NovaCast Technologies LTD. (publ) 556211-0790 INTERIM REPORT FOR PERIOD JANUARY-JUNE 2010

NovaCast Technologies LTD. (publ) 556211-0790

INTERIM REPORT FOR PERIOD JANUARY-JUNE 2010

April - June 2010

 Net sales for the quarter were at 19,7 MSEK (30,1) 
Loss after tax was -13,7 MSEK (-8,5)
Operating loss for the quarter was -13,0 MSEK (-7,7)
Earnings per share -0,68 SEK (-0,62)  
Considerable increase in order intake at end of period 
Camito/SwePart approved supplier to Magna Cosma 
Orders for dies worth 5 MSEK from new Saab Automobile  
Volvo order worth approx. 30 MSEK finalized during June 
Cooperation agreement with Finnveden

January - June 2010

Net sales for the period were at  38,9 MSEK (59,3)
Loss after tax was -28,8 MSEK (-22,3) 
Operating loss for the period was -26,7 MSEK (-20,0)
Earnings per share were -1,42 SEK (-1,64)
Order intake was 65,0 MSEK (46,2) and order backlog was 55,6 MSEK (45,1)
Cash flow from operating activities was -26,3 MSEK (-25,0)
Private placement new share issue of 40 MSEK to Fouriertransform
Successful introduction of foundry programs in USA

Group development during reporting period

 Net sales

 Net sales for the group for the first six months of 2010 were 38,9 MSEK
(59,3). The volume drop was mainly due to low order intake from the
automotive industry during 2009, as well as lower production of castings
to the wind power industry than planned at the beginning of the period,
partly as the result of a two-week production break due to a break-down
in the melting furnace and partly to production development of new
products.

 Result after tax

 Result after tax for the period was -28,8 MSEK (-22,3). The poor result
was mainly due to volume drop and also that the notices of dismissal
given during the first quarter had not given any effect during the
period. One-off items mainly due to personnel terminations charged the
operating loss with -1,7 MSEK (-1,2).

 Cash

 Cash and cash equivalents at end of accounting period were 14,2 MSEK
(8,4) including unutilized check credit of 12,3 MSEK. Accounts
receivable for the group were at 12,1 MSEK (36,0).

 The group made a private placement new share issue during the period,
which provided 40 MSEK before issue costs of approx. 0,75 MSEK.

 As a result of good order intake during the latest months, discussions
are under way about project financing for some of the larger business
deals.

 Order intake and order backlog

 A considerable increase in order intake took place from May and order
backlog during the whole period was 65,0 MSEK (46,2) of which  57,1 MSEK
(36,5) applies to the Automotive business area and 7,9 MSEK (9,7) to
activities within foundry technology. Outgoing order backlog was 55,6
MSEK (45,1) of which the Automotive business area reached 54,8 MSEK
(44,0) and Foundry Technology reached 0,8 MSEK (1,1).

 Investments

 Expenditure related to investments during the period was 5,2 MSEK
(2,5).

 Development per business area and market during reporting period

 Automotive

 Net sales for this business area were 31,2 MSEK (50,7). Operating loss
was - 23,1 MSEK (-19,4). Order intake was 57,1 MSEK (36,5) and outgoing
order backlog was  54,8 MSEK (44,0). One-off items charged the operating
loss with -1,2 MSEK.

 On the whole, the market situation for the Automotive business area has
improved considerably during the period but NovaCast will not note the
effects of increased demand from the automotive sector earlier than
during the second half of 2010.

 Camito AB

 Marketing activities have continued at a high pace during the period
and the new marketing strategy that was implemented during the first
quarter is giving the expected results. This strategy means increased
focus on ten top priority customer groups, of which three are automotive
manufacturers (OEM) and seven are sub-contractors (Tier 1). With these
prioritized customers we will strive towards a closer relationship aimed
at improving advance planning and achieving more even production
utilization at production facilities.

 The effects of good order intake have not had time to give any
substantial positive effect on production utilization or invoicing for
the six month period. Projects will continuously commence during the
third and fourth quarter.

 One of the most important market events for Camito/SwePart during the
period was their being approved as supplier to Magna Heavy Stamping, one
of the largest Tier 1 suppliers in the world.

 After a technical and financial quality audit Magna Heavy Stamping has
approved NovaCast Technologies Group, with subsidiaries Camito and
SwePart Verktyg, as approved supplier to the Magna Group. The approval
gives these companies “green light” in all Magna purchase and supply
organisations and possible access to a number of production units
throughout the world. The approval applies to both Camito dies and
traditional dies.

 Approval for Camito technology within Magna is an important milestone
in the continued process of establishing the Camito concept.

 During the second quarter Camito's marketing organization finalized
orders both from Volvo Car Corporation, approx. 30 MSEK and the new Saab
Automotive, approx. 5 MSEK.

 A new customer in Germany has also placed an order for dies worth
approx. 8 MSEK.

 Schweikert GmbH ordered further Camito dies during the period, which is
Schweikert's third order for Camito dies during the last eight months.  

 Camito has also received an interesting long-term order from a leading
global customer in the industry. The order includes completion and
adjustment of stamping dies to one of the leading truck manufacturers in
the world. Discussions that have been taking place continuously
regarding deeper cooperation have resulted in several smaller orders
during the period.

 Camito Technology Center AB (CTC)

 Production volumes were low during the whole period, partly due to weak
order flow and a two-week standstill of the melting furnace at the
beginning of the year and to production development of new products.
This mostly disrupted production of castings to the wind power industry
within the framework agreement with Enercon. Production of castings for
wind power has however increased during the period and is now at the
expected annual pace.

 Parts of the completion process at the foundry have been outsourced and
personnel have moved to a new employer. Personnel have been reduced with
six persons, to 24 due to notices of dismissal as well as various
resignations during the period.

 SwePart Verktyg AB

 Production volumes were very low during the period, but individual
projects show better production results than in previous years.
Production utilization is too low and could not be compensated for by
lowering fixed costs during the period. Notices of dismissal given in
March, together with other personnel reductions, have resulted in lower
personnel costs of approx. 1 MSEK (approx. 7%) during the second quarter
compared with the first quarter.

 During the first half of 2009 the result for old unprofitable
automotive projects was charged with costs of 13,4 MSEK.

 Production utilization will improve considerably during the fall thanks
to the good order intake from May and only limited further personnel
reductions are planned to take place.

 Experience in Camito-based die production is good within SwePart and
good references, such as the Magna approval, have also allowed for new
customers within the framework of the new concentrated marketing
strategy. Cooperation with sub-contractors has intensified prior to
increased product utilization in the fall, which is a prerequisite in
meeting the tight time frames demanded by the market.

 Foundry Technology (including Graphyte product area)

 NovaCast Foundry Solutions AB

 Net sales for the business area during the period were 7,7 MSEK (8,6).

Operating loss was -3,6 MSEK (-0,6) including one-off items that charged
the loss with approximately -0,5 MSEK.

 Demand, invoicing and results have increased during the latter part of
the period after a very weak first quarter.  

 NovaCast Foundry Solutions' subsidiary in the USA increased activities
during the period and has managed to achieve a positive result. Volume
has been very low on the whole but a certain improvement in invoicing
and result has taken place during the second quarter.  

 They have among others received an order for the ATAS process control
system from American Casting LLC, Oklahoma, USA and for the
NovaFlow&Solid and NovaStress simulation packages from Olazabal y Huarte
SA, Spain.

 The total customer base increased to 472 (430) and the installed
licence base to 678 (654). The number of Technology Partner Agreements,
TPA, which generate annual income to the company, is 177 (203).

 Current CGI projects within the Graphyte business area are proceeding
with varying intensity while new customer contacts are being established
at the same time.

 Parent company

 Net sales for the parent company were 5,4 MSEK (5,1) during the period,
of which intra group sales were 5,4 MSEK (5,1). Operating profit was 0,3
MSEK (0,2).

 Risks and uncertainty factors

 After a very weak six-month period we were able to get several
important orders during the latter part of the period. This means that
we now have an interesting backlog of orders and it is very important
that we process and produce this backlog with high quality, delivery
precision, improved production efficiency and thereby profitability. We
continue to adapt our fixed costs in order to quickly achieve balance
between income and expenses for the group.

 The expansion we can expect also demands access to project financing.
This depends primarily on the fact that the market still tends to see
sub-contractors as financiers within the die area.

 For further information about the group's operational and financial
risks, risk management and risk exposure, please see NovaCast
Technologies' annual report on
www.novacast.se (http://www.novacast.se/).

 Future developments

As in previous years, NovaCast Technologies AB does not give any
prognoses, mainly since business activities are still in the
construction phase, where individual orders or business deals can create
significant swings in these activities.  

 The Board and management focus on adapting business activities
according to current market conditions, liquidity and cash flow, as well
as on creating a  platform for expansion.

 Board certification and signatures

The Board and CEO certify that the report for the six month period
provides a just review of the company's and the group's business
activities, position and result and describes essential risks and
uncertainty factors that the company and its subsidiaries are facing.

 Tyringe August 18, 2010

  

Hans Golteus                         Jan-Erik Dantoft         Hans
Wikman

Chairman of the Board           Board member           Board member

 

Lars-Olof Strand         Monica Svenner         Sten Thunberg

  Board member            Board member            Board member

 Hans Svensson

Group CEO and CEO

  

This report has not been audited by company auditor.

 For further information contact Hans Svensson, CEO NovaCast
Technologies AB, +46 705 652 250.

See attached file for complete report.