Annual Review 2007 STFI-Packforsk Group

Annual Review 2007 STFI-Packforsk Group 1

From our President

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Activities Overview

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New Materials and Products

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Efficient Processes

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Improving Product Performance

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Board of Directors

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Executive Board

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Human Resources

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Doctors and Licentiates

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Financial Statements

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Subsidiaries: PFI, STFI-Packforsk Edge, LignoBoost

© STFI-Packforsk AB Photographs by Fotograf Johan Olsson Printed by SIB-Tryck, Norsborg, in May 2008

From our President In 2007, STFI-Packforsk has further strengthened its position as a world leading partner for industrially applied R&D in the fields of pulp, paper, the graphics media, packaging and logistics. We are very pleased to welcome Alabama River Pulp, USA, and Mercer Pulp, Germany, as new partner customers. The trend continues, with new partner companies coming from almost every part of the world. More than ever before, it is very important to be well known globally. This increases the possibility of serving customers, regardless of their geographic locations and it offers very good opportunities for co-operating with highly qualified researchers in different fields of expertise, wherever they may be. One important step for STFI-Packforsk was taken last year, when we established a subsidiary in Great Britain. By opening an office outside of the Nordic countries, we are showing our ambition to be more active in Europe. The staff in London work closely together with people in the rest of the STFI-Packforsk Group. This makes it possible for us to use all our facilities more effectively and efficiently in different places. PFI AS has been a subsidiary of STFI-Packforsk for more than four years. The company plays an important role, mainly in serving the Norwegian pulp and paper industry. The co-operation between PFI and STFIPackforsk is of enormous value to both companies. In 2007, we started work on reshaping our business strategy, according to the continuing development at STFI-Packforsk in recent years and the important changes in the industries we serve. This new strategy is now being implemented. As a result of the strategic development of our brand name, the company has a new graphic profile. Work with our graphic profile and brand name will continue throughout 2008. This edition of Annual Review is the first Company publication to bear the new STFI-Packforsk logotype. The pulp and paper industry in the northern hemisphere is facing serious problems, due mainly to the increasing costs of energy and the raw wood material. An intensive search for new processes and new products is going on. Turning pulp and paper mills into biorefineries

has shown itself to be one of the most promising ways of producing new and more valuable products, while the mills are still able to use the greater part of their capital intensive infrastructure. STFI-Packforsk is already heavily involved in projects aimed at utilising by-products from the production of pulp and providing valuable new business opportunities for the pulp and paper industry. Interest in the LignoBoost process, developed by STFI-Packforsk in cooperation with Chalmers, has grown tremendously in the last year. A number of companies have expressed interest in acquiring LignoBoost AB, one of our subsidiaries. In this Annual Review, we are presenting some glimpses into our activities. These demonstrate how STFI-Packforsk can be a partner in R&D for innovations and new business opportunities, such as the development of new products and materials or projects leading to more effecient processes or improved quality. You are always welcome to discuss R&D and innovations with us. Gunnar Svedberg President

Annual Review 2007 STFI-Packforsk Group

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2007 in Brief

Supporting the industry in European research applications On 18 January, 2007, the first information day of the European Support Office took place at STFI-Packforsk. This event provided important information for everyone in the forest-based sector interested in taking part in the new EU Framework Programme, FP7, e.g. openings in the first calls, news and how to applicate for a project, step-by-step. The Support Office has its secretariat at STFI-Packforsk and all services are free of charge.

January

February

Johan Alfthan awarded prestigious scholarship At a ceremony on 30 January, 2007, in conjunction with the SPCI Ekmandagarna, the 2006 Alf de Ruvo scholarship was awarded to researcher Johan Alfthan, STFI-Packforsk. In its citation, the Memorial Foundation said: “Johan Alfthan’s research is an important example of the application of research within the area of solid mechanics known as the mechanics of materials.”

The first EPCglobal discussion group Slightly more than 30 participants from the forest and packaging industries gathered for a conference on 1-2 February, 2007, to take the first steps together towards an international RFID Standard for fibrebased packaging. The initiative was taken by STFIPackforsk and the standardisation organization GS1.

Annual Review 2007 STFI-Packforsk Group

SustainPack meetings in Verona, Italy SustainPack is the biggest and most important packaging research project ever undertaken. It is a four year research programme with a budget of €36m and a consortium of 35 partners from 13 countries. By applying nanotechnology, SustainPack aimes at establishing fibre-based packaging as the dominant player in the packaging area within a decade. The project is co-ordinated by STFI-Packforsk.

Skills development prize to Magnus Viström Magnus Viström, a post graduate student at STFI-Packforsk, was awarded the 2007 Skills Development Prize of the Gunnar Sundblad Research Foundation. The award ceremony took place at a seminar celebrating the 50th anniversary of the Foundation on 22 March, 2007. The prize is now financing a visit at Nihon Tetra Pak K.K. in Japan to study developments in packaging.

March

April

Innovood Seminar On 21 March, 2007, a concluding seminar of the Innovood project took place at STFI-Packforsk. This Swedish-Finnish project has laid grounds for entirely new possibilities of finding wood or fibres with the right properties for new innovative products and processes. A database, combined with simulation models, provides support for finding raw materials that combine the properties needed.

LignoBoost demonstration plant inaugurated After 8 years of research and development, STFI-Packforsk subsidiary LignoBoost inaugarated its demonstration plant in Bäckhammar on 12 February, 2007. The plant produces 4,000 tonnes of lignin annually which is transported to Fortum Värme in Stockholm for use in the thermal power station, and thus provide heat to Stockholm’s remote heating network.

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Multi million grant to CAPPI The Knut and Alice Wallenberg Foundation has awarded a grant of SEK 35m to STFIPackforsk and KTH, the Royal Institute of Technology, for a joint venture on developing a centre for paper research (Centre for Advanced Paper Production Innovation – CAPPI). STFI-Packforsk’s part of the grant, SEK 25m, is going to developing and expanding EuroFEX, its unique Pilot Plant. The FEX paper machine celebrated its 25th anniversary in 2007.

May

June

TESS seminar 11-12 June, 2007, the partner customers financing the TESS II research cluster gathered at a seminar at Såstaholm in Stockholm. A Cluster consists of several projects that are run under the banner of a common theme for 2 to 4 years. The partners joining the partner consortium and funding the research of a specific cluster chare the rights to the results. Read more about Cluster research on the next page.

STFI-Packforsk at the International Furniture Fair For some years STFI-Packforsk and Konstfack, The University College of Arts, Crafts and Design in Sweden, have been working jointly on training industrial designers. The aim has been to involve them in the early stages, when developing materials. This is important when considering areas of usage and possible products. One of the recent collaborations was “Out of the Woods” which participated in The International Furniture Fair in Milan in April. The design students Farvash Razavi and Nandi Nobell presented a Kofes, an object that demonstrates the possibilities with a newly developed renewable composite material without limiting the fantasy on how it could be used.

2007 in Brief

Research Seminar for partners Many participants were gathered at the annual research seminar, exclusive for STFI-Packforsk Partner Customers. Besides presentations of on-going activities and exciting results, the joint session threw light on challenges for the pulp and paper industry, delivered by Mattias Ringvist from McKinsey & Company and by Leif Brodén, CEO of Södra.

STFI-Packforsk starts UK office With its setting up of a subsidiary in London, STFI-Packforsk took yet another step towards increasing its level of internationalisation. On the 20 August, 2007, STFI-Packforsk UK Ltd. started up. This new company offers services ranging from analysis of future markets and strategic planning, to sustainability consulting and market intelligence, under the trademark STFI-Packforsk Edge.

July

August

September

4th Pulp and Paper Chemical Analysis Seminar In September, 2007 the 4th Pulp and Paper Chemical Analysis Seminar took place at STFI-Packforsk. This biannual Nordic Forum gathered 56 people from the pulp and paper industry. Among the topics were Process analysis, Characterisation of components in process streams, Product safety analysis and Analytical demands for biorefinery.

Big national packaging conference In Sweden, one of the most important conferences is the annual Förpackningsdagarna, which is arranged jointly by STFI-Packforsk and Mentor Online. The conference is a meeting place for the whole packaging industry. Next conference will take place on 1-2 October, 2008, and will hold a full-day seminar on the role of packaging in the daily life, and two parallel seminars on trends and development.

National Research Agenda Conference The National Research Agenda for the forest-based sector is a result of joint efforts among the forest industry, public financiers and the research world. This unique strategy was first presented in November 2006, and the realization is now in progress. Work in the NRA is being carried out by its Council and Secretariat that are based at STFI-Packforsk. On these premises, a conference discussing research based on future needs, was held on 25 October, 2007.

EFORWOOD conference in Brussels, 1-2 October EFORWOOD is a big European research project that will provide methods to assess the sustainability impacts of modifications of Forestry-Wood Chains as influenced by policy changes, market drivers, or technological innovations. STFI-Packforsk plays an important role in this project which is co-ordinated by the Forestry Research Institute of Sweden, Skogforsk.

October

November

IKEA Tulip Award for sustainability work The IKEA Tulip Award, Prize of Honour, was in October 2007 awarded to the STFI-Packforsk Sustainability & Foresight Team by Inter IKEA Systems. In its quotation the jury said: “Based on a strong personal engagement as well as organisational resources, STFI-Packforsk has supported and challenged us in our work to secure the sustainability performance of our activities.”

December

Jimmy Lundström awarded twice for best master thesis “Chloride and potassium balances in the future energy efficient pulp mills” is the title of Jimmy Lundström’s master thesis. This thesis has awarded him two prizes during 2007, by The Swedish Norwegian Recovery Boiler Committee (ÅF) and also by The Bo Rydin foundation (SCA).

Third open workshop of ECOTARGET The STFI-Packforsk co-ordinated project ECOTARGET is the largest research project ever in the European pulp and paper industry and is financed by the European Commission. There are 26 partners from all over Europe participating in this project directed towards new and innovative processes for radical changes in the European pulp & paper industry. The third open workshop of ECOTARGET took place in Słok, Poland, 16-17 October, 2007.

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Holding a Unique Position STFI-Packforsk is the link between academic research and application in the industry and covers a large number of different fields, from raw materials to consumer needs. Having Partner Customers in several countries worldwide, STFI-Packforsk is becoming more and more global, growing continually in know-how and knowledge. This worldwide collaboration places STFI-Packforsk in a unique position and strengthens it to co-ordinate extensive research projects and programmes.

Cluster Research For many years, a well established enterprise at STFI-Packforsk has been Cluster research work, with the results from it being implemented in customers’ own commissions or through the developments in the companies themselves. Partner customers collaborate in the cluster research to solve problems in common and generate new possibilities, using the resources and expertise available at STFI-Packforsk. The results are further developed and then applied to create competitive advantages for the particular companies. A Cluster consists of several projects that are run under the banner of a common theme for 2 to 4 years. The research is spread over several areas of expertise with groupings of companies, preferably with similar or complementing operations. Sharing the investment costs in R&D, the participating companies reduce their risks, and benefit many times over from the investment. In 2007, the preparations for a new 3 year period started. The overall aims of this programme are to contribute to sustainable development and strengthening the competitiveness of the STFI-Packforsk partners .

Trade & Industry Groups A rewarding, appreciated form of research is taking place in the Trade and Industry Groups (NLG) at STFI-Packforsk. A number of companies, with common interests, come together to solve trade-specific issues and problems, by means of an all-embracing plan. These groups are linked together by STFIPackforsk researchers who contribute with their own special know-how and knowledge. The NLG programmes are, to a great extent, financed through the Private Owners Association Packforsk. Through a general membership in this association, interested parties are given the opportunity of partial participation in the NLGs. Following Sweden’s entry into the EU, the work of the NLGs has attracted much attention and been appreciated by an altogether larger body of companies outside Sweden, not least with the purpose of producing a factual basis for the increasing lobby work in Brussels.

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Annual Review 2007 STFI-Packforsk Group

Activities Overview

Cluster Research Programme 2006–2008

Strategic Research A number of activities at STFI-Packforsk deal with research directed at areas of future strategic importance. Today, the company is involved in several European research projects, as a co-ordinator or a partner. The generated knowledge from administrating these projects is also utilised to support the forest-based sector in realising projects in the EU 7th Framework Programme. This support is carried out by a special support unit which has its sectreriat at STFI-Packforsk. Another secretariat at STFI-Packforsk is co-ordinating the work of the National Research Agenda (NRA). For the forest industry, NRA is an important tool for carrying out the necessary process of transformation, thereby strengthening market positions, improving competitiveness and raising profitability. NRA proposes research activities for innovative product development and for the development of more cost-effective and energy-saving manufacturing processes. The Swedish NRA is in line with the European Forest Technology Platform that works for European research cooporations in strategic fields. A profitable example of strategic long-term research is the LignoBoost process which is a result of 7 years of research within the Future Resource Adapted Pulp Mill programme (FRAM) and the earlier Ecocyclic Pulp Mill programme (KAM). In these programmes, researchers from STFI-Packforsk and Chalmers University have joined forces to develop a technology that makes it possible to produce lignin in pure form from black liquor. In the current programme, FRAM2, the technology has been further developed into industrial scale and is now ready for implementation.

Client Projects In addition to the research activities based on long-term agreements, STFI-Packforsk offers a variety of services on an assignment basis, e.g. R&D, investigations, pilot trials, advice and trouble-shooting, analysis and testing services. The results from the Cluster Research Programme and other collaborations often serve as platforms for further development and applications in single client projects. A growing field of interest is carbon footprint, i.e. the emissions of carbon dioxide arising as a result of a specified activity or product. STFI-Packforsk has supported many companies with LCA – Life Cycle Assessment – which is a tool that can be used to find a product’s carbon footprint. With the results from the LCA, strategies can be developed to decrease a products carbon footprint.

• Adhesion, barrier and converting in multi-layer food packaging • Advanced fibre management in papermaking • Biorefinery • Characterisation and fibre properties of recycled fibres • Chemical and energy revcovery in the kraft mill • Chemical pulp fibre line • Coated surfaces – properties, interactions and performance • Creasing of board and corners tendency to crack at forming of packaging materials – Liquid paperboard • Energy efficient mechanical pulping • Engineering paperboard for packaging performance • Expansion of process and property space through novel paper chemistry • Human product interaction • Improved formation • New fibres new materials • Newsprint – enhanced runnability and printability • Optimal mechanical dewatering • Paper mechanics • Process chemistry in closed papermaking systems • The engineered sheet structure, TESS II • Tools for optimal fibre utilisation • Visual and interactive functionality of packaging

Trade & Industry Groups • ChemSource® • ESG, European Paper Sack Research Group • IGP, International Group for Paper Distribution Quality • Miljöpack • Normpack – Swedish Code for Food Packaging Materials • NSP, Nordic Standardization Programme • SKAF, Swedish Paperboard Research Group • Sustainability • SUW, International Development Group for Corrugated Board • Technical Committee for Product Protection • Printing of high quality newspaper supplements with optimal utilisation of raw materials

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New Materials and Products In the wake of climate change and increasing oil prices, the demand for new sustainable products has dramatically increased. To meet this demand, many research activities at STFI-Packforsk focus on inventing new materials and products made of cellulose and other renewable raw materials, such as by-products from the forest industry or gluten.

Bionanocomposites, with cellulose as the renewable raw material, are highly interesting as alternatives to petroleum-based plastics, e.g. in packaging and in moulded plastics.

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Annual Review 2007 STFI-Packforsk Group

New Materials and Products

Nanocellulose paves the way for new business areas Nanocellulose (also called microfibrillated cellulose) is a new product that is produced from pulp fibres and that is opening up new business areas for the forest industry. The material is composed of crystalline cellulose and therefore has many good strength properties. There are many areas of application for nanocellulose; a strength component in composite material or paper, barrier films for cardboard, a viscosity agent for foodstuffs as well as in pharmaceuticals, to name a few. The opportunity to use nanocellulose as a strength component in composite material makes it possible for the forest industry to become a player in the fastgrowing bioplastics market. Bionanocomposites, with cellulose as the renewable raw material, are highly interesting as alternatives to petroleum-based plastics, e.g. in packaging and in moulded plastics. STFI-Packforsk has a world leading position within the field of nanocellulose. The focus of the work has been on developing processes for the production of nanocellulose with low energy consumption – under STFIPackforsk’s development, energy consumption has dropped by up to 98%. Today, the low-energy demanding production of nanocellulose is carried out in a laboratory in a process that can be directly applied in the industry. The activity is mainly run within the “Expansion of Process and Property Space through Novel Paper Chemistry” cluster with its sponsors*, but also in other smaller and larger development projects concerning nanocellulose and its applications, such as Sustainpack (EU 6 th Framework Programme), DesignCell (WoodWisdom-NET) and SustainComp (EU 7th Framework Programme) which will start in 2008.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Innovation chain idea

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Contact [email protected]

*) Aracruz Celulose, Billerud, Borregaard, Eka Chemicals, Holmen, Kemira, Korsnäs, Mondi Packaging Paper, M-real, Metsä-Botnia, Stora Enso and Södra Cell

Fibre-based packaging in transport of fresh fish and agricultural products Finding alternatives to packaging based on fossil raw materials is a highly topical task. This task is more difficult for some packaging than it is for others. Packaging for the handling of fish and agricultural products is exposed to water and moisture, which means that it must be able to tolerate 4-7 days of transportation in a wet, humid and cool climate, without being damaged. The requirement is simple – the food must maintain top-quality throughout the entire value chain. The FiBaPack project at PFI will develop new fibre-based transport packaging which, in comparison to packaging made of expanded polystyrene (EPS), can provide benefits in terms of transportation and the environment. The objective is to develope prototypes for industrial production by the end of 2009, when the project is concluded. The project is financed by Peterson AS, Eka Chemicals AB and the Research Council of Norway. In kind contributions are also provided by AL Gartnerhallen and SalMar AS.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Innovation chain idea

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Contact [email protected]

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Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

Optoactive materials sell and protect P P

Innovation chain idea

business

Contact [email protected]

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

Biorefinery – new products from by-products P P

Innovation chain idea

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Contact [email protected]

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Marketing and product safety are two areas where a new technology using optoactive material is enjoying much interest. Optoactive materials can change colour when they are exposed to specific stimuli such as moisture, temperature, tension or electricity. Moisture-sensitive optoactive materials have been demonstrated on fibrebased materials in the laboratories at STFI-Packforsk and KTH (The Royal Institute of Technology). Several projects are driving the technology further towards commercialisation. A current application is authentication, i.e. the test of a product’s authenticity or that the packaging really contains what it claims. A change in colour takes place when the packaging is exposed to moisture. This can be exploited in hidden colour spectrums that provide information about the product. The moisture sensitivity also implies an increase in the interactivity between the consumer and the packaging, since the appearance of the packaging changes when someone breathes out or touches it. The material can be activated from transparent to coloured. As a result of this, it is possible to get colours and patterns to appear on the paper and packaging after they have been printed. The next step is to already add the optoactive material in the paper pulp, which would completely change the way images are created on paper and could consequently lead to new printing processes. The research has been financed by the EU project Sustainpack, the packaging industry as well as SMEs (small and medium-sized enterprises).

Annual Review 2007 STFI-Packforsk Group

A lot of the work is going into finding new products based on the wood that doesn’t become cellulose fibre during the production of chemical pulp. The two main focus areas studied at STFI-Packforsk are lignin and hemicellulose. Both can be extracted from the by-product black liquor. The high heat value and low ash content of the lignin product makes it ideal as a biofuel. Due to its structural and functional properties, lignin is also a very interesting raw material for the production of green chemicals and materials. By means of the LignoBoost process (see page 11), it is now possible to produce a lignin that is cleaner and dryer than before. This raw material opens up opportunities for many new areas of use, for example production of biobased carbon fibre. Using lignin as a raw material, the price of carbon fibre could be lowered and the volume of production could increase considerably. Under such conditions, carbon fibres could be used in many new fields. For instance, it could replace metals in certain parts of car construction, dramatically reducing their weight. Another large by-product is the carbohydrate group hemicellulose and its break-down products. Among its interesting properties, hemicellulose easily attaches itself to cellulose and can therefore be used to improve the strength properties of a material. Another interesting field of use for hemicellulose is hydrogels, i.e. substances that absorb a lot of water but are not water-soluble themselves. The potential use of hemicellulose as a raw material in medical products for special treatment and the encapsulation of pharmaceuticals opens for new and interesting markets for the forest industry. The Biorefinery cluster is financed by M-real, Södra, Kemira, Sveaskog (2005-2006), Perstorp, Borregaard (2005-2006), Aracruz, Weyerhaeuser, UPM-Kymmene, Sappi, Alabama River Pulp, Stora Enso and Mercer Pulp.

New Materials and Products

Sustainable product development Long-term sustainable products and responsibility-taking are prerequisites for tomorrow’s manufacturers and suppliers of products that people want to buy. Through working with sustainable product development (SPD), the right thing can be done from the start and consideration can already be taken for all the dimensions of sustainability – financial, social and environmental – in the design phase. The objective of SPD is to create maximum value while at the same time optimising the three dimensions. By using methods for sustainable product development and by making active choices, the sustainability performance of the products can be improved. A recently concluded project at STFI-Packforsk has developed working methods for facilitating sustainability work during the development of biocomposite products. The methods partly concern measurement and partly the assessment of sustainability performance (method for sustainable impact assessment, SIA, of biocomposite products), taking the entire value chain into consideration. Moreover, a general working method or procedure was developed in order to produce applied SIA methods. The methods developed are based on the sustainability aspects that are most relevant (significant sustainability aspects) for the current product area. These methods can be used in the development of new material, in product design and in the drawing up of product specifications when it comes to sustainability performance. In this way, the sustainability work can be realised and made concrete. The project was financed by Vinnova and the companies that are participating in the New Fibres New Materials research cluster: Alfa Laval, BASF, Billerud, Brødrene Hartmann, Korsnäs, M-real, Mondi Packaging Paper, Stora Enso and Södra Cell.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Innovation chain idea

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Contact [email protected]

To demonstrate the possibilities with a new renewable materials system without limiting the fantasy on how it could be used, STFIPackforsk has cooperated with the University College of Arts, Crafts and Design. In this collaboration, a so called kofes was created. A kofes is something that does not resemble to anything, least of all itself.

Annual Review 2007 STFI-Packforsk Group

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At the LignoBoost demonstration plant in Bäckhammar, the operational data, robustness and operability of the LignoBoost process is demonstrated. The demonstration plant produces 4,000 tonnes of lignin annually to be used, for example, as biofuel at Fortum’s thermal power station, providing electricity and heat to Stockholm.

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Annual Review 2007 STFI-Packforsk Group

Efficient Processes

Efficient Processes Adapted processes are necessary conditions for both energy and resource effective production. STFI-Packforsk has developed several new process technologies and measurement methods, which make it possible to optimise the production and, at the same time, reduce emissions and waste. These innovative technologies have enabled the development of completely new products with new functionalities.

Boosting pulp mill’s profitability LignoBoost is a new process involving the removal of lignin from the black liquor of the sulphate pulp process. The pulp mill can “boost” its total economy using a LignoBoost installation by capitalising on a new high-quality by-product – lignin – and, at the same time, the opportunity to increase the production of pulp. The lignin product can be used as biofuel with a high heat value and a low ash content, which makes it an excellent alternative to fossil fuel. Within the FRAM2 research programme, Future Resource Adapted Pulp Mill, it is studied how the lignin should be treated for combustion in three different processes: cofiring with coal, cofiring with other biofuels as well as combustion in the pulp mill’s lime kiln. In the first case, the lignin fuel is transported from Bäckhammar to Fortum’s thermal power plant in order to provide electricity and heat to Stockholm’s district heating system. Halfway between being a fuel and using the lignin’s properties for the production of green chemicals and materials, additives of small amounts of lignin can be used to improve the properties of straw and grass energy fuel pellets, material that normally provides pellets of lower quality. By removing lignin, the recovery boiler is unloaded, which gives the pulp mill the potential to increase its pulp production at a considerably lower cost compared to expanding existing recovery boilers or building new ones. Since the production of lignin is, in principle, separate from the sulphate process, it is possible to choose between connecting or disconnecting the LignoBoost process according to need, in view of the energy balance and desired pulp production. The LignoBoost process has been developed from the laboratory into a commercial large-scale process, tested in a factory environment and verified in LignoBoost’s demonstration factory in Bäckhammar. The technology that will “boost” the pulp mills’ total economy is now ready for industrial installation. The process, the use of the product as well as the integration of the process in a pulp mill are developed within FRAM2 which is financed by an industrial consortium as well as the Swedish Energy Agency and Åforsk (Ångpanneföreningen’s Foundation for Research and Development). A commercial concept for the LignoBoost process is being developed and financed by STFI-Packforsk’s subsidiary, LignoBoost AB.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

Automated measurement of Curl & Twist P P

Innovation chain idea

business

Contact [email protected]

During the conversion of paperboard into boxes, it is very important that the sheet maintains its planar shape. An uncontrolled alteration in shape mainly influences the speed of the conversion and, with that, theefficiency of a packaging line. With knowledge about the material’s propensity to deform due to changes in the climate, better control of the board machine is possible. Therefore, access to good tools for process control is of great importance for paper and board factories. STFI-Packforsk has developed an instrument for the measurement of curl and twist. The new technique means that samples can be handled considerably quicker compared to using meters available today. A field test has already been carried out and a prototype, similar to a possible future commercial solution, has now been lent to a board mill for long-term assessment. The development has been done within the Engineering paperboard research cluster and has been financed by M-real, Peterson, Voith, Korsnäs and Iggesund Paperboard.

Energy streamlining process that improves the quality of recycled fibres

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Annual Review 2007 STFI-Packforsk Group

Better products, cheaper raw materials, more flexible production and energysavings. This can sound like a waste paper manufacturer’s dream, but this has become a realistic objective in the EcoFracSmart project. The concept is based on a process with fewer stages than in existing recycled fibre mills: a new economical and energy-effective solution, a multi-functional screen and hydrocyclones for fractionation. The result is a better quality of fibre material and energy-savings. Consequently, the process means that more paper can be recycled in an economically justifiable way, when the quality of fibre material increases without there being unreasonably high demands on energy consumption. This means that even the recycling of complex paper-based products, such as liquid packaging board, is facilitated. Today, high-quality recycled fibre is a scarce commodity, resulting in higher costs. A technique that provides good runnability and quality, even for poor raw materials, would be an economic improvement for many waste paper mills. EcoFracSmart can therefore be a solution for when it comes to both focusing on maintaining the quality of fibre material at a lower cost or expanding towards higher-quality products. In the long run, products that are now only manufactured using virgin fibres can become available in variants manufactured from recycled fibres. A demonstration project for part of the concept has been carried out with very good results. A possible next step would be to test the entire concept as an overall solution on an industrial scale. The project was financed by the Swedish Energy Agency, Lyckeby Industrial, JLR Pulping System, Läckeby Waters, Holmen Paper, Smurfit Kappa and Noss.

Efficient Processes

Knowledge about what should be measured – a profitable business Uniform quality among paper products contributes positively to a manufacturing company’s competitiveness. Therefore, it is important to monitor and control processes in an optimal way and to know what information is required in order to be able to do this. In an extensive cooperation with Billerud Skärblacka, partly within the framework of the Advanced Fibre Management research cluster and partly in an individual development project, STFI-Packforsk has developed new knowledge about what needs to be measured and what type of on-line measuring practice is required for LC-refining (refining that is performed at low fibre concentration). This type of machining process, where wood fibre is ground or refined in order to increase the strength of the paper, requires a lot of energy. In addition to more uniform and better quality, well-functioning automatic monitoring and control can lead to greater energy-savings and also to reduced raw material consumption. The knowledge developed is not only a valuable tool for paper manufacturers to ensure their products have a more uniform quality. It could also provide the basis for the development of new measuring transducers and control systems. In the current situation, however, the knowledge is to be considered as unique and is reserved for those interested parties of STFI-Packforsk who have financed the research and development within the respective sub-area.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

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Innovation chain idea

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Contact [email protected]

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Improving Product Performance The value of a product is dependent on its properties and its capacity for further treatment, e.g. printing, conversion and filling processes. Consumer demands regarding functionality and design also play an important role. With expertise covering the whole value chain, from raw material properties and process development to product performance and consumer value, STFI-Packforsk can be a partner in product development.

The Human Product Interaction Laboratory (HPI) provides customers with added knowledge as to how their packages and printed materials are perceived by end users. Here STFIPackforsk combines its own research with standard and welltested methods for the evaluation of print quality and usability of packaging.

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Annual Review 2007 STFI-Packforsk Group

Improving Product Performance

Optimized transport packaging cuts the costs STFI-Packforsk’s unique product fragility tests help companies to develop high quality packaging. At the same time, the design and the consumption of material can be optimized so that resource utilisation and the impact on the environment are minimized and handling is more efficient. STFI-Packforsk has carried out a pilot project for Ericsson in which new transport packaging for two Radio Base Stations, one for indoor installation and one for outdoor installation, were assessed. The project would challenge the use of current packaging made of plywood in order to provide the basis for the packaging of new products later. The tests showed that the packaging for the indoor product would need to be redesigned in order to improve the product protection during transportation. On the other hand, the new packaging for the outdoor product could essentially be simplified and the amount of material minimized. In addition, the height could be reduced to less than 1600 mm, meaning that it could be air-transported in the cargo hold on the lower deck of a passenger plane, making greater transportation flexibility possible. A new transportation test standard geared to Ericsson’s current products and distribution systems has been recommended. This was the basis for the newly developed packaging, which is based on a combination of plywood pallet and corrugated cardboard packaging. The concept is also applicable for other manufacturers of electromechanical products such as computers, optical instruments, medical equipment and home electronics.

Tests for higher quality, safety and a better working environment Soft drinks and water in large packaging are sold almost entirely in PET bottles. They are delivered to the store packed for transportation between plastic trays. During transportation, it has been shown that the plastic trays have altered shape under the load. This has led to problems in handling, not only from a durability point of view, but also due to a worsening of the working environment for those who handle the drinks from the factory to the store, mostly from a safety point of view with the risk of pallets collapsing when being stacked. As a result, Brewers of Sweden (the trade organisation of the Swedish breweries, soft drinks and bottled water producers) commissioned STFIPackforsk to carry out a number of tests to find out what happens to the plastic trays under certain specified conditions. Both the specialist knowledge and the adequate equipment for carrying out the tests could be found at the laboratory in Kista. Load tests were carried out at a high temperature over a long period of time as well as stacking tests in order to check the strength and stability of the plastic trays. These types of tests are of great importance in the ongoing work to improve the quality of the products or the packaging. This specific case deals with safety and an improved working environment in handling as well as higher cost-effectiveness since the plastic trays can be used more efficiently.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

P P

Innovation chain idea

business

Contact [email protected]

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

P

Innovation chain idea

business

Contact [email protected]

Annual Review 2007 STFI-Packforsk Group

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Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

P P P P

Innovation chain idea

business

Contact [email protected]

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Annual Review 2007 STFI-Packforsk Group

Single headbox enhances new qualities and functionalities The next quantum leap in papermaking will be the introduction of stratified forming in order to reduce energy consumption, improve product properties and possibly develop completely new products. Contrary to multiply forming, stratified forming produces a layered structure with one single headbox. By using a single headbox, sheet stratification can be applied even to lowgrammage products, e.g. newsprint. Stratified forming makes it possible to produce printing paper grades with different furnishes in the different layers. Another interesting possibility would be to use wood containing pulp in the middle layer sandwiched between two bleached surface layers, obtaining the same product properties that can be obtained with 100% virgin kraft pulp today. For multiply grades, such as liner or board, stratified forming applied on the top ply means added design freedom since different functionalities, e.g. printing quality, mechanical properties and hydrophobicity, could be introduced of the top layer. Products with these characteristics would imply a significant environmental benefit while providing improved competitiveness. The TESS project illustrates how STFI-Packforsk focuses on bridging the gap between science (the fluid mechanics) and industrial implementation, a.k.a. new business opportunities. Today, when one year remains of the project, work is performed with demonstrating the impact of stratified forming. The results obtained in the product and/or functionality demonstrators will show the industrial potential of stratified forming for a given product. TESS is mainly financed by an industry group consisting of BASF, Smurfit Kappa Kraftliner, Klabin, Korsnäs, Mondi Packaging Paper, M-real, Norske Skog, Stora Enso, Södra and Voith Paper. In addition, the project is financed through the Ecotarget EU-project and the Swedish Energy Agency.

Improving Product Performance

The Physical testing facilities at STFI-Packforsk’s pilot plant EuroFEX can be a very useful tool when it comes to veryfying new processes and products as well as for troubleshooting.

Packaging printing – a key role in the brand’s communication Packaging has developed from being primarily used as protection and storage for products to becoming multifunctional products that communicate the brand and identity. In an increasingly consumer-driven packaging technology, the development of surface technology, materials, sensors and printing techniques are important for increasing the value of the packaging. Printing plays a key role in this context. The Funcpack research cluster will help the industry to understand the future needs within the visual and interactive functionality of the packaging. The studies will provide information about the properties and processes that affect the printing quality and about the visual factors that affect our purchasing decisions, information that provides companies guidance in choosing material and designing packaging. The research within the project will also contribute to developing appliable tools in order to improve the ability to meet future consumer demands. An example of this is the use of modified fibres for improving the interactive properties of the packaging, which can lead to new competitive products. Funcpack is financed by Korsnäs Frövi, BHS Corrugated, Billerud, Iggesund Paperboard, M-real and Peterson.

Energy saving Raw material saving New bio-products Innovation Prod. Efficiency/Runnability

P P

Innovation chain idea

business

Contact [email protected]

Annual Review 2007 STFI-Packforsk Group

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Board of Directors

Leif Brodén President and ceo, Södra

Peter Edwall Manager, Technology & Environment, Mondi Dynäs AB

Karin Emilsson Technical Director, Södra

Staffan Erenmalm Group Vice President, ABB Ltd.

Anders Flodström University Chancellor, Swedish National Agency for Higher Education

Peter Holmstedt President, IRECO Holding AB

Anders Wigsten Magnus Wikström Research Director, Stora Technical Director, Enso Magazine Paper Billerud AB

Sven Wird Vice President, Group Technology, Holmen AB

Stig Andersson Unionen STFI-Packforsk

Pierre Ljungquist Unionen STFI-Packforsk

Staffan Rydefalk SAK STFI-Packforsk

STFI-Packforsk Board of Directors 2007 Leif Brodén, Chairman Peter Edwall Karin Emilsson Staffan Erenmalm Anders Flodström Peter Holmstedt Anders Wigsten Magnus Wikström Sven Wird Personnel representatives Pierre Ljungquist, Unionen Staffan Rydefalk, SAK Stig Andersson, Unionen, deputy Anders Lundström, SAK, deputy

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Annual Review 2007 STFI-Packforsk Group

Anders Lundström SAK STFI-Packforsk

Organization

Executive Board

Gunnar Svedberg President

Anders Engström Executive Vice President

Anders Pettersson Peter Axegård Senior Vice President Director of Fibre, Pulp, Research Energy and Chemicals Director of Papermaking

Kennert Johansson Director of Packaging, Media and Materials

Torgny Persson Director of EuroFEX

Helena Vollmer Marketing Director

Lisa Tiliander Human Resources Development

Anita Ernlund Executive Assistant

Karl Gustaf Ekfeldt Finance and Human Resources

Philip A. Reme Managing Director of PFI AS

Annual Review 2007 STFI-Packforsk Group

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Human Resources The STFI-Packforsk Group has 267 employees. The parent company STFIPackforsk AB is organized in 4 divisions of competence:

Women 47%

Fibre, Pulp, Energy & Chemicals

Men 53%

Papermaking

Packaging, Media & Materials

EuroFEX

STFI-Packforsk has a unique system of having doctoral students on the staff, which is an excellent way of carrying out fundamental research and training highly qualified personnel. Postgraduate research projects provide new hightech knowledge that can be implemented in companies.

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Doctors and Licentiates 2007

8 7

Karin Almgren Stress-transfer mechanisms in wood-fibre composites Licentiate thesis, The Royal Institute of Technology Elisabeth Duker The use of carboxymethyl cellulose in papermaking; Aspects on process integration and strength-enhancing mechanisms Licentiate thesis, The Royal Institute of Technology Ingvild A. Johnsen The impact of dissolved hemicelluloses on adsorption of wood resin to TMP fines Doctoral thesis, Norwegian University of Science and Technology

Postgraduate students Professors Associate professors

Marcus Rehberger Topographical micro-changes in corrugated board production – Effects on flexographic post-print quality Licentiate thesis, The Royal Institute of Technology Erik Svanholm Printability and ink-coating interaction in inkjet printing Doctoral thesis, Karlstad University Siliva Viforr Way of reducing the energy demand in TMP by shear/compression deformation Licentiate thesis, The Royal Institute of Technology

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Annual Review 2007 STFI-Packforsk Group

Financial statements

Financial Statements The Group consists of the parent company, STFI-Packforsk AB, with its subsidiaries, LignoBoost AB and LignoBoost Demo AB in Sweden, PFI AS in Norway and STFIPackforsk UK Ltd. in Great Britain. The profit and loss statement and balance sheet include all the companies, in which the parent company directly or indirectly has more than half of the number of votes per share, and companies in which the Group, in another way, has a controlling influence and a more significant share in the result of their operations, which includes all the companies mentioned above.

Profit and loss statement

Income and EBT (adj.) 350 291

274

304

291

SEK m

20

2006-01-01 2006-12-31

15

250

10 5

200

0 150

-5 -10

100

-15

50 0

2007-01-01 2007-12-31

SEK 1,000

SEK m

300

25

-20 2004

2005

2006

2007

Income, SEK m EBT (adj.), SEK m

-25

Operating income Net sales Changes in work on contract Other operating income

297,885 4,703 1,057

286,246 3,233 1,050

303,645

290,529

-2,766 -97,290 -190,671 -10,665 0

-1,774 -88,139 -184,096 -10,267 -20

2,253

6,233

–

199

– 4,473 -886

838 752 -795

Profit after financial items

5,840

7,227

Tax on profit for the year Minority interests in profit for the year

-2,662 -61

-2,517 -21

PROFIT FOR THE YEAR

3,117

4,689

Operating expenses Raw materials, consumables and subcontractors Other external expenses Personnel expenses Depreciation of fixed assets Other operating expenses

Turnover per field of activity

Operating profit

3%

25% 39%

33%

Industrial Research, SEK 117 m Exploratory Research, SEK 102 m

Financial income and expense Result from participating in group companies Result from other securities and receivables accounted for as fixed assets Other interest income and similar revenues Interest expense and similar items

Client Projects, SEK 75 m Other, SEK 10 m

Annual Review 2007 STFI-Packforsk Group

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Balance sheet assets SEK 1,000

2007-12-31

2006-12-31

Fixed assets Tangible assets Buildings Equipment, tools, fixtures and fittings Fixed assets in progress

7,230 11,357 3,034

8,730 14,143 1,072

Financial fixed assets Other long-term receivables

21,621

23,945

40

–

Total fixed assets

40 21,661

0 23,945

4,646

6,310

Current assets Inventories and work in progress Work on contract

22

Current receivables Accounts receivable Other receivables Prepaid expenses and accrued income

4,646

6,310

32,100 16,644 9,185

20,061 11.851 14,190



57,929

46,102

Short-term investments Cash and bank balances ( limit SEK 20m )

– 88,085

28,527 65,787

Total current assets

150,660

146,726

TOTAL ASSETS

172,321

170,671

Annual Review 2007 STFI-Packforsk Group

Financial statements

Shareholders’ Equity and Liabilities SEK 1,000

Shareholders of STFI-Packforsk

2007-12-31

2006-12-31 10%

Shareholders’ equity Restricted equity Share capital Restricted reserves Unrestricted equity Unrestricted reserves Profit for the year

10% 51%

110 50,862

110 50,862

50,972

50,972

2,014 3,117

-3,297 4,689

Direct owners: Billerud, Holmen, Korsnäs, M-real, Stora Enso and Södra

5,131

1,392

The STFI Association of Interested Parties

29%

IRECO Holding

The Private Owners’ Association Packforsk

Minority interest Provisions Provisions for pensions and similar liabilities

56,103

52,364

364

301

12,571

11,968

12,571

11,968

Shareholders’ equity and Equity/assets ration 60

Current liabilities Advance payment from customers Accounts payable Tax liabilities Other short-term liabilities Accrued expenses and deferred income TOTAL SHAREHOLDERS’ EQUITY & LIABILITIES

52

2,332 629 1,530

2,665 630

4,491

3,295

12,560 14,151 2,829 31,854 37,398

1,823 18,821 2,085 48,076 31,938

98,792

102,743

172,321

170,671

1,459 251

2,043 239

40

56

48

50

SEK m

Long-term liabilities Liabilities to creditor The 1951 Donation Bank overdraft facility

60 50

38

40

30

30

20

20

10

10

0

2004

2005

2006

2007

0

Shareholders’ equity, SEK m Equity/assets ratio, %

Memorandum Pledged assets Contingent liabilities

Annual Review 2007 STFI-Packforsk Group

23

%

Total shareholders equity

Subsidiaries PFI AS

PFI AS Høgskoleringen 6b, NO-7491 Trondheim Norway Telephone +47 33 55 09 00 [email protected] www.pfi.no

PFI AS (Paper and Fibre Institute) was founded in January 2004, succeeding the Norwegian Pulp and Paper Research Institute (PFI), a research foundation dating back to 1923. From 1 February 2004, PFI AS is owned 95 % by STFI-Packforsk AB, the rest by the industrial groups Norske Skog, M. Peterson & Søn, Borregaard and Södra Cell with 1 % each. The old foundation, Norwegian Pulp and Paper Research Institute, also holds 1 % of the shares. PFI is technological and scientific centre of expertise in the fields of fibre, pulp and paper, wood fibre composites and sustainable woodbased biofuel. The company has 25 employees and is located on the campus of the Norwegian University of Science and Technology in Trondheim, Norway. Managing Director is Philip A. Reme.

STFI-Packforsk Edge

STFI-Packforsk Edge Unit 8, The Surrey Technology Centre 40 Occam Road, Guildford, Surrey, GU2 7YG, UK Telephone +44 1483 688181 [email protected] www.stfi-packforsk.eu/edge

STFI-Packforsk Edge is the trading name of STFI-Packforsk UK Ltd. The company was founded in 2007 and is owned 100% by STFI-Packforsk AB. STFI-Packforsk Edge is a niche management consultancy specialising in the packaging, paper and printing supply chains in international markets, enhancing client competitiveness and business decision making. The services of STFI-Packforsk Egde range from analysis of future markets and strategic planning, to sustainability consulting and market intelligence. STFI-Packforsk Edge is located in Guildford, Surrey, outside of London, UK. The company will have approx. 10 employees in the end of 2008. Managing Director is Greg Wood.

LignoBoost AB

LignoBoost AB Box 5604, SE-114 86 Stockholm, Sweden Telephone +46 676 70 00 [email protected] www.stfi-packforsk.eu/edge

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Annual Review 2007 STFI-Packforsk Group

The business was established in 2006 as a result of seven years of research within the STFI-Packforsk research programmes KAM (The Ecocyclic Pulp Mill) and FRAM (Future Resource-Adapted Pulp Mill). The company offers licencies, consulting and comprehensive solutions through partners. LignoBoost AB is owned 93,4 % by STFI-Packforsk AB. LignoBoost and its demonstration plant at Bäckhammar mill in Kristinehamn, Sweden, is financed by STFI-Packforsk, Södra, Stora Enso, Fortum Värme and The Swedish Energy Agency. Chief Operating Officer is Anders Engström.

STFI-Packforsk AB Box 5604, SE-114 86 Stockholm, Sweden Tel +46 (0)8 676 70 00, Fax +46 (0)8 411 55 18 [email protected] www.stfi-packforsk.se