Report 3rd quarter 2002ScanWafer ASA

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Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q12000 2001 2002

Productionper quarter 2000-2002(million dm2)

Report 3rd quarter 2002Sales revenues of NOK 274 million so far in 2002As of the end of the third quarter 2002,ScanWafer’s sales revenues are NOK 274million, of which NOK 101 million in thelast quarter. The sales revenues are derivedin equal shares from the Asian andEuropean markets.

With increasing production, ScanWafer isgradually extending its customer base andhas lately sent test deliveries to severalnew, potential customers. In September anew sales contract with a large Germancompany was signed. This contract has afive-year duration. For the time being, noagreements have been signed withcustomers in the American market.

During the summer, the solar energyindustry has in line with other industries,been affected by the uncertainties in theglobal financial and commercial markets.The German market has been especiallynervous, but the outcome of the Germanelections has instigated hope that thepublic initiatives promoting alternativeenergy, including solar power, will continue at an unabated level.

Raw materialsIn the third quarter, ScanWafer enteredinto an agreement with the Americancompany ASiMI for delivery of rawmaterials. ScanWafer’s largest share-holder, Norwegian Renewable EnergyCorporation AS, has entered into a jointventure agreement with ASiMI. The jointventure shall reconstruct one of ASiMI’splants in USA into a dedicated plant formanufacturing of silicon to be used insolar cell production. This agreement isexpected to stabilise the availability ofraw materials for all wafer producers inthe near future, including for ScanWafer.

In addition to the agreement with ASiMI,ScanWafer has agreements with otherraw material producers. Currently, theavailability and prices remain stable. Thecompany has significant volumes in stock,but expect that this stock will be reducedduring the first half of 2003.

Production in GlomfjordThe Glomfjord plant continues to set newvolume records. Since the two new wafersaws were installed in August, the com-pany has for the first time had a weeklyproduction equivalent to 1 megawatt(MW), given 14 % efficiency. In August-September, the average weekly productionhas been 747 000 dm2, equivalent toapproximately 1.05 MW. As of the end ofthird quarter, the company has produced23,2 million dm2 (equivalent to 32 MW).

Following a difficult second quarter, withunstable and low production volumes, thethird quarter shows significant improve-ment, both in terms of volumes and yield.In the first half of the third quarter, somecustomers informed ScanWafer of qualityproblems with our wafers in the cellprocessing, in the form of breakages andshort circuits. These quality problems wereboth mechanical and electric, and may beascribed to production in May/June. Thiscondition is now corrected.

The plant productivity is improvedthrough strengthening of routines andprocedures and by the fact that manage-ment and employees are graduallybecoming accustomed to the productionequipment. The company’s initiatives intechnology development shall boostcapacity and improve quality even further.

Construction at HerøyaThe construction of ScanWafer’s newplant at Herøya is progressing according

In the third quarter 2002, ScanWafer had focus on increase in production volumes and qualityenhancement at the company’s two factories in Glomfjord, as well as the establishment of plantnumber three at Herøya.

During the third quarter the production volumes and stability have increased significantly. A furtherincrease in production in Glomfjord is expected. Construction of the plant at Herøya is according toplan.

The market for ScanWafer’s products is still good. Especially active in the market are the Japanesecustomers, who are requesting delivery increases. As of the end of September, a new long-term contractwith a German customer has been signed as well as several letters of intent covering the totalproduction capacity of all three plants.

PROFIT AND LOSS STATEMENTQ3 First nine mths Full year Full year

(all figures in NOK 1 000) 2002 2002 2001 2000Sales revenue 101 318 273 875 160 491 78 023 Sales commission (68) (1 638) (1 637) (1 374)Grants (703) 48 354 0 60Total revenues 100 547 320 592 158 854 76 709

Changes in inventories of finished goods and work in progress 8 891 15 348 9 808 (1 278)Raw material and consumables used (63 902) (177 053) (111 905) (38 500)Salaries and personnel costs (15 052) (49 304) (44 360) (20 487)Depreciation and amortisation expense (10 987) (31 685) (20 009) (7 354)Impairment fixed assets 0 0 0 (442)Other operating expenses (13 396) (32 820) (20 387) (4 333)Total operating expenses (94 445) (275 515) (186 853) (72 394)

Profit (Loss) from Operations 6 102 45 077 (27 999) 4 315

Interest expense- net (3 355) (11 038) (5 996) (1 004)Financial revenue – net 1 897 9 418 2 343 2 741 Impairment financial assets 0 0 (480) (986) Net financial items (1 458) (1 621) (4 133) 751

Profit (Loss) Before Tax 4 644 43 457 (32 132) 5 066

Taxes (1 306) (11 736) 8 918 (1 566)Net Profit (Loss) 3 338 31 720 (23 214) 3 500

Basic earnings per share 0.18 1.70 (1.49) 0.36

BALANCE SHEET(all figures in NOK 1 000) 30.9 2002 31.12.2001 31.12.2000ASSETSIntangible assetsImmaterial assets 37 800 40 950 0Deferred tax asset 8 185 19 458 10 540Fixed assetsProperty, plant and other real estate 61 863 59 539 21 670Machinery and production equipment 342 675 227 459 45 802Operating equipment, FFT, tools, office machines 8 622 6 190 32 939Investment in associates 30 30 987Other non-current assets 10 810 2 218 1 655Total non-current assets 469 984 355 844 113 593

Other current assets 32 594 14 119 9 514Outstanding shareholder's contributions 0 0 4 880Inventories 112 351 88 640 25 712Trade receivables – net 58 324 43 678 9 035Cash and bank deposits 3 506 6 093 91 295Total current assets 206 775 152 530 140 436

Total assets 676 760 508 374 254 029

EQUITY AND LIABILITIES

Share capital 46 713 42 544 37 247Share premium reserve 236 651 182 526 135 531Retained earnings 31 720 0 3 500Total Equity 315 085 225 070 176 278

Long-term interest bearing debt to financial institutions 238 379 33 215 39 441Other long term debt 0 0 473Pension liability 5 709 4 629 2 491Total non-current liabilities 244 088 37 844 42 405

Trade and other payables 65 501 63 401 25 993Interest bearing debt to financial institutions 30 482 167 056 6 594Other short term debt 21 605 15 003 2 759Total current liabilities 117 587 245 460 35 346

Total Equity and Liabilities 676 760 508 374 254 029

As of 30th September, the company had a liquidity reserve of NOK 75.3 million in addition to unused loan facilities of NOK 130 million.

to plan. The building is closed and prepa-rations for installation of the productionequipment has started. Construction ofthe concrete floor is somewhat delayed.However, this delay is not expected toaffect the installation of equipment northe production start-up. The project is alsosatisfactory cost-wise.

The plant at Herøya is based on the sametechnical platform as the new productionline in Glomfjord. The operational experi-ence from Glomfjord is incorporated.

The new employees in ScanWafer Herøyaare taking part in an extensive trainingplan, where everyone including the admi-nistration, spend time in the productionline in Glomfjord. The co-operation bet-ween the plants is enthusiastic and good.

Financial resultThe operating revenues in the thirdquarter was NOK 101 million, which is anincrease of 18 % compared to the secondquarter. The sales revenues as of the endof the third quarter, including theestablishment grant from Norsk Hydro ofNOK 46 million, was NOK 321 million.

The operating profit before depreciationand taxes for the third quarter was NOK 17million, compared to NOK -1 million for thesecond quarter. As of 30th September thetotal operating profit before depreciationwas NOK 77 million, including the esta-blishment grant from Norsk Hydro.

Due to salary reimbursements received inconnection to the Herøya project, NOK 5.3million are deducted from salaries. Theaccounts for the third quarter includeexpenses of NOK 2.7 million related to theestablishment at Herøya and the imple-mentation of the IFS-project.

Profit before tax as of the end of the thirdquarter, including the establishmentgrant, was NOK 43 million. The earningsper share as of third quarter, after sharesplit, was NOK 1.70.

FinancingDespite the production problems expe-rienced in the second quarter, ScanWaferhas a satisfactory liquidity and cash flowas of the end of the third quarter. As a

direct consequence of the productionproblems, and the related operating losses,the company breached some of the profit-ability covenants in the construction loangranted in connection with the establish-ment at Herøya. The breach implies thatthe company’s bank, DnB, in line with theloan agreement has required additionalcapital injection during the fourth quarter.

The construction project at Herøya is fullyfinanced, in part through the establish-ment of an equity guarantee of NOK 50million. At the exercise of this guarantee,the company must issue shares at a priceof NOK 12.50 per share. However, due tothe requirement to inject capital, the com-pany has sought alternatives to the equityguarantee. For this purpose the companyis currently in negotiations to establish asubordinated loan. The decision on thefinancing will be resolved at the extraordinary general meeting the 31st October2002.

As of 30th September the company hadliquidity reserves of NOK 75.3 million andunused loan facilities of NOK 130 million,in addition to the equity guarantee.

The equity ratio as at the end of the thirdquarter was 47 %. During the summer,according to resolutions in the generalmeeting in June, the company issued newshares to the employees. 6 253 shareswere subscribed in this issue. Further,board members and the employee foun-dation have subscribed for 86 052 shares.In total, the equity has increased by NOK3.5 million from these share issues duringthe third quarter.

OrganisationScanWafer has decided to implement IFSas its new complete IT-system. It is expec-ted that the new system will give a signi-ficant contribution for an improved andmore efficient management of thecompany. The first implementation phasehas already started.

As of 30th September 2002, ScanWafer had208 permanent employees. Most of themanpower for Herøya is thereby employed.

ScanWafer ASAVeritasveien 14POB 2801323 Høvik, NorwayTelephone: +47 67 81 53 70Telefax: +47 67 81 53 77email: post@scanwafer.com

ScanWafer ASAØrnesveien 38160 Glomfjord, NorwayTelephone: +47 75 71 90 00Telefax: +47 75 71 90 13email: post@scanwafer.com

ScanWafer ASA Arthur Bergbys vei 6 3908 Porsgrunn Phone: +47 35 92 39 07Telefax: +47 35 92 22 89email: post@scanwafer.com

Organisation number: 971 592 311www.scanwafer.com

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This report contains "forward-looking state-ments" with respect to ScanWafer’s expectationsand plans, strategy, management’s objectives,future performance, cost, revenues, earnings andother trend information. Forward-looking state-ments are based on management’s current viewsand assumptions and, by their nature, involveknown and unknown risks and uncertaintiesbecause they relate to events and depend on cir-cumstances that will occur in the future. Thereare a number of factors that could causeScanWafer’s actual results, performance or deve-lopments to differ materially from those expres-sed or implied by forward-looking statements inthis press release. These factors include, but arenot limited to, further delays or difficulties in pro-duction, increased costs for, or difficulties in pro-curing, raw materials or production supplies, fai-lure to expand and to increase capacity asexpected, increased competition and the develop-ment of alternative and superior technologies byour competitors, failure of the photovoltaicenergy market to grow as expected, decreasedlevels of government support for solar energytechnology and programs and changes in govern-ment regulation. We do not assume any obliga-tion to update any forward-looking statements,whether as a result of new information, futureevents or otherwise.

KEY FIGURESFirst nine months 2002 2001 2000 1999

Net operating margin 14 % -17 % 6 % -38 %Equity ratio 47 % 44 % 70 % 33 %Net interest-bearing debt 265 354 194 178 -45 260 39 850Net gearing 84 % 86 % -26 % 150 %Basic earnings per share 1.70 -1.49 0.36 -1.34

Total number of shares outstanding after split is 18 685 353.Net operating margin for first nine months 2002 includes grants.

OutlookScanWafer expects that the plant inGlomfjord, will continue the good trend inthe fourth quarter with further increasesin production volume and improved yield.The increased volume should contributeto an increase of sales revenues and it isexpected that the fourth quarter willshow an operating profit. During thefourth quarter, the finalisation of volumesand prices for next year’s deliveries will beset. The company’s competitiveness in themarket is considered good.

Høvik, October 25. 2002The Board of Directors