Financial overview

(in million euros)	FY2007	FY2006	Rate of change	Factors & Issues
Overall
Sales	2,366.8	2,108.2	12.3%	-
EBIT	129.6	130.6	(0.8%)
Wire & Cable Division
Sales	1,491.4	1,248.1	19.5%	-
EBIT	73.5	68.6	7.1%
Wiring Systems Division
Sales	987.4	955.1	3.4%	-The division's external sales increased by just over 3 percent to 986 million euros even though the annual output of some of the models for which it supplies product declined as budgeted during the period under report. Wiring systems and cable harnesses for Mercedes-Benz A and B Class cars, General Motors's Astra and Zafira models, BMW's 1 and 3 Series as well as X5 and Ford's Land Rover line-up were the sales mainstays. The ongoing trend towards more electronic equipment in the vehicle, and thus to more complex wiring systems, formed the basis for the further rise.
EBIT	56.7	61.1	(7.2%)	-As expected, pre-production spending on new project caused a dip in the division's earnings. Strict cost management and the sales increased did, however, ensure that the impact of this was less than planned. Earnings before interest and taxes amounted to 56.7 million euros (61.1 million euros in the previous year). This result includes restructuring charges of 5.8 million euros pertaining to various facilities in Germany and other countries.

Extensive series production start-ups
-Series production for various new projects started up in 2007. The Company began to supply wiring systems for the new Smart, the Audi R8 sports car and the Roewe 750 models of the Chinese carmaker SAIC.
With the Chevrolet Tahoe and GMC Yukon hybrid vehicles of General Motors (GM), for which the Company is providing the cable harnesses for the electrical powertrain, the Company also in the past year tapped into the widely discussed market for hybrids.
-In the commercial vehicles sector, the Company started supplying the engine manufacturer Cummins and thus expand its position in the commercial vehicle segment of the global market in Asia as well.


Contracts
-The Company maintained its track record of success of the previous year and succeeded in gaining further major projects in 2007, too. These will make contributions to the volume of business initially in 2008 and then significantly from 2009. The sales relating to these orders from customers such as Audi, BMW, General Motors and Mercedes-Benz as well as various commercial vehicle manufacturers will peak 2010 and 2011. The total size of new contracts gained in 2007 will amount to about 1 billion euros over their term.
-A particularly interesting project is currently being prepared for the Company's customer General Motors: GM has commissioned the Company to develop and produced wiring systems for a new global platform in the compact car category.  


Activity in Asia stepped up
-The Company stepped up its involvement in the Asian market also in 2007.
-The Wiring systems division successfully operates three facilities in China.
-Along with a number of local producers as well as the engine manufacturer Cummins, the Company shall in the future also supply Mercedes-Benz and General Motors in China. As a result of the good demand, capacity at its plant erected in Shanghai in 2006 is currently being doubled.
-In South Korea, the Company increased activity with its own Engineering Center in Seoul, which started up in February 2007.
-Together with its Korean partner Daekyeung, the Company is developing cable harnesses here as part of a global General Motors project. The new facility also improves its starting position for supplying Korean manufacturers.


New Components business unit
-In line with the Company's strategy of making its product portfolio even more, the Company further expanded activity involving electrical and electronic system components in the year under report.
In this period, the Company took its first orders for this unit from its customers such as BMW and General Motors as well as from the commercial vehicle industry.
In August 2007, the Company set up its Components business unit. Its own developments in the field of sensors and switches represent additional enhancements of its product range.
In 2007, the Company succeeded in agreeing specific development contracts with new customers for both its patented LEONI SensoFiber pinch guard and its Flamecon technology.


Acquisitions
-The Company secured the takeover of the wiring systems operations of Valeo, France's largest component supplier. The agreement to purchase Valeo Connective Systems (VCS) effective 2 January 2008 was signed on 16 October 2007. VCS, meanwhile renamed LEONI Wiring Systems France and based in Montignyle-Bretonneux near Versailles, develops, produces and distributes wiring systems for vehicles including the related components for a customer base comprising PSA, Renault-Nissan, Fiat and Seat as well as several automotive component suppliers.
In fiscal 2007, VCS generated sales of 553.5 million euros with 12,120 employees at 12 production facilities, most of which are located in Tunisia and Morocco.

-With the aim of participating even more than hitherto in the dynamic growth of the Asian market, LEONI Bordnetz-System GmbH at the end of the January 2008 signed an agreement to purchase initially 50 percent of the shares in the South Korean wiring systems manufacturer and existing joint venture partner Daekyeung. It was agreed that the Company will, in a next step, acquire the outstanding shares in Daekyeung after a maximum of five years. This company is among the leading vendors in South Korea and give the Company direct access to key carmakers like GM DAT, a joint venture of General Motors and Daewoo, SsanYong Motors as well as the special vehicles maker Volvo Construction Equipment. Daekyeng has its headquarter in Busan, South Korea's second largest city, as well as two production plants in China and employs 1,900 people.


Expansion of business in Russia
-With the goal of tapping into the fast-growing Russian market, the Wiring Systems division is currently preparing for formation of a joint venture with a local partner of LEONI Wiring Systems France. Relating to this, a new production facility is being set up that will probably commence operations as early as the second quarter of 2008 and is to cover, in particular, the local demand of customer Renault-Nissan.


Performance forecast by division
-The Wiring Systems division will expand its volume of business significantly in 2008, to approximately 1.6 billion euros. LEONI Wiring Systems France (LWS France) will contribute about 0.6 billion euros to this total. LWS France will be involved in various production runs starting up in 2008, for example at Fiat, Peugeot and Renault.
-Other, major projects for new models of customers Audi, BMW, Mercedes-Benz and GM among others will start up on schedule. From today's perspective, the Company projects another considerable sales upsurge for fiscal 2009 ﾂ・based on these and other roll-outs.
-Far-reaching capital investment is due in the Wiring Systems division in 2008, involving expansion of capacity at the facilities in China, Mexico, Tunisia and the Ukraine. An additional plant in Mexico will also be built. LWS France's facilities, particularly so in Morocco and Tunisia, will likewise require larger-scale extension work to handle new orders.
The Company budgeted for further spending on expansion of activity in Russia.

R&D Expenditure

(in million EUR)	FY2007	FY2006	FY2005
R&D Expenses	55.9	47.2	41.9

-In addition to the head office of the Wiring Systems division in Kitzingen, the Company has its development offices around the world. A new Engineering Center was set up Seoul, Korea, in the first quarter of 2007. The Company has further development centers in the United States, the United Kingdom, Slovakia, Tunisia and China.
-The Intedis joint venture supports the Wiring systems division in the design and simulation of complex wiring system architectures. In the future, the Company's recently acquired R&D center in France with a sub-office in Morocco will also play a key role in the international network of the Company's competence centers.

Product Development
Flamecon
-Since November 2007, the new Technology & Innovation department has been responsible for basic research in the Wiring Systems division.
It is continuing the Flamecon project, among others. This involves a process for mask and chemical-free application of coatings that can conduct electricity and which provides new solution approaches to a wide variety of applications. A specific project now, for the first time in 2008, to be made ready for series production together with an outside partner. Series production of this project is scheduled to commence in 2009. There will be other areas of application, for example in the solar industry and in three-dimensional electric components for the automotive industry. In addition, work has started on researching the options for using Flamencon for low-cost production of flexible printed circuits.

PinchGuard
-Another current development project involves PinchGuard. A pinch protection system patented by the Company for vehicle windows, doors and tailgates, PinchGuard functions with highly sensitive optoelectronic sensors based on optical fibers. Industrialization of the project was started in 2007 based on the growing interest from industry. The first commercial application is to be realized by 2009.
In addition to the basic research, application-specific development was also stepped up significantly based on the large number of new orders obtained. These involved mainly design and development of customized cable harnesses, wiring systems and related components.

SAE 2007 World Congress

<Highlights> What do you want us to see? -Wire harness (car and truck) -BEC: Bus Electrical Centers (buses) -Smart box -Preformed injection harness/cable -Grommets -Connectors (heavy truck) Models the products (s) shown are installed into? -Europe: GM, DaimlerChrysler, Ford, BMW, Mercedes -USA: GM, DaimlerChrysler Where the products shown are made (facilities)? -Germany, Mexico

Capital Expenditure

Item (in million EUR )	FY2007	FY2006
Capital Expenditure	37.7	33.1
Total Capital Expenditure	93.7	83.7

Overseas Investment
-Preparations for extensive new and follow-on contracts characterized fiscal 2007. The development work in this respect was stepped up with capacity at the production facilities concerned in China, Mexico, Tunisia as well as the Ukraine being expanded. In addition, the Company set up new production capacity in Brazil to supply the Mercedes-Benz C-Class sports coupe, manufacture of which was relocated to South America. This capacity expansion accounted for much of the capital expenditure in 2007. It was spent primarily on property, plant and equipment as well as on intangible assets, which in the Wiring Systems division amounted 37.7 million euros ﾂ・up from 33.1 million euros in the previous year.