 24.8 39.7 24.4

*ClassificationbetweenindividualitemshasbeenchangedcomparedtoBooksClosingReport2009.

**TheRightsIssueamountedtoSEK11.4million(SEK23.1million)beforetransactioncosts

***ThesubscriptionofwarrantsamountedtoSEK1.8million(SEK0.0million)beforetransactioncosts

****Thecashandcashequivalentscomprisesshort-termdepositsandcashatbankandinhand.

2010Annual Report 18

Balance S

heet – Group

Balance Sheet – Group

AmountsinSEKmillion Note 31 Dec 2010 31Dec2009

ASSETS

Fixed assets

Intangible assets 14

Capitaliseddevelopment 1.1 1.1

Patents 1.8 2.2

Total intangible assets 2.9 3.3

Tangible assets 15

Computers,fixturesandfittings 0.1 0.1

Plantandmachinery 0.1 0.0

Total tangible assets 0.2 0.1

Financial assets

Otherlong-termreceivables 17 29.3 21.4

Total financial assets 29.3 21.4

Total fixed assets 32.4 24.8

Current assets

Stock 18

Finishedproducts 3.0 3.8

Total stock 3.0 3.8

Short-term receivables

Tradedebtors 16,27 11.6 3.0

Otherdebtors 19,27 1.8 1.2

Prepaidexpensesandaccruedincome 20,27 2.6 1.6

Total short-term receivables 16.0 5.8

Cashandcashequivalents 27 40.3 24.8

Total cash and cash equivalents 40.3 24.8

Total current assets 59.3 34.4

TOTAL ASSETS 91.7 59.2

SHAREHOLDERS’ EQUITY AND LIABILITIES

Sharecapital 25,26 7.0 6.5

Additionalpaidincapital 39.4 26.9

Exchangedifferences 27 6.4 6.3

Accumulatedresult 28.5 10.8

Total shareholders’ equity 81.3 50.5

Long-term liabilities

Otherlong-termliabilities 21 0.0 0.0

Total long-term liabilities 0.0 0.0

Current liabilities

Accountspayable 27 2.8 2.0

Othercurrentliabilities 22,27 4.3 4.4

Accruedexpensesandprepaidincome 23,27 3.1 2.2

Provisions 23 0.2 0.1

Total current liabilities 10.4 8.7

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 91.7 59.2

2010Annual Report 19

Statem

ent of Changes in E

quity – G

roup

Statement of Changes in Equity – Group

AmountsinSEKmillion NoteShare

CapitalAdditional Paid

In CapitalExchange

differencesAccumulated

ResultsTotal

Equity

Opening Balance 1 January 2009* 5.55 9.53 6.38 12.68 34.15

Totalcomprehensiveincome – – -0.05 -2.70 -2.75

Total recognised income and expense for 2009 – – -0.05 -2.70 -2.75

Employeestockoptionprogramme 5,25 – – – 0.78 0.78

NewShareIssue 26 0.93 17.37 – – 18.30

Closing balance 31 December 2009* 26 6.48 26.90 6.33 10.76 50.48

Totalcomprehensiveincome 0.03 16.52 16.55

Total recognised income and expense for 2010 0.03 16.52 16.55

Employeestockoptionprogramme,IFRS-2 5,25 – – – 1.25 1.25

RightsIssue,warrants 26 0.45 10.85 – – 11.30

Employeestockoptionprogramme,exercise 5,25,26 0.05 1.65 – – 1.70

Closing balance 31 December 2010 6.98 39.40 6.36 28.54 81.29

*ClassificationbetweenindividualitemshasbeenchangedsinceAnnualReport2009

2010Annual Report 20

Balance S

heet – Parent C

omp

any

Balance Sheet – Parent Company

AmountsinSEKmillion Note 31 Dec 2010 31Dec2009

ASSETS

Fixed assets

Intangible assets 14

Capitaliseddevelopment 1.1 1.1

Patents 1.8 2.2

Total intangible assets 2.9 3.3

Tangible assets 15

Computers,fixturesandfittings 0.1 0.1

Plantandmachinery 0.1 0.0

Total tangible assets 0.2 0.1

Financial assets

Sharesinsubsidiaries 25 2.8 2.2

Deferredtaxassets 13 29.3 21.2

Total financial assets 32.1 23.4

Total fixed assets 35.2 26.8

Current assets

Stock 18

Finishedproducts 2.3 3.0

Total stock 2.3 3.0

Short-term receivables

Tradedebtors 27 11.3 2.5

Intercompanyreceivables 1.0 0.4

Otherdebtors 19,27 1.8 1.2

Prepaidexpensesandaccruedincome 20 2.1 1.2

Total short-term receivables 16.2 5.3

Liquidity 27 39.7 24.4

Total liquidity 39.7 24.4

Total current assets 58.2 32.7

TOTAL ASSETS 93.4 59.5

SHAREHOLDERS’ EQUITY AND LIABILITIES

Restricted capital

Sharecapital 25,26 7.0 6.5

Statutoryreserve 9.5 9.5

Total restricted capital 16.5 16.0

Retained result

Resultbroughtforward 10.2 12.0

Sharepremiumreserve 29.9 17.4

Resultfortheyear 17.0 -3.1

Total retained capital 57.1 26.3

TOTAL SHAREHOLDERS’ EQUITY 73.6 42.3

Long-term liabilities

Otherlong-termliabilities 21 0.1 0.1

Total long-term liabilities 0.1 0.1

Current liabilities

Accountspayable 27 2.5 1.3

Intercompanypayable 11.0 10.1

Othercurrentliabilities 22,27 4.2 4.3

Accruedexpensesandprepaidincome 23 2.0 1.4

Total current liabilities 19.7 17.1

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 93.4 59.5

Contingent liability 24 – –

2010Annual Report 21

Statement of Changes in Equity – Parent Company

AmountsinSEKmillion NoteShare

CapitalStatutory

Reserve

Share Premium Reserve

Results Brought Forward

Results For the Year

Total Equity

Opening balance 1 January 2009 5.55 9.53 – 0.94 10.34 26.36

Appropriationoflastyear’sresult – – – 10.34 -10.34 –

Totalcomprehensiveincome – – – – -3.11 -3.11

Total recognised income and expense for 2009 – – – 10.34 -13.45 -3.11

Employeestockoptionprogramme 5,25 – – – 0.78 – 0.78

NewShareIssue 26 0.93 – 17.37 – – 18.30

Closing balance 31 December 2009 26 6.48 9.53 17.37 12.06 -3.11 42.33

Appropriationoflastyear’sresult – – – -3.11 3.11 –

Totalcomprehensiveincome – – – – 16.99 16.99

Total recognised income and expense for 2010 6.48 9.53 17.37 8.95 16.99 59.32

Employeestockoptionprogramme,IFRS-2 5,25 - - - 1.25 - 1.25

RightsIssue,warrants 26 0.45 - 10.85 - - 11.30

Employeestockoptionprogramme,exercise 5,25,26 0.05 - 1.65 - - 1.70

Closing balance 31 December 2010 26 6.98 9.53 29.87 10.20 16.99 73.57

Statem

ent of Changes in E

quity – P

arent Com

pany

2010Annual Report 22

Accounting P

olicies

Accounting PoliciesGeneral InformationTheconsolidatedfinancialaccountsforSinterCastAB(ParentCompany)for the financial year ending 31 December 2010 were approved on15 April 2011 by the Board of Directors and the Managing Director,for publication on 20 April 2011 and will be presented at the AnnualGeneralMeetingon19May2011forapproval.SinterCastAB(publ) istheparentcompanyof theSinterCastGroupwith its registeredofficelocatedinStockholm,Sweden.SinterCastistheworldleadingsupplierofprocesscontroltechnologyforthereliablehighvolumeproductionofCompactedGraphiteIron(CGI).

Basis of PreparationTheconsolidatedfinancialstatementsfor2010havebeenpreparedinaccordance with International Financial Reporting Standards (IFRS),as endorsed by the European Union. The consolidated accounts ofthe Group also comply with the Swedish Annual Accounts Act andthe Swedish Financial Reporting Board’s recommendation RFR 1– Supplemental Accounting Rules for Groups. The accounts of theParentCompanycomplywith theSwedishAnnualAccountsActandthe Swedish Financial Reporting Board’s recommendation RFR 2– Accounting for Legal Entities. The accounting policies used by theParent Company comply with the policies used by the Group unlessotherwise stated. The consolidated financial statements have beenpreparedunderthehistoricalcostconvention,unlessotherwisestated.

Asof1January2010,severalamendmentstoexistingstandards,newinterpretationsandonenewstandard(IFRS3R)havecomeintoeffect.Applyingthenewstandardsandinterpretationshasnotanysignificantimpacton the resultor theshareholders’equity. IFRS3R–BusinessCombinations is currently not applicable for SinterCast. Reviseddisclosure requirement according to IFRS 7 – Financial Instruments(Financialassetsatfairvaluethroughprofitandloss)hasinfluencedtheinformationgivenfortheGroupandtheParentCompany.

MoreinformationisavailableinthesectionentitledCriticalAccountingJudgementsandEstimatesandSegmentReporting.

Critical Accounting Judgements and EstimatesToestablishfinancialstatementsaccordingtoIFRS,judgementofhowtouseaccountingpolicies isneeded.Further, themanagementmustestimatehow toapplychosenaccountingprinciples.Theprincipleofcapitalisationof research&developmentcosts,patentcostsand thevaluationofdeferredtaxesontaxlossescarriedforwardareimportantforSinterCast.

ThestandardforaccountingfordeferredtaxisIAS12“IncomeTaxes”.SinterCast’s interpretationof IAS12isthatrecognitionofdeferredtaxassets for the carry forward of unused tax losses, when no taxableprofithasyetbeenreported,issubjecttomeetingtwocriteria.Thefirstcriterionisthatdeferredtaxassetsmayberecognisedtotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichtheunusedtaxlossesandunusedtaxcreditscanbeutilised.Thesecondcriterionisthat,forabusinessthathasyetnotreportedtaxableprofits,convincingevidencemustbepresentedtodemonstratethatsufficienttaxableprofitwillbeavailable.

SinterCast uses a model to determine when the recognition criterionofconvincingevidencecanbemet.Convincingevidence,thatcanbeobjectivelyestablished,isobtainedfromtheSinterCastbusinessmodelin the formof itscontractswith foundries for theengineprogrammesthat are in current series production, or where SinterCast’s foundrycustomershavereceiveddefinitiveordersforfutureseriesproduction,also referred to as secured production. The input for the modelincludes forecasted tonnes, communicated by the foundry and/orOEM,adjustedwithprobabilityfactorsforeachengineprogramme.Theprobabilityfactorsarereviewedregularlyandincludesafetymarginstomitigatepossibleoverestimates.

TheabovemodelisonlyusedtodecidewhentheconvincingevidencecriteriarequiredbyIAS12aremet,anddoesnotconstitutetoaprofitforecast.

CoststhataredirectlyassociatedwithfilingapatentcontrolledbytheGroup inanewmarket, andwhere thepatentwill probablygenerateeconomicbenefits exceedingcostsbeyondoneyear, are recognisedinthebalancesheet.Inapplyingthisprinciple,managementconsiderstheprobabilityof futurebenefits in thespecific localmarket, foreachpatent. During 2009 and 2010, several national phase patents wereintentionallyallowedtolapse.ItwasjudgedthattheseolderpatentsnolongerreflectedSinterCast’scurrenttechnologyandthattheprotectionoffereddidnotwarrantcontinuedpaymentoftheannualfees.

Development costs that have been directly associated with theproductionof specific anduniquedevelopmentprojects and thatwillprobably generate economic benefits exceeding costs beyond oneyear,are recognisedas intangibleassetsand thereforecapitalised. Inapplyingthisprinciple,themanagementspeciallyconsidertheabilityofmarketsuccessandfutureeconomicbenefits.

Share Based Compensation PlanTheGrouphasanequity-settled,share-basedcompensationplan.Thefairvalueoftheemployeeservicesreceived inexchangeforthegrantof the options is recognised as an expense. The total amount to beexpensedoverthevestingperiodisdeterminedbyreferencetothefairvalueoftheoptionsgranted.Ateachbalancesheetdate,theCompanyrevisesitsestimatesofthenumberofoptionsthatareexpectedtovest.It recognises the impactof therevisionoforiginalestimates, ifany, intheincomestatementassalarycosts,withacorrespondingadjustmentto equity. The proceeds received net of any directly attributabletransactioncostsarecreditedtosharecapital(nominalvalue)andsharepremiumwhentheoptionsareexercised.

Provisionsforsocialsecuritycostsarecalculatedbyapplyingthesamevaluation model used when the options were issued. The provisionis re-valuedat theendofeachaccountingperiodon thebasisof thecalculationoftheexpenditurethatmayarisewhentheinstrumentsareexercisedand accounted for as social security costs. The calculatedamountisaccruedinrelationtothevestingperiod.

SinterCastconductsvaluationpursuanttotheBlack&Scholesmodel,whichconsidersfactorssuchasshareprice,remainingtimetoexercise,volatility and risk-free interest rates. The payment of social securitycosts coincident with the employees’ exercise of options is offsetagainsttheprovisioningpursuanttotheabove.

StockoptionsattributabletothestaffofthesubsidiarySinterCastLtd.are accounted for pursuant to IFRIC 11, now included in IFRS 2. Inthis context, the issuance of options is regarded as a shareholders’contribution from the Parent Company to the subsidiary, andaccordingly, this is accounted as an investment in subsidiaries. Likeother contributions, this investment is then subject to an impairmenttest. If there is a need forwrite-downson shares in subsidiaries, theeffectisafinancialcostpostedtotheSinterCastABIncomestatement.

ConsolidationThe consolidated accounts include the Parent Company and allcompaniesinwhichtheParentCompanydirectlyorindirectlycontrolsmorethan50%ofthevotingrightsorbyothermeanshasfullcontrol.Nominority interest currently exists.Theconsolidatedaccountshavebeenpreparedinaccordancewiththepurchasemethod.

Thecostofanacquisition ismeasuredas the fairvalueof theassetsgiven,equity instruments issuedandliabilities incurredorassumedatthedateofexchange,pluscostsdirectlyattributabletotheacquisition.

Inter-company transactions, balances and unrealised gains ontransactions between Group companies are eliminated. Accounting

2010Annual Report 23

Accounting P

oliciespoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.TheGrouphasnoadditionalshareholdingsatpresentotherthanthesubsidiaries.

Cost by Functions and Segment ReportingCosts in SinterCast are presented in the profit and loss statementclassified by function. This coincides best with how SinterCast looksuponandcontrolsitsbusiness.

SinterCast constitutes one segment and the financial statements arepresentedaccordingly.SinterCastprovidesonlyoneproduct,processcontrolsystemsforthereliableproductionofCompactedGraphiteIron,andrelatedservicesforproductdevelopment,installations,calibration,and technical support. The company judges that the opportunitiesand risks with its business are related to the overall CGI marketdevelopment.The formatof the financialstatementspresented in thisAnnualReport coincideswith the internal reportingstructure that themanagementusestoplan,controlandfollowtheCompany’sbusinessactivities.

Tangible AssetsTangibleassetsconsistofmachineryandequipment,installedprocesscontrolequipment,andofficefurniture.Thetangibleassetsarestatedat historical cost lessdepreciation.Expenses for improvement of theassets are included in the carrying amount when it is probable thatfuture economic benefits associated with the item will flow to theGroup and the cost of the item can be measured reliably. Expensesformaintenanceandrepairareexpensed.Theassetsaredepreciatedsystematically over their anticipated useful life using the straight-linemethod.Therateofdepreciation,afterevaluationof theuseful life foreachasset is3years (33%) formachineryandequipment,3–4years(24–33%)forinstalledprocesscontrolequipmentand5years(20%)forofficefurniture.

Theresidualvaluesandusefullivesofassetsarereviewed,andadjustedifappropriate,ateachbalancesheetdate.Anasset’scarryingamountis written down immediately to its recoverable amount if the asset’scarrying amount is greater than its estimated recoverable amount.Gainsandlossesondisposalsaredeterminedbycomparingproceedswiththecarryingamount.Theseareincludedintheincomestatement.

Intangible AssetsCapitalised Patent ExpensesExpensesthataredirectlyassociatedwithfilingapatentcontrolledbytheGroupinanewmarket,andwherethepatentwillprobablygenerateeconomicbenefitsexceedingcostsbeyondoneyear,arerecognisedinthebalancesheet.Theannualpatentfeesareexpensed.Amortisationoncapitalisedpatentexpensesisincludedinthecostsforresearch&development.

Capitalised Development CostsDevelopment costs that are directly attributable to the design andtestingofidentifiableanduniquenewproductscontrolledbytheGrouparerecognisedasintangibleassetswhenthefollowingcriteriaaremet:

–It is technically feasible to complete the product so that it will beavailableforuse;

–Managementintendstocompletetheproductandsellit;

–Thereisanabilitytoselltheproduct;

–The means by which the product will generate probable futureeconomicbenefitscanbedemonstrated;

–Adequate technical, financial and other resources are available tocompletethedevelopmentandtoselltheproduct;and

–The expenditure attributable to the product during its developmentcanbereliablymeasured.

–Directlyattributablecoststhatarecapitalisedincludedirectemployeecostsandanappropriateportionofrelevantoverheads.

Coststhathavebeendirectlyassociatedwiththeproductionofspecificand unique customer products controlled by the Group and that willprobably generate economic benefits exceeding costs beyond oneyear, are recognised as intangible assets. Capitalised developmentcosts related to specific customer projects are amortised over theirestimateduseful lives.Amortisationoncapitaliseddevelopmentcostsisincludedinthecostsforresearch&development.

DepreciationTherateofdepreciation,afterevaluationoftheuseful livesis12years(8%) for patents and similar rights, 4 years (24%) for purchasedproduction agreements, and 3–4 years (20–33%) for capitaliseddevelopment.

Impairment of AssetsAssets that are subject to amortisation are reviewed for impairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamount may not be recoverable. The impairment test of capitaliseddevelopment cost has been performed based on future estimatedsales.Noimpairmentwasidentified.

Animpairmentlossisrecognisedfortheamountbywhichtheasset’scarrying amount exceeds its recoverable amount. The recoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.Forthepurposesofassessingimpairment,assetsaregroupedat the lowest levels for which there are separately identifiable cash-generating units. Assets that suffered impairment are reviewed forpossiblereversaloftheimpairmentateachreportingdate.

Financial InstrumentsAcquisitions and sales of financial instruments are accounted forattrade-date.An instrument is removed fromthebalancesheetwhencashflow rights from the instrumenthaveexpiredorbeen transferredand when the Group has transferred substantially all the risks andrewardsofownership.ThefollowingSinterCastbalancesheetitemsdonotconstitutefinancialinstruments:

–Fixedassets, includingdeferred taxassetsandexcludingdeposits,equityandaccruedexpenses.

SinterCastclassifiesitsinstrumentsinthefollowingcategories:

-Financial assets at fair value through profit or loss, consists ofDerivativeinstrumentsandareincludedinotherdebtors

-Held-to-maturity investments, consisting of governmental bonds orcommercial paper. These investments arepresented in thebalancesheetascashequivalents.

-Loansandreceivables,consistingof thebalancesheet items,cash,tradedebtors,othershortandlongtermdebtors,excludingdeferredtaxassets.

-Financial liabilities, consisting of long term loans, accounts payableandothercurrentliabilities,excludingaccruals.

Financialinstrumentsrecognizedatfairvaluesolelyconsistofderivativeinstruments,these are not traded on an active marketandareincludedinvaluelevel2.The calculated fair value is based on observable market data derived from the commercial bank.

Investments are initially recognised at fair value plus transactioncosts. Loans and receivables and held-to-maturity investments aresubsequently carried at amortised cost using the effective interestmethod.

Tradereceivablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredat amortisedcost using theeffective interestmethod, lessprovisionforimpairment.Aprovisionforimpairmentoftradereceivablesis established and presented as sales costs when there is objectiveevidence that the Group will not be able to collect all amounts dueaccording to the original terms of receivables. Significant financialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcy

2010Annual Report 24

Accounting P

oliciesorfinancialreorganisation,anddefaultordelinquencyinpaymentsareconsideredindicatorsthatthetradereceivableisimpaired.Theamountoftheprovisionisthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedattheeffectiveinterestrate.

Financialliabilitiesarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Subsequently,theliabilitiesarestatedatamortisedcost;anydifferencebetweentheproceeds(netoftransactioncosts)andtheredemptionvalueisrecognisedintheprofitandlossstatementovertheperiodof the liabilities using the effective interestmethod.SinterCastpostscostofborrowingforeachperiodtoitsprofitandlossstatement.

Foreign Currency TranslationItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(thefunctionalcurrency).Theconsolidatedfinancial statements are presented in Swedish Kronor, which is theCompany’sfunctionalandpresentationcurrency.

Transactions and BalancesTransactionsinforeigncurrencyhavebeentranslatedintothefunctionalcurrencyat thetransactiondateusingtheexchangerateprevailingatthe dates of the transactions. Payment, in foreign currency followingthe transaction, resulting in currency gain or loss is accounted for inthe profit and loss statements. Conversion of monetary liabilities orreceivablesinforeigncurrencyhasbeenmadetothecurrencyrateattheendoftheperiod.Gainsorlossesfromrecalculationofreceivablesorliabilitiesrelatedtotheoperationarepresentedintheprofitandlossstatementsanddistributedtothefunctions.

Translation of Group CompaniesTranslating the foreignsubsidiaries’ financial statements intoSwedishKronorhasbeenmadewiththefollowingprinciples:

–All assets and liabilities for each balance sheet presented aretranslatedattheclosingrateatthedateofthatbalancesheet

–Incomeandexpensesforeachprofitandlossstatementaretranslatedataverageexchangerates

Theexchangeratedifferencesthatconsequentlyarisearerecognisedasaseparatecomponentofequity.

Revenue RecognitionRevenuecomprises the fair value for thesaleofgoodsandservices.Revenueisshown,netofvalue-addedtax,rebatesanddiscountsandaftereliminatedsaleswithintheGroup.

Revenueisrecognisedasfollows:

–Sales of goods are recognised when an entity in the Group hasdelivered a product to a customer, the customer has accepted theproduct,theassociatedriskshavebeentransferredandcollectiblesoftherelatedreceivablearereasonablyassured.

–Sales of services and fixed price service agreements provided tocustomers are recognised in the accounting period in which theserviceisperformedandrecognisedaccordingtothepercentageofcompletionmethod.

–Revenues from customers’ series production are recognised on anaccrualbasisaccordingtothesubstanceoftherelevantagreement.

–Leasepaymentsunderoperatingleasesarecreditedtotheprofitandlossstatementonastraight-linebasisoverthecontractualperiodofthelease.Ifequipmentissoldaftertheleaseperiodhasexpired,therevenuefromthesaleisaccountedasrevenue.

StockInventories are stated at the lower of cost and net realisable value.Costconsistsofpurchaseprice,andothercostsdirectlyrelatedtothe

purchase,andisdeterminedusingthefirstin,firstoutmethod(FIFO).Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessapplicablevariablesellingexpenses.

ProvisionsProvisions are recognised when: the Group has a present legal orconstructiveobligationasaresultofpastevents; it ismorelikelythannotthatanoutflowofresourceswillberequiredtosettletheobligation;and the amount has been reliably estimated. Provisions are notrecognisedforfutureoperatinglosses.

Wherethereareanumberofsimilarobligations,thelikelihoodthatanoutflowwillberequiredinsettlementisdeterminedbyconsideringtheclassof obligationsasawhole.Aprovision is recognisedeven if thelikelihood of an outflow with respect to any one item included in thesameclassofobligationsmaybesmall.

Employee BenefitsAll expenses related to the remuneration of the employees havebeen accounted for in the period the work has been performed. Ifnotice terminating the employment has been served, expenses untiltermination of the employment are accounted for in theperiodwhenthenoticewasserved.

Iffutureperiodbenefitsarereceivedfromtheemployeetheexpensewillberecognisedascostinthatfutureaccountingperiod.

The pension plan for employees in the UK is based on a 10%contribution of the salary while, for employees in the US, it is basedona15%contributionof thesalary,withoutany futurecommitmentsin either country. All commitments to the employees are in the formofdefinedcontributionplans.Adefinedcontributionplanisapensionplan under which the Group pays fixed contributions into a separateentity.TheGrouphasnolegalorconstructiveobligationstopayfurthercontributions if the fund does not hold sufficient assets to pay allemployeesthebenefitsrelatingtoemployeeserviceinthecurrentandpriorperiods.

Thepensionplan foremployees inSweden follows the ITP-plan.TheAlecta ITP-plan is by definition a multi employer benefit plan but isconstructedsuchthatitisnotpossibletocalculatesurplusordeficitonthepensionplansthatfulfiltherequirementsinIAS19enablingdefinedbenefit accounting, for the respective participating legal entities. Theplan is therefore accounted for as a defined contribution plan. ThepensionageforallSinterCastemployeesis65years,howevera legalrighttoworkbeyondtheageof65existsintheUKanduntiltheageof67yearsexistsinSweden.

Leasing AgreementsSinterCast as LessorTheGrouphasclassifieditsleaseagreementsasoperationalbecausetheGroupmaintainstheownershipandassociatedrisksandreturns.

SinterCast as LesseeTheGrouphasclassifieditsleaseagreementsasoperationalbecausethelessormaintainstheownershipandassociatedrisksandreturnsforpremises and equipment. Expenses for leasing are charged to profitandlossonastraight-linebasisovertheperiodofthelease.

TaxesTaxontemporarydifferencesisaccountedforusingthebalancesheetliability method. The accounting policy for deferred tax in relation tounusedcarryforwardtaxlossesisdescribedundertheheading“CriticalAccountingJudgementsandEstimates”andpresentedinthenotes.

Liquidity/Cash and Cash EquivalentsCashandcashequivalentsaredefinedascash,cashholdingsatbankandshorttermdepositsavailablewithlessthanthreemonthsnotice.

Accounting N

otes

2010 25Annual Report

Accounting Notes to the Financial StatementsALLAMOUNTSINSEKMILLIONUNLESSOTHERWISESTATED

1 Revenue BreakdownGROUP PARENTCOMPANY

2010 2009 2010 2009

Equipment 6.8 2.6 6.5 2.2

SeriesProduction 30.9 15.6 30.0 14.2

EngineeringService 1.3 1.7 0.8 1.6

Other 0.4 0.1 0.4 0.0

GroupSales – – 0.8 1.3

Total 39.4 20.0 38.5 19.3

EquipmentincludessoldandleasedSystems,Mini-Systemsandspareparts.MarketrightsassignmentamountingtoSEK0.1million(0.1)forthepistonringmarketisalsoaccountedforasEquipment.SeriesProductionincludesConsumables,ProductionFeesandSoftwareLicenceFees.EngineeringServiceincludesperformedEngineeringServices,DemonstrationsandsalesofTestPieces.Revenueallocationisasfollows:toBrazil,50%(40%),China20%(19%),Korea19%(13%),U.S.3%(7%),Sweden3%(5%),Germany1%(6%)andothercountries4%(10%).

For theParentCompany,2% (9%)of the revenue representsGroupsalesand52% (67%)ofCostofgoodssold representsGrouppurchases.TheGroupsalesrepresentdeliverytoforeignsubsidiariesofEquipmentandEngineeringService.Grouppurchasesrepresentmainlyservicesprovidedbythesubsidiaries.

2 Research & DevelopmentGROUP PARENTCOMPANY

2010 2009 2010 2009

Costsforpersonnelandadministration 2.8 2.7 2.5 2.6

Externalexpenses 1.0 0.5 1.0 0.5

Depreciation 1.0 1.5 1.0 1.5

Capitaliseddevelopment -0.3 -0.8 -0.3 -0.8

Total 4.5 3.9 4.2 3.8

3 Costs per CategoryGROUP PARENTCOMPANY

2010 2009 2010 2009

Personnelexpenses 16.1 15.8 10.4 9.7

Costofgoodssold 6.3 3.1 13.0 10.2

Depreciationandwritedown* 1.1 1.5 1.1 1.5

Officeandrelatedcosts 1.8 1.8 1.3 1.1

Travel,commissions,exhibitionandsimilar 2.4 1.1 1.6 0.8

Consultantssales,marketingandadministrations 1.2 1.2 1.0 1.0

Operationalforeignexchangesdifferences 0.7 0.1 -0.1 0.1

Other 2.9 2.4 2.8 2.4

Capitaliseddevelopment -0.3 -0.8 -0.3 -0.8

Total 32.2 26.2 30.8 26.0

*SEK0.1million(SEK0.8million)isrelatedtopatentsthathavebeenallowedtolapse.

4 Auditors’ FeesGROUP PARENTCOMPANY

2010 2009 2010 2009

PricewaterhouseCoopers

Auditfees 0.2 0.3 0.2 0.3

Otherservices 0.0 0.2 0.0 0.2

Shanghai Ling Xin CPA firm

Auditfees 0.0 0.0 0.0 0.0

Otherservices – – – –

Gorman Darby & Co Ltd

Auditfees 0.0 – – –

Otherservices – – – –

PK Group

Auditfees – 0.0 – –

Otherservices 0.1 0.1 – –

Total 0.3 0.6 0.2 0.5

Accounting N

otes

2010 26Annual Report

5 Salaries, Remuneration, Incentive Programme and Social Security Costs

The Board of DirectorsTheChairmanreceivedremunerationofSEK0.2million(0.2).Nobonusscheme,pensioncommitments,orpensionliabilitiesexist.RemunerationfortheotherBoardmembers4(4)hasbeenwithinthelimitslaiddownbytheAnnualGeneralMeetingon20May2010andamountedtoSEK0.4million(0.4)dividedequallyamongtheBoardMembers(excludingsocialsecuritycosts),withnoBoardfeesbeingallocatedtotheManagingDirector.TheBoard,withtheexceptionoftheManagingDirector,isnotincludedinanyemployeestockoptionprogramme.

Group ManagementThe remuneration to the Managing Director amounted to SEK 2.8 million (3.3) including taxable benefits in the form of insurance premiums paid forlife, long term disability, and medical and school fees pay amounting to SEK 0.7 million (1.0). The pension costs (10% of salary), which are based oncontributions made without any further commitments, amounted to SEK 0.2 million (0.2) and the social costs amounted to SEK 0.3 million (0.4). According toIFRS-2,SEK0.7million(0.5)hasbeenexpensedassharebasedcompensationfortheManagingDirectorandthecorrespondingsocialcostofSEK0.1million(-)hasbeenexpensed.TheremunerationtotheothermembersoftheGroupManagement,twopeople,presentedonpage11,amountedtoSEK2.0million(1.8).ThepensioncostsamountedtoSEK0.5million (0.5) includingadditionalvoluntarycontributionsandthesocialcostsamountedtoSEK0.7million (0.7).ThepensionplanfollowstheSwedishITP-Plan.AccordingtoIFRS-2,SEK0.2million(0.1)hasbeenexpensedassharebasedcompensationfortheothermembersoftheGroupManagementandthecorrespondingsocialcostofSEK0.0million(-)hasbeenexpensed.

TheManagingDirectorholds127,500optionsandtheothermembersoftheGroupManagementhold17,000optionseach.Nobonusschemesexistbeyondtheemployeestockoptionprogramme.ThepensionagefortheManagingDirectorandtheGroupManagementis65years,howeveralegalrighttoworkbeyondtheageof65existsintheUK,anduntiltheageof67yearsexistsinSweden.

ThetermsofemploymentstipulateamutualperiodofnoticefortheManagingDirectorof12monthsandfortheothermembersoftheGroupManagementofsixmonths.Intheeventofachangeinthecontrollinginterestofthecompany,themutualperiodofnoticefortheManagingDirectorshallincreaseto24months.InthecaseofnoticebytheCompany,nodeductionshouldbemadeforremunerationpaidbyanotheremployerduringthenoticeperiodifthenewemploymentisapprovedbySinterCast.Noothercommitmentsregardingseverancepayexist.

The remunerationof theManagingDirector isdecidedby theCompensationCommittee.The remunerationof theothermembersof theGroupManagement isalsodecidedbytheCompensationCommittee,afterconsultationwiththeManagingDirector.

Salaries and remuneration allocated per country

AllamountsinSEKthousands

2010 2009

PARENTCOMPANYSalariesand

remunerationIFRS-2

costsSocialsecurity

costsPension

costsSalariesand

remunerationIFRS-2

costsSocialsecurity

costsPension

costs

China 929 30 – – 913 – – –

Sweden 6,401 565 2,259 970 6,241 274 2,114 896

Total 7,330 595 2,259 970 7,154 274 2,114 896

GROUP

China 929 30 – – 913 – – –

Sweden 6,401 565 2,259 970 6,241 274 2,114 896

UnitedKingdom 2,765 699 411 207 3,333 506 364 224

USA 1,336 – 67 142 1,341 – 67 173

Total 11,431 1,294 2,737 1,319 11,828 780 2,545 1,293

Salaries and remuneration allocated per country and between Board, Group Management and Employees

AllamountsinSEKthousands

2010 2009

PARENTCOMPANY

BoardandGroup

Management

IFRS-2BoardandGroup

Management OthersIFRS-2Others

BoardandGroup

Management

IFRS-2BoardandGroup

Management OthersIFRS-2Others

China – – 929 30 – – 913 –

Sweden 2,558 161 3,843 404 2,444 77 3,797 197

Total 2,558 161 4,772 434 2,444 77 4,710 197

GROUP

China – – 929 30 – – 913 –

Sweden 2,558 161 3,843 404 2,444 77 3,797 197

UnitedKingdom 2,765 699 – – 3,333 506 – –

USA – – 1,336 – – – 1,341 –

Total 5,323 860 6,108 434 5,777 583 6,051 197

Accounting N

otes

2010 27Annual Report

Incentive Programme Theemployeestockoptionprogramme2006–2010wasterminatedon1January2010,withoutsubscription.Thetotalnumberofemployeestockoptionsissuedwas240,000ofwhichtheManagingDirectorheld150,000Options.

Anewemployeestockoptionprogrammefortheperiod2009–2013wasapprovedattheSinterCastExtraordinaryGeneralMeetingof20August2009.TheemployeestockoptionswereallocatedtoallstaffemployedintheSinterCastGroupatthetimeofissueofwhichtheManagingDirectorreceived150,000Options.

Thestockoptionsentitledeachemployeetoacquireone(1)shareintheCompany.Thenumberofstockoptionsallottedwas285,000,withanadditional15,000sharewarrantsbeingreservedbytheCompanytocoverthesocialcostsassociatedwiththeprogramme.

Theoptionswillrunforaperiodofapproximatelyfour(4)years,where15%oftheallottedoptionsweresubscribedforsharesduringtheperiodof1Novemberto15December2010.Further,20%oftheallottedoptionscanbesubscribedforsharesduringtheperiodof1Novemberto15Decemberaftertwo(2)years,25%duringtheperiodof1Novemberto15Decemberafterthree(3)yearsandtheremaining40%duringtheperiodof1Novemberto15Decemberafterfour(4)years,providedthattheemployeeisstillemployedbytheGroupduringeachexercisewindow.

Thesubscriptionofsharesvia theoptionswill takeplaceannuallyovera fouryearperiod,with thesubscriptionpricebeingequivalent toacompoundedannualincreaseof10%ofSEK36.6.Theannualincreaseof10%correspondstoa46.5%increaseoverthefouryeartermoftheprogramme.Theemployeestockoptionsaresubjecttoaceilingsuchthatanyprofit,atexercise,cannotexceedSEK50peroption.

ThecostoftheemployeestockoptionswasestimatedatapproximatelySEK3.1million(SEK3.3million)includingsocialsecuritycostsduringtheperiod2010–2013.Socialsecuritychargeswillariseonthebenefitincurredinholdingtheemployeestockoptions.

Socialsecuritychargesaroseonthebenefitincurredinholdingtheemployeestockoptions.Thechargeswereexpensedassocialcostandcreditedtoaprovisionduring the option period based on the change in value of the options. A fair value (SEK 0) calculation was continuously made according to Black & Scholes,consideringshareprices(SEK51.3),remainingtimeoftheindividualtranches(0,12,24,36months)toexercise,volatility(45%)andrisk-freeinterestrates(1.75%).Theprovisionwasmadeonthebasisofthecalculationoftheexpenditurethatmayarisewhentheinstrumentsareexercised.

6 Transactions with Related PartiesWiththeexceptionoftheexerciseofthefirst15%ofthewarrantsinthecurrentEmployeeStockOptionProgramme,nosubstantialtransactionstookplacebetweentheSinterCastandtheBoardandtheManagementduring2010.

Transactionsmadehavebeencarriedoutatmarketvalue.

Employee Stock Option Programme Costs according to IFRS-2 and UFR 72010 2009

Salariesand

remunerationSocialsecurity

costsSalariesand

remunerationSocialsecurity

costs

Sweden 0.6 0.1 0.3 –

UnitedKingdom 0.7 0.1 0.5 –

Total 1.3 0.2 0.8 –

Number of options expected to vest 2010* 2009**

TotalOptions 255,000 240,000

Allocated 255,000 221,000

Tobedistributed – 19,000

Total number of options expected to vest 255,000 240,000

*45,000warrentswereexercisedduringDecember2010

**Theemployeestockoptionprogramme2006-2009wasterminatedon1January2010withoutsubscription

Remuneration Policy in Respect of Senior ManagementTheBoardofDirectorsproposethattheAnnualGeneralMeetingdecideuponaremunerationpolicyinrespectofSeniorManagementinaccordancewiththefollowingmainprinciples.Thetotalremunerationshallbecompetitiveandinlinewithmarketconditions,andgiveroomforreflectionofoutstandingachievements.Thebenefitsshallconsistoffixedsalary,othercustomarybenefitsandpension.Retirementbenefitsshallbefixedeitherastobenefitsorfees,andnormallygivearighttoreceivepensionfromtheageof65.Variableremunerationshall,inthemain,notqualifyforpensionpurposes.ThetermsofemploymentstipulateamutualperiodofnoticefortheCEOof12monthsandfortheGroupManagementofsixmonths.Intheeventofachangeinthecontrollinginterestofthecompany,themutualperiodofnoticefortheCEOshallincreaseto24months.Inthecaseofnoticebythecompany,nodeductionshouldbemadeforremunerationpaidbyanotheremployerduringthenoticeperiod,providedthatthenewemploymentisapprovedbySinterCast.Noothercommitmentsregardingseverancepayexist.TheBoardand,onbehalfoftheBoard,theCompensationCommittee,shallhavetherighttodeviatefromtheaboveprinciplesiftheBoard,inaspecificcase,findsthisjustifiedduetospecificcircumstances.

7 Board and Group Management2010 2009

GROUP Total Female Female% Total Female Female%

Boardmembers 11 4 36 11 4 36

CEOandgroupmanagement 3 0 0 3 0 0

PARENTCOMPANY

Boardmembers 5 2 40 5 2 40

CEOandgroupmanagement 3 0 0 3 0 0

Accounting N

otes

2010 28Annual Report

9 Absence from Work Due to Illness GROUP PARENTCOMPANY

2010 2009 2010 2009

Totalabsencefromworkduetoillnessasapercentageofregularworkingtime 0.62% 1.77% 0.75% 2.09%

Ofwhichmorethan60days 0.00% 0.00% 0.00% 0.00%

Nofurtherbreakdownispresentedduetothesmallsizeofthesub-groups.

10 LeasingSinterCast as Lessor GROUP PARENTCOMPANY

2010 2009 2010 2009

Incomefromleasedequipment 0.5 0.6 0.4 0.3

Contractedfutureincome 2.1 2.5 1.4 1.5

Payablewithin1year 0.4 0.6 0.3 0.4

Payablewithin2–5years 1.7 1.9 1.1 1.1

Payablebeyond5years 0.0 0.0 0.0 0.0

LeasedequipmentreferstoAgreementswithMotorCastingsandTeksid.

SinterCast as Lessee GROUP PARENTCOMPANY

2010 2009 2010 2009

Costfromleasedpremisesandequipment 1.2 1.3 0.7 0.8

Contractedfuturecommitments 4.6 6.0 3.6 3.5

Payablewithin1year 0.9 1.2 0.7 0.7

Payablewithin2–5years 3.7 4.8 2.9 2.8

Payablebeyond5years 0.0 0.0 0.0 0.0

Leasingfeesforoperationalleasingchargedtotheoperatingresultreferprimarilytoleasedpremisesusedformanufacturing,development,andofficespace.

11 Other Operating Income and Costs GROUP PARENTCOMPANY

2010 2009 2010 2009

Other Income

OtherIncome – – – –

Exchangegainsfromoperations 0.4 0.3 0.4 0.3

Total 0.4 0.3 0.4 0.3

Other Costs

Exchangelossfromoperations -1.1 -0.4 -0.3 -0.4

Total -1.1 -0.4 -0.3 -0.4

Total other operation income and costs -0.7 -0.1 0.1 -0.1

8 Average Number of Employees Employed During the Year 2010 2009

GROUP Total Male Total Male

China 1 1 1 1

Sweden 10 8 10 8

UnitedKingdom 1 1 1 1

USA 1 1 1 1

Total 13 11 13 11

PARENTCOMPANY

China 1 1 1 1

Sweden 10 8 10 8

Accounting N

otes

2010 29Annual Report

13 TaxGROUP PARENTCOMPANY

Income tax 2010 2009 2010 2009

Incometaxfortheyear -0.1 0.0 -0.1 0.0

Changeinvalueofcapitalisedtaxlosses 8.1 2.7 8.1 2.7

Income tax in the income statement 8.0 2.7 8.0 2.7

GROUP PARENTCOMPANY

Deferred tax asset 2010 2009 2010 2009

Deferredtaxvaluebroughtforward 21.2 18.5 21.2 18.5

Capitalisedduringtheyear 8.1 2.7 8.1 2.7

Accumulated value carried forward 29.3 21.2 29.3 21.2

Carry forward tax losses

Basedonthefiledtaxreturnsforthefinancialyear2009,thefollowingcarriedforwardtaxlosseswereavailabletooffsetfuturetaxableprofits.

Country 2010 2009 Validuntil TaxRates

Sweden 525.6 519.9 indefinitely 26.3%

UnitedKingdom 33.3 37.2 indefinitely 21%

USA 36.6 40.2 15yearsfromtheyearoffiling 15-35%

Total 595.5* 597.3 26.3%*SEK120.4million(SEK80.3million)oftheCompany’stotalcarried-forwardtaxlosseshasbeenusedasthebasisofthedeferredtaxassetcalculation.

GROUP PARENTCOMPANY

Tax expenses based on actual tax rate 2010 2009 2010 2009

Resultbeforetax 8.5 -5.4 9.0 -5.8

TaxcalculatedbasedonSwedishtaxrate -2.2 1.4 -2.4 1.5

Taxeffectonnontaxdeductibleexpenses -0.3 0.0 -0.1 0.0

Taxeffectonnontaxablerevenues 0.0 0.0 0.0 0.0

Taxeffectonnoncapitalisedtaxlosses 0.0 -1.4 0.0 -1.5

Taxeffectoncapitalisedtaxlosses 10.5 2.7 10.5 2.7

Effectforeigntaxrates 0.0 0.0 0.0 0.0

Tax on the result for the period as per the income statements 8.0 2.7 8.0 2.7

TheincometaxratevalidfortheGroupamountsis26.3%(28%).TheincometaxratevalidforSwedenamountsis26.3%(26.3%).TheincometaxratevalidforUKamountsis21%(21%).TheincometaxratevalidforUSamountsis15-35%(15-35%).

12 Financial Income and ExpensesGROUP PARENTCOMPANY

2010 2009 2010 2009

Interest

Interestreceived 0.1 0.0 0.1 0.0

Interestpaid -0.2 -0.1 -0.2 -0.1

Total -0.1 -0.1 -0.1 -0.1

Translation differences

Exchangegain 2.1 1.8 2.1 1.8

Exchangeloss -0.7 -0.8 -0.7 -0.8

Exchangegain/lossGroup – – – –

Total 1.4 1.0 1.4 1.0

Total financial income and expenses 1.3 0.9 1.3 0.9

Accounting N

otes

2010 30Annual Report

14 Intangible AssetsPatent Capitaliseddevelopment Total

GROUP 2010 2009 2010 2009 2010 2009

Acquisitionvaluebroughtforward 16.2 19.2 1.1 2.4 17.3 21.6

Acquisitionsduringtheyear

Research&development 0.1 0.2 0.4 1.1 0.5 1.3

Disposals -0.2 -3.2 -0.2 -2.4 -0.4 -5.6

Accumulated acquisition carried forward 16.1 16.2 1.3 1.1 17.4 17.3

Depreciationbroughtforward 14.0 15.7 0.0 2.4 14.0 18.1

Depreciationfortheyear

Research&development 0.4 0.7 0.2 – 0.6 0.7

Disposals* -0.1 -2.4 – -2.4 -0.1 -4.8

Accumulated depreciation carried forward 14.3 14.0 0.2 0.0 14.5 14.0

Book value carried forward 1.8 2.2 1.1 1.1 2.9 3.3

Patent Capitaliseddevelopment Total

PARENTCOMPANY 2010 2009 2010 2009 2010 2009

Acquisitionvaluebroughtforward 16.2 19.2 5.3 6.6 21.5 25.8

Acquisitionsduringtheyear

Research&development 0.1 0.2 0.4 1.1 0.5 1.3

Disposals* -0.2 -3.2 -0.2 -2.4 -0.4 -5.6

Accumulated acquisition carried forward 16.1 16.2 5.5 5.3 21.6 21.5

Depreciationbroughtforward 14.0 15.7 4.2 6.6 18.2 22.3

Depreciationfortheyear

Research&development 0.4 0.7 0.2 – 0.6 0.7

Disposals -0.1 -2.4 – -2.4 -0.1 -4.8

Accumulated depreciation carried forward 14.3 14.0 4.4 4.2 18.7 18.2

Book value carried forward 1.8 2.2 1.1 1.1 2.9 3.3

*Afteramanagementreviewofongoingdevelopmentprojects,oneactivityhasbeenidentifiedwhichwillnotbeencontinuedandhasbeendisposed.

Accounting N

otes

2010 31Annual Report

15 Tangible Fixed Assets*Computers,fixturesandfittings Plantandmachinery Total

GROUP 2010 2009 2010 2009 2010 2009

Acquisitionvaluebroughtforward 2.3 3.9 7.9 8.8 10.2 12.7

Acquisitionsduringtheyear

Administration 0.1 0.0 – 0.0 0.1 0.0

Salesandmarketing – – 0.1 – 0.1 –

Disposals

Salesandmarketing – – – -0.9 – -0.9

Administration – -1.6 – – – -1.6

Accumulated acquisition carried forward 2.4 2.3 8.0 7.9 10.4 10.2

Depreciationbroughtforward 2.2 3.8 7.9 8.8 10.1 12.6

Depreciationfortheyear

Salesandmarketing – – 0.0 0.0 0.0 0.0

Administration 0.1 0.0 – – 0.1 0.0

Disposals

Salesandmarketing – – – -0.9 – -0.9

Administration – -1.6 – – – -1.6

Accumulated depreciation carried forward 2.3 2.2 7.9 7.9 10.2 10.1

Book value carried forward 0.1 0.1 0.1 0.0 0.2 0.1

Computers,fixturesandfittings Plantandmachinery Total

PARENTCOMPANY 2010 2009 2010 2009 2010 2009

Acquisitionvaluebroughtforward 2.7 4.3 4.3 5.2 7.0 9.5

Acquisitionduringtheyear

Administration 0.1 0.0 – 0.0 0.1 0.0

Salesandmarketing – – 0.1 – 0.1 –

Disposals

Salesandmarketing – – – -0.9 – -0.9

Administration – -1.6 – – – -1.6

Accumulated acquisition carried forward 2.8 2.7 4.4 4.3 7.2 7.0

Depreciationbroughtforward 2.6 4.2 4.3 5.2 6.9 9.4

Depreciationfortheyear

Salesandmarketing – – 0.0 0.0 0.0 0.0

Administration 0.1 0.0 – – 0.1 0.0

Disposals

Salesandmarketing – – – -0.9 – -0.9

Administration – -1.6 – – – -1.6

Accumulated depreciation carried forward 2.7 2.6 4.3 4.3 7.0 6.9

Book value carried forward 0.1 0.1 0.1 0.0 0.2 0.1

*AllfixedassetsarerelatedtoSweden.

16 Account Receivables – TradeGROUP

2010 2009

Accountsreceivablesnotdue 8.8 0.7

Accountsreceivablesoverdue0–30days 2.5 2.0

Accountsreceivablesoverdue31–90days 0.2 0.2

Accountsreceivablesoverdue91–180days 0.1 0.1

Provisionforbaddebts – –

Accounts receivables net 11.6 3.0

Accounting N

otes

2010 32Annual Report

17 Other Long Term ReceivablesGROUP PARENTCOMPANY

2010 2009 2010 2009

Deposits* 0.0 0.2 0.0 0.0

DeferredTaxAsset 29.3 21.2 29.3 21.2

Total 29.3 21.4 29.3 21.2

*SEK0.2million(SEK0.0million)wasrepaidduring2010.

18 StockGROUP PARENTCOMPANY

2010 2009 2010 2009

Finishedproducts 3.0 3.8 2.3 3.0

Total 3.0 3.8 2.3 3.0

GROUP PARENTCOMPANY

Theamountofinventoriesrecognisedasanexpenseduringtheperiod 2010 2009 2010 2009

Expensedtocostofgoodssold 6.0 2.9 6.0 2.9

19 Other DebtorsGROUP PARENTCOMPANY

2010 2009 2010 2009

VATandtaxreceivables 0.5 0.4 0.5 0.4

Fairvalueofforwardcontracts 1.3 0.8 1.3 0.8

Total 1.8 1.2 1.8 1.2

20 Prepaid Expenses and Accrued IncomeGROUP PARENTCOMPANY

2010 2009 2010 2009

Prepaidrents 0.1 0.2 0.1 0.1

Prepaidinsurance 0.3 0.2 0.2 0.2

Prepaidbenefit 0.2 0.2 – –

AccruedincomefromProductionFee 1.2 0.5 1.2 0.5

Others 0.8 0.5 0.6 0.4

Total 2.6 1.6 2.1 1.2

21 Long Term liabilitiesGROUP PARENTCOMPANY

2010 2009 2010 2009

Otherlongtermliabilities 0.0 0.0 0.1 0.1

Total 0.0 0.0 0.1 0.1

22 Other Current LiabilitiesGROUP PARENTCOMPANY

2010 2009 2010 2009

Withholdingtaxandnationalinsurancecontributionsforemployees 1.3 1.4 1.2 1.3

Bankloan 3.0 3.0 3.0 3.0

Total 4.3 4.4 4.2 4.3

Accounting N

otes

2010 33Annual Report

23 Accrued Expenses, Prepaid Income and ProvisionsGROUP PARENTCOMPANY

2010 2009 2010 2009

Accruedpersonnelexpenses 1.1 0.5 0.5 0.3

Accruedadminstrativecosts 0.2 0.3 0.1 0.3

Deferredincome 0.7 0.7 0.5 0.5

Provisionsforcostofgoodssold* 0.2 0.1 0.2 –

Others 1.1 0.7 0.7 0.3

Total 3.3 2.3 2.0 1.4

*Outstandingestimatedcustomervisitcostsforoneinvoicedextendedtrial.

24 Contingent LiabilitiesGROUP PARENTCOMPANY

Guaranteetore-purchasesystem 2010 2009 2010 2009

Bankguarantees 0.1 – 0.1 –

Total contingent liabilities 0.1 – 0.1 –

25 Shares in Subsidiaries for the Parent Company, SinterCast AB (publ)

AllAmountsinSEK 2010 2009

Acquisitionvaluebroughtforward 63,095,053 62,586,609

Acquisitionduringtheyear

Newshareissue 659,994 508,444

Accumulated acquisition value carried forward 63,755,047 63,095,053

Depreciationbroughtforward -60,935,853 -60,935,853

Depreciationfortheyear

Write-offofequityinsubsidiaries – –

Accumulated depreciation carried forward -60,935,853 -60,935,853

Accumulated acquisition value carried forward 2,819,194 2,159,200

List of subsidiaries to SinterCast AB (publ)Corporate

identification numberVotes and percentage

of equity, %Book Value

SinterCastLtd. London,UK 2021239 100 2,719,191

SinterCast,Inc. Chicago,USA 187363 100 1

SinterCastPersonnelAB Katrineholm,Sweden 556702-5092 100 100,000

SinterCastSAdeCV Saltillo,Mexico SIN960415AY5 100 1

SinterCastServiciosSAdeCV Saltillo,Mexico SSE960408EX1 100 1

Total 2,819,194

Accounting N

otes

2010 34Annual Report

26 Share Capital Development in SinterCast AB (publ)NumberofShares

A* B** TotalPar

Value(SEK)Share

Capital(SEK)

Sharecapitalasof1January1993 101,200 2,660 103,860 0.50 51,930

March1993:ShareissueI 161,200 2,660 163,860 0.50 81,930

April1993:Split10:1 1,612,000 26,600 1,638,600 0.05 81,930

April–May:1993:ShareissueII 2,084,600 26,600 2,111,200 0.05 105,560

April–May:1993:ShareissueIII 2,311,350 26,600 2,337,950 0.05 116,898

December1993:Bonusissue 2,311,350 26,600 2,337,950 1.00 2,337,950

January1994:Directedshareissue 2,811,350 26,600 2,837,950 1.00 2,837,950

October1994:Directedshareissue 2,811,350 626,600 3,437,950 1.00 3,437,950

October1995:Directedshareissue 3,435,350 626,600 4,061,950 1.00 4,061,950

December1995:Subscriptionviawarrants 3,435,350 628,600 4,063,950 1.00 4,063,950

June1996:Subscriptionviawarrants 3,435,350 655,600 4,090,950 1.00 4,090,950

February2002:Directedshareissue 4,235,350 655,600 4,890,950 1.00 4,890,950

NumberofOutstandingShares

June2002:Changesharestructure*(BsharesconvertedtoA) 4,890,950 1.00 4,890,950

September2002:Subscriptionviawarrants 4,900,062 1.00 4,900,062

November2003:Subscriptionviawarrants 5,364,200 1.00 5,364,200

December2003:Subscriptionviawarrants 5,389,200 1.00 5,389,200

December2004:Subscriptionviawarrants 5,552,900 1.00 5,552,900

September2009Directedshareissue 6,478,383 1.00 6,478,383

October2010:Subscriptionviawarrants 6,930,653 1.00 6,930,653

December2010:Subscriptionviawarrants 6,975,653 1.00 6,975,653

Sharecapitalasof31December2010 6,975,653 1.00 6,975,653

*Onevotepershare

**Onetenthvotepershare

27 Risk Management, Risks and Uncertainty Factors

The Board of Directors has established SinterCast’s finance policy to providea framework for how different types of risks shall be managed and to definethe risk exposure with which the business may be operated. The objective ofthispolicy is tomaintaina lowriskprofile.Externalmonitoring isconductedbythe auditors. Internal monitoring takes place in accordance with the operatingprinciplesapprovedbytheBoardofDirectors.Appropriate insurancehasbeentakenagainstrisksassociatedwithassetsandinterruptionofoperationsandtominimiseindemnity.SinterCastiscurrentlynotinvolvedinanylegaldisputes.

All business and share-ownership involves some measure of risk. The riskfactors reportedhereinarenot rankedanddonotclaim tobecomprehensive.Shareholders should make their own assessment of each risk factor and itssignificance for the futuredevelopmentof theCompany.The riskexposure forSinterCastcanbedividedintooperationalrisksandfinancialrisks.

Operational Risks

Market RiskDespitethepositiveincreaseinseriesproduction,andtherenewedopportunitiesfor installations, the main uncertainty factor for SinterCast continues to betheoverall timingof theCGImarket ramp-up.Thisprimarily dependsonOEMdecisions fornewCGIenginesandothercomponents, theglobaleconomy fornewvehiclesalesandonthe individualsalessuccessofthevehiclesequippedwithSinterCast-CGIcomponents.

Overthepasttwoyears,theeconomicconditionsfacingtheglobalfoundryandautomotiveindustrieshavecausedsomeautomotiveOEMstodelayproductionlaunches and this has directly affected SinterCast. Although the automotivemarket is enjoying a recovery, volumes in SinterCast’s core markets are stillsignificantlybelowpre-downturnlevelsandtheSinterCast-CGIprogrammesthatstartedproductionbefore3Q08have still not fully recovered.WhileSinterCastcontinues tosupportnewproductdevelopmentactivities,andanticipatesnewproduction launches and new opportunities for installation revenue, the Boardbelievesthat it isstillnotpossible todeterminetheultimateeffectof theglobaleconomicrecessionorthetimingandrateoftheoverallmarketrecovery.

Major CustomersInrecentyears,SinterCasthasactivelyworkedtoexpand itscustomerbase inorder to reduce its dependence on individual customers. However, SinterCaststillhas relatively fewcustomers. In2010,SinterCast’s three largestcustomersrepresentedabout48%(40%),16%(19%)and11%(11%)oftheCompany’snetsaleswhilethefivelargestcustomersaccountedforabout85%(82%)ofsales.Asaresult,thelossofasinglecustomercould–atleastintheshortterm–haveasignificantnegativeeffectontheCompany’srevenueandresult.

CompetitionSinterCastenjoysglobalbrand recognitionand respectas theCGI technologyleader and is welcomed by the industry as a reliable and trustworthy partner.However,virtuallyeverycompanyencounterscompetition,andSinterCastisnoexception.AstheCGImarkethasdeveloped,somefoundrysupplycompanieshaveproposedalternativeCGI technologies.ToSinterCast’sknowledge, thesehave included Hereaus-Electronite, OxyCast, OCC and NovaCast. It is alsopossiblethatsomefoundriesmayopttoproduceCGIusingin-housecontrolanddiscipline,butthisisgenerallyjudgedtobecomelesslikelyasproductcomplexityand production volumes increase, and as specification requirements becomemorerigidlyenforcedbytheend-users.SinterCastjudgesthatitstechnologyandengineeringknow-howprovidesthemostreliableandcost-effectivesolutionfortheproductionofhighqualityCGI.Basedon itsproventechnology,productionexperienceandengineeringservice,SinterCastwillcontinuetosupportnewCGIdevelopmentactivitiestofurther increase itsshareoftheworldCGIproductioncapacity.

Alternative TechnologiesWith respect to the development of alternative automotive technologies suchas biofuels, hybrids and fuel cells, SinterCast does not expect these to havea significant effect on the Company’s competitive position for the foreseeablefuture. Although these technologies receive considerable media attention, thepenetrationrateremainslow.

Accounting N

otes

2010 35Annual Report

Key PersonnelFor the foreseeable future, SinterCast will be dependent on the expertise andcreativityofacoregroupofkeypersonnel.Thesepeoplehavetheknowledge,experience and contacts that support and develop the underlying technologyand maintain the customer support and sales activities. SinterCast’s futuredevelopment is linked to these key people remaining within the organisation.Thedepartureofoneormoreofthesepersonscouldhaveanegativeeffectonthecompany’sbusiness.TheBoardofDirectorshaveimplementedanincentiveprogrammetomanagethisrisk,andSinterCaststrivestoprovideachallengingandrewardingworkenvironment.

Patents and Intellectual Property RightsItisimportantfortheCompanytoprotectitstechnologythroughpatentsorotherintellectual property rights in order to preserve its leading position within CGIprocess control. The Company therefore implements a patent strategy whichinvolvesapplyingforpatentsincountriesthatareconsideredrelevant.However,there isnoguarantee that theCompanywill continue tobegrantedpatents intherelevantgeographicmarkets,orwillbeabletodefendthepatentsthathavebeen granted. There is also a risk that new technologies may be developedwhichcircumventorreplacetheCompany’spatents.During2009and2010,theCompanyallowedselectedpatentstolapse,asitwasjudgedcontinuedpaymentofthenationalphaseannuitieswouldnotprovideareturnontheinvestment.

Price RiskSinterCast enters into long term agreements with its foundry customers andpricereviewperiodsareclearlydefinedandlinkedtopublishedindicessuchasproducerpriceindiciesforrelatedindustrialsectors.TheSinterCastrevenuesareprimarily related toknow-how, technologyandserviceandarenotsignificantlyexposedtocommodityorenergypricefluctuations.

Financial Risks and Financial Instruments

In general, risks and principles are applicable for both the Parent Companyand the Group. Please see page 23 “Financial Instruments” for more detailedinformationofSinterCast’sclassificationofitsinstruments.

FinancingSinterCast has historically been financed by risk capital provided by itsshareholders and has managed its expenses according to market forecasts,resource requirements, and regular reviews of expenditures in relation to theannualbudget.

Following positive cashflow from operations during 2010, and the successfulcompletionofthewarrantprogrammeresultinginanetcashinjectionofSEK11.3millionduringOctober2010andanadditionalSEK1.7millioninjectionfromtheexerciseofthefirst15%oftheemployeestockoptionsduringDecember2010,theBoardjudgesthatthelong-termfinancingoftheCompanyissecure,allowingtheCompanytobemorepro-activeinitsoperations.

LiquidityTheliquidityriskisconsideredaslow.TheGroup’sliquidityon31December2010amounted to SEK 40.3 million (SEK 24.8 million). Held-to-maturity instrumentsconsist of governmental bonds or commercial paper with high availability andwithamaturitylessthanthreemonths.SinterCastalsoholdsaloanintheamountofSEK3.0million fromtheSörmlandSparbank.The loanwas reviewedon30December 2010 and extended until the next review date, 30 March 2011 andrepaid.

Liquidity

(AmountsinSEKmillion) 2010 2009 2008

Bonds 31.9 20.0 6.0

BankDeposits 8.4 4.8 3.0

Total 40.3 24.8 9.0

Liquidity 2010 2009

Total <30 days Total <30days

Totalcash,cashequivalents

andreceivables 40.3 39.9 24.8 21.8

Totalpayable,exsalaries 6.0 3.0 5.1 1.9

Incomesfromleases 0.5 0.0 0.6 0.0

Expensesfromleases 1.2 0.1 1.3 0.1

Interest Rate RiskInterestrateriskexistsinshortterminvestments,bankdepositsandoutstandingloansduetovariabilityofinterestrates.TheBoardofDirectors’hasestablishedaFinancePolicytomanagetheinterestraterisk.

Aninterestratechangeofonepercentagepointupordowncorrespondstoaninterest risk of approximately SEK 0.1 million for each SEK 10 million investedduringa12monthperiod.

Credit RiskCreditriskishandledbytheGroup’sFinancefunction.Creditsaresystematicallymonitored and followed-up. The majority of the Group’s customers are large,well-knowncompanies andorganisations. Thecredit risk isdistributedamongthe majority of the customers. Historical and present bad debt losses areinsignificant SinterCast therefore operates without credit insurance for mostcontracts.Atyear-end,tradereceivablesamountedtoSEK11.6million(SEK3.0million),ofwhichSEK8.8millionwerenotyet lateforpayment,SEK2.5million(SEK2.0million)were less than30daysbeyondduedateandSEK0.2million(SEK0.2million)were lessthan31–90daysbeyondduedate.Noprovisionforbaddebthasbeenmade.Thecreditriskislimitedtothebooksvalue.

Exchange Rate RiskSinterCast isexposedtoexchangerisk intwoways: first, throughexportsales(transactionexposure)and;second,whenconvertingnetprofitandnetassetsfromforeignsubsidiaries(translationexposure).

SinterCast’snet inflowof foreigncurrencyconsistsprimarilyofUSDandEUR.During2010,netinflowofthesecurrenciesamountedtoapproximatelyUSD1.8million(USD0.7million)andEUR1.0million(EUR0.8million).InaccordancewiththeGroup’sfinancialpolicy,partoftheexpectedandbudgetedflowofUSDandEURishedgedforthefollowing12monthperiod.Outstandingforwardexchangecontractsonthebalancesheetdate,was:

Forward Exchange Contracts

(AmountsinSEKmillion) 2010 2009

Total <6 month Total <6month

USD 1.5 0.9 0.8 0.4

EUR 1.0 0.4 0.7 0.3

The translation exposure of net assets in foreign subsidiaries is not hedged.The value of the Group’s net assets, meaning the difference between capitalemployedandnetdebt,totalledtoSEK11.0million,(SEK10.9million)andwasdistributedamongthefollowingcurrencies:

Net Assets in Foreign Subsidiaries

(AmountsinSEKmillion) 2010 2009 2008

GBP 6.2 5.9 4.9

USD 4.5 4.7 4.2

MEX 0.2 0.2 0.2

SEK 0.1 0.1 0.1

Ifthecurrencymoves10%towardsSEK,thefollowingtranslationeffectwillarise,andcorrespondingeffecttheresultbeforetax.

Translation Risk

(AmountsinSEKmillion)

GBP 0.6

USD 0.5

MEX 0.0

Capital RiskTheGroup’sobjectiveinrespectofthecapitalstructureistosecureSinterCast’sability tocontinuetoconduct itsoperationssothat itcangenerateareturn forshareholdersandvalueforotherstakeholdersandinordertomaintainanoptimalcapitalstructuresothatthecostofcapitalcanbereduced.Tomanagethecapitalstructure,theGroupcouldissuenewshares,buy-backshares,givedividendsorincrease/decreaseloans.TheGroupequityon31December2010amountedtoSEK81.29million(SEK50.48million).TheequityofSinterCastABamountedtoSEK73.57million(SEK42.33million).SinterCastregularlymonitorsitsneedforequity.Theforeignsubsidiarieshavebeenfinancedbyinternalloansandequity.

Accounting N

otes

2010 36Annual Report

28 Events After the Balance Sheet DateThefollowingpressreleaseshavebeenissued:

1March2011–ChryslerLaunches2011JeepGrandCherokeewithSinterCast-CGIV6DieselEngine

Therehavebeennosignificanteventssincethebalancesheetdateof31December2010thatcouldmateriallychangethesefinancialstatements.

ThebalancesheetsandtheincomestatementswillbeadoptedattheAnnualGeneralMeetingofshareholderson19May2011.

29 DefinitionsOperating margin % Capital employed

Operatingresultsaspercentageofrevenue Totalassetslessnon-interestbearingliabilities

Average number of shares Return on shareholders’ equity

Weightedaverageofthenumberofsharesoutstandingfortheperiod Netresultasapercentageofaverageadjustedshareholders’equity

Average number of shares adjusted for outstanding warrants Return on capital employed

Weightedaverageofthenumberofsharesandwarrantsoutstandingfortheperiod Netresultafterfinancialitemsplusfinancialexpensesasapercentage

Earnings per share ofaveragecapitalemployed

Netresultdividedbytheaveragenumberofshares Return on total assets

Earnings per share adjusted for outstanding warrants Netresultafterfinancialitemsplusfinancialexpensesasapercentage

Warrantsrelatedtoemployeestockoptions oftotalaverageassets

Adjusted equity per share Debt-to-equity ratio

Adjustedshareholders’equitydividedbytheaveragenumberofshares Interestbearingliabilitiesdividedbyadjustedshareholders’equity

Adjusted equity per share adjusted for outstanding warrants Share price at the end of the period

Warrantsrelatedtoemployeestockoptions LatestpaidpricefortheSinterCastshareat

Solidity NASDAQOMXstockexchange,Stockholmsbörsen

Adjustedshareholders’equityexpressedaspercentageoftotalassetsendofperiod Value presented as “0.0”

Adjusted shareholders’ equity AmountbelowSEK50,000

Shareholders’equityplus73.7%ofuntaxedreserves Value presented as “-”

Noamountapplicable

2010Annual Report 37

Signatures

Stockholm15April2011

Ulla-BrittFräjdin-HellqvistChairman

AageFigenschouVice Chairman

AndreaFesslerBoard Member

RobertDoverBoard Member

SteveDawsonBoard Member & Managing Director

Ourauditreportwassubmittedon18April2011

ÖhrlingsPricewaterhouseCoopersAB

Anna-CarinBjelkebyAuthorised Public Accountant

Signatures

TheBoardofDirectorsandtheManagingDirectordeclarethatthe consolidated financial statements have been prepared inaccordance with IFRS as adopted by the EU and give a fairviewoftheGroup’sfinancialpositionandresultsofoperations.The financial statements of the Parent Company have beenprepared in accordance with generally accepted accountingprinciplesinSwedenandgiveatrueandfairviewoftheParent

Company’s financial position and results of the operations.The Directors’ Report of the Group and the Parent CompanyprovidesafairreviewofthedevelopmentoftheGroup’sandtheParentCompany’soperations, financialpositionand resultsoftheoperations, anddescribesmaterial risksanduncertaintiesfacingtheParentCompanyandthecompaniesincludedintheGroup.

2010Annual Report 38

Aud

it Rep

ort

Audit Report

To the annual meeting of the shareholders of SinterCast AB Corporate identity number 556233-6494 We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of SinterCast AB for the year 2010. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing 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 the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below. The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair 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 statement and balance sheet 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 statutory administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year. Stockholm 18 April 2011 Öhrlings PricewaterhouseCoopers AB Anna-Carin Bjelkeby Authorized Public Accountant

Audit Report

To the annual meeting of the shareholders of SinterCast AB Corporate identity number 556233-6494

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of SinterCast AB for the year 2010. The annual accounts and the consolidated accounts of the company are included on pages 12-37. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing 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 the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company’s financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRSs as adopted by the EU and the Annual Accounts Act and give a true and fair 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 statement and balance sheet 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 statutory administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Stockholm 18 April 2011 Öhrlings PricewaterhouseCoopers AB

Anna-Carin Bjelkeby Authorized Public Accountant

2010Annual Report 39

Corp

orate Governance R

eport 2010

Corporate Governance Report 2010

BackgroundTheSwedishCompaniesActprescribesthat listedcompaniesshall, on a yearly basis, present a Corporate GovernanceReport,tobeincludedintheAnnualReport.

Corporategovernanceisaquestionofensuringthatcompaniesarerunasefficientlyaspossibleonbehalfoftheshareholders.TheSwedishCompaniesActdefinestheframeworkforlimitedliability companies including rules for the Annual GeneralMeeting (AGM), the Articles of Association, the Board ofDirectorsandotheractivities.

The Shareholders’ main influence to govern the Company isduring the AGM, which is the Company’s highest decision-making body, where all present shareholders have the rightto voteon thepresentedproposals.All shares representedattheAGMhavethesamevotingright.Theshareholdersshallbegiventhepossibilitytoexercisetheirownershiproleinanactive,well-informedmanner.Withinsixmonthsof theexpiryofeachfinancial year, the shareholders shall hold an Annual GeneralMeeting,atwhichtheBoardofDirectorsshallpresenttheAnnualReportandAuditor’sReport for theParentCompanyand theGroupandtheNominationCommitteeshallproposecandidatesforelectionto theBoardofDirectorsandtheChairmanof theBoard,aswellasfeesandotherremunerationtoeachmemberof the board. The Board of Directors are elected at the AGMandthetasksanddutiesoftheBoardofDirectorsarelaiddownprimarilyintheSwedishCompaniesActandotherrelevantlaws,theListingAgreementwiththeNASDAQOMXstockexchange,StockholmandtheSwedishCodeofCorporateGovernance.

Corporate Governance in SinterCastSinterCastAB(publ)isapubliclytradedlimitedliabilityCompanywith its registered office located in Stockholm, Sweden.SinterCast provides on-line process control technology to thecast iron foundry industry to enable the reliable high volumeproductionofCompactedGraphite Iron (CGI).CGI isprimarilyusedindieselenginecylinderblocksandheads,forpassengervehicle, commercial vehicle and industrial power applications.SinterCastAB (publ) is theParentCompanyof theSinterCastGroup.TheAnnualGeneralMeetingis,bytradition,heldduringMay each year. The Annual Meeting is the forum where theShareholders meet the Board of Directors, the Managementand the Company Auditors, and where the Shareholders aregiven the possibility to raise questions and to vote on theproposals distributed prior to the meeting. Traditionally, theManagingDirectorinformstheAGMoftheGroup’sdevelopmentandfinancialposition.AccordingtotheArticlesofAssociation,the Board of Directors shall be elected annually at the AGMand the Directors’ mandate shall last until the conclusion ofthe next AGM. The majority of the directors elected by theAGM are to be independent of the Company and its GroupManagement. A director’s independence is to be determinedbyageneralassessmentofall factors thatmaygivecause toquestion the individual’s independence of theCompany or itsGroupManagement.TheNominationCommitteeistoproposecandidates for election to the Board of Directors and theChairmanoftheBoard,aswellasfeesandotherremuneration

to each member of the Board. The AGM elects a ChairmanandaVice-Chairmananddecideson the remunerationof themembersoftheBoardofDirectorsaccordingtotheNominationCommitteeproposal,inlinewiththeSwedishCodeofCorporateGovernancerules.

The tasks and duties of theBoard ofDirectors are laiddownprimarilyintheArticlesofAssociation,theSwedishCompaniesAct and other relevant laws and the Listing Agreement withthe NASDAQ OMX stock exchange, Stockholm. Changes totheArticlesofAssociationmustbedecidedby theAGM.TheArticlesofAssociationofSinterCastdonot regulatedismissalof directors. A majority of the members of the Board mustbe independent of the Company, its management and alsoindependentoftheCompany’smajorshareholders.

SinterCasthascompliedwith theSwedishCodeofCorporateGovernance since 1 July 2008 and presents a CorporateGovernance Report in accordance with the Code includingthe Board of Directors’ Report on internal control of financialreporting, without any major deviations, as SinterCastprocedures and routines were essentially compliant when thecodecameintoforce.Asof1February2010,newCoderulescameintoforceandtheyhavebeenappliedbythecompaniesconcernedfromthatdate.

ShareholdersTheSinterCastshareshavebeenlistedsince26April1993andare quoted on the Small Cap segment of the NASDAQ OMXstockexchange,Stockholm.

Swedishshareholdersholdandcontrol78.26%(71.92%)ofthecapitalandvotesinSinterCastAB.Thelargestshareholder,SIXSISAG(Switzerland),controlled12.28%(12.61%)ofthecapitalandvotesasanomineeshareholder.SinterCastABhad3,841(3,748) shareholders on 31 December 2010. The ten largest,of which five were nominee shareholders, controlled 45.92%(47.86%)ofthecapitalandvotes.Asof31December2010,theSinterCastBoard,managementandemployeescontrolled1.0%(0.9%)ofthecapitalandvotes.

Parent Company Result 2010The January-December 2010 revenue amounted to SEK 38.5million (SEK 19.3 million). The revenue increase is as a resultofthesignificantincreasesinseriesproduction,SamplingCupshipments,andtheinvoicingofbothMini-SystemandcompleteSystem3000processcontrolsystems.

The January-December 2010 operating result of SEK 7.7million (SEK -6.7 million) was primarily affected by the highergrossresultofSEK16.6millioncomparedtothesameperiod2009.Thecostincreasecomparedtothesameperiod2009ismainly related to sales costs for sold equipment, travel costs,advisory services,operational exchange lossesand increasedR&Dcosts.TheresultaftertaxfortheJanuary-December2010periodamountedtoSEK17.0million(SEK-3.1million),primarilyrelatedtotherevaluationofthedeferredtaxasset.

2010Annual Report 40

Annual General Meeting (AGM) 2010TheAGMwasheldonThursday20May2010, inStockholm,Sweden. All Members of the Board, the Management andthe external Auditor were present during the meeting. TheAGMwasattendedby47shareholders,inpersonorbyproxy,representing950,218votes.

JanRynningwaselectedasChairmanoftheAGM.TheManagingDirector informed the AGM of the Group’s development andfinancialposition,andcommentedontheresultsfor2009.TheAGMadoptedtheAnnualReportandtheconsolidatedfinancialstatementsasof2009,aspresentedbytheBoardofDirectorsand the Managing Director; decided upon allocation of theCompany’sresult;and,grantedtheDirectorsandtheManagingDirectordischargefromliability.

The Nomination Committee presented how it conducted itsworkduringtheyearandpresenteditsproposals.

During theAGM,Ulla-BrittFräjdin-Hellqvist,AageFigenschou,AndreaFessler,RobertDoverandSteveDawsonwerere-electedasBoardmembersandtheAGMdecided, for theperioduntilthe next AGM, that the Board shall receive an unchangedtotal remuneration of SEK 600,000. The remuneration shallbe divided between the Chairman (SEK 225,000) and thethree ordinary Board Members (SEK 125,000 each), with noremunerationfortheManagingDirector.

The AGM decided the Nomination Committee to consist ofthreemembers and re-electedasmembersLarsAhlströmasChairman, SinterCast’s largest directly registered shareholder,as a representative of large shareholders, Torbjörn Nordberg,with the mandate to represent small shareholders and Ulla-BrittFräjdin-Hellqvist,inhercapacityasChairmanoftheBoardDirectors.

TheAnnualGeneralMeeting2010decideduponaremunerationpolicy in respect of group management such that the totalremuneration shall be competitive and in line with marketconditions, and provide room for reflection of outstandingachievements.Thebenefitsshallconsistoffixedsalary,possiblevariable remuneration, other customary benefits and pension.These principles have been followed during the year and theBoard will propose to the Annual General Meeting 2011 thatthe basic principles for compensation and other terms ofemployment for group management shall remain essentiallyunchangedforthecomingyear.

TheAGM2010decidedontheelectionofAuditors,accordingto the proposal presented by the Board of Directors, for theperioduntiltheconclusionoftheAnnualGeneralMeetingheldduring the fourth financial year hence. Accordingly, ÖhrlingsPricewaterhouseCoopers were re-appointed. Anna-CarinBjelkeby was appointed as auditor in charge by ÖhrlingsPricewaterhouseCoopers, replacing Liselott Stenudd. Theshareholders also decided to authorise the Board to, on oneor more occasions prior to the next Annual General Meeting,decideupontheacquisitionanddisposalofSinterCastshares.

Statutory Board Meeting InthestatutoryBoardmeetingheldimmediatelyaftertheAGM,itwasconfirmedthatUlla-BrittFräjdin-Hellqvistwasre-electedasChairmanoftheBoardandAageFigenschouwasre-electedas Vice Chairman. The Compensation Committee, electedby theBoard, consists ofUlla-Britt Fräjdin-Hellqvist andAageFigenschou.SteveDawsonwas re-electedManagingDirectorforSinterCastAB(publ)andPresident&CEOoftheSinterCastGroup.

The Board of DirectorsTheBoardofDirectorsarepresentedonpage10.

Committees/attendance

Name Independent Audit Nomination Compensation

Ulla-BrittFräjdin-Hellqvist

Yes Yes/100% Yes/100% Yes/100%

AageFigenschou Yes Yes/100% Yes/100%

AndreaFessler Yes Yes/100%

RobertDover Yes Yes/100%

SteveDawson No Yes/100%

The Board’s Establishment of Committees and its Work Nomination CommitteeThe task of the Nomination Committee is, after consultationwith major and minor shareholders, to nominate membersfor election to the Board, to propose remuneration for eachmemberoftheBoard,tonominateAuditorsforelection,tomakerecommendations on remuneration for the external auditors,and to establish certain other proposals for consideration ateach AGM. The majority of the members of the NominationCommittee are to be independent of the Company and itsGroupManagement.Nomembersof theGroupManagementaretobemembersof theNominationCommitteeandat leastonememberoftheNominationCommitteeistobeindependentof theCompany’s largest shareholder.TheAGM is toappointmembersoftheNominationCommitteeortospecifyhowtheyaretobeappointed.

Nomination Committee prior to the AGM 2010 The Nomination Committee, elected by the AGM 2009,consisted of Ulla-Britt Fräjdin-Hellqvist, Lars Ahlström andTorbjörnNordberg.TheCommitteeconcludedthatthecurrentBoard fulfilled the demands imposed on it in considerationof the Company’s position and future focus. The NominationCommitteethereforeproposedtotheAGM2010thattheBoardofDirectorsbere-elected,withunchangedremuneration.

Nomination Committee after the AGM 2010 TheNominationCommittee,electedbytheAGM2010,consistsofUlla-BrittFräjdin-Hellqvist,LarsAhlström(thelargestdirectlyregistered shareholder as of 20 May 2010) and TorbjörnNordberg. The Chairman of the Board has described to theNomination Committee the process applied for the annualevaluation of the Board of Directors, Managing Director andGroup Management and has provided information regardingthe results of the evaluation. The Nomination Committee’sproposalsaretobepresentedinthenoticeoftheAGMandon

Corp

orate Governance R

eport 2010

2010Annual Report 41

the Company’s website. The Nomination Committee will alsopresent how it conducted its work and explain its proposalsduring the AGM. During 2010, the Nomination Committee ofSinterCastcarriedoutthreeminutedmeetings.

TheNominationCommitteecanbecontactedat the followinge-mailaddress:nomination.committee@sintercast.com.

Compensation CommitteeTheBoardhasestablishedaCompensationCommitteewhosemain tasks are to monitor and evaluate the remunerationguidelinesthattheAGMislegallyobligedtoestablish,aswellasthecurrentremunerationstructuresandlevelsintheCompanyand to propose new incentive programmes to the Board todecideupon.

TheCompensationCommitteeshallalsoagreeontheprinciplesfor remuneration, and other terms of employment of theManagingDirectorand,afteradvicefromtheManagingDirector,forDirectorsandManagersreportingdirectlytohimandmonitorand evaluate programmes for variable remuneration, both forongoingprogramesand for those thathaveendedduring theyear,fortheGroupManagement.

TheCompensationCommittee,electedbytheBoard,consistsofUlla-BrittFräjdin-HellqvistandAageFigenschou.TheBoardhas established a work programme for the work of theCompensationCommittee.

During 2010, the Compensation Committee carried out oneminutedmeeting.TheBoardwasinformedoftheCompensationCommittee’sdecisions.

Audit CommitteeSinterCast established an Audit Committee during 2008 andallBoardMemberssitontheAuditCommittee.Until theAuditCommitteewasestablished,theBoardfulfilledthedutiesoftheAuditCommittee.

Onbehalfof theBoard,theAuditCommittee is toensurethatthe Company has adequate internal controls and formalisedroutinestoensurethatapprovedprinciplesforfinancialreportingand internal controls are applied, and that the Company’sfinancial reports are produced in accordance with legislation,applicable accounting standards and other requirements forlisted companies. The Committee meets regularly with theAuditors during the year to discuss audit reports and auditplans. The Committee also meets with the Auditor in theabsenceoftheManagingDirectorandSeniorManagement.

The Audit Committee is responsible for the evaluation of theAuditors’workand theAuditors’efficiency,qualifications, feesand independence.TheAuditCommitteemustalsoassist theNomination Committee with proposals for potential Auditors,which will be resolved during the Annual General Meeting.The Audit Committee also assists Group Management indetermining how identified risks will be handled in order toensuregood internal control and riskmanagement.TheAuditCommitteepreparesanddecidesontheCorporateGovernanceReport.During2010,SinterCast’sAuditCommitteecarriedoutfourminutedmeetings.

External Auditor Prior to the AGM 2010, after the Annual Report 2009 wasapproved, the Board of Directors met with the Auditor at the

MayBoardmeetingwheretheAuditorreporteditsobservationsdirectly to the Board of Directors without the presence of theGroupManagement.TheAuditorhasexaminedtheCompany’sannual accounts and accounting practices and reviewed theBoard’s and the Managing Director’s management of theCompany and the Auditor presented the annual Audit Reportat theAGM.TheAuditReportcontainedastatement that theAnnual Report has been compiled in accordance with therelevantlegislationandrecommendedthattheDirectorsandtheManagingDirectorshallbedischargedfromliability.

At the AGM 2010, Öhrlings PricewaterhouseCoopers wasre-appointedasAuditoruntiltheAGM2014.Anna-CarinBjelkebywasappointedasAuditorinchargebyPricewaterhouseCoopers.TheAuditorinchargehashadtwoAuditorsassistingintheauditworkduringtheyear.TheauditfollowsanauditscheduleagreedwiththeAuditCommittee.TheAuditorprovidedapresentationoftheAuditPlanfor2010duringtheNovemberAuditCommitteemeeting and gave audit feedback on the Interim Report July-September2010includingtheperiodJanuary–September2010andthereviewthatwasconductedduringthefourthquarterof2010.

Chairman of the Board The Chairman directs the Board’s activities and promotesthe overall efficiency of the Board. The Chairman ensuresthat the Board’s activities are conducted in accordance withthe Swedish Companies Act and other applicable laws andregulations and ensures that the resolutions of the Boardare implemented. The Chairman also ensures that the Boardmembersreceiveanynecessarytrainingandisresponsibleforevaluating the Board’s activities and sharing the evaluationswith the Nomination Committee. The Chairman proposes theagenda forBoardmeetings inconsultationwith theManagingDirector. The Chairman has regular communication with theManaging Director, relays opinions from the shareholders tootherBoardmembersandactsasspokespersononbehalfoftheBoard.

Board Meetings During 2010, the Board of Directors of SinterCast carried outnine minuted meetings. In connection with every quarterlyreport,theManagingDirectorpresentsthemarketandfinancialoutlookandreportsonoperationsandimportantcurrentevents.In addition, the Managing Director provides the Board withmonthly reports on significant events and financial summaryinformation. The Board of Directors dealt with long-termstrategies, structural organisational issues, approval of thebudgetforthefollowingyear,theannualevaluationoftheBoardof Directors and, risk assessment. Individual Board membersalso assisted the management group in various strategic andoperationalmatters.

With the exception of the exercise of the first 15% of thewarrantsinthecurrentEmployeeStockOptionProgramme,nosubstantialtransactionstookplacebetweentheSinterCastandtheBoardandtheManagementduring2010.

Work Programme Each year the Board adopts a written Work Programmedocumenting the Board’s responsibilities and regulating theinternal division of duties between the Board, its Committees

Corp

orate Governance R

eport 2010

2010Annual Report 42

and Group Management, the decision-making process withinthe Board, the Board’s meeting schedule, summonses toBoardmeetings,agendasandminutes,and theBoard’sworkon accounting and auditing matters and financial reporting.The Work Programme also regulates how the Board is toreceive information and documentation for its work so as tobe able to make well informed decisions. Other controllingdocuments adopted by the Board include the Finance Policy,theAuthorisationPolicyandtheOrganisationChart.

Managing Director and Group Management SinterCast’sBoardhasappointed theManagingDirectorwhoisresponsiblefortheday-to-daymanagementoftheCompanyin accordance with the Board of Directors’ instructions andguidelines. The Managing Director assists the Chairman withthe Board Meeting preparations and distributes informationaccordingtotheWorkProgrammetobedecideduponbytheBoard.TheManagingDirectorhasestablished,asthePresident&CEOfortheSinterCastGroup,theGroupManagementteamincludingtheOperationsDirectorandtheFinanceDirector.

Summary According to the Swedish Companies Act, the Board isresponsible for ensuring that the Company’s organisationis designed in such a way that the bookkeeping, financialmanagement and the Company’s financial conditions arecontrolled in a satisfactory manner. The Swedish Code ofCorporateGovernanceclarifiesandprescribes that theBoardis to ensure that theCompanyhasadequate internal controlsand formalised routines toensure thatapprovedprinciples forfinancial reporting and internal controls are applied, and thatthe Company’s financial reports are produced in accordancewith legislation, applicable accounting standards and otherrequirementsforlistedcompanies.SinterCastcomplieswiththeextendedrulesandhasimplementedthecodeinfull.

The Board of Directors hereby submits its report on internalcontroloffinancialreporting.

Corp

orate Governance R

eport 2010

2010Annual Report 43

The Board

of Directors’ R

eport on Internal C

ontrol

Stockholm15April2011

Ulla-BrittFräjdin-HellqvistChairman of the Board

AageFigenschouVice Chairman of the Board

AndreaFesslerMember of the Board

RobertDoverMember of the Board

SteveDawsonMember of the Board & Managing Director

The Board of Directors’ Report on Internal Control of Financial Reporting for the Financial Year 2010

IntroductionAccording to the Swedish Companies Act and the SwedishCode of Corporate Governance the Board of Directors’ areresponsible for internal control. This report is limited to theinternalcontrolregardingfinancialreporting.

DescriptionControl EnvironmentTheBoardofDirectorshastheoverallresponsibilityforinternalcontrol relating to financial reporting andan importantpart oftheBoard’sworkistoissuecontrollinginstructions.TheBoardhas established a Work Programme that clarifies the Board’sresponsibilities and regulates the internal distribution of workbetween the Board, its Committees and the Management.The Finance Policy and the Authorisation Policy includingthe organisation chart constitute other important controllingdocuments.TheBoardofDirectorshasestablishedSinterCast’sFinancePolicytoprovideaframeworkforhowdifferenttypesofrisksshallbemanaged.Operationalriskshavebeendiscussedand evaluated during all Board Meetings. The objective ofthis policy is to maintain a low risk profile. The entire BoardconstitutestheAuditCommittee.TheprimarytaskoftheAuditCommittee istoensurethatestablishedprinciplesfor financialreporting and internal control regarding financial reporting arefollowedandthatappropriaterelationsaremaintainedwiththeCompany’sauditors.

Risk AssessmentThe Business is monitored in a structured process andassociated risks have been discussed and evaluated duringBoardMeetings.AnysignificantriskswillresultinchangesintheinstructionsforthepreparationofFinancialReports.Processes

totrackchangesinaccountingregulationstoensurethatthesechangesareimplementedcorrectlyinthefinancialreportingareinplace,inwhichtheexternalauditorsplayanimportantrole.

Control ActivitiesThe primary purpose of control activities is to prevent, ordiscover at an early stage, errors in the financial reporting sothatthesecanbeaddressedandrectified.ControlactivitiestakeplaceonbothhigherandmoredetailedlevelswithintheGroup.Routinesandactivitieshavebeendesignedinordertofindandrectifysignificantrisksassociatedwiththefinancialreporting.

Information and CommunicationAll external information must be provided in accordance withthe listing agreement for listed companies in Sweden. TheBoard of Directors approves the Group’s Annual Report andinterimreports.AllfinancialreportsarepublishedonthewebsiteafterhavingfirstbeensenttoOMXNordicExchange.FinancialinformationconcerningtheGroupmayonlybeprovidedbytheManagingDirector.

MonitoringThe Board’s monitoring of the internal control with respectto financial reporting takes place primarily through the AuditCommittee follow-up on the Financial Reporting, by reportsfromtheexternalauditorsandthroughinternalself-assessmentreportedtotheBoard.

StatementThe yearly evaluation of the need for a separate internal auditfunctionhasbeendiscussedand,giventhesizeofthecompanyandthecosttoaddmorefunctions,itwasconcludedthatthereiscurrentlynoneedforaseparateauditfunction.

The internalcontrolover financial reportinghas functionedwellduringthepastfinancialyearandnomaterialweaknesseshavebeenobserved.

2010Annual Report 44

Auditor´s report on the Corporate Governance Report

To the annual meeting of the shareholders in SinterCast AB, corporate identity number 556233-6494

It is the board of directors who is responsible for the corporate governance report for the year 2010 and that it has been prepared in accordance with the Annual Accounts Act.

As a basis for our opinion that the corporate governance report has been prepared and is consistent with the annual accounts and the consolidated accounts, we have read the corporate governance report and assessed its statutory content based on our knowledge of the company.

In our opinion, the corporate governance report has been prepared and its statutory content is consistent with the annual accounts and the consolidated accounts.

Stockholm 18 April 2011 Anna-Carin Bjelkeby Authorized Public Accountant

Aud

itor’s report on the C

orporate G

overnance Rep

ort

Auditor s report on the Corporate Governance Report

To the annual meeting of the shareholders in SinterCast AB, corporate identity number 556233-6494

It is the board of directors who is responsible for the corporate governance report for the year 2010 on pages 39-43 and that it has been prepared in accordance with the Annual Accounts Act.

As a basis for our opinion that the corporate governance report has been prepared and is consistent with the annual accounts and the consolidated accounts, we have read the corporate governance report and assessed its statutory content based on our knowledge of the company.

In our opinion, the corporate governance report has been prepared and its statutory content is consistent with the annual accounts and the consolidated accounts.

Stockholm 18 April 2011 Öhrlings PricewaterhouseCoopers

Anna-Carin Bjelkeby Authorized Public Accountant

2010Annual Report 45

Historical S

umm

ary – Group

Historical Summary – Group

AmountsinSEKmillion 2010 2009 2008 2007 2006 2005

Profit and Loss accounts

Revenue 39.4 20.0 24.8 22.8 18.1 17.2

Operatingresult 7.2 -6.3 -5.7 -5.1 -10.0 -13.1

Financialnet 1.3 0.9 0.3 0.6 0.3 0.7

Tax 8.0 2.7 18.5 0.0 0.0 0.0

Result for the year for parent company shareholders 16.5 -2.7 13.1 -4.5 -9.7 -12.4

Cashflow analysis

Cashflowfromoperationsbeforechangeinworkingcapital 10.4 -3.2 -3.3 -2.2 -6.9 -8.6

Changeinworkingcapital -7.4 -1.7 -3.7 4.4 2.7 -3.0

Cashflowfromoperations 3.0 -4.9 -7.0 2.2 -4.2 -11.6

Cashflowfrominvestments -0.5 -0.6 -0.3 -1.4 -0.5 -0.4

Cashflowfromfinancialoperations 13.0 21.3 – – – 1.0

Change in cash position 15.5 15.8 -7.3 0.8 -4.7 -11.0

Balance sheet

Assets

Fixedassets 32.4 24.8 22.3 4.7 5.5 7.7

Currentassets 19.0 9.6 9.4 7.1 9.3 14.2

Cashandbankdeposits 40.3 24.8 9.0 16.3 15.5 20.2

Total assets 91.7 59.2 40.7 28.1 30.3 42.1

Total shareholders’ equity 81.3 50.5 34.1 20.0 23.4 33.0

Long-termliabilities 0.0 0.0 0.0 0.0 1.0 1.0

Currentliabilities 10.4 8.7 6.6 8.1 5.9 8.1

Total shareholders’ equity and liabilities 91.7 59.2 40.7 28.1 30.3 42.1

Key ratios

Solidity,% 88.7 85.3 83.8 71.2 77.2 78.4

Adjustedshareholders’equity 81.3 50.5 34.1 20.0 23.4 33.0

Capitalemployed 84.3 53.5 34.1 20.0 23.4 33.0

Totalassets 91.7 59.2 40.7 28.1 30.3 42.1

Returnonshareholders’equity,% 25.0 -6.4 48.4 -20.7 -34.4 -31.9

Returnoncapitalemployed,% 24.3 -5.6 50.0 -19.2 -33.7 -31.3

Returnontotalassets,% 22.2 -4.1 66.5 -29.7 -26.3 -26.1

Debt-to-equityratio 0.0 – – – – –

Dividends,SEK - – – – – –

Employees

Numberofemployeesattheendoftheperiod 13 13 15 14 12 11

Averagenumberofemployees 13 13 16 13 12 12

DefinitionofkeyratioscanbefoundinNote29

2010Annual Report 46

SinterC

ast Share

SinterCast ShareTheSinterCastshareshavebeenlistedsince26April1993andare quoted on the Small Cap segment of the NASDAQ OMXstockexchange,Stockholm.

Since 1 October 2007, Remium, Stockholm, Sweden, hasserved as liquidity provider for the SinterCast shares in orderto improve the liquidity and decrease the difference betweenquoted prices. Under the terms of the agreement, Remiumundertakesto,inaccordancewiththeguidelinesissuedbytheNASDAQ OMX stock exchange, Stockholm, quote prices inat least four trading lots,onthebuysideandsellside, for theSinterCastshare.TheLiquidityProviderguarantees that, foraminimumof85%ofthetradingtimeattheNASDAQOMXstockexchange,Stockholm,thedifferencebetweenthebidandaskpricesfortheSinterCastshareswillnotbemorethan3%.

TheSinterCast share capital on31December2010wasSEK6,975,653(SEK6,478,383at31December2009)atparvalueofSEK1pershare.

During2009,anewissueof925,483sharesand925,483sharewarrantswithpre-emptionrightsforexistingShareholderswas

Major Shareholders per 31 December 2010

CountryNo. of Share

holdersNo. of Shares

31 December 2010% of Total Share

Capital and Votes

SIXSISAG* CH 856,268 12.28%

NordnetPensionsförsäkringAB* SE 688,824 9.87%

FörsäkringsbolagetAvanzaPension* SE 644,092 9.23%

Ahlström,Larsincl.affiliates SE 480,947 6.89%

Hagman,Bertil SE 149,700 2.15%

SvenskaHandelsbankenLuxemburg* CH 96,833 1.39%

Ingelman,Carl-Gustaf SE 80,000 1.15%

Stenbeck,Ulf SE 77,963 1.12%

SvestenAB SE 73,488 1.05%

RoburFörsäkring* SE 55,151 0.79%

Subtotal 10 3,203,266 45.92%

Othershareholdersapprox. 3,831 3,772,387 54.08%

TOTAL 3,841 6,975,653 100.00%

Totalforeignshareholders 183 1,516,735 21.74%

TotalSwedishshareholders 3,658 5,458,918 78.26%

*Nomineeshareholder

Distribution of Share Ownership 31 December 2010

No. of shares No. of Shareholders % of Shareholders No. of Shares % of Share capital

1-500 2,722 70.87% 427,858 6.13%

501-10,000 1,046 27.23% 2,122,435 30.43%

10,001-20,000 33 0.86% 455,586 6.53%

Above20,000 40 1.04% 3,969,774 56.91%

Total 3,841 100.00% 6,975,653 100.00%

approved.FollowingsuccessfulcompletionoftheshareissueinSeptember2009,thenumberofsharesincreasedto6,478,383shares.

During October 2010, the exercise of the attached warrantsincreased the number of shares by 452,270, resulting in anewtotalnumberofSinterCastsharesof6,930,653.Likewise,the sharecapital increasedbySEK452,270 toa total ofSEK6,930,653,atparvalueofSEK1pershare.DuringDecember2010,theexerciseoftheemployeestockoptionsincreasedthenumber of shares by 45,000, resulting in a new total numberof SinterCast shares of 6,975,653. Likewise, the share capitalincreased by SEK 45,000 to a total of SEK 6,975,653, at parvalueofSEK1pershare.

SinterCast had 3,841 (3,748) shareholders on 31 December2010.Thetenlargest,ofwhichfivewerenomineeshareholders,controlled45.92%(47.86%)ofthecapitalandvotes.

Asof31December2010, theSinterCastBoard,managementandemployeescontrolled1.0%(0.9%).

2010Annual Report 47

SinterC

ast Share

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

25

35

45

55

65

75

85

95

105

115

125

135

145

155

165

175

185

____ SinterCast ____ I Turnover, Number of shares in thousands

Share priceNumber of shares

in thousands

OMXS30

2004 2005 2006 2007 2008 2009 2010 2011

SinterCast Share January 2004 – December 2010

Share Data2010 2009 2008 2007 2006 2005

Numberofsharesattheendoftheperiod 6,975,653 6,478,383 5,552,900 5,552,900 5,552,900 5,552,900

Averagenumberofsharesduringtheperiod 6,574,481 5,815,120 5,552,900 5,552,900 5,552,900 5,552,900

Averagenumberofsharesduringtheperiodadjustedforoutstandingwarrants1 6,574,481 – – – – –

EPSaveragenumberofshares,SEK2 2.5 -0.5 2.4 -0.8 -1.7 -2.2

EPSaveragenumberofsharesadjustedforoutstandingwarrants,SEK2 2.5 – – – – –

Adjustedequitypershare,SEK3 12.4 8.7 6.1 3.6 4.2 5.9

Adjustedequitypershareadjustedforoutstandingwarrants,SEK3 12.4 – – – – –

Dividends,SEK – – – – – –

Sharepriceattheendoftheperiod,SEK 51.3 50.5 32.5 140.0 82.5 101.0

Highestsharepriceduringtheperiod,SEK 75.0 60.0 150.5 172.0 93.5 105.5

Lowestsharepriceduringtheperiod,SEK 46.8 28.9 30.0 64.0 70.5 58.0

Numberofshareholders 3,841 3,748 3,686 3,806 3,698 3,512

Non-Swedishshareholdings,%ofsharecapital 22 27 31 33 38 39

Swedishshareholdings,%ofsharecapital 78 73 69 67 62 61

Marketvalue,MSEK 357.5 327.2 180.5 777.4 458.1 560.8

Notes:1CalculatedaspertherecommendationsoftheIAS33

2Netresultdividedbytheaveragenumberofshares

3Adjustedshareholders’equitydividedbytheaveragenumberofshares.

FordefinitionsseeNote29.

2010Annual Report 48

Imp

ortant Dates

Important Dates

Annual General MeetingTheAnnualGeneralMeeting2011willbeheldat15:00on19May2011atTheRoyalSwedishAcademyofEngineeringSciences(IVA),GrevTuregatan16,Stockholm.

InformationTheInterimReportJanuary-March2011willbepublishedon4May2011.

TheInterimReportApril-June2011willbepublishedon24August2011.

TheInterimReportJuly-September2011willbepublishedon2November2011.

TheInterimReportOctober-DecemberandFullYearResults2011willbepublishedon22February2012.

Inconsiderationofcost-efficiencyandenvironmentalconcern,theAnnualReport2010willbedistributedinPDF-formatandwillbeavailableontheSinterCastwebsite.TheAnnualReport2010willnotbedistributedasaprinteddocument.

ThisAnnualReportisavailableinSwedishandEnglish.TheEnglishversionisanunofficialtranslationoftheSwedishoriginal.

InterimReportsandtheAnnualReportcanbeobtainedbycontactingSinterCastAB(publ),orattheSinterCastwebsite:

www.sintercast.com

Contact us: info@sintercast.com

Parent CompanySinterCast AB (publ)Registered OfficeBox10203SE-10055StockholmSwedenTel:+4686607750Fax:+4686617979

SwedenSinterCast AB (publ)Technical CentreKungsgatan2SE-64130KatrineholmSwedenTel:+4615079440Fax:+4615079444

United Kingdom SinterCast Ltd30AnyardsRoadCobhamSurreyKT112LAUnitedKingdomTel:+441932862100

USA SinterCast Inc1755ParkStreet,Suite200Naperville,IL60563USATel:+16307783466Fax:+16307783501

China SinterCast AB Shanghai Representative OfficeSuite2621,26/F,HongKongPlaza283HuaiHaiRoad(M)Shanghai,China,200021Tel:+862161035888Fax:+862161035788

India SinterCast RepresentationArvindDeodharA3-301,KohinoorEstateMulaRoad,KirkeePUNE-411003IndiaTel:+919860383149

Korea SinterCast c/o STPC7FKyoboBldg1-16Pyollyang-dongKyonggi-do427-040KoreaTel:+8225073481/2

SinterCast ® AB (publ) Box 10203 100 55 Stockholm Sweden tel: +46 8 660 77 50 fax: +46 8 661 79 79 e-mail: info@sintercast.com

www.sintercast.com