##### Table of Contents







UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  FORM 20-F
  o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR
    (g)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORx

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number
    001-04192
  
  KHD
    Humboldt Wedag International Ltd.
 (Exact name of Registrant as
    specified in its charter)
  Not
    Applicable (Translation
    of Registrants Name into English)
  British
    Columbia, Canada (Jurisdiction
    of incorporation or organization)
  Suite 702,
    7th Floor, Ruttonjee House, Ruttonjee Centre, 11 Duddell Street,
    Central, Hong Kong SAR, China (Address
    of offices)
  Securities
    registered or to be registered pursuant to Section 12(b) of
    the Act.
  Title of each class

Name of each exchange on which registeredCommon Shares, Without Par Value

New York Stock Exchange   Securities registered or to be registered pursuant to
    Section 12(g) of the Act.
  Not
    Applicable (Title
    of Class)
  Securities for which there is a reporting obligation pursuant
    to Section 15(d) of the Act:
  Not
    Applicable
 (Title of Class)
    There were 30,224,237 common shares, without par value,
    issued and outstanding as of December 31, 2007.
  x o
  o x
    x o
  Rule 12b-2 x o o
  x o
  Rule 12b-2 o x
    o o







---



##### Table of Contents



(PHOTO OF TUBE MILL - STERLITAMAK PLANT, RUSSIA)Tube
Mill  Sterlitamak Plant, Russia




---



##### Table of Contents



DEAR SHAREHOLDERS




---



##### Table of Contents



OPERATING RESULTS




---



##### Table of Contents



ORDER BACKLOG BY REGION 2007
 ORDER INTAKE BY REGION 2007
    Discontinued Operations
 Adjustments to the Periods Ended September 30, 2007
 AS
REPORTED
    
    
    RESTATED
    
    
    ADJUSTMENTRevenues
    
    $
    418,825
    
    
    $
    416,893
    
    
    $
    1,932Cost of revenues
    
    $
    357,968
    
    
    $
    356,809
    
    
    $
    1,159Gross profit
    
    $
    60,857
    
    
    $
    60,084
    
    
    $
    773Income from 
continuing operations
    
    $
    38,639
    
    
    $
    38,126
    
    
    $
    513




---



##### Table of Contents



PERFORMANCE




---



##### Table of Contents



(PHOTO OF MORDOW02 PLANT)Cyclone Heat Exchanger  Mordow02 Plant  Russia
  PRESIDENTS REPORT




---



##### Table of Contents



SUMMARY OF ORDER BACKLOG AT DECEMBER 31, 2007PROJECT
    
    PROJECT LOCATION
    
    SUBJECTZaveh Torbat
    
    Middle East
    
    Cement production line 3,500 t/dJ.P. Himachal Grinding
    
    Asia
    
    Cement grinding plant with roller pressCNSAL
    
    Middle East
    
    Capacity increase from 2,000 to 3,800 t/dLonggu
    
    Asia
    
    3 Romjigs and 10 pneuflotsBeeshoek  BKM
    
    Africa
    
    4 Batac + 4 bucket conveyorRaysut Cement
    
    Middle East
    
    Cement production line 2,000 / 2,200 t/dHofuf
    
    Asia
    
    Supply of roller press / VSK + SKS separatorEkon / Askale
    
    Middle East
    
    Kiln line 3,500 t/d clinker productionÜnye
    
    Middle East
    
    Supply of roller press / VSK + SKS separatorCiment Campulung
    
    Eastern Europe
    
    Kiln line with mill clinker siloContinental
    
    N/S America
    
    Kiln feed system, preheater, kiln and clinker coolerGrasim Kotpuli
    
    Asia
    
    Preheater, kiln and pyrofloorKotpuli
    
    Asia
    
    Cement production line 8,000 t/dPanipat Grasim
    
    Asia
    
    Grinding line with roller pressCemex Balcones
    
    N/S America
    
    Pyro line 3,500 t/d, preheater, rotary kilnKhoy Cement
    
    Middle East
    
    Clinker production lineGrasim Aditya
    
    Asia
    
    Pyro line 8,000 t/d, cement grindingUltratech Tadapatri
    
    Asia
    
    8,000 t/d cement plant, pyro section, cement grindingMaras
    
    Middle East
    
    Kiln line 3,800 t/d clinker productionBuzzi Unicem, River 7000
    
    N/S America
    
    Kiln lineBuzzi Unicem, River Steel
    
    N/S America
    
    Material supply, steelMordow 3
    
    Russia
    
    Engineering and partsNovotroizk
    
    Russia
    
    EngineeringOrissa Cement
    
    Asia
    
    4,000 t/d kiln lineLafarge Askaka
    
    Africa
    
    Coal millHanson Permanente
    
    N/S America
    
    2 Mill shellsLafarge Mejia
    
    Asia
    
    Grinding plantAsec
    
    Middle East
    
    Ball mill with slide shoe bearingCarbossulcis
    
    Europe
    
    PneuflotAditya Cement Line 2
    
    Asia
    
    Pyro line 8,000 t/dMaas Jordan
    
    Middle East
    
    Tyre section, clinker cooler plantSouk El Khamis
    
    Africa
    
    Clinker cooler upgradeSouth Valley
    
    N/S America
    
    Spares kiln line 5,000 t/dLCC Benghazi 3
    
    Africa
    
    Rehabilitation of kiln sectionSichuan Yadong II
    
    Asia
    
    Kiln line 4,200 t/dHubei Yadong
    
    Asia
    
    Kiln line 4,200 t/dOrient Cement Devapur I & III
    
    Asia
    
    Roller press 13 + roller press 16Grasim Aligarh
    
    Asia
    
    Grinding line, roller press and VSK separatorRaysut lV
    
    Middle East
    
    2 Roller press 7, separator, pyrofloor, water treatmentDeccan Cement
    
    Asia
    
    Pyro process and grinding




---



##### Table of Contents



SUMMARY OF ORDER BACKLOG AT DECEMBER 31, 2007PROJECT
    
    PROJECT LOCATION
    
    SUBJECTUltratech (Awarpur)
    
    Asia
    
    Coal washery with batac jig and cyclonesUltratech (Hirmi)
    
    Asia
    
    Coal washery with cyclonesContinental
    
    N/S America
    
    Roller pressBroceni Kiln 5
    
    Eastern Europe
    
    Engineering, preheaterLukavac
    
    Eastern Europe
    
    Clinker production line 2,000 t/dDenizli
    
    Middle East
    
    Mill upgrade with roller pressEagle Mountain
    
    America
    
    New line expansionCemex Yaqui
    
    N/S America
    
    Kiln line 3,500 t/dJaypee Group
    
    Asia
    
    Pyro process and grindingChettinad Cement  Orient
    
    Asia
    
    Grinding line with roller press and upgrade coolerCemex Bayano
    
    N/S America
    
    Kiln line 3,500 t/d preheater tertiary airduct systemBhusan Power & Steel
    
    Asia
    
    Coal washery plantS.V. Power Coal Washery
    
    Asia
    
    Coal washery plantAdanac
    
    N/S America
    
    2 Roller pressAshaka Lignite
    
    Asia
    
    Grinding lineAKCC Al Katrana
    
    Middle East
    
    Cement production line 5,000 t/dHasanoglan
    
    Middle East
    
    Clinker production line 2,500 t/dHimachal II
    
    Asia
    
    Kiln line 6,000 t/dSengilej
    
    Russia
    
    Cement production line 3,000 t/dJaypee Cement
    
    Asia
    
    Grinding lineShree Cement
    
    Asia
    
    Grinding lineJindal Stainless Ltd
    
    Asia
    
    Coal washery plantRP Vasilkovka
    
    Russia
    
    2 Roller pressSibirski
    
    Russia
    
    2 Roller pressKrasnojarsk
    
    Russia
    
    Automation systemJSW Cement (Jindal)
    
    Asia
    
    Grinding line with roller press and separatorSangwon
    
    Middle East
    
    Cement plant 2 linesCemex Poland
    
    Eastern Europe
    
    Pyro processing line 8,000 t/dDuro Felguera II
    
    N/S America
    
    Mims permos 14xSeverstal
    
    Russia
    
    Slurry coal beneficationBhusan Steel Ltd
    
    Asia
    
    Coal washery plantJSW Cement
    
    Asia
    
    9 Roller presses and pyro line




---



##### Table of Contents



Cement
  Cement Order Intake
 Cement Backlog
  Coal and Minerals
  Coal and Minerals Order Intake
  Coal and Minerals Backlog




---



##### Table of Contents



KHD HUMBOLDT WEDAG INTERNATIONAL LTD.
 
 Inauguration
 Sterlitamak Plant, Russia




---



##### Table of Contents



GUIDANCE FOR 2008
   2008 GROWTH AND
SUSTAINABILITY PROGRAMS
 Growth  Cement Business




---



##### Table of Contents



KHD
HUMBOLDT WEDAG INTERNATIONAL LTD.
 (PHOTO OF PLANTS)Top: 1x BATAC  Beeshoek Plant, South AfricaBottom left to right:6x PNEUFLOT  Qipanjing Plant, ChinaCyclone Heat Exchanger  Continental Plant, USA1x PNEUFLOT  Dartbrook Plant, Australia
  PRESIDENTS REPORT




---



##### Table of Contents



Growth  Coal and Minerals Business
 
    PRESIDENTS REPORT




---



##### Table of Contents



(PHOTO OF IMPACT HAMMER MILL - MORDOW02 PLANT, RUSSIA)Impact Hammer Mill  Mordow02 Plant, Russia
  PRESIDENTS REPORT




---



##### Table of Contents



Sustainability




---



##### Table of Contents



RETURN OF EQUITY TO OUR SHAREHOLDERS BY DISTRIBUTION OF MASS FINANCIAL SHARES
   
 President and Chief Executive Officer
    PRESIDENTS REPORT




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD.FORM 20-F
    TABLE OF CONTENTS
  Page No.PART 1ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS


3ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE


3ITEM 3.

KEY INFORMATION


3Selected Financial Data


3Capitalization and Indebtedness


5Reasons for the Offer and Use of Proceeds


6Risk Factors


6ITEM 4.

INFORMATION ON THE COMPANY


10History and Development of the Company


10Business Overview


10Organizational Structure


18Property, Plant and Equipment


19ITEM 4A.

UNRESOLVED STAFF COMMENTS


20ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS


20Operating Results


21Liquidity and Capital Resources


26Research and Development, Patents and Licenses,
    Etc.


31Trend Information


31Off-balance Sheet Arrangements


31Tabular Disclosure of Contractual Obligations


31Safe Harbor


31ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


32Directors and Senior Management


32Compensation


33Board Practices


35Employees


36Share Ownership


36ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


37Major Shareholders


37Related Party Transactions


38ITEM 8.

FINANCIAL INFORMATION


40Consolidated States and Other Financial
    Information


40Significant Changes


40ITEM 9.

THE OFFER AND LISTING


41Offer and Listing Details


41Plan of Distribution


42Markets


42Selling Shareholders


42Dilution


42Expenses of the Issue


42ITEM 10.

ADDITIONAL INFORMATION


42Share Capital


42Notice of Articles and Articles


42Material Contracts


43Exchange Controls


45




---



##### Table of Contents



Page No.Taxation


46Dividends and paying agents


49Statement by Experts


49Documents on Display


49Subsidiary Information


49ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


50ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


52PART IIITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


52ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


52ITEM 15.

CONTROLS AND PROCEDURES


52ITEM 16.

RESERVED


54ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT


54ITEM 16B.

CODE OF ETHICS


54ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


54ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


55ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY OUR COMPANY AND
    AFFILIATED PURCHASERS


55PART IIIITEM 17.

FINANCIAL STATEMENTS


56ITEM 18.

FINANCIAL STATEMENTS


56ITEM 19.

EXHIBITS


103SIGNATURES


105Section 302 C.E.O. CertificationSection 302 C.F.O. CertificationSection 906 C.E.O. CertificationSection 302 C.F.O. CertificationConsent of Deloitte & Touche LLPConsent of BDO Dunwoody LLP.   2




---



##### Table of Contents



PART I
          ITEM 1
    Identity
    of Directors, Senior Management and Advisers    ITEM 2
    Offer
    Statistics and Expected Timetable    ITEM 3
    Key
    Information  A.
    Selected
    Financial Data   3




---



##### Table of Contents



Selected
    Financial Data
    (Stated in United States dollars in accordance with Canadian
    GAAP)
    (in thousands, other than per share amounts)
    Fiscal Years Ended December 31
  2007


2006(1)


2005(1)


2004(1)


2003(1)Revenues

$
580,391


$
404,324


$
316,978


$
144,039


$
Operating income (loss)


53,010



40,555



25,551



8,206



(1,476
)Income from continuing operations


50,980



34,152



22,864



6,270



1,229Income (loss) from discontinued operations


(9,351
)


(2,874
)


5,361



22,121



33,816Extraordinary gain


513















Income from continuing operations per
    share(2)Basic


1.71



1.13



0.84



0.23



0.05Diluted


1.68



1.12



0.84



0.23



0.05Income (loss) from discontinued operations per
    share(2)Basic


(0.31
)


(0.10
)


0.20



0.82



1.30Diluted


(0.31
)


(0.09
)


0.19



0.82



1.30Extraordinary gain per
    share(2)Basic


0.02















Diluted


0.02















Net income


42,142



31,278



28,225



28,391



35,045Net income per
    share(2)Basic


1.42



1.03



1.04



1.05



1.34Diluted


1.39



1.03



1.03



1.05



1.34Total assets


789,311



641,920



523,056



501,578



313,043Net assets


313,120



295,754



262,347



248,196



172,757Long-term debt, less current portion


13,920



10,725



2,920



3,320



12,643Shareholders equity


307,194



273,288



244,259



223,844



169,023Capital stock, net of treasury stock


44,566



44,212



53,574



52,478



45,356Weighted average common stock outstanding, diluted (in thousands
    of
    shares)(2)


30,402



30,415



27,509



27,040



26,110     (1)
    
    The disposition of our companys real estate interests in
    September, 2007 and the financial services segment in 2006
    resulted in discontinued operations. Accordingly, prior period
    financial statements have been reclassified to reflect this
    change. Please refer to the discussion in Note 4 to our
    consolidated financial statements included in this annual
    report. We use income from continuing operations as the control
    number in determining whether potential common shares are
    dilutive or anti-dilutive for purposes of computed diluted
    earnings per share for each year presented. Because we are
    reclassifying prior years financial statements for the
    presentation of discontinued operations, diluted earnings per
    share are not consistent with those originally presented.(2)
    
    Adjusted for two-for-one split which became effective on
    September 10, 2007. 4




---



##### Table of Contents



Selected
    Financial Data
    (Stated in United States dollars in accordance with U.S.
    GAAP)
    (in thousands, other than per share amounts)
    Fiscal Years Ended December 31
  2007


2006(1)


2005(1)


2004(1)


2003(1)Revenues

$
580,391


$
404,324


$
316,978


$
144,039


$
Operating income (loss)


45,046



38,596



25,551



8,206



(1,473
)Income from continuing operations


43,031



32,220



22,843



6,287



1,226Income (loss) from discontinued operations


(9,351
)


(2,874
)


(1,950
)


22,121



33,732Extraordinary gain


513















Income from continuing operations per
    share(2)Basic


1.44



1.07



0.84



0.23



0.05Diluted


1.42



1.06



0.84



0.23



0.05Income (loss) from discontinued operations per
    share(2)Basic


(0.31
)


(0.10
)


(0.07
)


0.82



1.30Diluted


(0.31
)


(0.10
)


(0.07
)


0.82



1.30Extraordinary gain per
    share(2)Basic


0.02















Diluted


0.02















Net income


34,193



29,346



20,893



28,408



35,058Net income per
    share(2)Basic


1.15



0.97



0.77



1.05



1.34Diluted


1.13



0.96



0.77



1.05



1.34Total assets


789,541



641,920



523,401



501,995



310,657Net assets


306,854



291,567



253,843



247,416



169,301Long-term debt, less current portion


13,920



10,725



2,920



3,320



12,643Shareholders equity


300,939



269,101



235,755



223,064



165,567Capital stock, net of treasury stock


50,162



44,174



53,574



52,478



45,356Weighted average common stock outstanding, diluted (in thousands
    of
    shares)(2)


30,402



30,415



27,509



27,040



26,110     (1)
    
    The disposition of our companys real estate interests in
    September, 2007 and the financial services segment in 2006
    resulted in discontinued operations. Accordingly, prior period
    financial statements have been reclassified to reflect this
    change. Please refer to the discussion in Note 4 to our
    consolidated financial statements included in this annual
    report. We use income from continuing operations as the control
    number in determining whether potential common shares are
    dilutive or anti-dilutive for purposes of computed diluted
    earnings per share for each year presented. Because we are
    reclassifying prior years financial statements for the
    presentation of discontinued operations, diluted earnings per
    share are not consistent with those originally presented.(2)
    
    Adjusted for two-for-one split which became effective on
    September 10, 2007.  Reconciliation
    to United States Generally Accepted Accounting
    Principles
    B.
    Capitalization
    and Indebtedness   5




---



##### Table of Contents



C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors            Risk
    Factors Relating to Our Business
  A
    downturn in the economy could reduce the demand for our
    industrial plant engineering and equipment supply business and
    therefore may have a material adverse effect on our financial
    results.
   6




---



##### Table of Contents



Our
    annual and quarterly operating results vary from period to
    period and therefore may have a material adverse effect on our
    financial results.
    Any
    significant disruption of our operations may harm our business
    reputation and cause an adverse effect on our financial
    results.
    We are
    exposed to political, economic, legal, operational and other
    risks as a result of our global operations, which may negatively
    effect our business, results of operations, financial condition
    and cash flow.
    Transactions
    with parties in countries designated by the United States State
    Department as state sponsors of terrorism may lead some
    potential customers and investors in the United States and other
    countries to avoid doing business with us or investing in our
    shares.
   7




---



##### Table of Contents



The cost
    of raw materials could have a material adverse effect on our
    financial condition and results of operations.
  and/or
  We are
    subject to risks associated with changing technology and
    manufacturing techniques, which could place us at a competitive
    disadvantage.
    Our
    competitors include firms traditionally engaged in the
    industrial plant engineering and equipment supply
    business.
  and/or
  Our risk
    management strategies leave us exposed to unidentified or
    unanticipated risks which could impact our risk management
    strategies in the future and could negatively affect our results
    of operations and financial condition.
    A rise in
    inflation may negatively affect our business, results of
    operations and financial condition.
   8




---



##### Table of Contents



We are
    exposed to legal risks in our business which are often difficult
    to assess or quantify. We may incur significant legal expenses
    in defending against any litigation.
    Some of
    our subsidiaries operating in the industrial plant engineering
    and equipment supply business are staffed by a unionized
    workforce, and union disputes and other employee relations
    issues may materially and adversely affect our financial
    results.
    We may
    not be able to protect the confidential or unique aspects of our
    technology, which would reduce our competitive
    advantage.
    General
    Risks Faced by Our Company
  Investors
    interests will be diluted and investors may suffer dilution in
    their net book value per share if we issue additional shares or
    raise funds through the sale of equity securities.
    Our
    constating documents contain indemnification provisions and we
    have entered into agreements indemnifying our officers and
    directors against all costs, charges and expenses incurred by
    them.
    Certain
    factors may inhibit, delay or prevent a takeover of our company
    which may adversely affect the price of our common
    stock.
   9




---



##### Table of Contents



Fluctuations
    in interest rates and foreign currency exchange rates may affect
    our results of operations and financial condition.
  Form 20-F
  Form 20-F
  ITEM 4
    Information
    on the Company  A.
    History
    and Development of the Company  Companies
    Act of 1934 Canada
    Business Corporations Act Business Corporations Act Business Corporations Act
      B.
    Business
    Overview         10




---



##### Table of Contents



2007


2006


2005(In thousands)Africa

$
21,393


$
10,488


$
8,475Americas


118,417



75,723



22,805Asia


196,348



106,336



66,573Russia & Eastern Europe


83,592



41,548



42,187Europe


35,502



29,764



30,889Middle East


123,283



135,759



134,180Australia


1,856



4,706



11,869Total

$
580,391


$
404,324


$
316,978   Description
    of Our Industrial Plant Engineering and Equipment Supply
    Business
    scale-up
    Business
    Activities  Cement
       11




---



##### Table of Contents



Business
    Activities  Coal and Minerals
        Recent
    Developments
    Business Corporations Act
   12




---



##### Table of Contents




    Gaudfrin (France) which specializes in large diameter vacuum
    disc filters for the alumina industry.
    Doppstadt (Germany) which provides municipal sewage waste
    treatment equipment engineering and systems.
    Westech Engineering (United States) which provides a
    comprehensive range of liquid and solid separation
    equipment and systems for mineral, chemical and environmental
    applications.
    Fraser Alexander Tailings (South Africa) which provides
    technology for hydraulic mining and paddock dams for mineral
    tailings.  Expanding
    Low Cost Platforms
    Global
    Risk Control
    Joint
    Venture in Russia
     13




---



##### Table of Contents



Research
    and Development
      2 2 2
    2 2
      Order
    Intake and Backlog
          Industry
    Description
    Competition
   14




---



##### Table of Contents




    complete line competitors which are companies providing either a
    similar, or even broader range of equipment services to the
    cement industry; and
    part line competitors which are companies focusing on a smaller
    range of equipment and technologies.        Sales and
    Distribution Channels
        Patents
    and Licenses
      Description
    of Our Royalty Interest
   15




---



##### Table of Contents



Discontinued
    Operations
  Disposition
    of Financial Services Operations
          2 3
  15-year
   16




---



##### Table of Contents



17




---



##### Table of Contents



dividend-in-kind.
    Real
    Estate and Other Interests
  Business
    Corporations Act
      C.
    Organizational
    Structure    Jurisdiction ofIncorporation orName of Wholly-Owned Subsidiary

OrganizationKHD Holding AG

SwitzerlandKHD Humboldt Wedag International Holdings GmbH

AustriaKHD Humboldt Wedag International GmbH

AustriaHumboldt Wedag Inc.

USAHumboldt Wedag India Ltd.

IndiaHumboldt Wedag Australia Pty Ltd.

AustraliaKHD Investments Ltd.

Marshall IslandsNew Image Investment Company Limited

USAInverness Enterprises Ltd.

CanadaKHD Humboldt Wedag (Cyprus) Limited

CyprusMFC & KHD International Industries Limited

SamoaKHD Humboldt Wedag (Shanghai) International Industries Limited

ChinaKHD Sales and Marketing Ltd.

Hong KongKHD Humboldt Wedag International (UAE) FEZ

UAE  18




---



##### Table of Contents



Jurisdiction of



OurIncorporation or



BeneficialName of Non-Wholly-Owned Subsidiary

Organization

Owner of Interests

ShareholdingKHD Humboldt Wedag International (Deutschland) AG

Germany

KHD Humboldt Wedag International Ltd.


97.9
%(1)KHD Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%Humboldt Wedag Coal & Minerals Technology GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%ZAB Zementanlagenbau GmbH Dessau

Germany

KHD Humboldt Wedag GmbH


97.9
%ZAB Industrietechnik & Service GmbH

Germany

Zementanlagenbau Dessau GmbH


97.9
%Humboldt Wedag (SA) (Pty) Ltd.

South Africa

KHD Humboldt Wedag International GmbH


71.9
%Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%Blake International Limited

British Virgin Islands

KHD Humboldt Wedag GmbH


97.8
%HIT International Trading AG

Germany

Blake International Limited


73.5
%     (1)
    
    Held by our company and/or our subsidiaries.  D.
    Property,
    Plant and Equipment  Office
    Space
        Royalty
    Interest  Wabush Iron Ore Mine
     19




---



##### Table of Contents



ITEM 4A
    Unresolved
    Staff Comments    ITEM 5
    Operating
    and Financial Review and Prospects     20




---



##### Table of Contents



Reclassification
    as a Result of Discontinued Operations
    A.
    Operating
    Results      Discontinued
    Operations
  Discontinued Operations  Disposition of Financial
    Services Operations Discontinued
    Operations  Real Estate and Other Interests
  Summary
    of Quarterly Results
    December 31,


September 30,


June 30,


March 31,2007


2007


2007


2007(Restated(3))


(Restated(3))


(Restated(3))(United States dollars in thousands, except per share
    amounts, in accordance with Canadian GAAP)Revenues

$
163,498


$
150,441


$
159,544


$
106,908Gross profit


25,875



20,551



19,405



20,128Income from continuing operations


12,854



19,727



10,284



8,115Income from continuing operations, per shareBasic


0.43



0.65



0.35



0.28Diluted


0.42



0.64



0.34



0.27Net
    income(2)


11,611



11,782



10,269



8,480Net income per
    share(2)Basic


0.39



0.39



0.35



0.29Diluted


0.38



0.38



0.34



0.28   21




---



##### Table of Contents



December 31,


September 30,


June 30,


March 31,2006(1)


2006(1)


2006(1)


2006(1)(United States dollars in thousands, except per share
    amounts, in accordance with Canadian GAAP)Revenues

$
164,743


$
96,770


$
80,868


$
61,943Gross profit


27,835



15,444



12,944



9,606Income from continuing operations


15,069



9,872



7,596



1,615Income from continuing operations, per share Basic


0.50



0.32



0.25



0.06Diluted


0.49



0.32



0.25



0.06Net
    income(2)


11,008



10,223



7,222



2,825Net income per
    share(2)Basic


0.37



0.33



0.24



0.10Diluted


0.36



0.33



0.24



0.10     (1)
    
    The disposition of our companys real estate interests in
    September, 2007 and the financial services segment in 2006
    resulted in discontinued operations. Accordingly, prior period
    financial statements have been reclassified to reflect this
    change. Please refer to Note 4 to our consolidated
    financial statements included in this annual report.(2)
    
    Including both continuing and discontinued operations.(3)
    
    For details of the restatement, see below.  Restatement
    of Quarterly Periods Ended March 31, June 30 and
    September 30, 2007
  Form 6-K
    Nine


Three


Three


ThreeMonths Ended


Months Ended


Months Ended


Months EndedSeptember 30,


September 30,


June 30,


March 31,Previously Reported

2007


2007


2007


2007(United States dollars in thousands, except per share
    amounts)Revenues

$
418,825


$
148,833


$
160,407


$
109,585Cost of revenues


357,968



132,286



138,902



87,353Gross profit


60,857



16,547



21,505



22,232Income from continuing operations


38,639



16,057



11,764



11,168Income from continuing operations per shareBasic


1.29



0.53



0.79



0.76Diluted


1.27



0.52



0.77



0.75Net income


31,044



8,112



11,764



11,168Net income per shareBasic


1.04



0.27



0.79



0.76Diluted


1.02



0.26



0.77



0.75   22




---



##### Table of Contents



Nine


Three


Three


ThreeMonths Ended


Months Ended


Months Ended


Months EndedSeptember 30,


September 30,


June 30,


March 31,Adjustment

2007


2007


2007


2007(United States dollars in thousands, except per share
    amounts)Revenues

$
(1,932
)

$
1.608


$
(863
)

$
(2,677
)Cost of revenues


(1,159
)


(2,396
)


1,237



Gross profit


(773
)


4,004



(2,100
)


(2,677
)Income taxes


260



362



413



(515
)Minority interests






(696
)


192



504Income from continuing operations


(513
)


3,670



(1,495
)


(2,688
)Income from continuing operations per shareBasic


(0.02
)


0.12



(0.10
)


(0.18
)Diluted


(0.02
)


0.12



(0.09
)


(0.18
)Net income


(513
)


3,670



(1,495
)


(2,688
)Net income per shareBasic


(0.02
)


0.12



(0.10
)


(0.18
)Diluted


(0.02
)


0.12



(0.09
)


(0.18
)   Nine


Three


Three


ThreeMonths Ended


Months Ended


Months Ended


Months EndedSeptember 30,


September 30,


June 30,


March 31,Restated

2007


2007


2007


2007(United States dollars in thousands, except per share
    amounts)Revenues

$
416,893


$
150,441


$
159,544


$
106,908Cost of revenues


356,809



129,890



140,139



87,353Gross profit


60,084



20,551



19,405



19,555Income from continuing operations


38,126



19,727



10,269



8,480Income from continuing operations per shareBasic


1.27



0.65



0.69



0.58Diluted


1.25



0.64



0.68



0.57Net income


30,531



11,782



10,269



8,480Net income per shareBasic


1.02



0.39



0.69



0.58Diluted


1.00



0.38



0.68



0.57   Acquisitions
    and Divestitures
  Discontinued Operations  Disposition of Financial
    Services Operations Discontinued
    Operations  Real Estate and Other Interests
    Overview
    of 2007 Results
   23




---



##### Table of Contents



Year Ended December 312007


2006(1)


2005(1)(United States dollars in millions,except per share amounts)Revenues

$
580.4


$
404.3


$
317.0Cost of revenues


494.4



338.5



269.8Other operating income  resource property


18.1



6.7



4.3General and administrative expenses (including stock based
    compensation)


51.1



31.9



26.0Income from continuing operations


51.0



34.2



22.9Basic earnings per share, continuing operations


1.71



1.13



0.84Diluted earnings per share, continuing operations


1.68



1.12



0.84     (1)
    
    The disposition of our companys real estate interests in
    September, 2007 and the financial services segment in 2006
    resulted in discontinued operations. Accordingly, prior period
    financial statements have been reclassified to reflect this
    change. Please refer to Note 4 to our consolidated
    financial statements included in this annual report.    Year
    Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006
           24




---



##### Table of Contents



Year
    Ended December 31, 2006 Compared to the Year Ended
    December 31, 2005
       25




---



##### Table of Contents



B.
    Liquidity
    and Capital Resources   26




---



##### Table of Contents



December 31,2007


2006(United States dollars in millions)Cash and cash equivalents

$
354.4


$
204.5Total assets


789.3



641.9Long-term debt, less current portion


13.9



10.7Shareholders equity


307.2



273.3             Changes
    in Financing and Capital Structure
    Operating
    Activities
     27




---



##### Table of Contents



Investing
    Activities
    Financing
    Activities
      Discontinued
    Operations
    Foreign
    Currency
            Derivative
    Instruments
   28




---



##### Table of Contents



Inflation
    Application
    of Critical Accounting Policies
      Revenue
    Recognition
  and/or contract-in-progress
  Inventories
  work-in-progress
  work-in-progress,
  Valuation
    of Securities
    and/or
 29




---



##### Table of Contents



Warranty
    Costs
    Pension
    Benefits
      Income
    Taxes
        
    the history of the tax loss carryforwards and their expiry dates;
    future reversals of temporary differences;
    our projected earnings; and
    tax planning opportunities.      Changes
    in Accounting Policies including Initial Adoption
   30




---



##### Table of Contents



C.
    Research
    and Development, Patents and Licenses, Etc.    D.
    Trend
    Information    E.
    Off-balance
    Sheet Arrangements    Disclosure of Guarantees
   F.  Tabular
    Disclosure of Contractual Obligations  Payments
    Due by Period
    (United States dollars in thousands)
  Contractual Obligations as

Less than


2  3


4  5


More thanat December 31, 2007

1 Year


Years


Years


5 Years


TotalLong-term debt
    obligations(1)

$



$
2,052


$
11,868


$



$
13,920Operating lease obligations


3,341



2,611



2,596



4



8,552Purchase
    obligations(2)


227,602















227,602Other long-term liabilities reflected on the Companys
    balance sheet under
    GAAP(3)






4,931











4,931Total

$
230,943


$
9,594


$
14,464


$
4


$
255,005     (1)
    
    Principal amounts only.(2)
    
    Purchases to complete our industrial plant engineering and
    equipment supply contracts which are accounted for by the
    percentage-of-completion accounting method.(3)
    
    Not including pension obligations.  G.
    Safe
    Harbor   31




---



##### Table of Contents



ITEM 6
    Directors,
    Senior Management and Employees  A.
    Directors
    and Senior Management    Date of

Expirationcommencement of

of termoffice with our

of office withName and age

Present position with our company

company

our companyMichael J. Smith (59)


Chairman and Director



1986



2008James Busche (49)


President and Chief Executive Officer



2006



N/AAlan Hartslief (49)


Chief Financial Officer and Secretary



2007



N/ADr. Shuming
    Zhao(1)(2)(3)
    (53)


Director



2004



2010Dr. Kelvin K.
    Yao(1)(2)(3)
    (55)


Director



2004



2010Silke
    Brossmann(1)(2)(3)
    (39)


Director



2003



2008Indrajit
    Chatterjee(1)(2)(3)
    (62)


Director



2005



2009     (1)
    
    Member of our audit committee.(2)
    
    Member of our compensation committee.(3)
    
    Member of our nominating and corporate governance committee.  Michael
    J. Smith  President and Director
      James
    Busche  Chief Executive Officer
    Alan
    Hartslief  Chief Financial Officer and
    Secretary
    Dr. Shuming
    Zhao  Director
   32




---



##### Table of Contents



Dr. Kelvin
    K. Yao  Director
    Silke
    Brossmann  Director
    Indrajit
    Chatterjee  Director
    Family
    Relationships
    B.
    Compensation   33




---



##### Table of Contents



Executive
    Compensation
    SUMMARY
    COMPENSATION TABLE
  Long Term CompensationSecurities UnderAnnual
    Compensation(1)

Other Annual

Options/SARs

All otherName and Principal Position

Salary

Bonus

Compensation

Granted

CompensationMichael J.
    Smith(2)


$240,000



$100,000



Nil



Nil



$134,953Chairman and DirectorJames
    Busche(3)(4)


$120,000



$100,000



Nil



Nil



$9,152Chief Executive Officer and PresidentAlan
    Hartslief(5)


$47,271



Nil



Nil



50,000
(6)


NilChief Financial Officer and SecretaryGeorge Zimmerman


$312,411



Nil



$15,051



50,000
(7)


$17,353Senior Vice PresidentHermann Kroger


$247,184



$34,172



$14,818



50,000
(7)


$17,526Vice President, EngineeringRudolf Pich


$264,516



Nil



$14,818



50,000
(7)


$21,614Vice President, Sales and Marketing     (1)
    
    On a cash basis, unless otherwise stated.(2)
    
    Mr. Smith resigned as our President and Chief Executive
    Officer effective March 7, 2006, our Chief Financial
    Officer effective October 16, 2007 and our Secretary
    effective March 1, 2008.(3)
    
    Mr. Busche was appointed our Chief Executive Officer
    effective March 7, 2006.(4)
    
    Does not include any amounts paid to Montgomery Partners.(5)
    
    Mr. Hartslief was appointed our Chief Financial Officer
    effective October 16, 2007 and our Secretary effective
    March 1, 2008.(6)
    
    Represents stock options with an exercise price of $31.28 per
    share until December 4, 2017.(7)
    
    Represents stock options with an exercise price of $26.85 per
    share until May 17, 2017.  Directors
    Compensation
    Employment
    Agreements and Termination of Employment or Change of
    Control
   34




---



##### Table of Contents



C.
    Board
    Practices  Business Corporations Act
       35




---



##### Table of Contents



Comparison
    of NYSE Corporate Governance Rules
    
  E.
    Employees    F.
    Share
    Ownership    Number ofNumber of



Stock OptionsCommon Shares



to PurchaseName Office Held

Beneficially Owned

Percentage(1)

Common SharesMichael J.
    Smith(2)


170,000




*%

110,000, exercise priceChairman and Director









of $13.06, expirydate of May 17, 2016James
    Busche(3)


Nil



Nil


NilChief Executive Officer and PresidentAlan
    Hartslief(4)


Nil



Nil


50,000, exercise priceChief Financial Officer and Secretary









of $31.28, expiry dateof December 4, 2017Dr. Shuming Zhao


Nil



Nil


NilDirectorDr. Kelvin K. Yao


Nil



Nil


NilDirectorSilke BrossmannDirector


Nil



Nil


NilIndrajit Chatterjee


Nil



Nil


NilDirector     *
    
    Less than one percent (1%)(1)
    
    Based on 30,234,237 common shares issued and outstanding as at
    March 15, 2008.(2)
    
    Michael J. Smith resigned as our Chief Financial Officer
    effective October 16, 2007 and our Secretary effective
    March 1, 2008. 36




---



##### Table of Contents



(3)
    
    James Busche was appointed our Chief Executive Officer and
    President effective March 7, 2006. Does not include options
    that were granted to Montgomery Partners Limited, a company in
    which James Busche has an ownership interest.(4)
    
    Alan Hartslief was appointed our Chief Financial Officer
    effective October 16, 2007 and our Secretary effective
    March 1, 2008.  Stock
    Option Plan
    ITEM 7
    Major
    Shareholders and Related Party Transactions  A.
    Major
    Shareholders    Name

Amount Owned

Percent of
    Class(1)Peter Kellogg


6,283,100
(2)


20.8%FMR Corp.


1,905,150



6.3%Apis Capital, LP and
    Others(3)


1,584,194



5.2%     (1)
    
    Based on 30,234,237 common shares issued and outstanding on
    March 15, 2008.(2)
    
    In his public filings, Mr. Kellogg disclaims beneficial
    ownership of 5,643,100 of the shares, or approximately 18.7% of
    our issued and outstanding common shares.(3)
    
    A Schedule 13G was filed by (i) Apis Capital, LP,
    (ii) Apis Capital (QP), LP, (iii) Apis Capital
    Offshore, Ltd., (iv) Apis Global Deep Value, LP,
    (v) Apis Global Deep Value Offshore, Ltd., (vi) Apis
    Capital Advisors, LLC, (vii) Steven A. Werber, Jr. and
    (viii) Daniel J. Barker.         37




---



##### Table of Contents



B.
    Related
    Party Transactions    and/or
  Continuing
    Operations
                  Discontinued
    Operations
   38




---



##### Table of Contents



Business Corporations Act
 39




---



##### Table of Contents



ITEM 8
    Financial
    Information  A.
    Consolidated
    Statements and Other Financial Information    Financial
    Statements filed as part of the Annual Report:
                        Legal
    Proceedings
    Dividend
    Distributions
    B.
    Significant
    Changes    Business Corporations Act
 40




---



##### Table of Contents



ITEM 9
    The
    Offer and Listing  A
    Offer
    and Listing Details    Exchange(1)High
    (U.S.$)(2)


Low
    (U.S.$)(2)Annual Highs and Lows2003


9.21



3.412004


13.83



7.632005


13.26



7.752006


22.10



10.342007


45.74



18.00Quarterly Highs and Lows2006First Quarter


13.23



10.65Second Quarter


14.93



11.51Third Quarter


16.51



12.68Fourth Quarter


22.10



15.352007First Quarter


20.53



18.00Second Quarter


32.25



20.46Third Quarter


34.60



25.38Fourth Quarter


45.74



25.37Monthly Highs and Lows2007September


31.53



28.65October


45.74



30.00November


44.87



27.72December


32.64



25.372008January


32.43



21.55February


29.88



24.63March (to March 15, 2008)


28.60



23.13     (1)
    
    Shares were traded on the Nasdaq Global Select Market up to and
    including June 15, 2007 and then on the NYSE on and after
    June 18, 2007.(2)
    
    All numbers have been adjusted to reflect the two (2) for
    one (1) stock split effective September 10, 2007.  201-680-5258; 201-680-4604).
 41




---



##### Table of Contents



B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution    F.
    Expenses
    of the Issue    ITEM 10
    Additional
    Information  A.
    Share
    Capital    B.
    Notice
    of Articles and Articles            winding-up
    Business
    Corporations Act
   42




---



##### Table of Contents



Investment Canada Act Investment Canada Act
      C.
    Material
    Contracts          and/or and/or
                 43




---



##### Table of Contents



44




---



##### Table of Contents



D.
    Exchange
    Controls    Investment Canada Act Investment Canada
    Act
  This summary is of a general nature only and is not intended
    to be, and should not be construed to be, legal advice to any
    holder or prospective holder of our common shares, and no
    opinion or representation to any holder or prospective holder of
    our common shares is hereby made. Accordingly, holders and
    prospective holders of our common shares should consult with
    their own legal advisors with respect to the consequences of
    purchasing and owning our common shares.
 45




---



##### Table of Contents



Investment Canada Act Investment
    Canada Act Investment Canada
    Act Investment Canada Act
  Investment Canada
    Act Investment Canada Act
  Investment Canada Act
        E.
    Taxation  Material
    Canadian Federal Income Tax Consequences
  Income
    Tax Act
  Income Tax Act Income Tax Act
  This summary is of a general nature only and is not intended
    to be, and should not be construed to be, legal, business or tax
    advice to any particular holder or prospective holder of our
    common shares, and no opinion or representation with respect to
    the tax consequences to any holder or prospective holder of our
    common shares is made. Accordingly, holders and prospective
    holders of our common shares should consult their own tax
    advisors with respect to the income tax consequences of
    purchasing, owning and disposing of our common shares in their
    particular circumstances.
 46




---



##### Table of Contents



Dividends
  Income Tax Act Income
    Tax Act
  Income Tax Act
  Capital
    Gains
  Income
    Tax Act Income Tax Act
  Material
    United States Federal Income Tax Consequences
      The following discussion is for general information only and
    is not intended to be, nor should it be construed to be, legal,
    business or tax advice to any holder or prospective holder of
    our common shares, and no opinion or representation with respect
    to the United States Federal income tax consequences to any such
    holder or prospective holder is made. Accordingly, holders and
    prospective holders of common shares are urged to consult their
    own tax advisors with respect to Federal, state, local, and
    foreign tax consequences of purchasing, owning and disposing of
    our common shares.
  U.S.
    Holders
   47




---



##### Table of Contents



Distributions
    Capital
    Gains
    Foreign
    Tax Credit
  year-by-year The availability of the
    foreign tax credit and the application of these complex
    limitations on the tax credit are fact specific and holders and
    prospective holders of our common shares should consult their
    own tax advisors regarding their individual circumstances.
  Passive
    Foreign Investment Corporation
      U.S. Holders and prospective holders should consult
    their own tax advisors regarding the potential application of
    the PFIC rules to their ownership of our common shares.
 48




---



##### Table of Contents



F.
    Dividends
    and paying agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Suite 800-885 West
  I.
    Subsidiary
    Information    Jurisdiction ofIncorporation orName of Wholly-Owned Subsidiary

OrganizationKHD Holding AG

SwitzerlandKHD Humboldt Wedag International Holdings GmbH

AustriaKHD Humboldt Wedag International GmbH

AustriaHumboldt Wedag Inc.

USAHumboldt Wedag India Ltd.

IndiaHumboldt Wedag Australia Pty Ltd.

AustraliaKHD Investments Ltd.

Marshall IslandsNew Image Investment Company Limited

USAInverness Enterprises Ltd.

CanadaKHD Humboldt Wedag (Cyprus) Limited

CyprusMFC & KHD International Industries Limited

SamoaKHD Humboldt Wedag (Shanghai) International Industries Limited

ChinaKHD Sales and Marketing Ltd.

Hong KongKHD Humboldt Wedag International (UAE) FEZ

UAE     Jurisdiction of



OurIncorporation or



BeneficialName of Non-Wholly-Owned Subsidiary

Organization

Owner of Interests

ShareholdingKHD Humboldt Wedag International (Deutschland) AG

Germany

KHD Humboldt Wedag International Ltd.


97.9
%(1)KHD Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%Humboldt Wedag Coal & Minerals Technology GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%ZAB Zementanlagenbau GmbH Dessau

Germany

KHD Humboldt Wedag GmbH


97.9
%ZAB Industrietechnik & Service GmbH

Germany

Zementanlagenbau Dessau GmbH


97.9
%Humboldt Wedag (SA) (Pty) Ltd.

South Africa

KHD Humboldt Wedag International GmbH


71.9
%Humboldt Wedag GmbH

Germany

KHD Humboldt Wedag International (Deutschland) AG


97.9
%Blake International Limited

British Virgin

KHD Humboldt Wedag GmbH


97.8
%IslandsHIT International Trading AG

Germany

Blake International Limited


73.5
%     (1)
    
    Held by our company and/or our subsidiaries. 49




---



##### Table of Contents



ITEM 11
    Quantitative
    and Qualitative Disclosures About Market Risk        Derivatives
    Interest
    Rate Risk
     As at December 31, 2007Carrying

Fair

Expected Cash
    Flow(1)Value

Value

2008

2009

2010

2011

2012

Thereafter(In thousands)Investments(2)

$
91,960


$
91,960


$
4,016


$
4,016


$
4,016


$
10,147


$
9,879


$
104,062Debt obligations


13,920



13,920



414



2,466



291



11,926







     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of investment in the preferred shares of
    former subsidiaries.  As at December 31, 2006Carrying


Fair


Expected Cash
    Flow(1)Value


Value


2007


2008


2009


2010


2011


Thereafter(In thousands)Investments(2)

$
77,976


$
77,976


$
3,459


$
3,459


$
3,459


$
3,459


$
8,658


$
96,995Note receivable


6,865



6,865



7,188



















Long-term payable


2,184



2,184



1,609



662















Debt obligations


13,083



13,083



927



372



2,188



263



10,987



  50




---



##### Table of Contents



(1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of investment in the preferred shares of
    former subsidiaries.  Foreign
    Currency Exchange Rate Risk
    As at December 31, 2007Carrying

Fair

Expected Cash
    Flow(1)Value

Value

2008

2009

2010

2011

2012

Thereafter(In thousands)Investments(2)

$
106,234


$
106,234


$
18,290



4,016



4,016



10,147



9,879


$
104,062Debt
    obligations(3)


13,920



13,920



414



2,466



291



11,916







     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities and preferred shares of
    former subsidiaries, which are denominated in Canadian dollars
    and Euros.(3)
    
    Debt obligations are denominated in Euros.  As at December 31, 2006Carrying


Fair


Expected Cash
    Flow(1)Value


Value


2007


2008


2009


2010


2011


Thereafter(In thousands)Investments(2)

$
82,032


$
82,032


$
7,571


$
3,459


$
3,459


$
3,459


$
8,658


$
96,939Long-term
    receivable(3)


8,878



8,878



185



7,523



1,580











Debt
    obligations(4)


15,321



15,321



5,005



263



263



263



10,987



     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities and preferred shares of
    former subsidiaries, which are denominated in Canadian dollars
    and Euros.(3)
    
    Long-term receivables are denominated in Euros.(4)
    
    Debt obligations are denominated in Euros.  Equity
    Price Risk
    As at December 31, 2007Carrying

Fair

Expected Cash
    Flow(1)Value

Value

2008

2009

2010

2011

2012

Thereafter(In thousands)Investments(2)

$
107,470


$
107,470


$
19,526


$
4,016


$
4,016


$
10,147


$
9,879


$
104,062     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities and preferred shares
    former subsidiaries. 51




---



##### Table of Contents



As at December 31, 2006Expected Cash
    Flow(1)Carrying Value

Fair Value

2007

2008

2009

2010

2011

Thereafter(In thousands)Investments(2)

$
82,643


$
82,643


$
7,571


$
3,459


$
3,459


$
3,459


$
8,658


$
97,550     (1)
    
    Including interest and dividends where applicable.(2)
    
    Investments consist of equity securities and preferred shares in
    former subsidiaries.  ITEM 12
    Description
    of Securities Other Than Equity Securities    PART II
  ITEM 13
    Defaults,
    Dividend Arrearages and Delinquencies    ITEM 14
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds    ITEM 15
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Rule 13a-15
  Report of
    Management on Internal Control over Financial
    Reporting
  Rule 13a-15(f) 13d-15(f)
       52




---



##### Table of Contents



Internal Control  Integrated Framework
    Form 20-F.
  Changes
    in Internal Control Over Financial Reporting
  Form 6-K
      
    A material weakness impacting our financial statements for the
    interim periods ended March 31, 2007, June 30, 2007
    and September 30, 2007 was identified related to our design
    and maintenance of adequate controls over the correct
    elimination of certain intercompany transactions. We remediated
    this material weakness through the design and implementation of
    enhanced controls and procedures prior to finalizing the
    preparation of our annual consolidated financial statements as
    of December 31, 2007. These measures included among other
    matters adding certain review and analysis procedures, adding
    qualified personnel as well as improving the information flow
    associated to the identification and analysis of non-routine
    transactions.
    A material weakness impacting our financial statements for the
    interim periods ended June 30, 2007 and September 30,
    2007 was identified related to our design and maintenance of
    adequate controls over the implementation of a new software
    system in a subsidiary. We remediated this material weakness
    through the design and implementation of enhanced controls and
    procedures prior to finalizing the preparation of our annual
    consolidated financial statements as of December 31, 2007.
    These measures included among other matters verification by an
    external consultant of the accuracy of the financial data
    upload, adding qualified personnel and enhancing our controls
    related to the accurate entering of financial data.    Inherent
    Limitations on Effectiveness of Controls
   53




---



##### Table of Contents



ITEM 16
    [Reserved]  ITEM 16A
    Audit
    Committee Financial Expert    ITEM 16B
    Code
    of Ethics  Code of
    Ethics
                and/or
  Form 20-F
  ITEM 16C
    Principal
    Accountant Fees and Services  Audit
    Fees
   54




---



##### Table of Contents



Audit
    Related Fees
    Tax
    Fees
    All Other
    Fees
    Audit
    Committee Pre-approved Procedures
  Rule 2-01 Regulation S-X.
    ITEM 16D
    Exemptions
    from the Listing Standards for Audit Committees    ITEM 16E
    Purchases
    of Equity Securities by our Company and Affiliated
    Purchasers   55




---



##### Table of Contents



PART III
  ITEM 17
    Financial
    Statements  Financial
    Statements Filed as Part of the Annual Report:
                      ITEM 18
    Financial
    Statements   56




---



##### Table of Contents



Report Of
    Management On Internal Control Over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
        /s/ James Busche

/s/ Alan HartsliefJames Busche

Alan HartsliefChief Executive Officer

Chief Financial Officer     57




---



##### Table of Contents



Report of
    Independent Registered Chartered Accountants
             Internal Control  Integrated Framework
         Comments
    by Independent Registered Chartered Accountants on
    Canada  United States of America Reporting
    Difference
          58




---



##### Table of Contents



Report of
    Independent Registered Chartered Accountants
     Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
          59




---



##### Table of Contents



Auditors
    Report
 To The Shareholders of
 KHD Humboldt Wedag International Ltd.
         
    60




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    December 31, 2007 and 2006
    (United States Dollars
    in Thousands)
  2007


2006(Note 1A and D(ii))ASSETSCurrent AssetsCash and cash equivalents

$
354,397


$
204,530Securities


15,510



4,111Restricted cash


24,116



16,180Accounts receivable, trade


62,074



67,157Other receivables


18,585



33,351Inventories


124,980



85,799Contract deposits, prepaid and other


33,775



24,069Future income tax assets


825



763Current assets of discontinued operations






4,301Total current assets


634,262



440,261Non-current AssetsSecurities






64Receivables






8,878Property, plant and equipment


2,957



2,936Interest in resource property


32,865



29,037Equity method investments


654



500Future income tax assets


24,658



27,724Investment in preferred shares of former subsidiaries


91,960



77,976Other non-current assets


1,955



Non-current assets of discontinued operations






54,544Total non-current assets


155,049



201,659$
789,311


$
641,920LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable and accrued expenses

$
147,869


$
129,668Long-term debt, current portion






4,596Progress billings above costs and estimated earnings on
    uncompleted contracts


184,830



92,518Advance payments received from customers


9,190



8,878Income tax liabilities


20,658



11,088Accrued pension liabilities, current portion


2,205



1,664Provision for warranty costs, current portion


31,503



21,868Current liabilities of discontinued operations






964Total current liabilities


396,255



271,244Long-term LiabilitiesLong-term debt, less current portion


13,920



10,725Accrued pension liabilities, less current portion


30,981



28,559Provision for warranty costs, less current portion


11,799



7,247Deferred credit, future income tax assets


15,712



15,539Future income tax liability


2,593



9,180Other long-term liabilities


4,931



625Long-term liabilities of discontinued operations






3,047Total long-term liabilities


79,936



74,922Total liabilities


476,191



346,166Minority Interests


5,926



22,466Shareholders EquityCommon stock, without par value; authorized unlimited number


138,359



108,595Treasury stock


(93,793
)


(64,383
)Contributed surplus


4,319



2,131Retained earnings


162,633



176,742Accumulated other comprehensive income


95,676



50,203Total shareholders equity


307,194



273,288$
789,311


$
641,920    61




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
    For the Years Ended December 31, 2007, 2006 and 2005
    (United States Dollars in Thousands,
    Except Earnings per Share)
  2007


2006


2005(Note 1A and D(ii))


(Note 1A and D(ii))Revenues

$
580,391


$
404,324


$
316,978Cost of revenues


494,432



338,495



269,768Gross profit


85,959



65,829



47,210Income from interest in resource property


18,132



6,660



4,303General and administrative expense


46,700



29,802



25,962Stock-based compensation  general and administrative


4,381



2,132



Operating income


53,010



40,555



25,551Interest income


13,155



5,044



2,419Interest expense


(2,668
)


(2,238
)


(3,251
)Other income, net


2,308



7,763



4,882Income before income taxes and minority interests from
    continuing operations


65,805



51,124



29,601Provision for income taxes:Income taxes


(8,278
)


(9,658
)


(1,691
)Resource property revenue taxes


(4,161
)


(644
)


(12,439
)


(10,302
)


(1,691
)Income before minority interests from continuing operations


53,366



40,822



27,910Minority interests


(2,386
)


(6,670
)


(5,046
)Income from continuing operations


50,980



34,152



22,864Income (loss) from discontinued operations, net of tax


(9,351
)


(2,874
)


5,361Extraordinary gain, net of tax


513







Net income

$
42,142


$
31,278


$
28,225Basic earnings (loss) per share from continuing operations

$
1.71


$
1.13


$
0.84 from discontinued operations


(0.31
)


(0.10
)


0.20 extraordinary gain


0.02



0.00



0.00$
1.42


$
1.03


$
1.04Diluted earnings (loss) per share from continuing operations

$
1.68


$
1.12


$
0.84 from discontinued operations


(0.31
)


(0.09
)


0.19 extraordinary gain


0.02



0.00



0.00$
1.39


$
1.03


$
1.03Weighted average number of common shares outstanding basic


29,895,468



30,162,412



27,218,696 diluted


30,402,130



30,415,452



27,509,386    62




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 For the
    Years Ended December 31, 2007, 2006 and 2005
  Equity





AccumulatedComponent





OtherCommon Stock


Treasury Stock





of





Compre-Number of





Number of





Contributed


Convertible


Retained


hensiveShares


Amount


Shares


Amount


Surplus


Debt


Earnings


Income


Total(Note 1A





(Note 1A


(Note 1


(Note 1


(Note 1A


(Note 1


(Note 1and D(ii))





and D(ii))


and D(ii))


and D(ii))


and D(ii))


and D(ii))


and D(ii))Balance at December 31, 2004


32,178,036


$
70,429



(5,023,744
)

$
(17,951
)

$



$
113


$
141,063


$
30,190


$
223,844Net income


























28,225







28,225Repurchase of shares


(3,000
)


(27
)


























(27
)Shares issued for increase of equity interest in subsidiaries


117,486



1,110



























1,110Shares issued for cash










1,990



13



















13Translation adjustment






























(8,906
)


(8,906
)Balance at December 31, 2005


32,292,522



71,512



(5,021,754
)


(17,938
)






113



169,288



21,284



244,259Net income


























31,278







31,278Distribution of Mass Financial Corp.










3,142,256



8,356











(22,662
)


22,662



8,356Disposition of MFC Merchant Bank S.A.


























(1,162
)






(1,162
)Shares received as a partial consideration on disposition of MFC
    Merchant Bank S.A.


1,562,256



27,246



(3,142,256
)


(54,801
)


















(27,555
)Shares issued for conversion of bonds


292,602



3,603















(113
)










3,490Shares issued for increase of equity interest in a non-
    wholly-owned Canadian subsidiary


170,000



3,083



























3,083Shares issued for increase of equity interest in an equity
    method investee


26,210



402



























402Shares issued to extinguish debt


144,546



2,749



























2,749Stock-based compensation


















2,131















2,131Translation adjustment






























6,257



6,257Balance at December 31, 2006


34,488,136



108,595



(5,021,754
)


(64,383
)


2,131







176,742



50,203



273,288Net income


























42,142







42,142Distribution of SWA Reit and Investments Ltd.


























(56,251
)






(56,251
)Shares issued for increase of equity interest in
    non-wholly-owned subsidiaries


676,766



18,749



























18,749Exercise of stock options


672,218



11,015











(2,193
)














8,822Price adjustment for shares received in connection with
    disposition of MFC Merchant Bank S.A. in 2006














(10,073
)


















(10,073
)Shares received on settlements of receivables










(371,921
)


(11,174
)


















(11,174
)Shares received as consideration for disposition of MFC Merchant
    Bank S.A.










(219,208
)


(8,163
)


















(8,163
)Stock-based compensation


















4,381















4,381Translation adjustment






























45,473



45,473Balance at December 31, 2007


35,837,120


$
138,359



(5,612,883
)

$
(93,793
)

$
4,319


$



$
162,633


$
95,676


$
307,194Total of retained earnings and accumulated other comprehensive
    incomeDecember 31, 2005

































$
190,572December 31, 2006

































$
226,945December 31, 2007

































$
258,309    63




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    For the Years Ended December 31, 2007, 2006 and 2005
    (United States Dollars in Thousands)
  2007


2006


2005(Note 1A and D(ii))


(Note 1A and D(ii))Net income for the year

$
42,142


$
31,278


$
28,225Other comprehensive income, net of taxUnrealized gains and losses on translating financial statements
    of self-sustaining foreign operations and adjustments from the
    application of U.S. dollar reporting, net of tax of $nil for
    2007, 2006 and 2005


45,473



6,257



(8,906
)Other comprehensive income (loss) for the year


45,473



6,257



(8,906
)Comprehensive income for year

$
87,615


$
37,535


$
19,319    64




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended December 31, 2007, 2006 and 2005
    (United States Dollars in Thousands)
  2007


2006


2005(Note 1A and D(ii))


(Note 1A and D(ii))Cash flows from continuing operating activitiesIncome from continuing operations

$
50,980


$
34,152


$
22,864Adjustments for:Amortization and depreciation


3,279



2,165



1,903Minority interests


2,386



6,670



5,046Gain on short-term securities


110



(915
)


(24
)Gain on debt settlement










(2,493
)Stock-based compensation


4,381



2,132



Future income taxes


(2,785
)


755



(821
)Changes in operating assets and liabilities, net of effects of
    acquisitions and dispositionsShort-term securities


(2,576
)


(2,166
)


(840
)Restricted cash


(5,813
)


7,401



(11,586
)Receivables


11,314



(31,944
)


(13,031
)Inventories


(28,089
)


(44,743
)


(31,900
)Accounts payable and accrued expenses


6,652



44,669



12,709Progress billings above costs and estimated earnings on
    uncompleted contracts


76,890



51,774



28,869Advance payments received from customers


(595
)


(14,767
)


18,491Income tax liabilities


7,838



7,848



905Provision for warranty costs


10,373



1,792



15,610Contract deposits, prepaid and other


(6,652
)


(11,100
)


4,439Other


2,410



(3,711
)


473Cash flows provided by continuing operating activities


130,103



50,012



50,614Cash flows from continuing investing activitiesPurchases of property, plant and equipment, net


(3,471
)


(2,532
)


(2,179
)Net decrease in loans










5,371Sales (purchases) of long-term securities, net


(456
)


(68
)


(15
)Disposition of subsidiaries, net of cash disposed






27,228



Purchases of subsidiaries, net of cash acquired


(7,807
)


(7,900
)


(3,366
)Other






(906
)


Cash flows (used in) provided by continuing investing activities


(11,734
)


15,822



(189
)Cash flows from continuing financing activities Borrowings


3,292



28,759



Debt repayments


(6,132
)


(17,304
)


(4,561
)Issuance of shares


8,822







(28
)Distribution in connection with SWA Reit and Investments
    Ltd.


(5,399
)






Other






190



(349
)Cash flows (used in) provided by continuing financing activities


583



11,645



(4,938
)Cash flows (used in) operating activities of discontinued
    operations


198



(12,273
)


5,043Cash flows (used in) investing activities of discontinued
    operations


58



(88,241
)


(4,157
)Cash flows (used in) financing activities of discontinued
    operations


(245
)


15,432



(17,420
)Exchange rate effect on cash and cash equivalents


30,756



17,968



(13,871
)Increase in cash and cash equivalents


149,719



10,365



15,082Cash and cash equivalents, beginning of period


204,678



194,313



179,231Cash and cash equivalents, end of period

$
354,397


$
204,678


$
194,313Cash and cash equivalents at end of period consisted of:Continuing operations

$
354,397


$
204,530


$
94,324Discontinued operations






148



99,989$
354,397


$
204,678


$
194,313Cash and cash equivalents

$
349,435


$
158,105


$
194,313Money market funds


4,962



46,573



$
354,397


$
204,678


$
194,313    65




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    The
    Company and Summary of Significant Accounting Policies    A.
    Change of
    Reporting Currency    Translation Method When the Reporting Currency Differs from
    the Measurement Currency or there is a Change in the Reporting
    Currency
      B.
    Two-for-one
    Split of Common Shares    C.
    Nature of
    Operations         66




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        D.
    Significant
    Accounting Policies  (i)
    Principles of Consolidation
  Consolidation of Variable Interest
    Entities.
      (ii)
    Financial Instruments
  Financial Instruments 
    Recognition and Measurement Hedges Financial
    Instruments  Disclosure and Presentation Comprehensive Income Equity
  and/or
   67




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                   68




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (iii)
    Cash and Cash Equivalents
    (iv)
    Restricted Cash
    (v)
    Securities
          (vi)
    Receivables
        (vii)
    Allowance for Credit Losses
     69




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (viii)
    Derivative Financial Instruments
    (ix)
    Inventories
  work-in-progress first-in
  2007


2006Raw materials

$
10,114


$
5,422Work-in-progress


114,222



80,128Finished goods


644



249$
124,980


$
85,799   work-in-progress
  (x)
    Property, Plant and Equipment
      Lives

MethodBuildings

25 years


straight-lineManufacturing plant equipment

3 to 20 years


straight-lineOffice equipment

3 to 10 years


straight-line     (xi)
    Interest in Resource Property
   70




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (xii)
    Asset Retirement Obligations
  Asset Retirement Obligations
  (xiii)
    Goodwill
    (xiv)
    Convertible Debt
    (xv)
    Revenue Recognition
        (xvi)
    Provision for Warranty Costs
   71




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (xvii)
    Research and Development Costs
    (xviii)
    Employee Future Benefits
      (xix)
    Foreign Currency Translation
      (xx)
    Taxes on Income
        (xxi)
    Stock-Based Compensation
  Stock-based Compensation and Other
    Stock-based Payments
 72




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (xxii)
    Earnings Per Share
        (xxiii)
    Measurement Uncertainty
    E.
    Supplemental
    Disclosure with Respect to Consolidated Statements of
    Income  2007


2006


2005Foreign currency transaction gains (losses), net

$
(2,003
)

$
2,046


$
1,548Gain (loss) on trading securities, net


(110
)


915



24Unrealized holding losses on currency derivative contracts, net


(145
)






Fee income






1,527



309Gain on debt settlement










2,493Other income


4,808



3,389



830Other expenses


(242
)


(114
)


(322
)Other income, net

$
2,308


$
7,763


$
4,882  73




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  F.
    Supplemental
    Disclosure with Respect to Consolidated Statements of Cash
    Flows            G.
    Reclassifications    H.
    Future
    Changes to Accounting Standards  International
    Financial Reporting Standards (IFRS)
       74




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Financial
    Instruments
  Financial
    Instruments  Disclosures, Financial Instrument 
    Recognition and Measurement, Financial
    Instruments  Presentation, Hedges.
  Financial
    Instruments  Presentation,
    Capital
    Disclosures
  Capital
    Disclosures
  .
  Inventories
    Going
    Concern
  General Standards of Financial Statement
    Presentation,
  Goodwill
    and Intangible Assets
  Goodwill and
    Intangible Assets,
 75




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Business Combination.
  Note 2.
    Capital
    Disclosure on the Companys Objective, Policies and
    Processes for Managing Its Capital Structure        2007


2006Total debt

$
13,920


$
15,321Less: cash and cash equivalents


(354,397
)


(204,530
)Net debt (net cash and cash equivalents)

$
(340,477
)

$
(189,209
)Total equity

$
307,194


$
273,288Debt-to-adjusted capital ratio


Not applicable



Not applicable     2007


2006Long-term debt

$
13,920


$
10,725Shareholders equity

$
307,194


$
273,288Long-term debt-to-equity ratio


0.05



0.04       Note 3.
    Acquisitions
    of Subsidiaries  Year
    2007
   76




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Year
    2006
        Year
    2005
   77




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Note 4.
    Discontinued
    Operations  Financial
    services operations
  Related Party Transactions,
  2 3
     78




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15-year
             79




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        dividend-in-kind.
    Real
    estate and other interests
     80




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 5.
    Securities  Short-term
    securities
  2007


2006Trading securities:Common shares, at fair value

$
15,460


$
4,111Available-for-sale security:Investment in a private company, at cost


50



$
15,510


$
4,111     Long-term
    securities
    Note 6.
    Other
    Receivables  2007


2006Investment income

$
644


$
Sale of MFC Bank (See Note 4)






13,482Government taxes


3,687



4,177Due from affiliates


693



4,327Income from interest in resource property


4,748



4,413Income on the preferred shares of former subsidiaries


4,080



Derivative assets


388



Sale of an investment






1,684Other


4,345



5,268$
18,585


$
33,351     Note 7.
    Contract
    Deposits, Prepaid and Other  2007


2006Prepayments and deposits for inventories on construction
    contracts

$
33,289


$
23,550Prepaids, deposits and other


486



519$
33,775


$
24,069  81




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8.
    Long-Term
    Receivables  2007


2006Payment-in-kind
    notes

$



$
8,878   payment-in-kind 6-month
  Note 9.
    Property,
    Plant and Equipment  2007


2006Accumulated


Net





Accumulated


NetCost


Depreciation


Book Value


Cost


Depreciation


Book ValueBuildings

$
1,435


$
800


$
635


$
2,177


$
1,141


$
1,036Manufacturing plant and equipment


10,111



8,003



2,108



6,331



4,537



1,794Office equipment


278



64



214



134



28



106$
11,824


$
8,867


$
2,957


$
8,642


$
5,706


$
2,936     Note 10.
    Contracts
    in Progress    2007


2006Costs incurred to date on uncompleted contracts

$
390,272


$
232,913Estimated earnings recognized to date on these contracts


93,007



43,772483,279



276,685Less: loss contracts


(3,529
)


Less: billings to date


(548,541
)


(296,285
)(68,791
)


(19,600
)Currency translation adjustments


(2,380
)


6,990$
(71,171
)

$
(12,610
)This amount is included in the consolidated balance sheet as
    follows:Costs and estimated earnings in excess of billings on
    uncompleted contracts (included in inventories 
    work-in-process)

$
113,659


$
79,908Progress billings above costs and estimated earnings on
    uncompleted contracts


(184,830
)


(92,518
)$
(71,171
)

$
(12,610
)    82




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 11.
    Accounts
    Payable and Accrued Expenses  2007


2006Accounts payable

$
131,268


$
112,174Value-added and other taxes


2,710



2,926Affiliates


2,171



3,755Compensation


8,451



5,831Interest


44



30Subscription of a trading stock






865Derivative liabilities


543



Other


2,682



4,087$
147,869


$
129,668   Note 12.
    Provision
    for Warranty Costs    2007


2006Balance at beginning of year

$
29,115


$
24,435Costs incurred


(3,371
)


(11,979
)Warranty reserves established on completed contracts


19,913



15,022Reversal of reserves at end of warranty period


(6,292
)


(1,252
)Currency translation adjustments


3,937



2,889Balance, at end of year

$
43,302


$
29,115Included in the consolidated balance sheet as follows:Current portion

$
31,503


$
21,868Long-term portion


11,799



7,247$
43,302


$
29,115   Note 13.
    Long-term
    Debt  2007


2006Note payable to a bank, 8,127 at both December 31,
    2007 and 2006, interest at 2.45% due quarterly and entire
    principal balance due February 2011. The Company is in
    compliance with financial covenants stipulated by the bank

$
11,868


$
15,321Note payable to a bank, 1,405 at December 31, 2007,
    interest at 6.0% due monthly and entire principal balance due
    December 2009


2,052



13,920



15,321Less current portion






4,596$
13,920


$
10,725  83




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Maturity

Amount2008

$
2009


2,0522010


2011


11,8682012


$
13,920     Note 14.
    Income
    Taxes    2007


2006


2005Income before income taxes and minority interests from
    continuing operations

$
65,805


$
51,124


$
29,601Computed provision for income taxes at statutory rates

$
(21,136
)

$
(16,421
)

$
(9,508
)(Increase) decrease in taxes resulting from:Statutory tax rate differences


(1,082
)


(4,374
)


(1,491
)Non-taxable income


1,862



1,537



1,382Stock-based compensation


(1,465
)


(673
)


Resource property revenue taxes


(4,161
)


(644
)


Permanent differences


(1,610
)


2,979



(1,541
)Change in valuation allowance


12,754



9,139



10,886Reduction in future tax rate


(3,955
)






Amortization of deferred credit, future income tax assets


6,062







Other, net


292



(1,845
)


(1,419
)Provision for income taxes

$
(12,439
)

$
(10,302
)

$
(1,691
)Consisting of:Resource property revenue taxes

$
(4,161
)

$
(644
)

$
Other income taxes


(8,278
)


(9,658
)


(1,691
)$
(12,439
)

$
(10,302
)

$
(1,691
)  84




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006Non-capital tax loss carryforwards

$
65,692


$
55,748Uncompleted contracts


(17,700
)


(15,195
)Other


1,038



2,34249,030



42,895Valuation allowance


(26,140
)


(23,588
)$
22,890


$
19,307Future income tax assets are included in the consolidated
    balance sheet as follows:Current

$
825


$
763Non-current


24,658



27,72425,483



28,487Future income tax liabilities are included in the consolidated
    balance sheet as follows:Non-current


(2,593
)


(9,180
)Net future income tax assets

$
22,890


$
19,307       Country

Amount


Expiration datesGermany

$
158,880



IndefiniteCanada


56,362



2008-2037Switzerland


1,838



2009China


1,598



2010-2011U.S.


792



2016    85




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 15.
    Earnings
    Per Share    2007


2006


2005Basic earnings from continuing operations available to common
    shareholders

$
50,980


$
34,152


$
22,864Effect of dilutive securities:Interest on convertible bonds






54



150Diluted earnings from operations

$
50,980


$
34,206


$
23,014   Number of Shares2007


2006


2005Basic earnings per share, weighted average number of common
    shares outstanding


29,895,468



30,162,412



27,218,696Effect of dilutive securities:Convertible bonds






131,478



290,690Options


506,662



121,562



Weighted average number of common shares outstanding 
    diluted


30,402,130



30,415,452



27,509,386   Note 16.
    Stock
    Option Plan      Weighted AverageNumber


Exercise Priceof Shares


Per ShareOutstanding at December 31, 2004 and 2005





$
Granted


1,173,336



13.17Outstanding at December 31, 2006


1,173,336



13.17Granted


1,029,994



24.80Exercised


(672,218
)


13.06Forfeited


(22,224
)


13.06Outstanding at December 31, 2007


1,508,888


$
21.13        86




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             87




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Options Outstanding


Options ExercisableWeighted-AverageRemaining


Weighted-Average





Weighted-AverageNumber


Contractual Life


Exercise Price


Number


Exercise PriceExercise Prices

Outstanding


(In Years)


per Share


Exercisable


per Share$13.06


447,782



8.63


$
13.06



225,550



13.06$15.90


31,112



8.96


$
15.90







$21.09


500,000



9.75


$
21.09



166,666



21.09$26.85


316,666



9.63


$
26.85







$29.25


66,664



9.50


$
29.25







$30.31


46,666



9.96


$
30.31



15,555



30.31$31.28


99,998



9.91


$
31.28







1,508,888



9.38


$
21.13



407,771


$
17.00   Note 17.
    Commitments
    and Contingencies  Leases
    Year

Amount2008

$
3,3412009


1,3132010


1,2982011


1,2982012


1,298Thereafter


4$
8,552
     Litigation
    Guarantees
  Disclosure of Guarantees.
  Note 18.
    Employee
    Future Benefits        88




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2007


2006Accrued benefit obligation, beginning of year

$
30,223


$
27,073Current service cost


711



112Interest cost


1,419



1,313Deferred compensation


70



265Net pension cost


2,200



1,690Cash benefit payments


(2,444
)


(1,638
)Currency translation adjustments


3,207



3,098Accrued benefit obligation, end of year

$
33,186


$
30,223     2007

2006Weighted average discount rate


5.3
%


4.8
%Rate of increase in future compensation


0.0
%


0.0
%         Year

Amount2008

$
2,2052009


2,0932010


1,9872011


1,7642012


1,675Thereafter


23,462$
33,186
   Note 19.
    Business
    Segment Information        89




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year ended December 31, 2007Industrial plantengineering and


Resource


Corporateequipment supply


property


and other


TotalRevenues from external customers

$
580,391


$



$



$
580,391Income from interest in resource property






18,132







18,132Interest expenseExternal


2,094







574



2,668Internal


269







498



767Income (loss) from continuing operations before income taxes and
    minority interests


61,277



16,635



(12,107
)


65,805   Year ended December 31, 2006Industrial plantengineering and


Resource


Corporateequipment supply


property


and other


TotalRevenues from external customers

$
404,324


$



$



$
404,324Income from interest in resource property






6,660







6,660Interest expenseExternal


1,961







277



2,238Internal


387







284



671Income (loss) from continuing operations before income taxes and
    minority interests


48,367



6,377



(3,620
)


51,124   Year ended December 31, 2005Industrial plantengineering and


Resource


Corporateequipment supply


property


and other


TotalRevenues from external customers

$
316,978


$



$



$
316,978Income from interest in resource property






4,303







4,303Interest expenseExternal


3,095







156



3,251Internal










223



223Income from continuing operations before income taxes and
    minority interests


24,721



4,268



612



29,601     2007


2006


2005Cement

$
518,573


$
340,704


$
283,724Coal and minerals


61,818



63,620



33,254$
580,391


$
404,324


$
316,978   90




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As at December 31, 2007Industrial plantengineering and


Resource


Corporateequipment supply


Property


and other


TotalSegment assets

$
615,238


$
37,612


$
158,750


$
811,600Less: intercorporate investment














(22,289
)Consolidated total assets













$
789,311Equity method investments


654











654Cash expenditures for capital assets


3,471











3,471   As at December 31, 2006Industrial plantengineering and


Resource


Corporateequipment supply


Property


and other


TotalSegment assets

$
384,799


$
31,712


$
178,046


$
594,557Add: assets of discontinued operations














58,845Less: intercorporate investment














(11,482
)Consolidated total assets













$
641,920Equity method investments


500











500Cash expenditures for capital assets


2,507







25



2,532     2007


2006


2005Africa

$
21,393


$
10,488


$
8,475Americas


118,417



75,723



22,805Asia


196,348



106,336



66,573Russia & Eastern Europe


83,592



41,548



42,187Europe


35,502



29,764



30,889Middle East


123,283



135,759



134,180Australia


1,856



4,706



11,869$
580,391


$
404,324


$
316,978         2007


2006Africa

$
66


$
79Americas


33,481



29,565Asia


837



1,947Europe


1,288



204Australia


150



178$
35,822


$
31,973  91




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 20.
    Financial
    Instruments    2007


2006Carrying


Fair


Carrying


FairAmount


Value


Amount


ValueFinancial AssetsHeld for trading:Cash and cash equivalents (including restricted cash)

$
378,513


$
378,513


$
220,710


$
220,710Short-term securities


15,460



15,460



4,111



4,111Derivative assets


388



388







Loans and receivables:Current receivables*


76,584



76,584



96,331



96,331Non-current receivables










8,878



8,878Available-for-sale instruments that do no have a quoted
    market price in an active market:Short-term securities, unlisted


50



50







Long-term securities, unlisted










64



64Investment in preferred shares of former subsidiaries


91,960



91,960



77,976



77,976Financial LiabilitiesOther financial liabilities:Accounts payable and accrued expenses*


144,616



144,616



137,001



137,001Debt


13,920



13,088



15,321



15,321Other long-term liabilities


4,931



4,931



625



625Held for trading:Derivative liabilities


543



543







     *
    
    not including derivative financial instruments        92




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    RisksMarket risksFinancial instrument

Credit

Liquidity

Currency

Interest rate

Other priceCash and cash equivalents (including restricted cash)


X







X



XShort-term securities










X







XDerivative assets and liabilities


X



X



XInvestment in preferred shares of former subsidiaries










X







XCurrent receivables


X







XAccounts payable and accrued expenses






X



XLong-term debt










X



XOther long-term liabilities   Interest
    rate risk
    Credit
    risk
  and/or
     93




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amounts recognized on the consolidated balance sheetCash and cash equivalents (including restricted cash)

$
378,513Derivative assets


388Investment in preferred shares of former subsidiaries


91,960Current receivables


76,584547,445Amount of investment in preferred shares of former subsidiaries
    offset by indebtedness due to the former subsidiary (See
    Note 4)


37,446Guarantee (See Note 17)


Maximum credit risk exposure

$
584,891   Currency
    risk
    Other
    price risk
    Liquidity
    risk
        Cash
    flow risk
    Concentration
    risk
   94




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007Change in the fair value of financial assets required to be
    classified as held for trading

$
(1,714
)Total interest income on financial assets not classified as held
    for trading


12,146
*Total interest expense on financial liabilities not classified
    as held for trading


2,667Total dividend income on financial assets classified as held for
    trading


302Total dividend income on financial assets classified as
    available-for-sale


238     *
    
    including income of $3,751 on the preferred shares in a former
    subsidiary  Note 21.
    Related
    Party Transactions  and/or
  Continuing
    operations
             95




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Discontinued
    Operations (See Note 4)
             96




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 22.
    Differences
    between Canadian and United States Generally Accepted Accounting
    Principles    Reconciliation of Net Income

2007


2006


2005(Restated)Income from continuing operations in accordance with Canadian
    GAAP

$
50,980


$
34,152


$
22,864Interest accretion on convertible bonds






9



12Change in fair value of guarantees issued


15



18



(33
)Stock-based compensation expense


(7,964
)


(1,959
)


Income from continuing operations in accordance with U.S. GAAP


43,031



32,220



22,843Discontinued operations in accordance with U.S. GAAP, net of tax


(9,351
)


(2,874
)


(1,950
)Extraordinary gain


513







Net income in accordance with U.S. GAAP

$
34,193


$
29,346


$
20,893Basic earnings per common share: U.S. GAAPContinuing operations

$
1.44


$
1.07


$
0.84Discontinued operations


(0.31
)


(0.10
)


(0.07
)Extraordinary gain


0.02







$
1.15


$
0.97


$
0.77Diluted earnings per common share: U.S. GAAPContinuing operations

$
1.42


$
1.06


$
0.84Discontinued operations


(0.31
)


(0.10
)


(0.07
)Extraordinary gain


0.02







$
1.13


$
0.96


$
0.77   December 31Reconciliation of Shareholders Equity

2007


2006


2005(Restated)Shareholders equity in accordance with Canadian GAAP

$
307,194


$
273,288


$
244,259Deferred income taxes


(1,071
)


(1,071
)


(1,071
)Equity component of convertible debt










(121
)Unrealized gains on available for sale investments










2Fair value of guarantees issued






(15
)


(33
)Interest accretion on convertible bonds










29Stock-based compensation expense


(4,659
)


(3,101
)


Gain on reduction of interest in a subsidiary










(7,311
)Unrecognised pension benefit expense, net of tax


(525
)






Shareholders equity in accordance with U.S. GAAP

$
300,939


$
269,101


$
235,754   97




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31Comprehensive Income

2007


2006


2005(Restated)(1)Net income in accordance with U.S. GAAP

$
34,193


$
29,346


$
20,893Other comprehensive income, net of tax Unrealised gains and
    losses on translating financial statements of self-sustaining
    operations and adjustments from the application of U.S. dollar
    reporting


45,473



6,257



(8,906
)Unrealized losses on securities:Unrealized holding losses during the year










(234
)Reclassification adjustment for other than temporary decline in
    value










(182
)Reclassification adjustment for discontinued operations






(3
)


Net unrealized losses on securities






(3
)


(416
)Unrecognised pension expense, net of tax:Unrecognised actuarial loss arising during the year


(525
)






Net unrecognised pension expense


(525
)






44,948



6,254



(9,322
)Comprehensive income, net of tax, in accordance with U.S. GAAP

$
79,141


$
35,600


$
11,571     (1)
    
    Under SFAS No. 123(R), Share-Based Payment,
    stock options issued to employees of Canadian and foreign
    operations, with an exercise price denominated in a currency
    other than the Companys functional currency or the local
    currency of the foreign operation, are required to be classified
    and accounted for as financial liabilities and re-measured to
    fair value at each period end. On adoption of new accounting
    standards for stock-based compensation in 2006, the Company
    incorrectly calculated the stock option expense based on the
    full fair value of stock options outstanding. During 2007, the
    Company revisited the requirements under
    SFAS No. 123(R) and concluded that the compensation
    cost should have been recorded over the vesting period depending
    on the vested status of the award. 98




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Adjustment toAs previously


correct stock-based


As currentlyreported


compensation expense


reportedReconciliation of Net Income
    for the year ended December 31, 2006Stock-based compensation expense

$
(4,695
)

$
2,736


$
(1,959
)Income from continuing operations


29,484



2,736



32,220Net income


26,610



2,736



29,346Basic earnings per common share  continuing operations


0.98



0.09



1.07Basic earnings per common share  total


0.88



0.09



0.97Diluted earnings per common share  continuing
    operations


0.97



0.09



1.06Diluted earnings per common share  total


0.88



0.08



0.96Reconciliation of
    Shareholders Equity as of December 31,
    2006Stock-based compensation expense


(5,837
)


2,736



(3,101
)Shareholders equity


266,365



2,736



269,101Comprehensive Income for the
    year ended December 31, 2006Net income


26,610



2,736



29,346Comprehensive income


32,864



2,736



35,600Total assets as of December 31, 2006


641,920







641,920Total liabilities as of December 31, 2006


353,089



(2,736
)


350,353   Securities
        Convertible
    Bonds
  Accounting for Derivatives and Hedging Activities No. 00-27, Application of Issue
    No. 98-5
    to Certain Convertible Instruments
  Stock-Based
    Compensation
    Accounting for
    Stock Issued to Employees, Accounting for Stock-based
 99




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Compensation.
  Share-Based Payment,
    Guarantee
  Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others, Contingencies,
    Gain
    on Reduction of Interest in Subsidiary
    Defined
    Benefit Pension
  Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans,
   100




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Future
    Changes to United States Accounting Standards
  Fair Value Measurements,
  The Fair Value Option for Financial
    Assets and Financial Liabilities including an Amendment of FASB
    Statement No. 115, Fair
    Value Measurements, Disclosures about
    Fair Value of Financial Instruments
  Business Combinations Business Combinations.
  Noncontrolling Interests in
    Consolidated Financial Statements, an Amendment of ARB
    No. 51
  Disclosures about Derivative
    Instruments and Hedging Activities, an Amendment of FASB
    Statement No. 133,
  No. FIN 39-1, Amendment of FASB Interpretation No. 39, Offsetting of Amounts Related to Certain
    Contracts
 101




---



##### Table of Contents



KHD
    HUMBOLDT WEDAG INTERNATIONAL LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EITF 06-1, Accounting for Consideration Given by a Service Provider to
    Manufacturers or Resellers of Equipment Necessary for an
    End-Customer to Receive Service from the Service Provider, EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer
    (Including a Reseller of the Vendors Products). EITF 06-1
  EITF 07-03, Accounting for Nonrefundable Advance Payments for Goods or
    Services Received for Use in Future Research, EITF 07-03
 102




---



##### Table of Contents



ITEM 19
    Exhibits  Exhibits Required
    by
    Form 20-F
  ExhibitNumber

Description1.1

Articles of Amalgamation.(1)1.2

By-laws.(1)1.3

Certificate of Continuance(3)1.4

Notice of Articles(3)1.5

Articles(5)1.6

Certificate of Change of Name(6)1.7

Vertical Short Form Amalgamation Application(7)1.8

Notice of Articles(7)1.9

Certificate of Amalgamation(7)2.1

Trust Indenture between our company and Computershare
    Trust Company of Canada, dated January 7, 2004(4)2.2

Supplemental Indenture between our company and Computershare
    Trust Company of Canada, dated October 27, 2005.(6)4.1

Memorandum of Agreement between our company and Wabush Iron Co.
    Limited, Stelco Inc. and Dofasco Inc. dated November 24,
    1987.(2)4.2

Amendment to Mining Lease between our company and Wabush Iron
    Co. Limited, Stelco Inc. and Dofasco Inc. dated January 1,
    1987.(2)4.3

First Amendment to Memorandum of Agreement between our company
    and Wabush Iron Co. Limited, Stelco Inc. and Dofasco Inc.(2)4.4

Shareholder Protection Rights Plan Agreement between our company
    and Montreal Trust Company of Canada dated as of
    May 18, 1993.(1)4.5

Amended 1997 Stock Option Plan of our company.(1)4.6

Trust Indenture, dated January 7, 2004, between our
    company and Computershare Trust Company of Canada, as
    Trustee, for the issuance of 4.4% Convertible Unsecured
    Subordinated Bonds due December 31, 2009.(5)4.7

Variation Agreement dated December 22, 2004 between our
    company and Sutton Park International Limited varying our
    companys interest obligation to Sutton Park International
    Limited in respect of the 4.4% Convertible Unsecured
    Subordinated Bond in the principal amount of 6,786,436,
    maturing December 31, 2009.(5)4.8

Arrangement Agreement dated September 11, 2006 between our
    company and Cade Struktur Corporation.(7)4.9

Arrangement Agreement dated March 29, 2007 between our
    company and Sasamat Capital Corporation.8.1

Significant subsidiaries of our company as at March 15,
    2008:KHD Holding AGKHD Humboldt Wedag International Holdings GmbHKHD Humboldt Wedag International GmbHHumboldt Wedag Inc.Humboldt Wedag India Ltd.Humboldt Wedag Australia Pty Ltd.New Image Investment Company LimitedInverness Enterprises Ltd.KHD Humboldt Wedag (Cyprus) LimitedKHD Humboldt Wedag International (Deutschland) AGKHD Humboldt Wedag GmbHHumboldt Wedag Coal & Minerals GmbHZAB Zementanlagenbau GmbH DessauHumboldt Wedag (SA) (Pty) Ltd.ZAB Industrietechnik & Service GmbH 103




---



##### Table of Contents



ExhibitNumber

DescriptionMFC & KHD International Industries LimitedKHD Sales and Marketing Ltd.KHD Humboldt Wedag International (UAE) FEZHumboldt Wedag GmbHBlake International LimitedHIT International Trading AG11.1

Code of Ethics(4)12.1

Section 302 Certification under Sarbanes-Oxley Act of 2002
    for James B. Busche.(8)12.2

Section 302 Certification under Sarbanes-Oxley Act of 2002
    for Alan Hartslief.(8)13.1

Section 906 Certification under Sarbanes-Oxley Act of 2002
    for James B. Busche.(8)13.2

Section 906 Certification under Sarbanes-Oxley Act of 2002
    for Alan Hartslief.(8)15.1

Consent of Deloitee & Touche LLP.(8)15.2

Consent of BDO Dunwoody LLP.(8)99.1

Audit Committee Charter(6)99.2

Compensation Committee Charter(7)99.3

Nominating and Corporate Governance Charter(7)    (1)
    
    Incorporated by reference to our
    Form 20-Fs
    filed in prior years.(2)
    
    Incorporated by reference to our
    Form 10-K
    for the year ended December 31, 1989.(3)
    
    Incorporated by reference to our
    Form 6-K
    filed with the Securities and Exchange Commission on
    November 23, 2004.(4)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 26, 2004.(5)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 6, 2005.(6)
    
    Incorporated by reference to our
    Form 20-F
    filed with the Securities and Exchange Commission on
    April 3, 2006.(7)
    
    Incorporated by reference to our
    Form 20-F
    with the Securities and Exchange Commission on April 3,
    2007.(8)
    
    Filed herewith. 104




---



##### Table of Contents



SIGNATURES  Form 20-F
  KHD Humboldt Wedag International Ltd.
  
        
       105