Cemat — Annual Report 2008

Apr 20, 2009

MANAGEMENT REPORT

(cover) Financial highlights

(cover) Group profile

• Main events in 2008
• Growth potential secured
• A new Topsil
• Activities in 2008
• Financial performance in 2008
• Special risks
• Events after the balance sheet date
• Outlook for 2009
• Business platform
• Group overview
• Staff
• Risk management
• Corporate governance
• Shareholder information

• Company information

• Statement by the Board of Directors and Management

• Independent auditor's report

FINANCIAL STATEMENTS

• Income statement
• Balance sheet
• Statement of changes in equity
• Cash flow statement
• Notes
• (cover) Glossary

FINANCIAL HIGHLIGHTS

Five-year financial highlights (DKK'000)	2008	2007	2006	2005	2004
Revenue	289,402	193,231	147,503	129,592	115,657
Operating profit (EBIT)	64,154	52,093	33,593	(7,080)	3,899
Net financial income and expenses	(2,085)	(4,016)	(4,359)	(1,033)	(2,810)
Profit for the year	45,865	34,867	28,143	(13,969)	1,089
Invested capital	260,454	73,702	30,717	30,262	45,711
Net working capital (NWC)	62,509	32,489	5,872	18,510	35,429
Equity	249,246	149,327	111,079	50,253	62,974
Balance sheet total	503,875	216,847	179,827	112,284	115,672
Investments in property, plant and equipment	8,058	7,372	4,534	8,603	375
Net interest-bearing debt	35,922	(89,976)	(70,734)	17,149	24,025
Cash earnings	54,063	56,941	44,075	(2,598)	14,444
Average number of full-time employees	140	73	64	76	84
No. of shares, current (thousands)	403,392	398,823	393,150	262,100	262,100
No. of shares, diluted (thousands)	408,823	409,972	408,150	266,032	262,100
Financial ratios
Profit margin (%)	22.2	27.0	22.8	(5.5)	3.4
Return on invested capital (%)	38.4	99.8	110.2	(18.6)	8.5
Return on equity (%)	23.0	26.7	34.9	(24.7)	1.7
Financial gearing	0.1	(0.60)	(0.64)	0.34	0.38
Revenue/invested capital	1.1	2.6	4.8	4.3	2.5

The financial highlights for 2004–2008 have been prepared in accordance with IFRS. See the description in note 1 to the financial statements, Accounting policies.

GROUP PROFILE

Topsil was founded by Haldor Topsøe in 1958 and throughout the past 50 years, Topsil has devoted its efforts to producing and selling high-quality monocrystalline silicon to the semiconductor industry. Topsil's silicon is produced using two different methods, the Float Zone (FZ) method and the Czochralski (CZ) method, and it is sold in a niche market to manufacturers of critical high and medium-power components for the electronics industry. The components are used e.g. for management and distribution of high and medium voltage currents in power supply networks, in wind turbines and in energy-saving motor control units in the industrial and transport sectors.

The group employs an average of 140 employees. In 2008, the group generated revenue of DKK 289m, and its profit margin stood at 22%.

Topsil holds a strong position as one of only five leading producers of FZ silicon in the global market. The market for CZ silicon, on the other hand, is characterised by a large number of suppliers. Global sales in the semiconductor market represented approximately DKK 72bn in 2007, of which Topsil's niche market, the discrete market, represented approximately 16%. Topsil's market for high and medium-power components shows strong growth as a result of the global expansion of energy infrastructural solutions, and the strong growth rates of 10–20% witnessed in recent years are therefore expected to continue.

Objectives

Based on the favourable market trends and a strong business platform, which have been strengthened significantly in recent years through long-term raw materials agreements and the continuous implementation of production optimisation measures, Topsil will continually seek to expand its competitive position within production of silicon for the discrete market through an aggressive, growth-based and targeted strategy.

The group plans to expand production capacity to be scalable to revenue of DKK 1bn in line with growing demand, and hence create a basis for intensifying growth. At the same time, the group's goal will be to ensure a long-term profit margin of about 20% at EBIT level.

Outlook for 2009

The favourable trend in the demand for and the prices of FZ silicon is expected to continue in 2009, despite the global recession. The market for CZ silicon, on the other hand, is strongly affected by the macroeconomic situation, and demand in this area is expected to drop significantly.

Topsil has secured a volume of raw materials sufficient for meeting the growing demand for FZ silicon in 2009. In terms of production, Topsil will expand its capacity at its existing facilities at Frederikssund by introducing continuous operations (24-7-365).

Topsil has initiated a restructuring of its recently acquired Polish subsidiary, Cemat Silicon S.A., comprising a reorganisation of sales, products and production, which will lead to a substantial staff reduction.

In 2009, the group is expected to generate revenue of DKK 430–450m, a profit margin of 18% and profit before tax of DKK 65–75m.

Developments during the past five years

INVESTED CAPITAL AND RETURN (%)

MAIN EVENTS

IN 2008

• TOPSIL'S CONSOLIDATED REVENUE for 2008 grew by 49.8% against 2007 to DKK 289.4m, of which just under DKK 30m derived from the Polish company Cemat Silicon S.A. This was marginally higher than the most recent guidance. Operating profit for 2008 was DKK 64.2m (2007: DKK 52.1m), corresponding to a profit margin of 22.2% (2007:27.0%).
• PROFIT BEFORE TAX FOR 2008 was DKK 62.1m, in line with the most recent forecast, and an increase of DKK 14.0m on 2007. Profit for the year after tax was DKK 45.9m (2007: DKK 34.9m).
• This was the HIGHEST PROFIT reported in group history, and the Board of Directors and Management consider it to be very satisfactory.
• THE STRONG MARKET GROWTH within Float Zone silicon continued in 2008, and at the beginning of 2009, Topsil's intake of orders for delivery within the following 12 months was the highest ever.
• TOPSIL COMPLETED the acquisition of 95.92% of Cemat Silicon S.A., Poland, at a purchase price of DKK 153.7m. As a result of the acquisition, Topsil established a position within Czochralski silicon and acquired its own wafering and wafer polishing facilities.
• TOPSIL SIGNED A NEW LONG-TERM AGREEMENT for delivery of polysilicon with a view to expanding its Float Zone production. The agreement runs from 2010 to 2017 and supplements the existing long-term agreement which runs up until 2012. Over time, the agreement will add 30% to Topsil's Float Zone silicon capacity.
• IN ORDER TO MEET GROWING DEMAND, Topsil initiated a process to expand production capacity at Frederikssund, Denmark. The first phase of the expansion will be implemented in 2010.

Keld Lindegaard Andersen, CEO Topsil Semiconductor Materials a/s

GROWTH POTENT IAL SECURED

In many ways, 2008 was a landmark year for Topsil. We reported the strongest revenue and profit ever reported in the nearly 50 years Topsil has existed, and we built on the platform for Topsil's future which we have been developing since 2006.

In 2006, we decided to establish a stronger and more stable platform for our business. We wished to strengthen Topsil's future growth and earnings potential by securing access to raw materials, achieve a more efficient and profitable production while at the same time expanding into new growth areas matching our core competences and niche area: supplying silicon for the high to medium-power area of the semiconductor industry.

Favourable growth potential

Topsil's traditional market within niche products based on Float Zone silicon is witnessing strong growth rates driven by major energy infrastructure expansion. The demand for intelligent solutions for ensuring management and distribution of energy is rapidly growing and there is an ever-increasing need for ensuring more energy-efficient solutions in industry.

Topsil's strategic focus on supplying silicon for the semiconductor components used for long-distance distribution and transport of the energy with a minimum power loss has therefore proved its value. Regardless of whether energy is generated based on conventional methods or is a new type of energy generated at large-scale wind and hydro-power plants, Float Zone-based high-power components are essential in transmission and management systems.

The properties in relation to safety and reliability are also the reason why Topsil's Float Zone silicon is widely applied in intelligent, energy-efficient solutions for pumps, compressors, engines and other industrial plants, and a key component of electric trains and the hybrid cars of the future.

Significant strategic measures strengthened our position

Since 2006 we have introduced tools and processes to improve the efficiency of our production and have thus continually implemented our production optimisation strategy and, in 2008, we introduced two important initiatives in the raw materials and product areas. We secured additional long-term supplies of polysilicon, a raw material which is crucial in Float Zone production, and we acquired the Polish company Cemat Silicon S.A., which specialises in the Czochralski silicon technology, which is primarily applied in medium and low-power components.

Although the market for Czochralski-based silicon, which is mostly applied in consumer electronics, is currently affected by the global recession, the acquisition was a major strategic move for Topsil: We gained access to considerable expertise and production facilities within a Float Zone substituting technology and the possibility to carry out wafering or, in other words, gain control of a larger share of the supply chain.

A strengthened growth platform – but based on the same qualities

In early 2009, we have addressed and tackled many of the challenges defined in 2006. We have established a strong, powerful and efficient business with a solid market position in a niche market witnessing growth driven by current megatrends in the energy area.

Looking ahead, we are entering a period of significant potential, but also a period which will constantly demand renewal and retention of the qualities and core competences to which we owe our success.

We must therefore be opportunistic and aggressive when exploring the possibilities of exploiting our technological platform even better; both in relation to research and development and in relation to achieving sales synergies from a considerably broader product range. Based on our high level of knowledge, quality and flexibility, we must, however, remain our current customers' preferred supplier of silicon for high and medium-power components; both within the Float Zone technology and the Czochralski technology. In-house, we must explore the possibilities of constantly expanding our raw materials agreements, continuously devoting efforts to ensuring a higher utilisation rate and efficiency in production, and invest in increased capacity, which will enable us to grow in line with customer demand.

In this way, we will be able to strengthen Topsil's position and competitiveness, to the benefit of our customers, business partners and employees, while at the same time meeting our ambitious growth and earnings targets, to the benefit of our shareholders.

A NEW TOPSIL

In recent years, Topsil has made dedicated efforts to meet a number of strategic challenges identified by the group as part of a number of strategy sessions in 2006 and 2007. Back then, the group defined four main challenges to be addressed from 2006 to 2009:

• 1. Topsil needed to secure access to the raw material, polysilicon, for Float Zone (FZ) production in sufficient volumes and on acceptable terms in order to ensure that customer demand and requirements for reliability of supply would be met, despite the distinct and increasing global shortage of polysilicon.
• 1. It was necessary to ensure efficient and competitive production with a high level of raw material utilisation, a higher level of automation and a high and uniform quality of production output.
• 1. Access to wafering (wafer slicing and wafer processing) had to be secured to a sufficient degree and on acceptable terms.
• 1. Topsil needed to be capable of addressing competition from various FZ substituting products in the discrete market.1

Access to raw materials

Since mid-2005, the silicon industry has been affected by a shortage of raw silicon due to growing demand from the solar cell industry, which now buys approximately 70% of global production. As production of monocrystalline silicon is dependent on the access to raw materials, it has been essential for Topsil and the rest of the industry in recent years to secure raw materials supplies. This especially applies to raw materials for the production of FZ silicon, which represents a niche market with a 3–5% share of the total silicon market for the semiconductor industry, where raw silicon is only offered under long-term agreements by two producers globally.

Topsil therefore reached a very important milestone in 2006 when the group signed a raw materials agreement with one of the two global suppliers, securing supplies of fixed volumes of polysilicon from 2007 to 2012. Topsil's raw materials position was further strengthened when the group signed a long-term agreement in 2008 with the other supplier of polysilicon for FZ production, covering the years from 2010 to 2017. Topsil now has agreements with both suppliers of traditional FZ material and is therefore now able to produce a full range of FZ-based products going forward and expects to be able to scale production in line with growing demand.

¹ The discrete market, which represents approximately 16% of the total market for silicon for the semiconductor industry, forms part of the semiconductor components market that is primarily aimed at industrial solutions with one-function components. An entire silicon wafer is often used for one component, e.g. for thyristors, as opposed to integrated circuits with multiple functions. 'Discrete components' are often applied for controlling and distributing high-voltage current that requires the highest level of purity and uniformity of electrical properties.

Efficient and competitive production

FZ production is a processing industry which has developed from manual, mechanical control to increasingly automated production, where factors such as the quality and the processing of raw materials, the processing technologies applied, machine configurations, purity, heat and other thermal conditions have a significant effect on production volumes, quality and efficiency.

Since 2006, Topsil has devoted its efforts to implementing measures to improve production efficiency and minimise costs, facilitating the production of as many finished goods as possible while at the same time minimising consumption of raw materials and the number of process steps. In 2007–2008, the group invested heavily in an upgrade of the preparation processes, including in the development of grinding and etching processes, new cleanroom and ventilation systems, work processes, procedures and product flow. Lean and Six Sigma tools are extensively applied in these optimisation efforts. The initiatives have made production significantly more consistent and the utilisation ratio of the raw materials higher; not least as a result of the significant quality improvement of the preparation processes.

Access to wafering

As a result of the acquisition of Cemat Silicon S.A. Topsil gained market opportunities within the large CZ market, but the group had another convincing argument for acquiring the company. Since 2000, Topsil has been outsourcing wafering to two business partners with factories in Taiwan and China. However, the shortage of raw materials, the massive growth of the solar cell industry and increased demand from the semiconductor industry posed a risk that it would be difficult in future to secure sufficient capacity and capability from wafering sub-suppliers. It therefore became increasingly attractive to have an alternative sourcing model, and by acquiring Cemat Silicon S.A., Topsil gained access to in-house wafering and wafer polishing as an alternative to outsourcing. The group is now able to place wafer production where it is deemed most favourable taking into account costs, volumes, production time and production flow.

Addressing competition from FZ substituting products

FZ silicon is characterised by high purity levels, and by being more uniform and more costly than the silicon predominantly used in the semiconductor industry, CZ silicon. However, the availability of the raw material is more limited, and several producers are therefore attempting to replace the FZ raw material by substituting raw materials or by developing products to replace conventional FZ products.

Despite the fact that FZ-based silicon continues to be the preferred material for high and medium-power components in the semiconductor industry, Topsil therefore assesses that it is strategically important to have access to CZ technology and CZ production in order to achieve the optimum platform for ensuring the development of the group's position in the discrete market.

In the autumn of 2008, Topsil therefore took a very significant, strategic step by acquiring the Polish company Cemat Silicon S.A. Cemat Silicon S.A. produces and sells traditional CZ

silicon as well as the more specialised CZ-EPI product, which is to some extent used as a substitute for FZ silicon. The acquisition of Cemat Silicon S.A. has placed Topsil in a much better position than previously, as the group now has the opportunity to offer a broader range of different silicon wafers used in the discrete market of the semiconductor industry.

AGGRESSIVE STRATEGY AND NEW OBJECTIVES

Despite the global recession, there is still strong, underlying demand for Topsil's products. The relatively limited number of producers in the semiconductor industry of high-power components are witnessing massive growth, which is expected to continue in the years ahead.

Having addressed the four key challenges identified in 2006, Topsil has created a new and strengthened business platform and is ready to exploit the potential resulting from the group's strong market position in a growing market with expected annual growth rates of 10–20%.

Based on an aggressive, growth-oriented and targeted strategy, Topsil will continually seek to expand its competitive position. The group plans to expand production capacity to be scalable to revenue of DKK 1bn in line with growing demand, and hence create a basis for continuing growth. In terms of earnings, the group's goal will be to achieve a long-term profit margin of about 20% at EBIT level.

Topsil's ambitious growth plan is focused on using three business and strategic strengths:

Access to raw materials

Two supplier agreements, one of which runs up until 2017, have placed Topsil in the most favourable raw materials position in the group's history. As a result of the agreements, Topsil is able to continue to expand production and provide customers with fully guaranteed supplies through long-term agreements, which is a major competitive parameter. In addition, the Board of Directors and Management believe that the group's opportunities for expanding and establishing new long-term agreements with both suppliers of raw materials are good. If deemed favourable, Topsil may also exploit the opportunity to use CZ materials produced by Cemat Silicon S.A. as a third alternative raw material for FZ solutions that allow for lower levels of

MANAGEMENT REPORT

purity. This will enable Topsil to allocate the limited volume of FZ material to high-price products and thereby ensure improved profitability.

Expansion of capacity and improved production flow The group will intensify its focus on efficient production flows in terms of cost and raw materials throughout the value chain. This will support exploitation of market developments, renewed access to raw materials, a broader product range and the group's high intake of orders. Topsil will continue its efforts to implement efficiency optimisation measures, e.g. by exploiting the in-house wafering facilities at Cemat Silicon S.A. and the synergies associated with the acquisition of the Polish business.

As mentioned above, in order to meet demand for FZ silicon, Topsil has decided to expand production capacity at Frederikssund. A new production facility with cleanroom facilities for FZ production is therefore being projected. The facility will be constructed so as to be scalable by a number of new FZ machines to be added in line with demand. The first machines are expected to be put into operation in the first half of 2010.

Sales strategy

The group plans to exploit its core competences within silicon production in relation to deliveries for semiconductors that will be crucial to the expansion of the energy sector in the years ahead. In the high-power area, Topsil will primarily allocate capacity and raw materials to growth in sales of the technically demanding and expensive NTD products that are based on the FZ technology. Topsil assesses the combined market share of its three largest customers to be about 50% for these components, and the group aims to continue to grow with these customers and to add 1–2 new customers to its portfolio. In the medium and lowpower area, Cemat Silicon S.A.'s expertise will further add to the group's growth by accelerating sales of both traditional CZ-based products and CZ-EPI products.

Crystal angle measured using an X-ray unit.

ledelsens beretning

ACTIVITIES IN 2008

Developments in the silicon market

The FZ market was characterised by strong growth in 2008, driven by expansion of infrastructure and improvement of energy efficiency, which were unaffected by the economic crisis and financial turmoil.

Sales in the CZ market for low and medium-power products were stable up until the fourth quarter of 2008, when the markets were hit hard as a consequence of the economic downturn in the electronics and semiconductor industries. This will put pressure on CZ producers until the macroeconomic situation returns to normal.

Supplier status

In 2008, the global market for polysilicon was also affected by a shortage of raw materials in line with growing demand from the solar cell industry.

Since only two suppliers offer the polysilicon used in Topsil's FZ production globally, Topsil's announcement in December 2008 that it had signed a long-term raw materials agreement with Wacker Chemie AG therefore had great strategic and commercial value. The agreement complements Topsil's existing long-term agreement with the other supplier, which terminates in 2012.

The agreement with Wacker will secure further supplies of polysilicon in 2010–2017, and already on a continuing basis in 2009, Topsil will receive deliveries from Wacker in order to be able to scale production to increased volumes. With the conclusion of the agreement Topsil expects to be able to increase production of FZ silicon by approximately 10–15% in 2009, 20–25% in 2010 and about 30% in the subsequent years compared to the 2008-level. The agreement with Wacker thus provides a strong platform for the future implementation of Topsil's growth strategy.

Acquisition of Cemat Silicon S.A.

It was a strategic key event for Topsil when, in July 2008, it announced that it had signed an agreement for the purchase of 19.28% of the shares in the Polish company Cemat Silicon S.A. In late October 2008, Topsil announced the acquisition of 95.92% of the shares in Cemat Silicon S.A. at a price of DKK 153.7m, of which DKK 145m was financed by debt. Topsil expects to acquire the remaining 4.08% of the shares on similar terms in 2009.

At the time of acquisition, Cemat Silicon S.A. employed 260 employees. In 2008, the company reported revenue of approximately DKK 113m and an operating loss of approxi-

mately DKK 2m after purchase price allocation. Cemat Silicon S.A. holds approximately 53% of the shares in the real estate company Cemat70 S.A., which engages in leasing operations, and employed 55 employees at the time of acquisition.

The acquisition of Cemat Silicon S.A. not only meant that Topsil gained access to the other silicon production technology, the Czochralski technology, which is the most widely used silicon technology in the semiconductor industry, e.g. for low and medium-power product components; the group also gained access to yet another production facility, making it easier to scale future production. The acquisition also provided Topsil with its own facilities for wafering and wafer polishing.

As a result of the acquisition of Cemat Silicon S.A., Topsil now offers a full product portfolio of silicon for the semiconductor industry, and the acquisition has therefore significantly strengthened the group's business platform and market position. After the acquisition, Topsil appointed a new management at Cemat Silicon S.A., which has begun the process of integrating and implementing the synergy and restructuring plan expected to lead to a major restructuring of Cemat Silicon S.A. and savings on purchases and production corresponding to DKK 25m at EBIT level as from 2012.

Expansion of production capacity

The strong growth in demand for Topsil's FZ silicon products in recent years has resulted in full utilisation of the group's production capacity.

In order to meet growing demand, Topsil launched an initiative for building a platform for growing production output. This process will be implemented throughout 2009 and 2010. The efforts are aimed at three areas: Firstly, the group will invest in optimisation of the existing FZ production plant. Secondly, Topsil will expand FZ production with new production lines at Frederikssund. The first phase of the expansion will be completed in the first half of 2010. Subsequently, it will be possible to scale production with additional FZ machines, as and when the need arises. Thirdly, more operators will be hired, making it possible to switch to 24/7/365 production operations from mid-2009.

Overall, these measures to expand FZ production capacity are expected to enable Topsil to meet anticipated growth in the years ahead.

FINANCIAL PERFORMANCE IN 2008

Cemat Silicon S.A. and its partly owned subsidiary, Cemat70 S.A., were acquired in late October 2008 and were consolidated as from that time and fully recognised at the balance sheet date.

INCOME STATEMENT

Topsil's revenue for 2008 was DKK 289.4m (2007: DKK 193.2m), corresponding to revenue growth of 49.8%. Revenue improved marginally compared with the most recent forecast of revenue of DKK 260–280m for the financial year 2008.

Of the 2008 revenue, just under DKK 30m derived from Cemat Silicon S.A., whereas the remaining part of revenue growth was organic, driven by higher volumes and higher selling prices in the FZ market as a result of the group's focus on optimising its product and customer mix and passing on price increases on raw materials to selling prices.

Sales of the residual product remelt represented approximately 20% of Topsil's profit before tax in 2008.

In change in finished products and work in progress, the value of inventories at 31 December 2008 was recognised at DKK 85.3m in 2008 (2007: DKK 47.0m). The increase was due to the recognition of Cemat Silicon S.A., which contributed DKK 26.5m, a larger stock of raw materials and the recognition of raw materials at a higher price due to rising cost prices throughout 2008. Finally, the volume of work in progress had grown due to higher activity levels.

Costs of raw materials and consumables grew to DKK 138.2m in 2008 (2007: DKK 95.4m). As in previous years, this increase was a reflection of higher raw materials prices, which characterised the silicon market throughout most of the period. Total direct production costs increased by 45%, or DKK 42.8m, relative to 2007, DKK 13.0m of which related to costs in subsidiaries.

Other external expenses grew by DKK 14.1m to DKK 42.0m in 2008 (2007: DKK 27.9m). DKK 7.8m of the increase related to other external expenses incurred in Cemat Silicon S.A. and its subsidiary. The increase of DKK 6.3m in the parent company was due to a higher level of activity in the parent company aimed at stabilising and sustaining volume growth. The higher costs were attributable to measures such as an increased focus on repairs and maintenance and increased energy costs. In addition, costs were incurred in relation to the negotiations for the acquisition of Cemat Silicon S.A., which were not attributable to the purchase price.

Staff costs grew to DKK 51.1m in 2008 (2007: DKK 37.3m), reflecting a substantial increase in the number of employees in the group, from 73 to 402 at 31 December 2008 (140 employees on average), due to the acquisition of Cemat Silicon S.A.

Depreciation, amortisation and impairment totalled DKK 8.1m in 2008 (2007: DKK 5.8m).

Topsil's operating profit (EBIT) for 2008 came to DKK 64.2m (2007: DKK 52.1m), and this group's profit margin was 22.2% (2007:27.0%). In addition to the factors referred to above, operating profit was also affected by increased costs relating to expansion of production capacity.

Financial items were a net expense of DKK 2.1m in 2008 (2007: a net expense of DKK 4.0m). This reflected increased financial income due to an improved cash position ahead of the acquisition of Cemat Silicon S.A., and increased financial expenses due to realised and unrealised foreign exchange losses in USD, interest expenses in relation to the acquisition loan and operating credits in Cemat Silicon S.A. and initial expenses relating to the acquisition loan. The unrealised foreign exchange losses in USD primarily related to security expiring in 2012, which Topsil chose not to hedge.

Profit before tax for 2008 was DKK 62.1m, in line with the most recent guidance, and an increase of DKK 14.0m on 2007.

Tax on the profit for the year was DKK 16.2m, corresponding to an effective tax rate for the year of 26.2% (2007: 27.5%). The reduction was a result of the effects of a changed rate of taxation in 2006 on the comparative figure for 2007.

Profit for the year grew by DKK 11.0m, or 32%, to DKK 45.9m (2007: DKK 34.9m), primarily due to increased sales.

BALANCE SHEET

The group's assets at 31 December 2008 stood at DKK 503.9m, an increase of DKK 287.1m on 2007, DKK 264.8m of which was attributable to the acquisition of Cemat Silicon S.A. and its subsidiary.

The most important assets acquired in connection with the acquisition of Cemat Silicon S.A. were production plant and

buildings, rights of use of land, trade receivables, inventories and cash and cash equivalents, recognised at fair value at the date of acquisition (see specification in note 30 to the financial statements). The net assets of the real estate company Cemat70 S.A. amounted to DKK 133m, of which Topsil's share was DKK 70m.

ASSETS

Intangible assets grew to DKK 47.0m in 2008 (31 December 2007: DKK 13.7m), primarily relating to goodwill (DKK 17.8m) and a fixed-term right of use of land in Poland (DKK 15.5m).

Property, plant and equipment grew to DKK 151.0m at 31 December 2008 (31 December 2007: DKK 27.5m). This was attributable to the buildings and production plant acquired together with Cemat Silicon S.A.

Financial assets increased to DKK 66.7m at 31 December 2008 (31 December 2007: DKK 52.2m), mainly reflecting a prepayment to a supplier of raw materials.

Inventories stood at DKK 85.3m at 31 December 2008 (31 December 2007: DKK 47.0m), due to an increase in the value of stocks in the parent company and the inventories acquired in Cemat Silicon S.A.

Receivables grew to DKK 85.8m at 31 December 2008 (31 December 2007: DKK 38.7m). This was attributable to an increase in receivables in the parent company due to improved sales in the fourth quarter of 2008 compared with the year-earlier level. DKK 20.0m of the total increase of DKK 47.1m related to receivables in the acquired company.

CASH AND CASH EQUIVALENTS

During the financial year, the group had cash inflows from operating activities. The acquisition of Cemat Silicon S.A. was made with the company's own funds and by raising an acquisition loan. At 31 December 2008, the parent company had a free cash flow of DKK 9.4m; the group's free cash flow was DKK 68.2m. DKK 58m of the group's free cash flow derived from the company Cemat70 S.A., in which Topsil Semiconductor Materials A/S has a controlling influence through an ownership interest of 53%.

EQUITY AND LIABILITIES

The group's equity at 31 December 2008 stood at DKK 249.2m, DKK 70.2m of which was attributable to minority interests and DKK 179.0m to shareholders of Topsil Semiconductor Materials A/S. The change in equity before minority interests was primarily due to growth in the profit for the year, whereas foreign exchange adjustments adversely affected equity.

The group's non-current liabilities at 31 December 2008 amounted to DKK 146.1m. The increase mainly related to debt to credit institutions of DKK 116.1m, DKK 104.1m of which related to the parent company. The non-current debt in the parent company related to the acquisition loan. Furthermore, deferred tax liabilities grew, mainly due to the purchase price allocation on property, plant and equipment in Cemat Silicon S.A. and Cemat70 S.A.

Current liabilities amounted to DKK 108.6m at 31 December 2008 (31 December 2007: DKK 53.2m). The increase was primarily a result of increased debt to credit institutions, the major part of which concerned the parent company's share of the acquisition loan, which falls due in 2009.

Invested capital at 31 December 2008 was DKK 260.5m (1 January 2008: DKK 73.7m), mainly attributable to the acquisition of Cemat Silicon S.A.

Return on invested capital therefore came to 38.4% in 2008 (2007: 99.8%) and was affected by the acquisition of Cemat Silicon S.A.

CASH FLOWS AND INTEREST-BEARING DEBT

Topsil's cash flows from operating activities were a cash inflow of DKK 5.8m (2007: a cash inflow of DKK 35.9m). The change in working capital was minus DKK 49.3m in 2008 (2007: minus DKK 26.6m), primarily due to an increase in trade receivables in the fourth quarter of 2008.

Cash flows from investing activities were an outflow of DKK 85.6m (2007: an outflow of DKK 7.8m). The substantial increase mainly related to the acquisition of Cemat Silicon S.A. and operational investments of DKK 9.1m, mainly attributable to expansion and improvement of production capacity.

Cash flows from financing activities were an inflow of DKK 119.2m (2007: an outflow of DKK 12.8m), mainly relating to the raising of the acquisition loan.

Cash flows for the year thus came to an inflow of DKK 39.4m (2007: an inflow of DKK 15.3m).

SPECIAL RISKS

Net interest-bearing debt amounted to DKK 35.9m at 31 December 2008 (31 December 2007: a deposit of DKK 90.0m). This was primarily a reflection of increased borrowing relating to the Cemat Silicon S.A. acquisition.

At 31 December 2008, interest-bearing debt amounted to DKK 155.9m. The difference of DKK 120.0m relative to net interest-bearing debt represented interest-bearing assets, including cash and cash equivalents of DKK 68.1m, a substantial part of which was placed in Cemat70 S.A. DKK 116.1m, or 74%, of the interest-bearing debt of DKK 155.9m was non-current debt, i.e. debt falling due later than one year from 31 December 2008, and primarily consisted of facilities in DKK and JPY.

FINANCING

.

Interest-bearing debt amounted to DKK 155.9m at 31 December 2008, DKK 116.1m of which was non-current debt falling due after 31 December 2009. The remaining DKK 39.8m will fall due in 2009. The group has not defaulted on any loan agreements.

Business risks

Topsil is the world's fourth-largest supplier of FZ silicon with a market share of about 8%. The group is therefore a small player in a market with very large competitors, which may entail a business risk.

Sales to Topsil's ten largest customers account for approximately 90% of revenue, and two customers each account for more than 10% of consolidated revenue.

In the long term, a number of risk factors exist. The current large raw materials producers may cease production of raw material for FZ production, which may force the semiconductor and the electronics industries to find substituting silicon products. Over time, the FZ market may therefore shrink or disappear altogether.

New technology may lead to a surplus of raw materials, or the current investments in new capacity may lead to renewed surplus production of raw materials. If this happens, the semiconductor industry will again squeeze silicon producers, and prices may return to a level creating a more competitive market and putting profitability under pressure. However, this seems less likely at present as investments in reactor plants and the construction of reactor plants only relate to new raw material output already sold under long-term agreements.

Topsil has now signed agreements with the two primary raw materials suppliers and is therefore not as vulnerable to risks associated with raw materials as previously.

The group is still dependent on access to irradiation capacity. Topsil is well positioned in relation to the irradiation suppliers.

Financial risks

The activities of the group, including the acquisition of the Polish company Cemat Silicon S.A., implies that the group's equity and profit are exposed to several financial risks, primarily relating to fluctuations in exchange rates and interest rates.

The group's capital resources are regularly reviewed and consist of binding loan commitments and cash reserves in the parent company and subsidiaries. The Board of Directors and Management believe that the existing cash reserves and expected future cash flows are sufficient to maintain operations and implement planned measures to expand production when warranted by demand.

EVENTS AF TER T HE BALANCE SHEET DATE

No significant events have occurred after the balance sheet date.

OUTlook for 2009

Despite the global recession, NTD products are expected to continue to be in strong demand in 2009. This is evident from Topsil's FZ product orders to be delivered in 2009; at DKK 156m, this is the highest order volume in group history. In addition to the number of confirmed orders, the group has signed a number of framework agreements and has received a number of enquiries covering the FZ raw materials supplies available to Topsil in 2009, including the supplies from Wacker.

The market for CZ silicon, on the other hand, is strongly affected by the macro-economic situation, which has caused a dramatic slowdown in the propensity to consume and the demand for products such as consumer electronics and cars. As a result, Cemat Silicon S.A.'s order volume at the beginning of the year was significantly below last year's level.

As a consequence of the reduced activity level, the Board of Directors and Management initiated a plan for capacity adjustment and restructuring at Cemat Silicon S.A. in early 2009. The plan involves measures such as a reduction of the number of full-time employees at Cemat Silicon S.A. by 60 to about 200, and Topsil utilising wafering facilities at Cemat Silicon S.A. earlier than planned, instead of the current outsourcing to external sub-suppliers. The organisational restructuring at Cemat Silicon S.A. to be implemented in March and April 2009 is expected to lead to annual savings in the region of DKK 4m, and the full effects are expected to materialise as from the fourth quarter of 2009. The above adaptations are expected to entail restructuring costs of a non-recurring nature of DKK 1–2m in aggregate, which are included in the outlook for 2009.

Overall, consolidated revenue for 2009 is expected to grow by some 50% to approximately DKK 430–450m. The Polish operations are expected to generate revenue of DKK 100–120m in 2009. Revenue growth within FZ reflects improved access to raw materials and higher prices due to sales of products with a higher technological value.

In 2009, consolidated earnings will be influenced by two opposing factors: On the one hand, the improved access to FZ raw materials and growing demand for the group's technically advanced NTD and PFZ products are expected to contribute to earnings growth. On the other hand, the effects of the global recession on the CZ market will have an adverse impact on the intake of orders and, hence, earnings in Cemat Silicon S.A. Combined with the restructuring activities commenced, this is expected to lead to an operating loss from the Polish operations of DKK 10–15m in 2009. The Board of Directors and Management believe that once the global market for consumer electronics has returned to normal, the Polish operations will again contribute to earnings.

The group is expected to achieve a profit margin of approximately 18% for 2009 and profit before tax in the region of DKK 65–75m.

Due to the production capacity expansion at Frederikssund, the group's investment level will be significantly higher than previously in the coming years. In 2009, the group's investments are expected to amount to approximately DKK 40m.

The group does not use derivative financial instruments to hedge currency risks. Instead, the group uses commercial hedging by balancing currency inflow and outflow. The group's most important currency is USD, which makes up about 30% of total cash flows. Moreover, the group has provided substantial cash security in USD to uphold the raw materials agreement (2007–2012). A currency fluctuation in USD/ DKK of +/- DKK 0.50 would affect the group's results before tax by about +/- DKK 5.3m.

The group's expectations for the results before tax for 2009 are based on a USD exchange rate of DKK 600/USD 100.

Step 1 is undertaken by Topsil's sub-suppliers. Step 2 shows the production processes of Topsil and Cemat, respectively. Step 3 shows the manufacturing of components by Topsil's customers and step 4 the end-use of the components by the customers of Topsil's customers, e.g. wind turbine manufacturers.

FROM SAND TO POLYSILICON

QUARTZ SAND REDUCTION DISTILLATION SIEMENS PROCESS POLYSILICON

THE FLOAT ZONE PROCESS - FROM POLYSILICON TO WAFER

POLYSILICON FZ PROCESS IRRADIATION (NTD)

WAFERING FINISHED WAFER

STEP 2

Wafering

POLYSILICON CZ process EPITAXY PROCESS finished wafer

finished wafer DIFFUSION end-use

component ELECTRONIC

CONTROL

business platform

FROM SAND TO POWER

Electronic components, containing silicon produced by Topsil, are the cornerstones of all electrical appliances and systems used in households, offices, industrial manufacturing and in the distribution and transport of energy. Before the components can be used for transferring power to the point of use, a long and complex four-step manufacturing process must be completed:

During the first step, ultra-pure silicon is produced from naturally occurring quartz sand, which is repeatedly refined until transformed into pure polycrystalline silicon, or polysilicon.

During the second step, polysilicon ingots are transformed into monocrystalline silicon ingots through melt growth processes. During this process, a number of electrical and mechanical properties are added to the silicon, which are crucial for its ability to conduct current, before it is sliced into wafers of various thicknesses, depending on the intended application. The electrical properties and mechanical measurements are determined according to individual component specifications. Topsil and Cemat operate in this step of the production process.

During the third step, the electronic components are manufactured based on silicon wafers. The wafers undergo a number of processing steps in which electrical conduction patterns are created and component properties are formed.

During the fourth step, the components are fitted in control units or systems forming part of the finished applications, such as computers, flat screens, cars, solar cell panels, wind turbines, high-speed trains and distribution networks.

The silicon wafer is etched in order to remove any surface defects, Cemat.

Modern society's growing need for transport of people and energy constitutes the pillar of growth in Topsil's activities. The group focuses its efforts on supporting the establishment of infrastructure for transmission of energy, rapid growth in demand for intelligent energy management tools and the dissemination of energy-efficient solutions in industry.

There is a trend towards polarisation of energy consumption in major geographical centres, comprising both housing and industry. The most important parameters for energy management in these areas are intelligent and safe distribution and high efficiency and utilisation rates in order to prevent unforeseen failures and unnecessary losses. Energy must be transported to the energy-intensive centres, and there is an ever-increasing need for energy in industry for electric control of production facilities that produce and move goods.

Semiconductor-based control electronics is widely used in energy-intensive processes to handle high current and voltages, which is exactly what Topsil offers with its Float Zone (FZ). Digital and analogue signal processing devices are embedded in control electronics. In highly energy-intensive processes, these are based on bipolar components operating with reverse current, which may be united to form very high current. A bipolar high-power component is a complex unit combining the functionality of the semiconductor and special packaging technologies, preventing component overload which poses a safety risk in the supply chain to the production facility or the consumer.

The semiconductor consists of processed silicon wafers with added functionalities in the form of diodes, bipolar bridges and contact areas ensuring optimum current and voltage management by means of external digital or analogue signals. An example of such a component is a thyristor, which in principle constitutes voltage-controlled resistance. Semiconductors are produced in front-end production, typically in cleanroom facilities where all FZ wafer processes are performed as serial processes on several wafers requiring a uniform electrical profile and a high level of purity in relation to contamination of the wafer.

The size and dynamics of the market for semiconductors

The global value of the market for silicon products for the semiconductor industry is some DKK 72bn. The market is directly linked to the end-markets for electrical appliances and systems fitted with semiconductor components (see figure 1).

The largest purchasers of silicon-based semiconductors are the manufacturers of computers, PC-related equipment, mobile equipment and mobile phones, as well as consumer electronics such as flat screens, DVD and MP3 players and white goods. Together with telecommunication and data transmission devices, these products share a common feature in that they all contain semiconductor components based on CZ wafers.

Together with industrial devices for motor control units, sensors and control electronics, semiconductors for cars and trains represent a small share of the overall market for semiconductors. Manufacturers in this area require power electronics to handle high voltages, and semiconductor components based on FZ silicon such as NTD wafers are therefore used in this part of the market.

Topsil estimates the discrete market, in which its products are sold, to represent approximately 16% of the total silicon market (see figure 2).

Overall, demand for silicon is consistent with general consumption trends, and, historically, demand has been cyclical with short-term fluctuations of 3–5 years. Since 2000, the compound annual market growth rate has been approximately 8% according to the semiconductor industry association SEMI.

The market for Topsil's primary products is more stable and is characterised by long-term fluctuations. The compound annual market growth rate for this segment has been approximately 3–5% since 2000. Since 2007, the rate of market growth, especially for bipolar and intelligent components, has, however, exceeded 10%, driven by an increased need for transport and management of energy. Topsil expects the growth rates for these components to remain at an extraordinarily high level for a number of years.

TOPSIL ANNUAL REPORT 2008 19

Polysilicon ingots produced using the Siemens process and ready for Float Zone production.

FROM SAND TO POLYSILICON

QUARTZ SAND REDUCTION DISTILLATION SIEMENS PROCESS POLYSILICON

FROM SAND TO POLYSILICON

Polysilicon is used as a raw material in the production of monocrystalline silicon, both in FZ and CZ production. The requirements for polysilicon are very strict, since the purity of the silicon determines the electrical properties of the end-products. Purity is measured as the ratio between contamination and silicon. Silicon that is defined as technically pure typically contains 1% foreign substance, whereas the typical contamination level of silicon for solar cells is 0.0001%. Materials for CZ and FZ crystal growth typically contain 0.0000001% foreign substance.

To achieve the silicon purity required by the electronics industry, raw silicon is subjected to a number of purification processes. The first step consists of the production of technically pure silicon from quartz sand in a reduction oven.

The technically pure silicon is subsequently dissolved in acid, and a silicon gas is formed, which is subsequently refined by distillation, thereby increasing the level of purity. Following the refining process, the silicon is solidified in a so-called Siemens process, in which the silicon is separated from the silicon gas at approximately 1,000 degrees Celsius, resulting in ultra-pure polysilicon rods.

Polysilicon ingots are used as a raw material in both the FZ and the CZ production methods. The CZ process uses crushed silicon rods, and the FZ process uses whole polysilicon rods, which have been further processed and mechanically and chemically purified before use.

The market for polysilicon

The production of polysilicon takes place in large chemical facilities and requires major capital investments. Global production of polysilicon for the semiconductor industry is therefore dominated by six major producers, only two of which have developed technologies for producing polysilicon for the FZ process.

In recent years, the market for polysilicon has been characterised by short supply, accelerated by growth in the solar cell industry, which buys more than 70% of global production of polysilicon.

The raw materials producers have exploited the heavy demand and have introduced new sales terms and conditions. At the same time, it has become strategically important for silicon producers to secure stable supplies of raw materials at predictable prices. Consequently, the polysilicon agreements now being signed in the semiconductor and solar cell industries are long-term agreements which stipulate substantial prepayments and which are often based on prices and volumes fixed for periods of 5–10 years.

As a result of the heavy demand for polysilicon, the six major raw materials producers are expected to double their production in the coming years, and a number of new producers intending to supply polysilicon to the solar cell market are currently being established.

Topsil's access to polysilicon

In mid-2006, Topsil signed a long-term agreement for supplies of polysilicon for FZ production with one of the two global suppliers, securing deliveries of a fixed volume of polysilicon up until 2012 and, accordingly, continued and stable supplies of monocrystalline silicon to the group's customers.

The raw materials agreement is a combination agreement of which 50% of the volume is a fixed volume of polysilicon at fixed, index-linked prices and the remaining 50% a variable volume at market prices. The variable volume may not exceed the fixed volume in any given calendar year.

In December 2008, Topsil signed a long-term agreement with the other global supplier of polysilicon for FZ production for deliveries of fixed volumes of raw materials at fixed prices from 2010 to 2017. However, already in 2009 Topsil will receive regular supplies in order to scale production to increased volumes.

As a result of the agreement, Topsil may increase its production of FZ volumes by up to 30% in the period leading up to 2017, and Topsil therefore expects to be able to better adapt to the expected growth in demand for FZ silicon. At the same time, the agreement will enable Topsil to develop FZ products based on larger diameters than previously. The group is now developing 200 mm diameter FZ wafers; in contrast, the group's product range has up until now mainly consisted of 100–150 mm diameter products.

Topsil has covered the major part of its consumption of polysilicon for FZ production through the two raw materials agreements and will seek to expand the collaboration with both suppliers during the contract periods. Topsil is, however, also exploring the possibility of using CZ materials produced by the group's Polish company as an alternative and less costly raw material for FZ products not requiring high purity levels. This will help Topsil achieve a strengthened competitive position, and the limited volumes of polysilicon for FZ production may be allocated to high-price products and thus contribute to improved profitability.

The supply of polysilicon for CZ production is significantly larger due to the larger number of suppliers. Cemat Silicon S.A. has secured its polysilicon supplies through oneyear agreements with three of the established raw materials producers. Volumes and prices are agreed from year to year on market terms.

Float Zone production.

THE FLOAT ZONE PROCESS - FROM POLYSILICON TO WAFER

POLYSILICON FZ PROCESS IRRADIATION (NTD)

WAFERING FINISHED WAFER

Float zone

THE FLOAT ZONE AND CZOCHRALSKI TECHNOLOGIES

Of the two technologies for converting polysilicon into monocrystalline silicon, the FZ technology is the most precise and the purest production method, and the method in which Topsil has specialised. Components produced with FZ silicon wafers are used for special purposes for which the purity of the silicon in the wafers is essential to the function of the components, for example in high and medium-power components.

The CZ method, in which Cemat Silicon S.A. specialises, is a less expensive method for producing monocrystalline silicon, and silicon wafers produced by this method are used in various types of low and medium-power components.

The most significant difference between FZ and CZ silicon is the level of purity, which is up to 100 times higher in FZ than in CZ wafers. The reason for the extensive use of CZ silicon in the semiconductor industry is that many applications are not critically dependent on the purity of the crystal or the electrical uniformity of the wafer, but instead on the surface area of the wafer to allow as many units as possible to be produced from a single wafer. CZ silicon is easier to produce with large diameters, e.g. 200 and 300 mm, whereas the diameters of FZ wafers are limited to 150 and 200 mm. A 50% increase in wafer diameter nearly doubles the usable surface area and thus potentially the number of components on the wafer surface.

Although several CZ producers have attempted to produce products to replace FZ silicon, no one has been able to achieve a purity of CZ silicon as good as that achieved in FZ silicon.

The Float Zone production technology

The FZ process is a crystal growth technique that consists of polysilicon ingots being heated to the melting point of 1,400 degrees Celsius and subsequently solidified into a monocrystal.

The necessary process steps for producing FZ silicon involves initial preparation of the polysilicon ingot, followed by surface purification to ensure removal of contamination e.g. from transport.

The polysilicon ingot is subsequently mounted in an FZ processing machine together with a seed crystal. The FZ processing machine is a closed chamber with mechanical movement of the polysilicon ingot and the seed crystal.

In the FZ process, polysilicon is melted through induction heating. Once the silicon has melted, a seed crystal is introduced into the smelter, and the crystal is grown by adjusting heat conditions. The processing time for growing a crystal is 10–12 hours.

The crystal, now a monocrystalline ingot, is cooled down, and samples for quality testing are taken.

An important element of the production of FZ silicon is controlling electrical conductivity of the monocrystals. Conductivity is tested by adding phosphorus to the crystal, either directly in the FZ process during crystal growth, resulting in PFZ products, or through neutron irradiation of the crystal in a nuclear reactor, which is more costly, but results in more precise doping. The latter products are the so-called NTD products. The irradiation technique was invented jointly by Topsil and Risø National Laboratory in 1976. Neutron irradiation is now performed on the basis of long-term agreements with approximately ten external business partners.

The development of new electrical FZ wafer properties and research into the development of new processes and products based on the FZ technology are essential for identifying future component needs. Topsil is conducting such research at Frederikssund, assisted by knowledge centres and universities all over the world.

Czochralski production.

CZHOCHRALSKI PROCESS - FROM CRUSHED POLYSILICON TO WAFER

Wafering

POLYSILICON CZ process EPITAXY PROCESS finished wafer

CZOCHRALSKI

The Czochralski production technology

The CZ crystal growth technique consists of crushed polysilicon being melted in a quartz crucible at 1,400 degrees Celsius. A seed crystal is subsequently dipped into the molten silicon and is slowly pulled upwards causing the CZ crystal to solidify. CZ crystals may be grown with large diameters of up to 450 mm.

A disadvantage of CZ crystal growth is the dissolution of the crucible and the resulting contamination of the silicon. The CZ process produces a silicon product of a lower quality than the FZ technology, and it is more energy-intensive and considerably more time-consuming. The cost of crucibles adds to production cost, as a new crucible is required for each crystal growth.

Despite this, the spot price of CZ wafers is lower than that of FZ wafers due to the high production volumes, e.g. for microchips.

Production and processing of silicon wafers

The final stage of silicon production for the semiconductor industry is the production of wafers. Following all materials approvals of CZ crystal or FZ crystal, wafers are produced using different slicing or grinding techniques. The wafer production processes are identical for CZ and FZ materials.

Knowledge resources

The silicon industry is characterised as being knowledgeintensive. The technically complex production processes and the heavy demands on efficiency and product quality require continual product development and product optimisation efforts. Production is therefore dependent on specially-trained staff, and the technical functions are dependent on highlyskilled engineers.

The development of FZ processes is based in Denmark, whereas the development of CZ processes is based in Poland. The development of both technologies is focused on increasing crystal diameters and the precision of electrical crystal parameters.

Topsil has its own expertise in design, development and manufacturing of machines for the production of FZ silicon, and the group has developed its own production processes and FZ machines, which basically means that the group's production and process know-how is protected.

Research into CZ crystal growth and new semiconductor materials is conducted in close collaboration with the Polish Institute of Electronic Materials Technology, ITME, which is highly experienced in the development of new technologies and new types of semiconductors. One of the development projects of the ITME collaboration consists of the development of a method for using CZ material as a raw material for FZ production, thereby enhancing the potential for using alternative raw materials.

The ability to develop new products and processes and improve machine technology is crucial for Topsil's continued ability to meet customer demand in future. In the years ahead, Topsil will intensify and target its development efforts in collaboration with enterprises and institutions in the industry.

	SILICON PRODUCTS MAY BE DIVIDED INTO THE FOLLOWING MAIN AREAS:
NTD: Neutron Transmutation Doping	Neutron-irradiated Float Zone silicon wafer used in high and medium-power components. These products are essential for building infrastructure, power generation and power distribution and in connection with wind farms, electric trains, hybrid cars and energy-saving motor control units for the industrial and transport sectors.
PFZ: Gas-doped Float Zone	Gas-doped Float Zone silicon wafer, primarily used in medium-power components for industrial plants and consumer electronics where the requirements for electrical properties are not as strict as for NTD. The components are used in energy-saving motor control units, solar cell panel control units, white goods, etc. This market represents one of the growth areas of Float Zone silicon and is driven by high energy prices and energy-saving measures.
PV-FZ®	Float Zone silicon wafer used for high-efficiency solar cells and as reference material in the development of new solar cell designs.
HPS: High Purity Silicon	Float Zone silicon wafer, mainly used in special components such as detectors and sensors, for example in medtech equipment and security scanners.
CZ EPI	Czochralski silicon wafer coated with a thin layer of EPI (Epitaxy). These products are used in low and medium-power components for energy-saving solutions, e.g. in power supplies for computers and in motor control units.
CZ prime	Czochralski silicon wafer used as a basic material in electronics components for digital signal processing, for example in microchips.

component ELECTRONIC CONTROL unit

FROM TOPSIL TO CUSTOMER

Topsil has specialised in producing and selling high-quality silicon for the production of critical high, medium and lowpower components for the electronics industry which places high demands on the components' electrical properties and performance.

Topsil's silicon products are used in a wide range of electronics components for the discrete market, and the electrical properties of each product are designed for the specifications necessary for optimum performance of the components. Silicon products may be divided into the following main areas:

Power generation and infrastructure

Power electronics represents the largest application area for Topsil products. NTD silicon is used in components such as diodes, transistors and thyristors. The components control and adjust power from the energy source through the power network to the electrical appliance or system at the point of use.

In addition to their application in traditional coal and nuclear-based energy production, thyristor components are also applied e.g. for managing hydro or wind-power, which may be associated with great variations in power generation, creating a need for being able to switch transmission lines to the network on or off as appropriate. The focus of the energy sector on wind and hydro-power plants is a significant factor behind market growth and is one of the reasons for growth in demand for FZ-based bipolar high-power components applied in active switches, DC/AC converters and in voltage step-up AC/ DC converters. The latter converters are used in transmission systems typically applied for long-distance energy transport.

The bipolar component technologies, which are applied for high-power components for energy transport and energy distribution, are also applied in intelligent and energy-efficient industrial control units, e.g. in pumps, compressors, air conditioning systems, servo motors, robots, CNC machines and several other applications.

Transport

Bipolar solutions are also increasingly used for transport purposes, which place heavy demands on safety and efficiency. There is an increasing demand for high-power products for locomotives, trains, metro-trains, subways and tramways, where they are applied for energy-efficient DC/AC conversion between transmission line and motor and AC/AC conversion centrally in the engine block to achieve higher acceleration and increased comfort. AC/AC converters are also used in electric buses, agricultural machinery, fork-lift trucks and traffic lights.

Another application area within transport is in vessels, in which the screw was previously driven by large diesel engines through mechanically coupled gears and shafts. In future, electronic high-power control units may replace mechanical gears, leading to reduced fuel consumption and increased comfort, as vessel vibration is reduced. Some cruise vessels have already been fitted with these control units, as comfort is given high priority.

The automotive industry represents one of the largest consumers of discrete components, e.g. for dashboard display, electric window control, temperature sensors, electronic petrol injection and tyre pressure and rain sensors.

Electric and hybrid cars are an example of one of the new areas requiring high-power control electronics. In electric cars, battery-charged power replaces petrol as fuel. The energy stored must be quickly converted through the car's electric motor to be used as fuel.

Medical and security systems

In addition to power electronics, silicon is now also used in detectors and sensors. These components are used in medical equipment, such as CT and MR scanners, used for medical diagnosing of serious illnesses, and in security scanners used for scanning passengers at airports.

Solar cells

Throughout the past eight years, the market for silicon-based solar cells has grown rapidly, and silicon is now used more widely for solar cells than for electronics components.

Large-scale production of silicon-based solar cells is currently based on two technologies: the multicrystalline and the CZ monocrystalline technologies. The efficiency of a solar cell is determined by various factors, the most important factor being the quality of the silicon applied. Monocrystalline FZ silicon is the purest form of silicon and is therefore the best material for producing high-efficiency solar cells with efficiency rates exceeding 20%, as opposed to the efficiency rates of standard solar cells of approximately 15%. Due to the manufacturing cost, the use of FZ silicon is, however, limited to research in and development of FZ-based solar cells in laboratories. In 2008, sales of silicon for solar cells accounted for less than 1% of Topsil's revenue.

CUSTOMER RELATIONS

In recent years, underlying market trends have led to a surge in the demand for FZ-based high and medium-power components. However, as the supply of FZ silicon has been relatively stable due to the limited production of high-quality polysilicon, it has become strategically important for manufacturers of electrical components to cover their consumption of silicon through long-term agreements with silicon producers.

In 2006, Topsil signed long-term agreements with three strategic customers within the high-power components area. This will secure stable basic revenue for Topsil until 2012. Over the past years, the demand for highpower components has grown at rates significantly higher than anticipated, and the volumes sold by Topsil to its contract customers are therefore higher than stipulated in the agreements.

High-quality electronics is a prerequisite for managing and adapting energy. Electric currents from wind turbine generators are adapted to the power transmission network using powerful, discrete electronics components based on silicon wafers produced using the FZ technology.

Photo 1 shows an offshore wind farm. In photo 2, it is possible to see the generator located in the upper part of the turbine. When the wind speed is sufficiently powerful, the generator is connected by means of thyristors based on Float Zone silicon. Photo 3 shows an offshore transformation system collecting energy from the individual wind turbines and converting power for the next transformer station, which is located on land (photo 4). Both transformer stations include a number of functions based on Float Zone silicon.

FROM FLOAT ZONE WAFER TO WIND TURBINES

High-quality electronics is a prerequisite for managing and adjusting energy. Electric energy is primarily produced by generators driven e.g. by steam turbines, diesel engines or wind. In wind turbines, a number of powerful discrete electronic components based on the Float Zone technology ensure the control of movable parts, rotation stop and start and the adjustment of energy to the power grid.

Most wind turbines are programmed so as to allow the turbine to run idle without connection to the power grid when wind speeds are low. When the wind is sufficiently powerful to drive the rotor and the generator at the right speed, it is crucial that the generator is connected at the right time through gradual connection/disconnection to the power grid; partly to prevent unwanted power fluctuations occurring at the point of use; partly to reduce any wearing of the turbine's mechanical parts, including the gearbox. Such connection/ disconnection is performed by means of thyristors made of Float Zone silicon; a kind of electric on/off switch.

Furthermore, wind turbines use alternators, the rotors of which are fitted with electromagnets which are powered with direct current from the power grid. The power transmission system delivers alternating current, which must be rectified into direct current before being directed into the coils surrounding the electromagnets in the rotor.

Most wind turbines operate at almost constant rotational speed and are directly connected to the power grid through a synchronous motor. However, some wind turbines have their own separate power networks, in which the alternate current frequency of the turbine generator may be varied so as to achieve the required frequency. However, the public power grid cannot handle alternate current with variable frequencies. For this reason, a series of electronic components are required in such wind turbines. Initially, the components convert the alternate current with variable frequencies into direct current, and from direct current into alternate current with a frequency matching that of the public power grid. Thyristors, power transistors and inverters based on Float Zone silicon are required for this process.

A wind turbine is fitted with up to 50 power components based on Float zone silicon.

Electric power must be transported from the power stations to the consumer. The use of modern high-power transmission systems facilitates long-distance transfer of power without any significant power loss. Power is managed using powerful high-power components based on FZ wafers.

Photo 1 shows a thyristor based on Float Zone silicon, used for switching power on and off. Photo 2 shows stacks of serially-connected thyristors controlling power. All high-power stations (photo 3) contain many stacks of thyristors, which are always based on Float Zone silicon. Photo 4 shows a transformer station transmitting power to and from the grid, seen in the background.

FROM FLOAT ZONE WAFER TO POWER TRANSMISSION

Power is transported from the power plant through highvoltage transmission systems before being distributed to the energy consumer from a local distribution centre. Once the power reaches the distribution centre, high-voltage current is converted into medium-voltage current and subsequently further reduced to low-voltage current before being distributed in the consumer network. Costly conversion equipment is therefore required for transporting power from the point of generation to the point of use.

HVDC (High Voltage Direct Current) transmission systems are more efficient than high-voltage alternate current systems for long-distance transport of large volumes of energy due to the significantly lower level of power loss associated with direct current systems. Regardless of the increased establishment costs of direct current solutions, they are more feasible, since operating costs are significantly lower due to the lower level of power loss.

The HVDC (High Voltage Direct Current) transmission systems are fitted with powerful Float Zone silicon based components such as thyristors and bipolar components to manage and control energy transport by means of electronically-controlled on/off functions. With voltage levels of HVDC (High Voltage Direct Current) systems at up to 800 kV, a large number of serially connected silicon units are often applied to prevent overload and resulting supply line failure.

HVDC (High Voltage Direct Current) transmission systems contain thousands of components based on Float Zone silicon.

The power for electric trains is drawn from overhead cables, and the power adjusting the train's speed is controlled by discrete components, such as FZ wafers. When the train is decelerated, any unused power is returned to the overhead cable in order to reduce power consumption.

Photo 1 shows a thyristor based on Float Zone silicon encased in white ceramics. Photo 2 shows the thyristor component integrated into the train's motor control unit, which is located in the lower part of the train (photo 3). Photo 4 shows how power is transmitted to the train from the overhead cables and conducted via collectors to the motor underneath the train.

4

FROM FLOAT ZONE WAFER TO TRAINS

A significant change of technology is currently taking place in the area of transport of people and goods towards more efficient and environmentally compatible means of transport, whether by car, lorry, train or ship.

The advantages of using electricity to power trains include less pollution, higher performance and less energy and maintenance costs. In addition, electric trains also generate energy, which is redirected to the overhead cables once the motors are applied to decelerate the trains, thereby reducing the overall energy consumption.

Today's highly advanced electric trains receive power from overhead cables, typically mounted on poles alongside the rails. The overhead cables convey thousands of volts due to the use of high-voltage current that may be transmitted long-distance on light cables without any significant loss of power. Power is intercepted from the overhead cables by collectors and conducted by cables through the train to the highvoltage systems mounted underneath the train. The train's high-voltage system transforms voltages to lower voltage levels that power the locomotive's AC motors. The power systems are fitted with high-voltage components of which Float Zone silicon wafers form an essential part. The reason is that the chemical purity levels of Float Zone-based components are significantly higher than other types of siliconbased components, resulting in significantly improved control of electrical properties. In addition, Float Zone silicon is able to handle current of up to 10,000 volts, as opposed to the Czochralski silicon, which is only able to handle up to 500 volts.

The total costs of electronic equipment in a modern locomotive constitute up to 50% of the total costs of the locomotive, part of which is applied for the hundreds of components based on Float Zone silicon.

Any production process centres on the optimum utilisation of raw materials and energy. Frequency converters containing silicon-based components facilitate optimum control of electric motors, both with respect to production and energy consumption.

Photo 1 shows an IGBT (insulated gate bipolar transistor) component, and photo 2 a powerful frequency converter/motor control unit used in a typical production environment; in this case, for the production of power cables. The frequency converter contains a number of components, such as IGBTs and diodes, based on Float Zone products. Photo 3 shows the electric motor adjusted by the frequency converter, and photo 4 the manufacturing of the finished cable.

FROM FLOAT ZONE WAFER TO INDUSTRY MOTORS – IMPROVING ENERGY EFFICIENCY

The steam engine was invented early in the industrial age. In principle, the steam engine was an engine that pulled machines with various functions by mechanical chains and belts. The steam engine operated at a certain speed, which was adjusted by means of gears and brakes.

This method of adjustment has survived for many years and is still widely applied in industry, although the steam engine has long since been replaced by electric motors.

The total equation shows that electric motors are more efficient than petrol and steam engines. The energy efficiency rate of steam is typically 3–5%; for petrol this is 10–20% and for an electric motor up to 60%. The rest is heat loss. In power plants, the rate of energy conversion is very high. Power is generated and heat is distributed as district heating. The energy efficiency rate is as high as 90%.

For example, the transport of gas or oil consists of pumping the gas or oil through pipelines by means of powerful electric motors. These motors operate at a certain speed, and the speed at which gas or oil is transported can be adjusted through mechanical valves.

The speed of an electric motor can be controlled by adjusting the power in the motor through a frequency converter. Frequency converters allow for faster and more precise adjustment of speed, and the solution is more efficient due to the lower combined energy consumption, since the motor does not continually operate at full power.

Frequency converters consist of electrical modules in the form of circuit boards mounted with components that have the functions necessary for adjusting the system. These components are typically insulated gate bipolar transistors (IGBTs) based on Float Zone.

A frequency converter contains between 20 and 50 components based on Float Zone silicon.

EPI reactor for the production of EPI wafers, Cemat.

PRODUCTION FACILITIES AND PRODUCTION OPTIMISATION

Topsil's production activities are based at two locations, in Denmark and Poland, respectively.

Preparation, crystal growth, quality control and distribution of FZ silicon are based at the group's facilities in Frederikssund in Denmark, which is also home to the group's head office and corporate administrative functions. Crystal growth is performed at production lines developed in-house by the group. 45 employees work in preparation and production in three shifts, and the production facility is therefore in operation 24/7/365.

Since 2000, Topsil has been outsourcing its wafering and wafer polishing activities. Finishing, including packing and distribution, however, is placed at Frederikssund. In 2008, Topsil initiated the building of a new, modern production facility for cleanroom production of FZ silicon at Frederikssund, the first stage of which will be completed in the first half of 2010. The production facility is intended to allow for the installation of additional FZ machines, making it possible to scale production in line with new future sales potential. The establishment of the new production facility, in collaboration with the landlord, is expected to lead to investments in infrastructure and machinery of approximately DKK 25m in 2009.

The group's production of CZ silicon is based at Cemat Silicon S.A's facilities in Warsaw, Poland. The production comprises crystal growth, crystal processing, wafering, polishing and EPI growth. Cemat Silicon S.A. has fully established production lines for wafering and polishing of silicon wafers, including sawing, edge grinding, lapping, etching, thermal processes, polishing, purification and measuring, and the company has a number of EPI reactors for EPI growth, the latest reactors having been implemented within recent years.

Quality control

Due to the specific and critical application of silicon in components for the semiconductor industry, quality control of the silicon produced is a key element of any order executed by Topsil. Topsil's production facilities at Frederikssund and Warsaw are both certified to the ISO 9001:2000 quality standard and in compliance with the ISO 14001:2004 environmental standard.

Lean and Six Sigma optimisation

Since 2005, Topsil has been committed to ensuring maximum quality, raw material utilisation and production flow, and the group has therefore implemented Lean and Six Sigma tools in all production processes with the aim of optimising productivity and work processes.

The efforts to optimise production processes will continue at the same high level in the years ahead, with a focus on areas such as stable production output and utilisation of the raw material. The production model is also being implemented at Cemat Silicon S.A., where it is expected to contribute significant shortterm and long-term efficiency gains and increased capacity.

Exploitation of synergies

Topsil gained access to in-house wafering and polishing capacity in connection with the acquisition of Cemat Silicon S.A., and the group intends to use this capacity for part of its FZ silicon wafering. The transfer will be successively implemented as from 2009, and it will be further intensified in the following years, if deemed expedient taking into consideration costs, volumes, production time and production flow.

As from 2012, the acquisition of Cemat Silicon S.A. is expected to result in annual synergy potential of some DKK 25m at EBIT level. In addition to the use of in-house wafering capacity for selected FZ specifications, synergies will be achieved in line with general optimisation of production and work processes across units and through a new product mix of Cemat Silicon S.A.'s current sales. At the beginning of 2009, the process for achieving the expected synergies proceeded according to plan.

GROUP OVERVIEW

Topsil Semiconductor Materials A/S owns 94.23% of Cemat Silicon S.A. in Poland, which owns 52.92% of Cemat70 S.A.

Cemat70 S.A.

Cemat Silicon S.A. owns approximately 53% of the share capital of Cemat70 S.A., a real estate company, whose activities include ownership of the buildings from which Cemat Silicon S.A. operates. In addition to Cemat Silicon S.A., its largest tenancy, Cemat70 S.A. has approximately 60 tenancies, which are all centrally located in Warsaw.

During 2009, Topsil will explore the opportunities for divesting its ownership interest in Cemat70 S.A. in order to dedicate its resources to its core business: production of silicon.

TOPSIL INC., USA

Topsil Inc., the other subsidiary of the group at the beginning of the year, was solvently liquidated in 2008.

STAFF RISK MANAGEMENT

Being able to recruit and retain the most valued staff is crucial to Topsil. Therefore, the group offers all employees a professional employment framework and the opportunity to develop their personal and professional skills. The group gives high priority to a good working environment and strives to be a professionally managed enterprise in all respects.

Due to Topsil's growth, the acquisition of Cemat Silicon S.A. in Poland and the group's ambitions for significant revenue and earnings growth, it has become important to revise and establish an overall and up-to-date framework for the group's position on issues influencing the way it does business, employee satisfaction and employee conditions on a broader scale.

Topsil intends to focus more on general industrial, process, business and managerial skills, and sees significant perspectives in setting up broadly founded management teams to support technical skills, research and development efforts and progress in all group activities.

Topsil believes that a high level of employee satisfaction is key to creating a strong enterprise attractive to everyone. Group-wide policies on employee satisfaction, health and absence are therefore being drafted. Ambitions are high – Topsil aims to range among the best employers.

The aim of introducing policies on employee satisfaction, health and absence is to retain employees and create social commitment and a healthy and secure workplace with high levels of employee satisfaction and safety. The initiative is based on a principle of "quid pro quo". Most people will at some point experience difficult times due to events in their personal or professional lives. Topsil wishes to support employees going through such difficult times. The employee satisfaction and health package will give the employees access to various assistance and support for most problems that may arise. In return, it is important to Topsil that its employees are healthy and dedicated when they go to work every day.

The objective of risk management is not a wish to eliminate all risks, but to actively determine the risks acceptable to and manageable by the group and the risks to avoid entirely. Risk management is an integral part of the day-to-day business management and is subject to continuous review by the Board of Directors and Management. The Board of Directors and Management have assessed that the most significant risks, in addition to financial risks, relate to supplier and customer relations due to the limited number of suppliers who can supply raw materials of a sufficient quality and customers demanding the group's finished goods.

The group has elected to arrange for insurance cover within a number of general areas, including all risks insurance (machinery, equipment, inventories and business interruption), transport insurance, professional and product liability insurance and directors' and officers' liability insurance. In addition, the group has taken out workers' compensation insurance based on local conditions.

The group operates with a low-risk profile so that currency, interest rate and credit risks arise only in connection with commercial relations. It is the group's policy not to actively speculate in financial risks.

Due to the nature of its operations and financing, the group is exposed to fluctuations in exchange rates and interest rates. The group manages its financial risks by means of a model for managing its cash forecasting, which covers a period of 6 to 12 months.

The group's currency, interest rate, credit and liquidity risks are described in a note to the consolidated financial statements.

Corporate Governance

Topsil's Board of Directors and Management continually consider measures and procedures for ensuring good corporate governance and business ethics. These efforts are based on applicable legislation and the guidelines established by the Board of Directors for the management of the group and, in addition, the continuous review of and taking positions on NASDAQ OMX Copenhagen's recommendations on corporate governance. Topsil basically concurs with the recommendations, and the Board of Directors and Management believe that Topsil complies with the recommendations.

A full account of Topsil's position on the individual recommendations, according to the 'comply or explain' principle, is available on Topsil's website, www.topsil.com. The section below provides an overview of the recommendations or standard practices with which Topsil does not comply as well as details on matters to be described in annual reports according to corporate governance recommendations.

Shareholders and annual general meeting

The Board of Directors and Management perform an annual assessment of whether the group's capital and share structures are consistent with the interests of the shareholders. With the profit generated for 2008, the Board of Directors finds that the capital and share structures of the group are appropriate and sufficient for a foreseeable future.

The group makes use of electronic document exchange and electronic mail in its communications with shareholders, see section 65 b of the Danish Public Companies Act. Notices convening shareholders to annual and extraordinary general meetings and agendas for the meetings are sent via e-mail.

Shareholders who have requested to be notified of annual and extraordinary general meetings are notified by e-mail. Printed versions of annual reports may be requested by telephone or by e-mail (investor@topsil.com).

Stakeholders

The Board of Directors ensures that good and constructive relations and an active dialogue exist with the group's stakeholders and that the interests and roles of stakeholders are respected. Because of the modest size of Topsil, no written policy currently exists governing the group's relations to its stakeholders. However, such policy is currently being drafted.

Board of Directors

When composing the Board of Directors, the aim is that the majority of the Board members elected by the shareholders in general meeting should be independent of special interests, whether they be the group, major shareholders, chief suppliers or key accounts.

Three out of four of the Board members elected by the shareholders are independent of special interests. The vicechairman of the Board of Directors, Eivind Dam Jensen, is a major shareholder of Topsil and the owner of Ejendomsaktieselskabet Bangs Gård, which owns and leases the head office at Linderupvej 4, DK-3600 Frederikssund to Topsil. The transactions are disclosed in note 38 to the financial statements.

Board meetings are held at least six times a year. In 2008, the Board of Directors held seven meetings, and five ordinary meetings have currently been scheduled for 2009. In addition, the Board of Directors and Management plan to meet in the fourth quarter of 2009 to discuss and define their most important tasks in relation to the overall strategic management.

It is up to each member of the Board to assess how many directorships he/she is able to undertake while serving on the Board of Topsil. In principle, this is considered a personal matter; however, the issue is discussed in connection with the Board's annual self-assessment.

Audit committee

Topsil has not set up any Board committees. However, the Board of Directors expects to submit a proposal for a resolution to set up an audit committee at the annual general meeting on 29 April 2009 in pursuance of EU's eighth Directive.

Remuneration of members

of the Board of Directors and Management

The fee paid to the members of the Board of Directors must be competitive and reasonable having regard to the duties and responsibilities of the office. The fee paid to the members of the Board of Directors is determined at the first Board meeting and is paid as a lump sum in the year following the approval of the annual report by the annual general meeting. The fees paid to the chairman, vice-chairman and ordinary members of the Board of Directors are disclosed in note 5 to the financial statements, in compliance with IFRS.

The remuneration of the group's Board of Directors and Management is regularly reviewed by the Board of Directors with a view to ensuring that there is a fair balance between the efforts of members of the Board of Directors and Management and value creation for the group and their remuneration.

The remuneration paid to the members of Management (basic salary, bonus, etc.) must reflect shareholder interest and conditions and be reasonable relative to the tasks to be performed and the responsibility involved. The remuneration and bonuses paid to the members of Management are disclosed in note 5 to the financial statements. In case of substantial or atypical contributions to non-pay benefits, severance agreements, etc. for Management, such contributions will also be specified in the annual report. There were no costs of this nature in 2008.

Members of Topsil's Management and a number of managerial employees have been granted warrants. Management's share, terms and conditions and valuation are disclosed in note 7 to the financial statements. Topsil's current incentivebased remuneration scheme and guidelines were adopted by the shareholders in 2008 and are available on Topsil's website under 'Investor Relations'. Any future incentive-based remuneration schemes will be presented for adoption at the annual general meeting.

Material agreements with members of the Board of Directors and Management

Other than as provided above, the group has not entered into any material agreements with members of the Board of Directors and Management.

SHAREHOLDER INFORMATION

The group has adopted an information and communication policy to ensure that Topsil is seen as a noticeable, trustworthy, accessible and professional group with a high level of information, a consistent information flow and an open dialogue with its stakeholders.

The Board of Directors and Management aim to provide the best basis for the stakeholders to assess the group share and thus for the share price to reflect the current standing of the group and its future prospects.

At the same time, the information and communication policy will ensure that Topsil meets the disclosure requirements of the share market and that inside information, which must be assumed to affect the price of Topsil's share considerably, is not disclosed to unauthorised persons.

The full wording of Topsil's information and communication policy is available on the group's website under 'Investor Relations'.

Relations with shareholders, potential investors and equity analysts are handled by: Keld Lindegaard Andersen, Chief Executive Officer E-mail: keld.lindegaard.andersen@topsil.com Tel.: +45 4736 5600

Share capital and shareholder structure

The share capital of Topsil Semiconductor Materials A/S amounts to DKK 100,847,917.50 nominal value divided into 403,391,670 shares of DKK 0.25 each. The group has one share class only, and no shares are subject to restrictions on voting rights.

Share price performance

The group's shares are listed on NASDAQ OMX Copenhagen and are traded under securities identification code DK0010271584. The shares form a component of the SmallCap+ index under the segment for small and medium-sized companies which generate high liquidity of the share, provide frequent information to the market and pursue good investor relations.

In 2008, the price of the Topsil share fell by 38%, and the share traded at 0.84 at 31 December 2008, resulting in a market capitalisation of DKK 339m. By comparison, the SmallCap+ index fell by 62% in the same period.

Shareholders

The number of registered shareholders was 7,176 at 31 December 2008, representing approximately 75% of the share capital. Shareholders holding more than 5% of the share capital are listed in the table below.

Trading in the Topsil share by members of the Board of Directors and Management

The Board of Directors has adopted guidelines for trading in the group's shares, which are laid down in the rules of procedure and the internal rules of the group. These guidelines apply to trading by the group as well as by members of the Board of Directors and Management and managerial employees. Similarly, the group has written rules prohibiting the abuse and the disclosure of inside information.

The trading window for members of the Board of Directors and Management and other insiders to whom the guidelines for insiders apply is set at four weeks after the publica-

COMPOSITIO N OF SHAREHO LDERS AT 31 DECEMBER 2008	Number of shares	Capital in DKK	Capital %	Votes %
EDJ-Gruppen Bangs Gård, Torvet 21 DK-6701 Esbjerg, Denmark	63,063,311	15,765,827.75	15.63	15.63
Other registered shareholders	236,488,521	59,122,130.25	58.63	58.63
Unregistered shareholders	103,839,838	25,959,959.50	25.74	25.74
Total	403,391,670	100,847,917.50	100.00	100.00

tion of each interim report and only if they do not possess inside information. Subscription for employee shares/exercise of employee warrants already held is not covered by the rule even if the subscription/exercise takes place outside the fourweek window.

It is the responsibility of the chairman of the Board of Directors to inform insiders in case the trading window is closed due to inside information.

Register of shareholders

Topsil's shares are issued to bearer, but may be registered by name in the group's register of shareholders. Registered shareholders receive notices convening general meetings directly and have voting rights. Furthermore, registered shareholders and other stakeholders may automatically receive copies of annual reports, interim reports and other stock exchange announcements by subscribing to Topsil's electronic news service on the group's website.

Shareholders may be registered by name by contacting their bank's equities division or their stockbroker. Topsil's register of shareholders is managed by I-NVESTOR.TV, Kongevejen 418, DK-2840 Holte, Denmark.

Dividend policy

It is Topsil's policy that the shareholders should obtain a return on their investment in the form of a price increase and/or dividend. Dividends will be paid with due consideration to the necessary consolidation of equity forming the basis for the continued growth of the group.

Proposed dividend for 2008

The Board of Directors proposes to the Annual General Meeting that the profit for the year be applied to optimise capital resources and that no dividend be paid in respect of the financial year 2008.

Annual general meeting

The Annual General Meeting will be held on Wednesday, 29 April 2009 at 10:00 am, at Plesner law firm, Amerika Plads 37, DK-2100 Copenhagen Ø, Denmark.

LIST OF STOCK EXCHANGE ANNOUNCEMENTS IN 2008

Date	Announcement
28.02	Full-year profit announcement 2007
29.02	Capital increase due to exercise of warrants
29.02	Insider transaction
19.03	Notice convening annual general meeting
25.03	Annual report 2007
02.04	Minutes of annual general meeting 2008
03.04	Notice convening extraordinary annual general
14.04	Minutes of extraordinary annual general meeting 2008
07.05	Interim report – Q1 2008
15.05	Insider transaction
22.05	Insider transaction
23.05	Insider transaction
09.06	Insider transaction
14.07	Topsil submits bid to buy the
	Polish company Cemat Silicon S.A.
21.08	Interim report – H1 2008
01.10	Topsil is completing acquisition of Cemat in Poland
30.10	Interim report – Q3 2008
03.11	Change in Board of Directors
06.11	Insider transaction
18.12	Poly contract
19.12	Financial calendar 2009

FINANCIAL CALENDAR 2009

Date	Announcement	Silent periods
24.03	Full-year profit announcement 2008 24.02.09 – 24.03.09
20.04	Annual report
29.04	Annual general meeting
25.05	Interim report – Q1 2009	28.04.09 – 25.05.09
20.08	Interim report – H1 2009	23.07.09 – 20.08.09
12.11	Interim report – Q3 2009	15.10.09 – 12.11.09

COMPANY INFORMATION

Topsil Semiconductor Materials A/S

Linderupvej 4, DK-3600 Frederikssund, Denmark Company registration (CVR) no. 24 93 28 18 Registered office: Frederikssund, Denmark Tel.: +45 4736 5600 Fax: +45 4736 5601 topsil@topsil.com www.topsil.com

Jens Borelli-Kjær, Chairman, age 49

MSc Engineering (Mathematics/Physics) Graduate Diploma (Economics and International Management) MBA (INSEAD) Elected chairman of the Board of Directors in 2006 Term expires in 2009

Eivind Dam Jensen, Vice-Chairman, age 57

State-Authorised Estate Agent Joined the Board of Directors in 2005 Term expires in 2009

Jørgen Frost, Board Member, age 54

MSc Engineering (Mechanical Engineering) Graduate Diploma (Economics and Marketing) Joined the Board of Directors in 2006 Term expires in 2009

Ole Christian Andersen, Board Member, age 42

MSc Engineering (Electronics) Graduate Diploma, Part I Joined the Board of Directors in 2007 Term expires in 2009

Employee representatives:

Trine Schønnemann, age 41 Key Account Manager, employed in 1997 BSc Economics (International Marketing) Joined the Board of Directors in 2003 Term expires in 2011

Leif Jensen, age 51

Senior Silicon Scientist, employed in 1986 BSc Engineering (Electrical Engineering) Joined the Board of Directors in 2008 Term expires in 2011

MANAGEMENT:

Keld Lindegaard Andersen, age 48 Chief Executive Officer, employed in 2005 MA, MBA

Jørgen Bødker, age 51 VP Logistics, Sales and Marketing, employed in 2002 BSc Engineering (Electronics) Graduate Diploma (Management and Organisation)

company information

BOARD OF DIRECTORS: DIRECTORSHIPS AND MANAGEMENT POSITIONS:

Vitral A/S, Managing Director and Board Member

Ejendomsaktieselskabet Bangs Gård, Managing Director and Board Member Aktieselskabet Eivind Dam Jensen, Managing Director and Board Member Statsaut. Ejendomsmæglerfirma E. Dam Jensen, Owner

Blendex A/S, Managing Director and Board Member Frost Invest A/S, Managing Director, Founder and Board Member Vestergaard Company Holding A/S, Board Member Kongskilde Industries A/S, Board Member RMIG A/S, Board Member

Nangate A/S, President & CEO and Board Member OCA Holding ApS, Manager OCA Family Holding ApS, Manager

AUDITORS:

Deloitte Statsautoriseret Revisionsaktieselskab

represented by represented by Tim Kjær-Hansen Jørgen Holm Andersen State-Authorised Public Accountant

State-Authorised Public Accountant

STATEMENT BY T HE BOARD OF DIRECTORS AND MANAGEMENT

We have today considered the annual report for the financial year 1 January – 31 December 2008 of Topsil Semiconductor Materials A/S.

The annual report has been prepared in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.

We consider the accounting policies to be appropriate. Accordingly, the annual report gives a true and fair view of the assets, liabilities and financial position at 31 December 2008 of the group and the parent company and of the results of the group's and the parent company's operations and cash flows for the financial year 1 January – 31 December 2008.

Furthermore, in our opinion the Management Report gives a true and fair view of the developments in the activities and financial position of the group and the parent company, the results for the year and of the group's and the parent company's financial position in general and describes the significant risk and uncertainty factors that may affect the group and the parent company.

The annual report is recommended for approval by the annual general meeting.

Frederikssund, 24 March 2009

MANAGEMENT:

Keld Lindegaard Andersen

Chief Executive Officer

BOARD OF DIRECTORS

Jens Borelli-Kjær

Eivind Dam Jensen Vice-Chairman

Chairman

Leif Jensen Trine Schønnemann (Representatives elected by the employees)

Jørgen Bødker VP Logistics, Sales and Marketing

Ole C. Andersen

Board Member

Jørgen Frost Board Member

independent auditor's report

To the shareholders of Topsil Semiconductor Materials A/S

We have audited the financial statements of Topsil Semiconductor Materials A/S, which comprise balance sheet as at 31 December 2008, income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. The financial statements comply with International Financial Reporting Standards approved by EU, and additional Danish disclosure requirements for annual reports of listed companies.

Management's

responsibilityfor the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and additional Danish disclosure requirements for annual reports of listed companies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the assets and liabilities of the group and the parent company and their financial position as of 31 December 2008, as well of the financial performance and cash flows of the group and the parent company for the financial year 1 January to 31 December 2008 in accordance with International Financial Reporting Standards and additional Danish disclosure requirements for annual reports of listed companies.

Copenhagen, 24 March 2009

Deloitte Statsautoriseret Revisionsaktieselskab

Auditor's report

Tim Kjær-Hansen Jørgen Holm Andersen State-Authorised Public Accountant State-Authorised Public Accountant

INCOME STATEMENT FOR 2008

	Parent company		Group
2007	2008		2008	2007
		DKK '000 Note
193,231	261,658	Revenue 4	289,402	193,231
24,438	11,824	Change in finished goods and work in progress	13,063	24,438
796	1,004	Work carried out for own account	1,004	796
28	60	Other operating income	60	28
(95,384)	(125,170)	Costs of raw materials and consumables	(138,224)	(95,384)
(27,850)	(34,235)	Other external expenses	(41,981)	(27,850)
(37,339)	(46,272)	Staff costs 5, 6, 7	(51,099)	(37,339)
(5,827)	(6,058)	Depreciation, amortisation and impairment 8	(8,071)	(5,827)
52,093	62,811	Operating profit (EBIT)	64,154	52,093
3,566	5,830	Financial income 9	6,167	3,566
(7,582)	(5,327)	Financial expenses 10	(8,252)	(7,582)
48,077	63,314	Profit before tax	62,069	48,077
(13,210)	(16,382)	Tax on the profit for the year 11	(16,204)	(13,210)
34,867	46,932	Profit for the year	45,865	34,867
		Distribution of profit for the year:
		Parent company shareholders	46,044	34,867
		Minority interests	(179)	0
			45,865	34,867
0.09	0.12	Earnings per share (DKK) 12	0.11	0.09
0.09	0.11	Diluted earnings per share (DKK) 12	0.11	0.09
		Proposed profit appropriation:
34,867	46,932	Retained earnings
34,867	46,932

BALANCE SHEET AS AT 31 DECEMBER 2008 ASSETS

	Parent company	Group
2007	2008			2008	2007
		DKK '000	Note
12,168 11,720		Completed development projects		11,720	12,168
0	0	Goodwill		17,758	0
0	0	Right of use		15,510	0
11	0	Other intangible assets		1,317	11
1,504	638	Development projects in progress		638	1,504
13,683	12,358	Intangible assets	8, 13, 14	46,943	13,683
0	0	Buildings		59,038	0
22,023	22,434	Plant and machinery		81,598	22,023
2,597	2,532	Other fixtures and fittings, tools and equipment		3,597	2,597
2,910	6,569	Property, plant and equipment under construction		6,769	2,910
27,530	31,535	Property, plant and equipment	8, 15	151,002	27,530
0	153,725	Investments in subsidiaries	16, 30	0	0
52,206	66,694	Other non-current receivables etc.	17	66,694	52,206
52,206	220,419	Financial assets		66,694	52,206
93,419	264,312	Non-current assets		264,639	93,419
47,001	58,825	Inventories	18	85,310	47,001
28,911	46,595	Trade receivables	19	65,262	28,911
8,652	13,297	Other receivables	20	20,152	8,652
1,094	358	Prepayments		358	1,094
38,657	60,250	Receivables		85,772	38,657
37,770	9,404	Cash and cash equivalents	21	68,154	37,770
123,428	128,479	Current assets		239,236	123,428
216,847	392,791	Assets		503,875	216,847

EQUITY AND LIABILITIES

Parent company Group
2007	2008			2008	2007
		DKK '000	Note
99,706	100,848	Share capital	22	100,848	99,706
0	0	Translation reserve	23	(17,706)	0
1,111	844	Reserve for share-based payments 23		844	1,111
48,510	95,951	Retained earnings		95,063	48,510
149,327	197,643	Equity attributable to parent company shareholders		179,049	149,327
0	0	Equity attributable to minority interests		70,197	0
149,327	197,643	Equity		249,246	149,327
0	104,167	Debt to credit institutions	24	116,076	0
0	0	Finance lease liabilities	25	614	0
12,090	10,548	Prepayments received on account from customers		10,548	12,090
0	0	Other non-current liabilities		1,845	0
2,261	3,745	Deferred tax liabilities	11	16,973	2,261
14,351	118,460	Non-current liabilities		146,056	14,351
0	23,321	Debt to credit institutions	24	39,793	0
0	0	Finance lease liabilities	25	191	0
29,572	23,332	Trade creditors	26	31,958	29,572
214	0	Prepayments received on account from customers		3,659	214
3,698	4,047	Income tax payable	11	4,046	3,698
232	962	Provisions	27	962	232
19,453	25,026	Other payables	28	27,964	19,453
53,169	76,688	Current liabilities		108,573	53,169
67,520	195,148	Total liabilities		254,629	67,520
216,847	392,791	Equity and liabilities		503,875	216,847
		Operating lease liabilities	31
		Charges, warranty commitments and contingent liabilities	32–33
		Notes without reference	34–42

STATEMENT OF CHANGES IN EQUI T Y FOR 2008 GROUP

DKK '000	Share capital	Transla tion reserves	Reserve for fair value adjustment of available for-sale financial assets	Reserve for share based payments	Reserve for market value adjustment of hedging instruments	Retained earnings	Total equity
Equity as at 01.01.07	98,288	0	1,026	686	17	11,062	111,079
Change in accounting policy for fair value
adjustment of subsidiary, see note 1	0	0	(1,026)	0	0	1,026	0
Adjusted equity as at 01.01.07	98,288	0	0	686	17	12,088	111,079
Fair value adjustment of financial instruments
used to hedge future cash flows	0	0	0	0	(17)	0	(17)
Net income recognised directly in equity	0	0	0	0	(17)	0	(17)
Profit for the year	0	0	0	0	0	34,867	34,867
Total recognised income and expenses	0	0	0	0	(17)	35,867	34,850
Share-based payment, see note 7	0	0	0	783	0	0	783
Share-based payment, exercised share
warrants, see note 7	0	0	0	(358)	0	358	0
Employee share plan, see note 7	0	0	0	0	0	1,042	1,042
Cash capital increase	1,418	0	0	0	0	0	1,418
Share premium on capital increase	0	0	0	0	0	155	155
Equity as at 31.12.07	99,706	0	0	1,111	0	48,510	149,327
Equity as at 01.01.08	99,706	0	0	1,111	0	48,510	149,327
Foreign exchange adjustment relating
to foreign companies	0	(17,706)	0	0	0	0	(17,706)
Net income recognised directly in equity	0	(17,706)	0	0	0	0	(17,706)
Profit for the year	0	0	0	0	0	46,044	46,044
Total recognised income and expenses	0	(17,706)	0	0	0	46,044	28,338
Share-based payment, see note 7	0	0	0	691	0	0	691
Share-based payment, exercised share
warrants, see note 7	0	0	0	(394)	0	394	0
Share-based payment, lapsed share warrants,
see note 7	0	0	0	(564)	0	0	(564)
Cash capital increase	1,142	0	0	0	0	0	1,142
Share premium on capital increase	0	0	0	0	0	115	115
Equity attributable to parent company
shareholders as at 31.12.08	100,848	(17,706)	0	844	0	95,063	179,049
Addition from acquisitions, see note 30	0	0	0	0	0	79,556	79,556
Foreign exchange adjustments, acquisitions	0	0	0	0	0	(9,180)	(9,180)
Profit for the year	0	0	0	0	0	(179)	(179)
Equity as at 31.12.08 attributable to
minority interests	0	0	0	0	0	70,197	70,197
Equity as at 31.12.08	100,848	(17,706)	0	844	0	165,260	249,246

PARENT COMPANY

		Reserve for fair value adjustment of available for-sale financial	Reserve for share-based	Reserve for market value adjustment of hedging	Retained
DKK '000	Share capital	assets	payments	instruments	earnings	Total equity
Equity as at 01.01.07	98,288	1,026	686	17	11,062	111,079
Change in accounting policy for fair value adjust
ment of subsidiary, see note 1	0	(1,026)	0	0	1,026	0
Adjusted equity as at 01.01.07	98,288	0	686	17	12,088	111,079
Fair value adjustment of financial instruments used
to hedge future cash flows	0	0	0	(17)	0	(17)
Net income recognised directly in equity	0	0	0	(17)	0	(17)
Profit for the year	0	0	0	0	34,867	34,867
Total recognised income and expenses	0	0	0	(17)	34,867	34,850
Share-based payment, see note 7	0	0	783	0	0	783
Share-based payment, exercised share warrants,
see note 7	0	0	(358)	0	358	0
Employee share plan, see note 7	0	0	0	0	1,042	1,042
Cash capital increase	1,418	0	0	0	0	1,418
Share premium on capital increase	0	0	0	0	155	155
Equity as at 31.12.07	99,706	0	1,111	0	48,510	149,327
Equity as at 01.01.08	99,706	0	1,111	0	48,510	149,327
Profit for the year	0	0	0	0	46,932	46,932
Total recognised income and expenses	0	0	0	0	46,932	46,932
Share-based payment, see note 7	0	0	691	0	0	691
Share-based payment, exercised share warrants,
see note 7	0	0	(394)	0	394	0
Share-based payment, lapsed share warrants, see
note 7	0	0	(564)	0	0	(564)
Cash capital increase	1,142	0	0	0	0	1,142
Share premium on capital increase	0	0	0	0	115	115
Equity as at 31.12.08	100,848	0	844	0	95,951	197,643

CASH FLOW STATEMENT FOR 2008

	Parent company	Group
2007	2008		2008	2007
		DKK '000 Note
52,093	62,811 Operating profit (EBIT)		64,154	52,093
5,827	6,058	Depreciation, amortisation and impairment	8,071	5,827
0	0	Foreign exchange adjustment of results of subsidiary	84	0
783	127	Share-based payment recognised in the income statement	127	783
1,042	0	Employee share plan recognised in the income statement	0	1,042
		Fair value adjustment of hedging instruments recognised
(17)	0	in the income statement	0	(17)
(26,561)	(34,697)	Change in net working capital 29	(49,347)	(26,561)
33,167	34,299	Cash flows from operating activities	23,089	33,167
0	(14,698)	Income tax paid	(15,356)	0
3,566	5,830	Financial income received	6,167	3,566
(851)	(5,178)	Financial expenses paid	(8,105)	(851)
35,882	20,253	Cash flows from operating activities	(5,795)	35,882
(401)	(1,082)	Acquisition etc. of intangible assets	(1,082)	(401)
(7,372)	(7,656)	Acquisition etc. of property, plant and equipment	(8,058)	(7,372)
0	(153,725)	Company acquisition	(76,461)	0
(7,773)	(162,463)	Cash flows from investing activities	(85,601)	(7,773)
0	127,488	New loan raised	132,848	0
(8,294)	0	Other repayments to credit institutions	0	(8,294)
1,573	1,257	Proceeds from the issue of shares, net	1,257	1,573
(6,128)	0	Repayment of lease liability	0	(6,128)
0	(14,901)	Paid-up deposit	(14,901)	0
(12,849)	113,844	Cash flows from financing activities	119,204	(12,849)
15,260	(28,366)	Cash flows for the year	39,398	15,260
24,844	37,770	Cash and cash equivalents at 1 January	37,770	24,844
(2,334)	0	Market value adjustment of cash and cash equivalents	(9,014)	(2,334)
37,770	9,404	Cash and cash equivalents at 31 December 21	68,154	37,770

LIST OF NOTES

• 1. Accounting policies
• 1. Significant accounting estimates, assumptions and uncertainties
• 1. Segment information
• 1. Revenue
• 1. Staff costs
• 1. Pension plans
• 1. Share-based payment
• 1. Depreciation, amortisation and impairment
• 1. Financial income
• 1. Financial expenses
• 1. Tax on the profit for the year and deferred tax
• 1. Earnings per share
• 1. Intangible assets
• 1. Research and development costs
• 1. Property, plant and equipment
• 1. Investments in subsidiaries
• 1. Other non-current receivables
• 1. Inventories
• 1. Trade receivables
• 1. Other receivables
• 1. Cash and cash equivalents
• 1. Share capital
• 1. Other reserves
• 1. Other credit institutions and bank debt
• 1. Finance lease liabilities
• 1. Trade creditors
• 1. Provisions
• 1. Other payables
• 1. Change in net working capital
• 1. Company acquisition
• 1. Operating lease liabilities
• 1. Charges
• 1. Warranty commitments and contingent liabilities
• 1. Other contractual commitments
• 1. Financial risks and financial instruments
• 1. Fee for auditors appointed by the general meeting
• 1. Related parties
• 1. Related party transactions
• 1. Shareholder information
• 1. Board of Directors and Management
• 1. Events after the balance sheet date
• 1. Approval of the annual report for publication

Accounting policies 1.

The annual report of Topsil Semiconductor Materials A/S for 2008, comprising the financial statements of the parent company and the consolidated financial statements, is presented in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies in reporting class D, pursuant to the Danish Statutory Order on Adoption of IFRS issued in accordance with the Danish Financial Statements Act and the Rules and Regulations of NASDAQ OMX Nordic Exchange Copenhagen.

The annual report also complies with IFRSs issued by the International Accounting Standard Board (IASB).

The annual report is presented in Danish kroner (DKK), which is the presentation currency of the group and the functional currency of the parent company.

The annual report is based on the historical cost principle, with the exception of certain financial instruments which are measured at fair value.

The accounting policies have been changed from last year in the following area:

• Investments in subsidiaries.

Previously, investments in subsidiaries were initially recognised at fair value. In 2008, the accounting policy was changed so that investments in subsidiaries are measured at cost. The changed accounting policy does not affect the comparative figures for 2007. Consolidated comparative figures for 2007 are identical to the figures for the parent company for 2007.

Otherwise, the accounting policies are consistent with last year's, as described in the following.

Implementation of new and changed Standards and Interpretations

The annual report for 2008 is presented in accordance with the new and amended Standards (IFRS/IAS) and the new Interpretations (IFRIC) that apply to financial years beginning on or after 1 January 2008. These Standards and Interpretations are:

• Revised IFRS 39, Financial Instruments: Recognition and Measurement (amended 2008)
• IFRIC 11, IFRS 2 Group and Treasury Share Transactions
• IFRIC 12, Service Concession Arrangements
• IFRIC 14, The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The implementation of the new and amended Standards and Interpretations in the annual report for 2008 has not resulted in changes to accounting policies.

Standards and Interpretations that have not yet come into force

At the time of publishing the present annual report, the following new or amended Standards and Interpretations have not yet taken effect and therefore have not been incorporated into the present annual report:

• Amended IFRS 2, Share-based Payment (2008). The standard takes effect for financial years beginning on or after 1 January 2009. The standard has not yet been adopted for use in the EU.
• Amended IFRS 3, Business Combinations (2008). The standard takes effect for financial years beginning on or after 1 July 2009. The standard has not yet been adopted for use in the EU.
• IFRS 8, Operating Segments (2006). The standard takes effect for financial years beginning on or after 1 January 2009.
• Amended IAS 1, Presentation of Financial Statements (2007). The amended standard takes effect for financial years beginning on or after 1 January 2009. The standard has not yet been adopted for use in the EU.
• Amended IAS 23, Borrowing Costs (2007). The amended standard takes effect for financial years beginning on or after 1 January 2009. The standard has not yet been adopted for use in the EU.
• Amended IAS 27, Consolidated and Separate Financial Statements (2008). The amended standard takes effect for financial years beginning on or after 1 July 2009. The standard has not yet been adopted for use in the EU.
• Amended IAS 27, Consolidated and Separate Financial Statements (2008). The amended standard takes effect for financial years beginning on or after 1 January 2009. The standard has not yet been adopted for use in the EU.
• Amended IFRS 39, Financial Instruments: Recognition and Measurement (2008). The amended standard takes effect for financial years beginning on or after 1 July 2009. The standard has not yet been adopted for use in the EU.
• Minor amendments of various standards as a result of the IASB's annual improvement process (2008). Most of the amendments take effect for financial years beginning on or after 1 January 2009. The amendments have not yet been adopted for use in the EU.
• IFRIC 13, Customer Loyalty Programmes (2007). The interpretation comes into force for financial years beginning on or after 1 July 2008. The interpretation has not yet been adopted for use in the EU.
• IFRIC 15, Agreements for the Construction of Real Estate (2008). The interpretation comes into force for financial years beginning on or after 1 January 2009. The interpretation has not yet been adopted for use in the EU.
• IFRIC 16, Hedges of a Net Investment in a Foreign Operation (2008). The interpretation comes into force for financial years beginning on or after 1 October 2008. The interpretation has not yet been adopted for use in the EU.
• IFRIC 17, Distributions of Non-Cash Assets to Owners (2008). The interpretation comes into force for financial years beginning on or after 1 July 2009. The interpretation has not yet been adopted for use in the EU.
• IFRIC 18, Transfers of Assets from Customers (2009). The

interpretation comes into force for financial years beginning on or after 1 July 2009. The interpretation has not yet been adopted for use in the EU.

The implementation of the amended IAS 23, Borrowing Costs, will mean that as from the financial year 2009 the group must include borrowing costs in the cost of qualifying assets in the form of intangible assets and property, plant and equipment as well as inventories with long production periods. Previously, the group has not included borrowing costs in the cost of property, plant and equipment and intangible assets.

The implementation of the amended IFRS 3, Business Combinations, will mean that, as from the financial year 2010, the group must recognise acquisition costs and changes to contingent consideration on company acquisitions directly in the income statement. The implementation may also entail a change to the accounting policies regarding recognition of goodwill attributable to the minority interests' share of acquired companies and step acquisitions of companies and partial disposals of investments in subsidiaries, respectively.

The Board of Directors and Management believe that the application of these other new and amended standards and interpretations will not have any material impact on the annual reports for the coming financial years.

Consolidated financial statements

The consolidated financial statements consolidate the financial statements of the parent company, Topsil Semiconductor Materials A/S, and subsidiaries in which the parent company directly or indirectly holds more than 50% of the voting rights. Topsil Inc. was without activity during the financial year and was, according to plan, solvently liquidated in 2008. Accordingly, the company is not included in the consolidated accounts.

Basis of consolidation

The consolidated financial statements are prepared on the basis of the financial statements of the parent company and those of the subsidiaries which are all prepared in accordance with the group's accounting policies.

On consolidation, items of the same nature are aggregated and intra-group income and expenses, intra-group balances and shareholdings are eliminated. Unrealised gains and losses on transactions between consolidated companies are also eliminated.

The items of the financial statements of subsidiaries are fully consolidated in the consolidated financial statements. The minority interests' proportionate share of the profit is included in the consolidated profit for the year and as a separate item under the consolidated equity.

Business combinations

Newly acquired companies are recognised in the consolidated financial statements from the date of acquisition. The date of acquisition is the date when control of the company actually passes to the group.

Acquisitions are accounted for using the purchase method, under which the identifiable assets, liabilities and contingent liabilities of companies acquired are measured at fair value at the date of acquisition. However, non-current assets held for sale are measured at fair value less expected costs to sell.

Restructuring costs are only recognised in the take-over balance sheet if they represent a liability to the acquired company. The tax effect of revaluations is taken into account. The cost of a company is the fair value of the consideration paid plus costs directly attributable to the business combination. If the final determination of the consideration is conditional on one or more future events, such adjustments are only recognised in cost if the event in question is likely to occur and its effect on cost can be reliably measured.

Any excess of the cost of an acquired company over the fair value of the acquired assets, liabilities and contingent liabilities (goodwill) is recognised as an asset under intangible assets and tested at least annually for impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is written down to the lower recoverable amount.

In case of negative differences (negative goodwill), the calculated fair values and the calculated cost of the company are resessed. If the fair value of the acquired assets, liabilities and contingent liabilities still exceeds cost following the reassessment, the difference is recognised as income in the income statement.

Foreign currency translation

On initial recognition, transactions denominated in currencies other than the individual company's functional currency are translated at the exchange rate ruling at the transaction date. Receivables, payables and other monetary items denominated in foreign currencies that have not been settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange differences between the exchange rate at the date of the transaction and the exchange rate at the date of payment or the balance sheet date, respectively, are recognised in the income statement under financial items.

Property, plant and equipment and intangible assets, inventories and other non-monetary assets acquired in foreign currency and measured based on historical cost are translated at the exchange rates at the transaction date.

On recognition in the consolidated financial statements of subsidiaries whose financial statements are presented in a functional currency other than DKK, the income statements are translated at average exchange rates for the respective months, unless these deviate materially from the actual exchange rates at the transaction dates. In that case, the actual exchange rates are used. Balance sheet items are translated at the exchange rates at the balance sheet date. Goodwill is considered to belong to the acquired company in question and is translated at the exchange rate at the balance sheet date.

Exchange differences arising on the translation of foreign subsidiaries' opening balance sheet items to the exchange rates at the balance sheet date and on the translation of the income statements from average exchange rates to exchange rates at the balance sheet date are taken directly to equity. Similarly, exchange differences arising as a result of changes made directly in the equity of the foreign company are also taken directly to equity.

Foreign exchange adjustment of receivables from or debt to subsidiaries which are considered part of the parent company's overall investment in the subsidiary in question are also taken directly to equity in the consolidated financial statements, whereas they are recognised in the income statement of the parent company.

Derivative financial instruments

On initial recognition, derivate financial instruments are measured at fair value at the settlement date. Directly attributable costs related to the purchase or issuance of the individual financial instruments (transaction costs) are added to the fair value on initial recognition unless the financial asset or the financial liability is measured at fair value through profit or loss.

Subsequently, the derivative financial instruments are measured at fair value at the balance sheet date. Positive and negative fair values of derivative financial instruments are recognised under other receivables and other payables, respectively.

Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement together with any changes in the value of the hedged asset or hedged liability.

Changes in the fair value of derivative financial instruments designated as and qualifying for recognition as effective hedges of future transactions are recognised directly in equity. The ineffective part is recognised immediately in the income statement. When the hedged transactions are realised, the cumulative changes are recognised as part of the cost of the respective transactions.

Derivative financial instruments that do not qualify for hedge accounting are considered trading portfolios and are measured at fair value. Any fair value changes are recognised in the income statement under financial items as they occur.

Certain contracts include terms and conditions similar to those of derivative financial instruments. To the extent that the embedded derivative financial instruments differ significantly from the overall contract, they are recognised and measured as separate instruments at fair value, unless the contract in question in its entirety is recognised and measured at fair value.

Share-based incentive plans

Share-based incentive plans in which employees can only opt to buy shares in the parent company (equity-based plans) are measured at the equity instruments' fair value at the grant date and recognised in the income statement under staff costs over the vesting period. The balancing item is recognised directly in equity.

The fair value of the equity instruments is determined using Cox, Ross & Rubinstein's binomial tree with the parameters indicated in note 7 to the financial statements.

Employee shares granted and exercised during the financial year are recognised as an expense at an amount calculated as the difference between the market price and the exercise price at the grant date.

Tax

Income tax for the year comprises the current tax for the year and changes in deferred tax. The tax expense relating to the profit or loss for the year is recognised in the income statement, and the tax expense relating to changes directly recognised in equity is recognised directly in equity.

Current tax payable and receivable is recognised in the balance sheet as the tax charge on the taxable income for the year, adjusted for tax paid on account.

The current tax charge for the year is calculated based on the tax rates and rules applicable at the balance sheet date.

Deferred tax is measured using the tax rates and tax rules that, based on legislation in force or in reality in force at the balance sheet date, are expected to apply in the respective countries when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a result of changed tax rates or rules are recognised in the income statement, unless the deferred tax can be attributed to items previously recognised directly in equity. In the latter case, the change is also recognised directly in equity.

Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to the initial recognition of goodwill or the initial recognition of a transaction, apart from business combinations, and where the temporary difference existing at the date of initial recognition affects neither profit/loss for the year nor taxable income.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, unless the parent company is able to control when the deferred tax is to be realised and it is likely that the deferred tax will not crystallise as current tax within the foreseeable future.

Deferred tax is calculated based on the planned use of the individual asset and the settlement of the individual liability, respectively.

Deferred tax assets, including the tax value of tax loss carry-forwards, are recognised in the balance sheet at the value at which the asset is expected to be realised, either through a set-off against deferred tax liabilities or as net tax assets to be offset against future positive taxable income. At each balance sheet date, it is assessed whether it is likely that there will be sufficient future taxable income for the deferred tax asset to be utilised.

INCOME STATEMENT

Revenue

Revenue is recognised in the income statement once delivery has taken place and the risk has been transferred to the purchaser.

Revenue is measured as the fair value of the consideration received or receivable. If interest-free credit has been granted for payment of the outstanding consideration extending beyond the usual credit period, the fair value of the consideration is calculated by discounting future payments. The difference between the fair value and the nominal value of the consideration is recognised as financial income in the income statement over the extended credit period by using the effective interest method.

Revenue is calculated exclusive of VAT, taxes, discounts, etc. collected on behalf of third parties.

Costs of raw materials and consumables

Costs of raw materials and consumables comprise direct costs incurred in generating the revenue. Costs concerning development projects in the production environment that do not qualify for recognition in the balance sheet are also recognised in costs of raw materials and consumables.

Other operating income and operating costs

Other operating income and costs include items of a secondary nature relative to the main activity of the group, including gains and losses on sales of intangible assets and property, plant and equipment, if the selling price of the assets exceeds the original cost.

Other external expenses

Other external expenses include distribution, selling and advertising costs, administrative expenses, expenses for office premises, bad debts, etc.

Other external expenses also comprise costs of development projects that do not qualify for recognition in the balance sheet.

Government grants

Government grants are recognised when there is reasonable assurance that the conditions for the grant have been met and that the grant will be received.

Grants to cover expenses incurred are recognised in the income statement proportionally over the periods in which the associated expenses are recognised. The grants are set off against the expenses incurred.

Government grants associated with an asset are deducted from the cost of the asset.

Staff costs

Staff costs comprise wages and salaries and social security costs, pensions, share-based payment, etc. to the employees of the group.

Staff costs also comprise costs for development projects that do not qualify for recognition in the balance sheet.

Financial items

Financial items comprise interest income and expenses, the interest element of finance lease payments, realised and unrealised foreign exchange gains and losses as well as surcharges and allowances under the Tax Prepayment Scheme.

BALANCE SHEET Goodwill

On initial recognition, goodwill is measured and recognised as the excess of the cost of the acquired company over the fair value of the acquired assets, liabilities and contingent liabilities, as described under the consolidated financial statements.

On recognition of goodwill, the goodwill amount is allocated to those of the group's activities that generate separate cash flows (cash-generating units).

Goodwill is not amortised, but is tested for impairment at least once a year, as described below.

Intangible assets

Development projects concerning products and processes which are clearly defined and identifiable are recognised as intangible assets if it is probable that the product or the process will generate future economic benefits for the group and the development costs of the individual asset can be measured reliably.

Other development costs are recognised as costs in the income statement when incurred.

On initial recognition, development projects are measured at cost. The cost of development projects includes costs such as salaries and amortisation that are directly attributable to the development projects and are necessary to complete the project calculated from the date when the development project first qualifies for recognition as an asset.

Completed development projects are amortised on a straight-line basis over their expected useful lives. The amortisation period is usually five years, but may in certain cases be as long as 20 years if this longer amortisation period is deemed to be more representative of the group's use of the developed product, etc. Amortisation for the year is included in the income statement under 'Depreciation and amortisation".

Development projects are written down to their recoverable amount where this is lower than the carrying amount, as described below. Development projects in progress are tested for impairment at least once a year.

Other acquired intellectual property rights in the form of rights of use, patents and customer lists are measured at cost less accumulated amortisation and impairment. Other intellectual property rights are amortised on a straight-line basis over the remaining life of the patent. If the actual life of the patent is shorter than either the remaining term or the contract period, amortisation is provided over the shorter life of the patent.

Other intellectual property rights are written down to their recoverable amount where this is lower than the carrying amount, as described below.

Property, plant and equipment

Buildings, plant and machinery, operating equipment, fixtures and fittings are measured at cost less accumulated depreciation and impairment.

Cost comprises the purchase price and any costs directly attributable to the acquisition and any preparation costs incurred until the date when the asset is available for use. In the case of assets produced by the group itself, cost comprises costs that are directly attributable to the production of the asset including materials, components, sub-suppliers and wages. For assets held under finance leases, the cost is the lower of the fair value of the asset and the present value of the future lease payments.

Interest expenses on loans to finance the production of property, plant and equipment are not included in cost.

The depreciation base is cost less the residual value. The residual value is the amount expected to be obtainable in a sale of the asset, less costs to sell, if the asset already had the age and were in such condition as the asset is expected to be at the end of its useful life. The cost of a total asset is split into smaller parts that are depreciated separately if such components have different useful lives.

Straight-line depreciation is provided based on the estimated useful lives of the assets as follows:

Buildings 20 years
Plant and machinery10–20 years
Other fixtures and fittings, tools and equipment 3–6 years

Depreciation methods, useful lives and residual values are reassessed annually.

Property, plant and equipment are written down to their recoverable amount if this is lower than the carrying amount, see below.

Impairment of property, plant and equipment, intangible assets and investments in subsidiaries

The carrying amounts of property, plant and equipment, intangible assets with determinable useful lives and investments in subsidiaries are tested at the balance sheet date to determine whether there are any indications of impairment. If this is the case, the recoverable amount of the asset is determined to establish if there is a need to recognise an impairment loss and the extent of such impairment loss. The recoverable amount of development projects in progress is tested annually regardless of whether any indication of impairment has been established.

If the asset does not generate any cash flows independently of other assets, the recoverable amount is calculated for the smallest cash-generating unit of which the asset forms part.

The recoverable amount is calculated as the higher of the fair value less costs to sell and the value in use of the asset or the cash-generating unit, respectively. In determining the value in use, the estimated future cash flows are discounted to their present value, using a discount rate reflecting current

NOTES

market assessments of the time value of money as well as risks that are specific to the asset or the cash-generating unit and which have not been taken into account in the estimated future cash flows.

If the recoverable amount of the asset or the cash-generating unit is lower than the carrying amount, the carrying amount is written down to the recoverable amount. For cashgenerating units, the impairment loss is allocated within the unit, although individual assets are not written down to a lower value than their fair value less expected costs to sell.

Impairment losses are recognised in the income statement. If write-downs are subsequently reversed as a result of changes in the assumptions on which the calculation of recoverable amount is based, the carrying amount of the asset or the cash-generating unit is increased to the adjusted recoverable amount, not exceeding the carrying amount that the asset or cash-generating unit would have had, had the write-down not been made. Impairment of goodwill is not reversed.

Investments in subsidiaries

On initial recognition, investments in subsidiaries are measured at cost plus transaction costs. Where the recoverable amount of the investments is lower than cost, the investments are written down to this lower value. Cost is also written down if the dividend distributed exceeds the accumulated earnings in the company since the parent company's acquisition of the investments.

Inventories

Inventories are measured at the lower of cost according to the FIFO method and net realisable value.

The cost of raw materials and consumables comprises the purchase price plus delivery costs. The cost of manufactured goods and work in progress comprises the cost of raw materials, consumables and direct labour as well as allocated fixed and variable indirect production costs.

Variable indirect production costs comprise indirect materials and wages and are allocated based on preliminary calculations of the goods actually produced. Fixed indirect production costs comprise maintenance costs and depreciation and impairment of the machinery and equipment used in the production process as well as general factory administration and management expenses. Fixed production costs are allocated on the basis of the normal capacity of the production plant.

The net realisable value of inventories is calculated as the expected selling price less costs of completion and costs incurred to make the sale.

Receivables

Receivables comprise deposits in connection with goods purchased and goods sold, trade receivables, long-term deposits and other receivables. Receivables are included in the category loans and receivables, which are financial assets with fixed or determinable payments that are not listed on an active market and are not derivative financial instruments.

Receivables are measured at fair value on initial recognition and subsequently at amortised cost, which usually corresponds to the nominal value less provision for bad debts. Impairment loses are assessed individually.

Prepayments

Prepayments comprise costs incurred relating to subsequent financial years. Prepayments are measured at cost.

Pension liabilities etc.

The group has entered into defined contribution plans and similar plans with a substantial part of the group's employees.

In respect of defined contribution plans, the group currently makes fixed contributions to independent pension funds etc. The contributions are recognised in the income statement during the period in which the employee renders the related service. Amounts due are recognised in the balance sheet as a liability.

Provisions

Provisions are recognised when the group has a legal or constructive obligation as a consequence of past events during the financial year or prior years, and when it is likely that settlement of the obligation will require an outflow of the group's financial resources. Warranty commitments cover commitments to repair faulty or defective products sold within the warranty period.

Provisions are measured as the best estimate of the costs required to settle the liabilities at the balance sheet date. Provisions with an expected term of more than a year after the balance sheet date are measured at present value.

Lease liabilities

Lease liabilities concerning assets held under finance leases are recognised in the balance sheet as liabilities and measured at the inception of the lease at the lower of the fair value of the leased asset and the present value of future lease payments.

On subsequent recognition, lease liabilities are measured at amortised cost. The difference between the present value and the nominal value of the lease payments is recognised in the income statement over the term of the lease as a financial expense.

Lease payments concerning operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

Other financial liabilities

Other financial liabilities comprise bank loans, trade creditors and other amounts owed to public authorities. On initial recognition, other financial liabilities are measured at fair value less transaction costs. In subsequent periods, financial liabilities are measured at amortised cost, applying the effective interest method, to the effect that the difference between the proceeds and the nominal value is recognised in the income statement as financial expenses over the term of the loan.

CASH FLOW STATEMENT

The consolidated cash flow statement is presented according to the indirect method and shows cash flows from operating, investing and financing activities as well as cash and cash equivalents at the beginning and the end of the year.

The cash effect of acquisitions and divestments of companies is shown separately under cash flows from investing activities. In the cash flow statement, cash flows relating to acquired companies are recognised from the date of acquisition, while cash flows relating to divested companies are recognised up until the date of divestment.

Cash flows from operating activities are stated as operating profit, adjusted for non-cash operating items and changes in working capital and financial income and expenses, less the income tax paid during the year attributable to operating activities.

Cash flows from investing activities comprise payments related to the purchase and sale of financial assets, including deposits and non-current prepayments for goods, subsidiaries as well as the purchase, development, improvement, sale, etc. of intangible assets and property, plant and equipment.

Cash flows from financing activities comprise changes in the size or the composition of the parent company's share capital and related costs as well as the raising and repayment of loans, instalments on interest-bearing debt, acquisition of treasury shares and payment of dividends. Furthermore, cash flows regarding assets held under finance leases in the form of lease payments made are recognised.

Cash and cash equivalents comprise cash less bank overdrafts that are an integral part of the cash management.

Segment information

The group's sole segment is the "production and sale of silicon ingots and wafers".

Key figures and ratios

The financial ratios have been defined and calculated in accordance with "Recommendations and Financial Ratios 2005" issued by the Danish Association of Financial Analysts.

Financial ratios Formula

Profit margin EBIT

Revenue

Return on invested capital EBITA incl. goodwill (%) Average invested capital

Return on equity (%) Profit for the year after tax Average equity

Financial gearing Net interest-bearing debt Total equity

The calculations of basic and diluted earnings per share are specified in note 12.

EBITA (Earnings Before Interest, Tax and Amortisation) is defined as the operating profit (EBIT) plus amortisation and impairment of goodwill for the year.

Net working capital (NWC) is defined as the value of inventories, receivables and other operating assets less trade creditors and other short-term operating liabilities. Cash and cash

Significant accounting estimates, assumptions and uncertainties 2.

Many financial statement items cannot be measured reliably, but must be estimated. Such estimates comprise judgments made on the basis of the most recent information available at the reporting date. It may be necessary to change previous estimates as a result of changes to the assumptions on which the estimates were based or due to supplementary information, additional experience or subsequent events.

In applying the accounting policies described, the Board of Directors and Management have exercised the following critical accounting judgements that significantly affect the annual report:

• The value of assets and liabilities often depends on future events that are somewhat uncertain. In that connection, it is necessary to assume e.g. a course of events that reflects equivalents and deferred tax are not included in net working capital. Net interest-bearing debt is defined as interest-bearing liabilities less interest-bearing assets including cash and cash equivalents.

Capital employed is defined as the net working capital plus the carrying amount of property, plant and equipment and intangible assets and less other provisions and non-current operating liabilities.

the Board of Directors' and Management's assessment of the most probable course of events. The recognition and measurement of certain assets and liabilities, including the measurement of development projects, goodwill, rights of use, inventories, trade receivables and provisions, involve estimates and judgments subject to these conditions.

• In connection with the acquisition of foreign subsidiaries, when calculating the fair value of the acquired identifiable assets and liabilities, a number of estimates and judgments were made based on external valuation reports and the Board of Directors' and Management's industry knowledge.
• Although the group trades extensively with customers and suppliers in foreign currencies, the functional currency of the parent company is still deemed to be Danish kroner based on IAS 21.9–12.

Segment information 3.

The acquisition of Cemat Silicon S.A. etc. has not given rise to any change to the group's segments.

Primary segment

The group's primary segment is the "production and sale of silicon ingots and wafers".

Secondary segment

The parent company's and the group's sale of goods broken down by geographical markets:

Parent company		Geographical segments	Group
2007	2008	DKK '000	2008	2007
115,400	186,310	Europe	195,162	115,400
26,627	27,961	USA	32,569	26,627
51,204	47,387	Asia	61,671	51,204
193,231 261,658		Total	289,402	193,231

The group's assets are located in Europe.

Revenue 4.

The majority of the group's revenue derives from the sale of goods, whereas a less significant part derives from rent.

Staff costs 5.

	Parent company		Group
2007	2008	DKK '000	2008	2007
723	750	Directors' fees	750	723
29,484	38,020	Salaries and wages	41,499	29,484
1,188	2,240	Bonuses for managerial employees	2,240	1,188
1,527	1,875	Bonuses for Management	1,875	1,527
783	127	Share-based payment	127	783
1,042	0	Employee share plan	0	1,042
2,277	2,861	Pension contributions, defined contribution plan	2,861	2,277
315	399	Other social security costs	1,747	315
37,339	46,272		51,099	37,339
73	87	Average number of full-time employees	140	73

With respect to the employees of the parent company, the calculation of average number of full-time employees is based on pension premiums. With respect to the employees of subsidiaries, the calculation is based on the number of employees and the number of months of the year during which the subsidiary was owned by the group.

Group and parent company Remuneration of Board of Directors		Board of Directors Management			Other managerial employees
and Management	2008	2007	2008	2007	2008	2007
Directors' fees	750	723	0	0	0	0
Salaries and wages	0	0	2,784	2,375	6,326	3,022
Bonuses for managerial employees	0	0	0	0	2,240	1,188
Bonuses for Management	0	0	1,875	1,527	0	0
Pension contributions	0	0	249	234	535	306
Share-based payment	0	0	66	458	61	325
	750	723	4,974	4,594	9,162	4,841

Management and other managerial employees are covered by special bonus schemes subject to individually agreed performance targets. Under the current bonus scheme, 2% of the profit on ordinary activities before tax is paid to the CEO, 1% to the VP Logistics, Sales and Marketing and 0.5% to other managerial employees.

The chairman of the Board receives a fee of DKK 200 thousand, the vice-chairman a fee of DKK 150 thousand and other members of the Board a fee of DKK 100 thousand.

Pension plans 6.

The group has solely entered into defined contribution plans.

Parent company		Group
2007	2008	DKK '000	2008	2007
2,277	2,861	Contributions to defined contribution plans	2,861	2,277
2,277	2,861		2,861	2,277

Under defined contribution plans, the employer pays regular contributions to an independent pension company, pension fund or the like, but has no risk in relation to the future development of interest rates, inflation, mortality, disability, etc. in so far as the amount that will eventually be paid to the employee is concerned.

Share-based payment 7.

Management and a number of managerial employees were granted warrants to subscribe for shares in the group at a fixed strike price. The warrant plan is an equity-based share-based payment scheme. The value of the warrants is recognised in the income statement under staff costs on a straight-line basis from the grant date up to the vesting date, which means that at the exercise date no further recognition is made in the income statement.

Specification of outstanding warrants (parent company and group)

	No. of warrants held, thousands	Weighted average exercise prices, DKK
Warrants granted at 01.01.07	15,000	0.28
Granted during the financial year	2,011	1.93
Forfeited due to termination of employment	(862)	0.28
Exercised during the financial year	(5,000)	0.28
Lapsed during the financial year	0	0
Warrants granted at 31.12.07	11,149	0.57
Warrants granted at 01.01.08	11,149	0.57
Granted during the financial year	0	0
Forfeited due to termination of employment	(790)	1.98
Exercised during the financial year	(4,569)	0.28
Lapsed during the financial year	(359)	1.91
Warrants granted at 31.12.08	5,431	0.53

	2008	2007
Number of exercisable warrants at year end	0	0
Number of exercisable warrants at the release of the full-year profit announcement (thousands)	5,431	5,287
Total fair value of outstanding warrants (DKK '000)	2,755	10,677
Fair value per warrant	0.51	0.96
Weighted average strike price per warrant	0.53	0.57

In 2008, the fair value of warrants was recognised at DKK 127 thousand, against DKK 783 thousand in 2007.

The grant year, strike price and exercise period for the individual grants are as follows:

Year of grant	Strike price (*)	Exercise period (**)	Granted	Lapsed	Not exercised	Exercised	Yet to be exercised
2006	0.28	2008	5,000,000	430,939	0	4,569,061	0
2006	0.28	2009	5,000,000	430,936		0	4,569,064
2007	1.98	2009	1,436,456	790,051	215,468	0	430,937
2007	1.80	2009	574,582	0	143,645	0	430,937

(*) The strike price is stated exclusive of deductions for future distribution of dividends and calculated as an average price. (**) The warrants may be exercised during a six-week period after the release of the full-year profit announcement.

The calculated fair values at the grant date are based on Cox, Ross & Rubinstein's binomial tree for valuation of the warrants. The CEO's exercise price has been changed from 0.26 to 0.27 to ensure that the terms of contract meet the requirements of

section 7H of the Danish Tax Assessment Act.

The assumptions applied in determining the fair value at the grant date of warrants granted during the year are as follows: No warrants were granted to managerial employees during the year. The most recent grant was made in 2007.

thousands	Granted in 2008	Granted in 2007
Average share price	0	1.93
Strike price	0	1.93
Expected volatility	0	51.8%
Expected term	0	1–2 years
Expected dividend per share	0	0
Risk-free interest rate	0	4.9%
Warrants granted (thousands*)	0	2,011
Fair value per warrant	0	0.14
Total fair value (DKK '000)	0	238

* excluding warrants granted in connection with the share issue.

The expected volatility is based on the historical volatility (calculated over the past year) adjusted for expected changes as a result of publicly available information.

Warrants that have not been exercised are forfeited if the owner terminates his/her employment. In the event of changes in the group's capital structure resulting in a dilution of the value of the warrants, the employees are entitled to subscribe for a further number of warrants corresponding to the ratio between the group's share capital before and after the change in its capital structure. In the event of changes in the control of the group, the employee will be entitled to exercise all his/her warrants, which exercise is to take place during the first coming exercise period. If the warrants are not exercised during the first coming exercise period, the unexercised warrants will lapse.

In 2008, the following changes occurred in the number of warrants held by Management and the Board of Directors:

Number of warrants	Held 01.01.08	Exercised 28.02.08	Lapsed 2008	Held 31.12.08
Keld Lindegaard Andersen, CEO	3,931,500	1,965,750	0	1,965,750
Jørgen Bødker, VP Logistics, Sales and Marketing	2,621,000	1,310,500	0	1,310,500
Leif Jensen, Board Member	861,875	430,937	0	430,938
Hans P. Mikkelsen, Procurement and Quality Manager	861,875	430,937	0	430,938
Theis Leth Sveigaard, Expansion Projects & Facilities Manager	861,875	430,937	0	430,938
Jens Peter Faldt, Production Manager*	790,051	0	790,051	0
Thomas Clausen, R&D Manager	646,405	0	215,468	430,937
Jens Christian Nielsen, CFO	574,582	0	143,645	430,937

Total 11,149,163 4,569,061 1,149,164 5,430,938

* Resigned 31 July 2008

The remaining warrants may be exercised during a period of up to six weeks following publication of the full-year profit announcement on 24 March 2009.

No employee shares were granted during the year. Employee shares were granted and exercised in 2007. The amount was recognised as an expense at an amount calculated as the difference between the market price and the exercise price at the grant date.

Employee share plan

thousands	Granted in 2008	Granted in 2007
Shares granted to employees	0	673
Strike price	0	0.25
DKK '000
Expensed bonus element, share price	0	1,042

Depreciation, amortisation and impairment 8.

Parent company			Group
	2007	2008	DKK '000	2008	2007
	3,024	2,407	Amortisation, intangible assets	2,462	3,024
	2,803	3,651	Depreciation, property, plant and equipment	5,609	2,803
	5,827	6,058		8,071	5,827

Financial income 9.

Parent company				Group
	2007	2008	DKK '000	2008	2007
	3,566	3,825	Interest on bank deposits, etc.	4,162	3,566
	0	2,005	Foreign exchange adjustments	2,005	0
	3,566	5,830		6,167	3,566

10. Financial expenses

Parent company			Group
2007	2008	DKK '000	2008	2007
362	2,488	Interest on mortgages and bank loans	2,488	362
0	149	Other interest	404	0
489	2,690	Fees, warranties, etc.	2,690	489
6,731	0	Foreign exchange adjustments	2,670	6,731
7,582	5,327		8,252	7,582

Tax on the profit for the year and deferred tax (group) 11.

Current tax for the financial year was calculated at a tax rate of 25% for the years 2008 and 2007.

DKK '000	2008		2007
Current tax	(15, 430)		(3,698)
Change in deferred tax	(774)		(8,735)
Effect of change in income tax rate (from 28% to 25%)	-		(777)
	(16,204)		(13,210)
Tax on the profit for the year is specified as follows:
Profit before tax	62,069		48,077
Tax at a rate of 25%	(15,517)	(25.0%)	(12,019)	(25.0%)
Effect of changed tax rate			(777)	(1.6%)
Effect of changed tax rate in foreign companies	(75)	(0.1%)	-	-
Tax base of non-deductible expenses	(108)	(0.2%)	(414)	(0.9%)
Adjustment relating to deferred tax relating to prior years	(467)	(0.8%)
Value adjustment in respect of tax asset, etc.	(37)	(0.1%)	-	-
Effective tax rate for the year	(16,204)	(26.2%)	(13,210)	(27.5%)

DKK '000	Deferred tax 01.01.07	Recognised in income statement 2007	Foreign exchange adjustments 2007	Acquisition/ disposal of company 2007	Deferred tax 31.12.07
Intangible assets	(4,053)	632	0	0	(3,421)
Property, plant and equipment	3,506	(2,238)	0	0	1,268
Inventories	(665)	(341)	0	0	(1,006)
Other payables	141	290	0	0	431
Temporary differences	(1,071)	(1,657)	0	0	(2,728)
Tax loss carry-forwards	8,322	(7,855)	0	0	467
Unused tax losses	8,322	(7,855)	0	0	467
	7,251	(9,512)	0	0	(2,261)

11. Tax on the profit for the year and deferred tax (group) (continued)

DKK '000	Deferred tax 01.01.08	Recognised in income statement 2008	Foreign exchange adjustments 2008	Acquisition/ disposal of company 2008	Deferred tax 31.12.08
Intangible assets	(3,421)	115	414	(3,581)	(6,473)
Property, plant and equipment	1,268	(1,043)	1,447	(12,598)	(10,926)
Inventories	(1,006)	78	129	(1,256)	(2,055)
Trade receivables	0	86	16	(184)	(82)
Other provisions	431	583	(230)	1,779	2,563
Temporary differences	(2,728)	(181)	1,776	(15,840)	(16,973)
Tax loss carry-forwards	467	(467)	0	0	0
Unused tax losses	467	(467)	0	0	0
	(2,261)	(648)	1,776	(15,840)	(16,973)

Tax on the profit for the year and deferred tax (parent company)

DKK '000	2008		2007
Current tax	(14,898)		(3,698)
Change in deferred tax	(1,484)		(8,735)
Effect of change in income tax rate (from 28% to 25%)	-		(777)
	(16,382)		(13,210)
Tax on the profit for the year is specified as follows:
Profit before tax	63,314		48,077
Tax at a rate of 25% (2006: 28%)	(15,829)	(25.0%)	(12,019)	(25.0%)
Effect of changed tax rate	-	-	(777)	(1.6%)
Tax base of non-deductible expenses	(86)	(0.1%)	(414)	(0.9%)
Adjustment of deferred tax relating to prior years	(467)	(3.0%)	-	-
Effective tax rate for the year	(16,382)	(28.1%)	(13,210)	(27.5%)

DKK '000	Deferred tax as at 01.01.07	Recognised in income statement 2007	Deferred tax 31.12.07
Intangible assets	(4,053)	632	(3,421)
Property, plant and equipment	3,506	(2,238)	1,268
Inventories	(665)	(341)	(1,006)
Other payables	141	290	431
Temporary differences	(1,071)	(1,657)	(2,728)
Tax loss carry-forwards	8,322	(7,855)	467
Unused tax losses	8,322	(7,855)	467
	7,251	(9,512)	(2,261)

		Recognised in
DKK '000	Deferred tax 01.01.08	income statement 2008	Deferred tax 31.12.08
Intangible assets	(3,421)	115	(3,306)
Property, plant and equipment	1,268	(1,163)	105
Inventories	(1,006)	(171)	(1,177)
Trade receivables	0	0	0
Other payables	431	202	633
Temporary differences	(2,728)	(1,017)	(3,745)
Tax loss carry-forwards	467	(467)	0
	(2,261)	(1,484)	(3,745)

12. Earnings per share

Parent company			Group
2007	2008	DKK '000	2008	2007
0.09	0.12	Earnings per share	0.11	0.09
0.09	0.11	Diluted earnings per share	0.11	0.09

The calculation of earnings

Parent company		per share is based on the following:	Group
2007	2008	DKK '000	2008	2007
		Return for the group's shareholders used to calculate
34,867	46,932	earnings per share	46,044	34,867
		Earnings used in the calculation of diluted earnings
34,867	46,932	per share	46,044	34,867

Parent company

	Parent company		Group
2007	2008	thousands	2008	2007
398,294	403,011	Average number of shares issued	403,011	398,294
		Average number of shares used to calculate earnings
398,294	403,011	per share	403,011	398,294
11,149	5,431	Dilutive effect of outstanding subscription rights	5,431	11,149
		Average number of shares used to calculate earnings
409,443	408,442	per share	408,442	409,443

13. Intangible assets (group)

DKK '000	Right of use etc.	Goodwill	Other intangible assets	Completed develop ment projects	Develop ment projects in progress	Total
Cost at 01.01.07	0	0	56	32,014	1,240	33,310
Addition of assets developed in-house	0	0	0	0	3,429	3,429
Disposals	0	0	0	137	(137)	0
Reversal on disposals	0	0	0	0	(3,028)	(3,028)
Cost at 31.12.07	0	0	56	32,151	1,504	33,711
Amortisation and impairment at 01.01.07	0	0	(34)	(16,970)	0	(17,004)
Amortisation	0	0	(11)	(3,013)	0	(3,024)
Impairment	0	0	0	0	0	0
Reversal on disposals	0	0	0	0	0	0
Amortisation and impairment at
31.12.07	0	0	(45)	(19,983)	0	(20,028)
Carrying amount at 31.12.07	0	0	11	12,168	1,504	13,683

			Other	Completed develop	Develop ment
DKK '000	Right of use etc.	Goodwill	intangible assets	ment projects	projects in progress	Total
Cost at 01.01.08	0	0	56	32,151	1,504	33,711
Foreign exchange adjustments	(2,030)	(2,320)	(173)	0	0	(4,523)
Addition on company acquisitions	17,572	20,078	1,513	0	0	39,163
Addition of assets developed in-house	0	0	0	0	1,082	1,082
Disposals	0	0	0	1,948	(1,948)	0
Reversal on disposal	0	0	0	0	0	0
Cost at 31.12.08	15,542	17,758	1,396	34,099	638	69,433
Amortisation and impairment at 01.01.08	0	0	(45)	(19,983)	0	(20,028)
Foreign exchange adjustments	2	0	1	0	0	3
Amortisation	(34)	0	(35)	(2,396)	0	(2,465)
Impairment	0	0	0	0	0	0
Reversal on disposals	0	0	0	0	0	0
Amortisation and impairment at
31.12.08	(32)	0	(79)	(22,379)	0	(22,490)
Carrying amount at 31.12.08	15,510	17,758	1,317	11,720	638	46,943

Intangible assets (parent company)

DKK '000	Patents and licenses	Completed development projects	Development projects in progress	Total
Cost at 01.01.07	56	32,014	1,240	33,310
Addition of assets developed in-house	0	0	3,429	3,429
Disposals	0	137	(137)	0
Reversal on disposals	0	0	(3,028)	(3,028)
Cost at 31.12.07	56	32,151	1,504	33,711
Amortisation and impairment at 01.01.07	(34)	(16,970)	0	(17,004)
Amortisation	(11)	(3,013)	0	(3,024)
Impairment	0	0	0	0
Reversal on disposals	0	0	0	0
Amortisation and impairment at 31.12.07	(45)	(19,983)	0	(20,028)
Carrying amount at 31.12.07	11	12,168	1,504	13,683

	Patents and	Completed development	Development projects in
DKK '000 Cost at 01.01.08	licenses 56	projects 32,151	progress 1,504	Total 33,711
Addition of assets developed in-house	0	0	1,082	1,082
Disposals	0	1,948	(1,948)	0
Reversal on disposal	0	0	0	0
Cost at 31.12.08	56	34,099	638	34,793
Amortisation and impairment at 01.01.08	(45)	(19,983)	0	(20,028)
Amortisation	(11)	(2,396)	0	(2,407)
Impairment	0	0	0	0
Reversal on disposals	0	0	0	0
Amortisation and impairment at 31.12.08	(56)	(22,379)	0	(22,435)
Carrying amount at 31.12.08	0	11,720	638	12,358

The Board of Directors and Management consider all intangible assets apart from goodwill to have limited economic lives.

The recoverable amounts of individual cash-generating units on which the development costs are distributed are determined on the basis of calculations of the value in use of the units. The greatest uncertainties in that respect are associated with determining discount factors and growth rates as well as expected changes in selling prices and production costs during the budget and terminal periods.

The discount factors determined reflect the market valuations of the time value of money expressed by a risk-free interest rate and the specific risks associated with the individual cash-generating unit. The discount factors are determined on an aftertax basis.

The growth rates determined are based on industry forecasts.

The estimated changes in selling prices and production costs are based on historical experience as well as expectations as to future market changes.

The calculation of the value in use of the cash-generating units is based on the cash flows included in the most recent management-approved budgets for the coming financial years.

The group holds a patent, which is capitalised under patents and licences. This patent has a remaining term of 16 years.

The main activities in 2008 related to in-house development of processes for production of new variants of silicon crystals. In 2007, the cost of a LEAN project of DKK 2,869 thousand was recognised in the income statement under "work carried out for own account" and "other external expenses" as an expense of DKK 907 thousand and DKK 1,962 thousand.

Goodwill

Goodwill has arisen in connection with the acquisition of Cemat Silicon S.A. and its subsidiary. Goodwill is distributed at the acquisition date and allocated to the units expected to obtain the economic benefits from the business combination.

The acquisition of Cemat Silicon S.A. was completed in October 2008. Due to the deteriorating market situation within consumer electronics, the group decided to place wafering activities at Cemat Silicon S.A. earlier than planned. These are currently outsourced to external sub-suppliers. It was also necessary to adjust capacity at Cemat Silicon S.A. earlier than scheduled. It is therefore assessed that the business platform has remained intact and that no significant changes have occurred with respect to long-term expectations of the investment. In the future, impairment tests will be conducted annually on the basis of the budgets and business plans approved by Management and the Board of Directors and other assumptions. The annual impairment test is conducted at 31 December, and the initial test will be conducted at 31 December 2009.

14. Research and development costs

	Parent company		Group
2007	2008	DKK '000	2008	2007
4,373	638	Research and development costs incurred	638	4,373
(1,504)	(638)	Development costs recognised as intangible assets	(638)	(1,504)
		Research and development costs incurred recognised
2,869	0	in the income statement	0	2,869

15. Property, plant and equipment (group)

			Other fixtures and fittings,
DKK '000	Buildings	Plant and machinery	tools and equipment	Plant in progress	Total
Cost at 01.01.07	0	57,575	5,199	2,017	64,791
Additions	0	2,860	1,151	3,360	7,371
Transfers	0	2,068	399	(2,467)	0
Disposals	0	(3,070)	0	0	(3,070)
Cost at 31.12.07	0	59,433	6,749	2,910	69,092
Depreciation and impairment at 01.01.07	0	(38,580)	(3,249)	0	(41,829)
Depreciation	0	(1,900)	(903)	0	(2,803)
Disposals	0	3,070	0	0	3,070
Depreciation and impairment at 31.12.07	0	(37,410)	(4,152)	0	(41,562)
Carrying amount at 31.12.07	0	22,023	2,597	2,910	27,530

			Other fixtures and fittings,
DKK '000	Buildings	Plant and machinery	tools and equipment	Plant in progress	Total
Cost at 01.01.08	0	59,433	6,749	2,910	69,092
Foreign exchange adjustments	(7,708)	(7,515)	(147)	(303)	(15,673)
Addition on company acquisitions	67,023	65,775	1,277	2,622	136,697
Additions	258	740	289	6,770	8,057
Transfers	0	4,141	1,089	(5,230)	0
Disposals	0	0	0	0	0
Cost at 31.12.08	59,573	122,574	9,257	6,769	198,173
Depreciation and impairment at 01.01.08	0	(37,410)	(4,152)	0	(41,562)
Foreign exchange adjustments	33	83	4	0	120
Depreciation	(568)	(3,649)	(1,512)	0	(5,729)
Disposals	0	0	0	0	0
Depreciation and impairment at 31.12.08	(535)	(40,976)	(5,660)	0	(47,171)
Carrying amount at 31.12.08	59,038	81,598	3,597	6,769	150,002
Of which assets held under finance leases	0	0	805	0	805

Property, plant and equipment (parent company) DKK '000	Plant and machinery	Other fixtures and fittings, tools and equipment	Plant in progress	Total
Cost at 01.01.07	57,575	5,199	2,017	64,791
Additions	2,860	1,151	3,360	7,371
Transfers	2,068	399	(2,467)	0
Disposals	(3,070)	0	0	(3,070)
Cost at 31.12.07	59,433	6,749	2,910	69,092
Depreciation and impairment at 01.01.07	(38,580)	(3,249)	0	(41,829)
Depreciation	(1,900)	(903)	0	(2,803)
Disposals	3,070	0	0	3,070
Depreciation and impairment at 31.12.07	(37,410)	(4,152)	0	(41,562)
Carrying amount at 31.12.07	22,023	2,597	2,910	27,530

15. Property, plant and equipment (group) (continued)

DKK '000	Plant and machinery	Other fixtures and fittings, tools and equipment	Plant in progress	Total
Cost at 01.01.08	59,433	6,749	2,910	69,092
Additions	597	289	6,770	7,656
Transfers	2,022	1,089	(3,111)	0
Disposals	0	0	0	0
Cost at 31.12.08	62,052	8,127	6,569	76,748
Depreciation and impairment at 01.01.08	(37,410)	(4,152)	0	(41,562)
Depreciation	(2,208)	(1,443)	0	(3,651)
Disposals	0	0	0	0
Depreciation and impairment at 31.12.08	(39,618)	(5,595)	0	(45,213)
Carrying amount at 31.12.08	22,434	2,532	6,569	31,535

Investments in subsidiaries 16.

Parent company
2007	2008	DKK '000
1,526	0	Cost at 1 January
(1,526)	0	Disposal on liquidation
0	153,725	Addition on company acquisitions
0	153,725	Cost at 31 December

No impairment losses were recognised on investments in subsidiaries during the year.

	Registered office	Ownership interest 2008 %	Share of voting rights 2008 %	Activities
				Production and sale of silicon wafers
Cemat Silicon S.A.	Poland	94.23	90.02	for the semiconductor industry

17. Other non-current receivables

Parent company			Group
2007	2008	DKK '000	2008	2007
38,065	39,636	Held in escrow accounts as guarantee to supplier	39,636	38,065
0	14,901	Prepayment of goods	14,901	0
11,891	9,865	Prepayments from customers held in escrow accounts	9,865	11,891
2,250	2,250	Deposit, rent	2,250	2,250
0	42	Other	42	0
52,206	66,694		66,694	52,206

On concluding a supplier contract for delivery of raw materials until 2012, the group agreed to deposit USD 7.5m. This deposit agreement expires on 31 December 2012, whereupon the deposit will be released. Another agreement was concluded with a different supplier for delivery of raw materials in 2008 for the period 2010–2017. Under the agreement, a prepayment of EUR 2.0m was payable in 2008.

Prepayments from customers cover an agreement to deliver goods until 2012, in which connection security has been provided for the group in the form of an escrow account until 2012.

18. Inventories

Parent company		Group
2007	2008	DKK '000	2008	2007
16,303	21,357	Raw materials and consumables	38,900	16,303
22,408	30,804	Work in progress	39,634	22,408
8,290	6,664	Manufactured goods and goods for resale	6,776	8,290
47,001	58,825		85,310	47,001

In the parent company, inventories were written down by a total of DKK 85 thousand in 2008, against DKK 56 thousand in 2007. In the group, inventories were written down by DKK 711 thousand in 2008, against DKK 56 thousand in 2007.

Trade receivables 19.

	Parent company		Group
2007	2008	DKK '000	2008	2007
28,911	46,595	Trade receivables	65,272	28,911
28,911	46,595		65,372	28,911
		Impairment losses included in the above receivables
0	0	and recognised in "Other external expenses"	(110)	0
28,911	46,595		65,262	28,911

Parent company		Overdue receivables	Group
2007	2008	DKK '000	2008	2007
2,330	8,489	Overdue by up to 1 month	12,188	2,330
0	45	Overdue by 1 to 3 months	1,647	0
350	410	Overdue by more than 3 months	1,314	350
2,680	8,944	Total	15,149	2,680

Overdue receivables distributed by geographical

Parent company		segment, debtors not written down	Group
2007	2008	DKK '000	2008	2007
2,067	6,391	Europe	8,945	2,067
143	353	USA	1,500	143
470	2,200	Asia	4,704	470
2,680	8,944	Total	15,149	2,680

Impairment losses are recognised for receivables if the value is found to be impaired based on an individual assessment of each debtor's ability to pay, for example in case of suspension of payment, bankruptcy, etc. Receivables are written down to net realisable value, corresponding to the sum of expected future net payments received on the receivables.

The carrying amount of receivables equals their fair value.

Receivables are not interest-bearing until approximately 30–60 days after the invoice date. After this date, interest accrues on the receivables at a monthly rate of 1% of the outstanding amount.

Other receivables 20.

Parent company			Group
2007	2008	DKK '000	2008	2007
8,652	13,297	Other	20,152	8,652
8,652	13,297		20,152	8,652

Other receivables are measured at amortised cost, unless otherwise disclosed. The category "Other" comprises VAT on exports, prepaid VAT and refunds.

Other receivables are not subject to particular credit risks. In conformity with last year, no impairment losses on such receivables are recognised. None of these receivables are overdue.

Cash and cash equivalents 21.

Parent company			Group
2007	2008	DKK '000	2008	2007
37,770	9,404	Cash holdings and bank deposits	68,154	37,770
37,770	9,404		68,154	37,770

The group's cash and cash equivalents primarily consist of deposits in reputable banks. Therefore, no significant credit risk is deemed to be associated with the cash and cash equivalents.

Bank deposits and bank debts carry floating rates of interest. The carrying amount equals the fair value of the assets. The group has unused bank overdraft facilities totalling DKK 10,000 thousand.

Share capital 22.

The share capital consists of 403,391,670 shares with a denomination of DKK 0.25 each. The shares are not subdivided into classes and no shares have special rights.

Units	2008	2007
Number of shares at 1 January	398,822,609	393,150,111
Capital increase through cash payment	4,569,061	5,672,498
Number of shares at 31 December	403,391,670	398,822,609
DKK '000
Denomination, nom. value DKK 0.25	99,706	98,288
Capital increase through cash payment	1,142	1,418
	100,848	99,706

The capital increase in 2007 concerned the exercise of warrants for Management and managerial employees as well as the issue of employee shares. The capital increase in 2008 concerned the exercise of warrants for Management and managerial employees.

23. Other reserves

The translation reserve comprises all foreign exchange adjustments arising on the translation of the financial statements of entities which have a functional currency other than Danish kroner.

The reserve for fair value adjustment of hedging instruments comprises the accumulated net change in the fair value of hedging transactions that qualify for recognition as hedges of future cash flows and where the hedged transaction has not yet been concluded.

The reserve for share-based payment comprises the accumulated value of vested warrant plans (equity-based plans) measured at the fair value of the equity instruments at the grant date and recognised over the vesting period. The reserve is dissolved as the employees exercise their vested rights in the warrants.

24. Other credit institutions and bank debt

	Parent company			Group
2007	2008	DKK '000	2008	2007
0	127,488	Debt to credit institutions	155,869	0
0	127,488		155,869	0
		The debt falls due as follows:
0	23,321	Within 1 year	39,793	0
0	20,833	Between 1 and 2 years from the balance sheet date	27,554	0
0	20,834	Between 2 and 3 years from the balance sheet date	26,022	0
0	20,833	Between 3 and 4 years from the balance sheet date	20,833	0
0	20,834	Between 4 and 5 years from the balance sheet date	20,834	0
0	20,833	More than 5 years after the balance sheet date	20,833	0
0	127,488		155,869	0
		Other debt to credit institutions and bank debt is
		recognised in the balance sheet as follows:
0	23,321	Current liabilities	39,793	0
0	104,167	Non-current liabilities	116,076	0
0	127,488		155,869	0

Debt to credit institutions does not include interest.

Name	Currency	Maturity	Fixed/ floating rate	Interest rate % p.a.	Fair value DKK '000
Overdraft facility	USD	2009	Floating	Libor+1.4%	9,722
Loan	JPY	2012	Floating	Libor+1.8%	18,659
Acquisition loan, parent company	DKK	2014	Floating	Cibor+ 3.5/5.5%	127,488
31.12.2008					155,869
31.12.2007					-

The differentiation of the interest margin on the parent company's acquisition loan is that when the principal is greater than DKK 65m, the loan carries interest at Cibor +5.5%. When the principal has been reduced to less than DKK 65m, the loan carries interest at Cibor+3.5% p.a.

Finance lease liabilities (group) 25.

	Minimum lease payments DKK '000		Present value of future minimum lease payments, DKK '000
	2008	2007	2008	2007
Finance lease liabilities fall due as follows:
Within 1 year of the balance sheet date	191	0	191	0
Between 1 and 5 years from the balance sheet date	614	0	614	0
At 31 December	805	0	805	0

The carrying amount equals the fair value of the liabilities. The finance lease liabilities relate to cars.

Trade creditors 26.

Parent company			Group
2007	2008	DKK '000	2008	2007
		Amounts owed to suppliers for goods
29,572	23,332	and services delivered	31,958	29,572
29,572	23,332		31,958	29,572

The carrying amount equals the fair value of the liabilities. Amounts owned to suppliers fall due within 1 year.

Provisions 27.

Parent company		Group
2007	2008	DKK '000	2008	2007
0	232	Warranty commitments, 1 January	232	0
0	0	Used during the year	0	0
232	730	Provisions made during the year	730	232
232	962	Warranty commitments, 31 December	962	232

During the year, a further provision for warranty commitments was made of DKK 730 thousand, equal to the production price of a specific customer order. The order was for selected silicon wafers not compliant with the specifications. Consequently, new wafers will be delivered in the first half of 2009 free of charge.

Other payables 28.

Parent company			Group
2007	2008	DKK '000	2008	2007
		Payroll liabilities, tax liabilities, accrued social security
114	241	contributions, etc.	241	114
3,731	4,555	Holiday pay liabilities etc.	4,555	3,731
9,344	12,537	VAT and other tax liabilities	15,105	9,344
6,264	7,693	Other accrued expenses	8,063	6,264
19,453	25,026		27,964	19,453

The carrying amount of payables in respect of payroll, income tax, social security contributions, holiday pay, etc., derivative financial instruments, VAT and other taxes, income tax payable and other accrued expenses payable correspond to the fair value of these liabilities.

Holiday pay liabilities, etc. represent the group's obligation to pay wages and salaries during holidays in the next financial year, to which the employees have earned entitlement as at the balance sheet date.

Change in net working capital 29.

Parent company			Group
2007	2008	DKK '000	2008	2007
(24,439)	(11,824)	Change in inventories	(10,794)	(24,439)
(10,883)	(21,180)	Change in receivables	(21,359)	(10,883)
8,761	(1,693)	Change in trade creditors and other payables	(17,194)	8,761
(26,561)	(34,697)		(49,347)	(26,561)

Company acquisition 30.

During the financial year, the group acquired the following company:

Name	Primary activity	Date of acquisition	Acquirer's ownership interest %	Ownership interest acquired %	Cost DKK '000
2008
Cemat Silicon S.A.,	Production and sale of silicon
Warsaw	crystals and wafers	28.10.2008	94.23	90.02	153,725
					153,725

Furthermore, Cemat Silicon S.A. owns 52.92% of the capital of the real estate company Cemat70 S.A., whose activities include ownership of the buildings from which Cemat Silicon S.A. operates. In addition to Cemat Silicon, Cemat70 S.A. has some 60 tenancies.

There were no business combinations in 2007.

	Carrying amount DKK '000	Fair value adjustment DKK '000	Fair value DKK '000
Intangible assets (right of use, land, fixed-term)	0	17,572	17,572
Other intangible assets (customer lists etc.)	237	1,276	1,513
Production plant	53,419	16,252	69,671
Buildings	16,969	50,054	67,023
Inventories	31,063	46	31,109
Trade receivables	18,851		18,851
Deferred tax assets	1,858		1,858
Other receivables	5,907		5,907
Cash and cash equivalents	77,264		77,264
Bank debt	(26,027)		(26,027)
Trade creditors	(28,253)		(28,253)
Provisions	(4,551)		(4,551)
Tax provisions	0	(1,034)	(1,034)
Deferred tax liabilities	(1,512)	(16,188)	(17,700)
Net assets	145,225	67,978	213,203
Minority interests	(51,332)	(28,224)	(79,556)
Equity, Topsil's share	93,893	39,754	133,647
Goodwill on acquisition			20,078
Cost paid in cash			153,725
Acquired cash and cash equivalents, see above			(77,264)
Net cash flow impact			76,461

The cost of Cemat Silicon S.A. was paid in cash. Acquisition costs, including legal fees, audit fees, other specialist fees and other directly attributable purchase costs are included in the cash acquisition cost. The above-mentioned purchase costs amount to DKK 5m.

Fair value adjustment of the right of use and buildings is based on valuation reports and conservative estimates received from an independent valuer.

After recognition at fair value of identifiable assets and liabilities, goodwill amounts to DKK 20.1m. Goodwill represents assets, stated at fair value, which cannot be measured accurately or reliably. These values include the employees in the acquired company, their knowhow and access to wafering and wafer polishing. Another contributing factor is the synergies between Cemat Silicon S.A. and the parent company's existing activities.

The group assesses that the synergies from the acquisition will contribute some DKK 25m when their full effect has been achieved after three years. Of the 2008 revenue, DKK 27.7m derived from Cemat Silicon S.A. and the company reported a loss before tax of DKK 1.2m. If Cemat Silicon S.A. had been owned by the group from 01.01.08, revenue for 2008 would have been DKK 402m and the profit before tax DKK 64m.

Operating lease liabilities 31.

For the years 2006–2011 operating leases have been concluded for cars as well as a photocopier. Leases have been concluded for cars with a minimum of 2–4 years at fixed lease payments whereas the lease for the photocopier of minimum 4 years was concluded at variable payments. The leases are non-cancellable for the periods mentioned.

Parent company		Group
2007	2008	DKK '000	2008	2007
		Non-cancellable operating leases are specified as follows:
701	910	0–1 years	910	701
975	709	1–5 years	709	975
0	0	More than 5 years	0	0
1,676	1,619		1,619	1,676

An amount of DKK 882 thousand (2007: DKK 780 thousand) relating to operating leases has been recognised in the income statement for 2008.

Charges 32.

In security of acquisition loan and increased operating credits with the group's banker, the parent company has provided a charge on the acquired shares in Cemat Silicon S.A. and issued a floating charge of DKK 75,000 thousand. On unsecured claims, inventories and operating equipment, charges of DKK 25,000 thousand have been provided for each of the mentioned categories.

In addition, the group has two mortgage deeds registered to the mortgager, one for DKK 10,000 thousand nominally and one for DKK 5,250 thousand nominally, concerning production plant and chattels, respectively, provided as security for the loan.

Deposits in escrow accounts have been provided as security for warranty commitments to a customer as well as a letter of credit in favour of a supplier.

Parent company			Group
2007	2008	DKK '000	2008	2007
49,956	49,501	Carrying amount of escrow accounts	49,501	49,956

In Cemat Silicon S.A. and Cemat70 S.A., a charge has been provided on assets with a carrying amount of DKK 36.9m as security for loans and operating credits.

33. Warranty commitments and contingent liabilities

The group has no warranty commitments or contingent liabilities.

34. Other contractual commitments

Raw material suppliers The parent company has concluded a six-year long-term agreement (2007–2012) for the supply of polysilicon (the group's primary raw material) with an approved raw material supplier.

The agreement is a combination agreement with a fixed volume at fixed (but index-linked) prices and a variable volume at market prices. The variable volume may not exceed the fixed volume in any given calendar year. The agreement is therefore limited in terms of volume.

Under the long-term agreement, the group is committed to purchasing a minimum volume.

Towards the end of the period, the parent company concluded a new long-term agreement to ensure additional supplies of polysilicon for the period 2010–2017. In the opinion of the Board of Directors and Management, the agreement was entered into on an arm's length basis. Under the terms of the agreement, the parent company is required to make a prepayment. The prepayment will be used in payment of raw materials as delivery takes place over the period 2010 to 2017.

The agreements concluded may be terminated in case of a takeover of control of the parent company. In the event of a takeover, the supplier may terminate the agreement. The effect of such termination may jeopardise the continued existence of the group.

Customers To minimise the group's exposure when concluding contracts for the supply of polysilicon in fixed minimum volumes and at fixed (index-linked) prices, the group has concluded contracts on similar terms with its key customers.

More than 30% of the group's budgeted/forecast sales for the period 2008–2012 is covered through customer contracts at fixed (index-linked) prices to several of the group's key customers.

Other A lease for buildings is non-cancellable until 15.10.2010 and the liability is DKK 2.9m.

Financial risks and financial instruments 35.

The group's and the parent company's financial assets and liabilities can be specified as follows:

	Parent company		Group
2007	2008	DKK '000	2008	2007
28,911	46,595	Trade receivables	65,262	28,911
8,652	13,297	Other receivables, current	20,152	8,652
52,206	51,793	Other receivables, non-current	51,793	52,206
37,770	9,404	Cash and cash equivalents	68,154	37,770
127,539	121,089	Loans and receivables	205,361	127,539
0	104,167	Debt to credit institutions, non-current	116,076	0
0	23,321	Debt to credit institutions, current	39,793
0	0	Finance lease liabilities	805	0
29,572	23,332	Trade creditors	31,959	29,572
3,698	3,579	Income tax payable	3,579	3,698
19,453	25,026	Other payables	27,048	19,453
52,723	179,425	Financial liabilities, measured at amortised cost	219,260	52,723

The group's risk management policy

Risk management is an integral part of the day-to-day business management and is subject to continuous review by the Board of Directors and Management. The Board of Directors and Management have assessed that significant risks, other than financial risks, are associated with supplier and customer relations due to the limited number of suppliers who can supply raw materials of a sufficient quality and customers demanding the group's finished goods. Due to the nature of its operations and financing, the group is exposed to risks in relation to changes in exchange rates and interest rates. The group manages the financial risks centrally and co-ordinates cash management, capital procurement and investment of surplus cash. Following the acquisition of Cemat Silicon S.A., internal business procedures are being updated. The group has a low risk profile so that currency, interest rate and credit risks arise only in connection with commercial relations. It is the group's policy not to actively speculate in financial risks.

The group manages its financial risks by means of a model for managing its cash forecasting, which covers a period of 1 year.

Currency risks

Currency risks comprise the risk of loss (or the possibility of a gain) when the exchange rates change. Currency risk arises when income and expense items in foreign currency are recognised in the income statement. A major part of the group's sales and purchases take place in USD and EUR. The group does not use derivative financial instruments to hedge currency risks. Instead the group uses commercial hedging by balancing currency inflows and outflows. The group's most important currency flow is in USD, which makes up about 30% of the total cash flow. Moreover, the group has provided substantial cash security in USD to uphold the raw materials agreement (2007–2012). An exchange rate fluctuation in USD/DKK of +/- DKK 0.50 would subject the group to currency risk of about +/- DKK 5.3m at the balance sheet date.

Below, the group's unhedged net position as at the balance sheet date is shown:

(Group)
---------

Currency	Cash, escrow accounts and securities DKK '000	Receivables DKK '000	Liabilities DKK '000	Net position DKK '000	Of which hedged	Unhedged net position
USD	57,361	33,609	(34,976)	55,994		55,994
EUR	16,019	25,299	(7,079)	34,239		34,239
GBP		756		756		756
NOK			(232)	(232)		(232)
JPY		7	(18,659)	(18,652)		(18,652)
Other currencies	42	726	(559)	209		209
31.12.2008	73,422	60,397	(61,505)	72,314	0	72,314

Currency	Cash, escrow accounts and securities DKK '000	Receivables DKK '000	Liabilities DKK '000	Net position DKK '000	Of which hedged	Unhedged net position
USD	59,773	14,099	(20,812)	53,060		53,060
EUR	351	11,659	(171)	11,839		11,839
GBP		882		882		882
NOK			(587)	(587)		(587)
Other currencies	32	1,887	(399)	1,520		1,520
31.12.2007	60,156	28,527	(21,969)	66,714	0	66,714

	2008	2007
Equity sensitivity to exchange rate fluctuations (DKK '000)
Impact if the USD exchange rate were DKK 0.50 lower than the actual rate	(5,300)	(4,100)
Profit sensitivity to exchange rate fluctuations (DKK '000)
Impact if the USD exchange rate were DKK 0.50 lower than the actual rate	(5,300)	(4,100)
Interest rate risks
	2008	2007
Profit sensitivity to interest rate fluctuations (DKK '000)
Impact of an effective interest rate of +/- 1%	+/- 230	+/- 800

(Parent company)	Cash, escrow accounts and securities	Receivables	Liabilities	Net position	Of which	Unhedged net
Currency	DKK '000	DKK '000	DKK '000	DKK '000	hedged	position
USD	57,354	24,477	(24,397)	57,434		57,434
EUR	15,091	20,893	(1,651)	34,333		34,333
GBP	0	755	0	755		755
NOK	0	0	(232)	(232)		(232)
Other currencies	42	726	(559)	209		209
31.12.2008	72,487	46,851	(26,839)	92,400	0	92,499

Currency	Cash, escrow accounts and securities DKK '000	Receivables DKK '000	Liabilities DKK '000	Net position DKK '000	Of which hedged	Unhedged net position
USD	59,773	14,099	(20,812)	53,060		53,060
EUR	351	11,659	(171)	11,839		11,839
GBP	0	882	0	882		882
NOK	0	0	(587)	(587)		(587)
Other currencies	32	1,887	(399)	1,520		1,520
31.12.2007	60,156	28,527	(21,969)	66,714	0	66,714

	2008	2007
Equity sensitivity to exchange rate fluctuations (DKK '000)
Impact if the USD exchange rate were DKK 0.50 lower than the actual rate	(5,500)	(4,100)
Profit sensitivity to exchange rate fluctuations (DKK '000)
Impact if the USD exchange rate were DKK 0.50 lower than the actual rate	(5,500)	(4,100)
Interest rate risks
	2008	2007
Profit sensitivity to interest rate fluctuations (DKK '000)
Impact of an effective interest rate of +/- 1%	+/- 500	+/- 800

Interest rate risks

The parent company's acquisition loan and, as a result, the group's interest rate exposure is mainly attributable to interest-bearing debt. A 1% change in the group's effective interest rate would impact the parent company's earnings by some DKK 0.5m p.a.

Credit risks

The group's credit risks associated with financial activities correspond to the amounts recognised in the balance sheet. The group assesses the need for insurance on individual debtors on an ongoing basis. The assessment is based on the individual debtor's current and anticipated dealings with the group.

The primary credit risk of the group is associated with trade receivables. The group's cash and cash equivalents and deposits are placed with the group's bankers, and the vast majority with the group's principal banker. No special credit risks are found to exist in this regard.

Capital management

The group evaluates the need to adapt its capital structure on an ongoing basis. In connection with the acquisition of Cemat Silicon S.A., Poland, the parent company raised an acquisition loan and increased its operating credit. In the Board of Directors' and Management's assessment, the group's future expansion plans can also be funded by means of the existing bank facilities and the commitments obtained in 2008.

The priority of the free cash flow generated by the group is first to repay interest-bearing debt as it falls due and secondly to use it for product development and shareholder dividends.

Equity as a percentage of the balance sheet total at the end of 2008 was 50.3% (2007: 68.9%). The realised return on equity for 2007 was 22.5%. Despite the considerable increase in non-current liabilities, the Board of Directors and Management still assess the group to be financially strong, which is considered necessary.

It is the group's policy that the shareholders should obtain a return on their investment in the form of a price increase and a dividend that exceeds a risk-free investment in bonds.

	Parent company		Group
2007	2008	DKK '000	2008	2007
0	127,488	Credit institutions/bank debt	155,869	0
(37,770)	(9,404)	Cash and cash equivalents	(68,154)	(37,770)
(52,206)	(51,793)	Other receivables, non-current	(51,793)	(52,206)
(89,976)	66,291	Net interest-bearing debt	35,727	(89,976)
149,327	197,643	Equity	249,922	149,327
(0.6)	0.3	Financial gearing	0.1	(0.6)

The group's gearing at the balance sheet date is calculated as follows:

The acquisition loan raised is subject to covenants relating to the group's future EBITDA and solvency ratio and the investment level in the coming years.

Cash flow

The group had a substantial cash outflow from operating and investing activities in 2008 primarily due to the acquisition of Cemat Silicon S.A. and a deposit made in connection with the signing of a new raw materials contract. In both instances, payment was made with the parent company's own free funds and by the parent company raising an acquisition loan. At 31 December 2008, the parent company had a free cash flow of DKK 9.4m; the group's free cash flow was DKK 68.2m. DKK 58m of the group's free cash flow derived from the company Cemat70 S.A., in which Topsil Semiconductor Materials A/S exercises control through an ownership interest of 53%. The Board of Directors and Management assess that the cash and cash equivalents and increased operating credits constitute adequate capital resources to meet future investments, additional prepayments in relation to potential new raw materials contracts, etc.

36. Fee for auditors appointed by the general meeting

Parent company		Group
2007	2008	DKK '000	2008	2007
330	360	Deloitte, audit of annual report	766	330
1,188	3,372	Deloitte, non-audit services	3,372	1,188
1,518	3,732		4,138	1,518

37. Related parties

The group has no related parties exercising control.

• The group has the following related parties:
• Cemat Silicon S.A., Poland
• •Cemat70 S.A., Poland
• •Ejendomsaktieselskabet Bangs Gård, Denmark
• •Frost invest A/S, Denmark
• •CCMA Holding ApS, Denmark

The group had transactions with the following related parties in 2008:

• Ejendomsaktieselskabet Bangs Gård

The vice-chairman of the Board of the parent company, Eivind Dam Jensen, is the managing director and member of the board of Ejendomsaktieselskabet Bangs Gård, which owns the parent company's premises in Frederikssund.

38. Related party transactions

	Parent company		Group
2007	2008	DKK '000	2008	2007
1,088	1,206	Rent, Ejendomsaktieselskabet Bangs Gård	1,206	1,088
18	0	Consulting services, Ejendomsaktieselskabet Bangs Gård	0	18
20	0	Consulting services, Frost Invest A/S	0	20
7	0	Consulting services, CCMA Holding ApS	0	7

Other management remuneration, etc. is stated separately in connection with note 5, staff costs. All transactions with related parties have been carried out on an arm's length basis.

Overview of outstanding balances between related parties

	Parent company		Group
2007	2008	DKK '000	2008	2007
2,250	2,250	Deposit, Ejendomsaktieselskabet Bangs Gård	2,250	2,250
(127)	1,076	Rent, etc., Ejendomsaktieselskabet Bangs Gård	1,076	(127)
20	0	Consulting services, Frost Invest A/S	0	20
7	0	Consulting services, CCMA Holding ApS	0	7
2,150	3,326		3,326	2,150

39. Shareholder information

The parent company has registered the following shareholders holding more than 5% of the voting rights or nominal value of the share capital:

Composition of shareholders	Number of
at 31.12.08	shares	Capital in DKK	Capital %	Votes %
EDJ-Gruppen
Bangs Gård, Torvet 21
DK-6701 Esbjerg, Denmark	63,063,311	15,765,827.75	15.63	15.63

40. Board of Directors and Management

The shareholdings of members of the Board of Directors and Management of Topsil Semiconductor Materials A/S in Topsil Semiconductor Materials A/S are set out below:

	Shareholding
	nom. DKK '000
	2008	2007
Shares (own and related parties*)
Jens Borelli-Kjær, Chairman	218	113
Eivind Dam Jensen, Vice-Chairman (EDJ-Gruppen)	15,766	15,689
Jørgen Frost, Board Member	25	25
Ole Christian Andersen, Board Member	54	38
Trine Schønnemann, Board Member	21	21
Leif Jensen, Board Member	159	114
Keld Lindegaard Andersen, CEO	552	241
Jørgen Bødker, VP Logistics, Sales and Marketing	449	246
Ole Sinkjær Andersen, former Board Member	6	6
Hans P. Mikkelsen, Procurement & Quality Manager	120	63
Theis Leth Sveigaard, Expansion Projects & Facilities Manager	91	46
Total	17,461	16,602

* Related parties are defined as close relatives of the members of the Board of Directors and Management and companies in which such members hold managerial functions.

41. Events after the balance sheet date

No significant events have occurred after the balance sheet date.

42. Approval of the annual report for publication

The Board of Directors has approved this annual report for publication at a board meeting held on 24 March 2009. The annual report will be presented to the shareholders of the parent company for adoption at the annual general meeting to be held on 29 April 2009.

Glossary

AC/AC	(Alternating Current/Alternating Current) converter Converts alternating current into alternating current, e.g. from wind turbine to the power network.
AC/DC	(Alternating Current/Direct Current) converter Converts alternating current into direct current, e.g. for charging of batteries.
Analogue	Electronic circuit with an infinite number of values.
Bipolar	Semiconductor property with two charge carriers (holes and electrons).
CNC	(Computer Numerical Controlled) machines Automated processing machine.
CZ	(Czochralski) Crystal growth technique for monocrystalline silicon, which is the most widely applied production method optimised for low to medium-power components. See page 25.
CZ-EPI	(Czochralski-Epitaxy) See page 26.
DC/AC	(Direct Current/Alternating Current) converter Converts direct current into alternating current, e.g. from solar cells to the power network.
Digital	Electrical signal represented by the symbols 0 and 1.
Diode	Electronic component rectifying alternating current to direct current.
	Discrete component Electronic component with limited functions, e.g. a thyristor. Manufactured as a separate component, as opposed to components in integrated circuits. See page 6.
EPI (Epitaxy)	Crystal growth technique. A thin layer of material which takes on the structure of the crystal lattice on the silicon wafer.
FZ (Float Zone)	Crystal growth technique for monocrystalline silicon resulting in pure silicon for use in high and medium-power components. See page 23.
HiRES	Product name. Float Zone silicon optimised for mobile phones and wireless communication.
HiTran	Product name. Float Zone silicon optimised for windows and lenses within the infrared area.
HPS	(Hyper Pure Silicon) Product name. See page 26.
HVDC	(High Voltage Direct Current) transmission systems Direct current connection typically applied for cross-border or underwater transmission of power.
IC	(Integrated Circuit) Integrated circuit in which many electronic functions are combined into one unit.
IGBT	(Insulated Gate Bipolar Transistor) Electronic component switching the power supply on and off.
Infrared	Long-wavelength light/thermal radiation.
MG	(Metallurgical Grade) Silicon Technically pure silicon used for aluminium cans and in the metal industry. A small part of the global production output is used in the semiconductor industry as a raw material for production of polysilicon.
Monocrystalline	Monocrystalline atoms joined in a symmetrical crystal lattice, e.g. a diamond.
NTD	(Neutron Transmutation Doped) Product name. See page 26.
PFZ	(Premium Float Zone) Product name. See page 26.
Polysilicon	Raw material for production of monocrystalline silicon.
Power network	Electricity is conducted to the 240 V socket through the power network.
SEMI	The industry organisation Semiconductor Equipment and Materials International, www.semi.org.
Thyristor	Electronic component switching on power. The component is associated with low energy loss.

Topsil is commit ted to quality in every aspect of operation

Topsil Semiconductor Materials A/S

Linderupvej 4 DK-3600 Frederikssund Denmark

Telephone:+45 47 36 56 00
Telefax:+45 47 36 56 01
E-mail: topsil@topsil.com

Internet: .......................................... www.topsil.com Company registration number:......... 24 93 28 18