Financial Overview

(in million euros)

	FY2008	FY2007	Rate of Change (%)	Factors
Overall
Sales revenue	409.4	439.1	(6.8)	1)
Profit	(28.3)	30.9	-	-

Factors
1)
-Sales revenue decreased by 6.9% from EUR 439.9 million in 2007 to EUR 409.4 million in 2008, mainly due to the unit-sales slump in the automobile industry in the second half of the year. An additional factor is that the Company was once gain obliged to grant price reductions, as in the previous years. Solely in 2008, discounts granted totaled EUR 9.2 million. Furthermore, it is necessary to consider the fact that the French companies are no longer consolidated following their disposal to BorgWarner at the beginning of December 2008.

-In the Original Equipment segment, the Company generated sales revenue of EUR 265.4 million in 2008, equivalent to a 10.1% decrease compared with the prior year (EUR 295.1 million). The drop in revenue in this segment reflects the drastic slump in unit sales in the automobile industry. An additional factor is that less revenue was generated by the tire-pressure monitoring system due to the launch of a less expensive version. Revenue in the Original Equipment segment from sales of diesel cold-start components was also lower. Revenue from sales of PTC auxiliary heating systems increased, however. 64.9% of the Group's total sales revenue was generated in the Original Equipment segment (67.1%).


Contracts
-Due to the financial and economic crisis, the Company's market environment became more difficult in 2008. For this reason, orders received decreased from EUR 442.4 million in 2007 to EUR 370.6 million in 2008. The order backlog at December 31, 2008 amounted to EUR 163.2 million, compared with EUR 202.0 million at the end of the prior year.

TSS
-The TSS (Tire Safety System) is fitted to all BMW models destined for export to the United States. In addition, other European carmakers offer TSS as an optional extra. In the United States, Ford and Hyundai models are supplied with TSS in collaboration with Lear.

PTC auxiliary heating system
-The Company supplies its PTC auxiliary heating system to automobile manufacturers, who fit it as standard equipment. In 2008, the first application of its auxiliary heater for an electric vehicle was made by a European manufacturer for export to the United States. This electric version will also be sold in Europe in the near future.

Spark plugs
-The Company's platinum spark plugs (slim M12 spark plugs called Bi-Hex) will be equipped with the Citroen C4 model and the C4 Picasso. The slim M12 spark plugs are characterized by an excellent cold-start performance even when the temperature is very low. (from a press release reported on May 26, 2008.)

PSG Pressure Sensor Glow Plug
-The PSG Pressure Sensor Glow Plug was selected as one of the components of the new 2.0 liter Diesel engine in the VW Jetta. Volkswagen will bring the Jetta onto the US market in mid-2008. The Company produces the pressure sensor glow plugs for the new VW TDI at the headquarters in Ludwigsburg. (From a press release on July 18, 2008)

R&D Expenditure

(in million euros)

	FY2008	FY2007
Overall	19.6	13.4

R&D Structure
-More than 200 people work in the area of research and development and 4.8% of revenue was invested in R&D in the year 2008 (3.1%).


R&D Facilities
-In the spring of 2007, the extension of the Company's research and development center (FEZ) was officially opened. The main element of this EUR 5 million extension is a new all-wheel dynamometer inside a cooling chamber, in which tests can be carried out at temperatures down to -40 °C.


Product Developments
Diesel cold start technology
-The PSG (pressure sensor glow plug) went into series production in 2008. With this component, diesel engines' emissions of pollutants can be reduced by directly controlling the combustion process. In this way, the PSG helps to meet future limits for particulate matter and nitrogen oxides. The Company will also launch ceramic glow plugs in 2009. This type of glow plug has the advantage of reaching higher temperatures more quickly, allowing engines to start more smoothly and thus reducing the emission of pollutants.

Ignition technology
-The Company launched a spark plug with a titanium electrode in 2008. With the titanium spark plug, the poly-V top electrode is made of a highly burn-resistant nickel-titanium alloy. The titanium electrode, combined with the tapered platinum ignition point of the central electrode, facilitates long-term ignition performance with optimal fuel utilization.

Electronics and Sensors
-With its third-generation TSS (tire safety system), the Company developed a cost-optimized system that fulfills regulations while offering drivers the convenience of seeing tire pressure individually for each tire. For the further development of tire-pressure monitoring systems, the main priority is to reduce costs by means of a high level of integration.

-In the future, the Company's battery-free systems can also be developed as soon as they are required by its customers.

-High Temperature Sensor (HTS) was designed for use in the exhaust-gas after-treatment of gasoline and diesel engines and is suitable for monitoring exhaust-gas recirculation systems, oxidation catalysts, particulate filters and de-NOx systems. In addition to applications in various measuring positions in the exhaust system, other positions in the vicinity of the turbocharger are being investigated in cooperation with Turbo & Emissions Systems, a BorgWarner business unit.

Capital Expenditure

(in million euros)

	FY2008	FY2007
Germany	26.2	34.3
Rest of Europe	2.9	4.6
North America	0.02	0.6
Asia	0.4	0.6
Other Countries	0	0
Total	29.5	40.2