**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**Washington, D.C. 20549

**FORM 20-F**

----

 
| o      | **Registration Statement pursuant to  Section 12(b) or 12(g) of the Securities Exchange Act of 1934**                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **or**                                                                                                                                                |
| x      | **Annual report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934 for the fiscal year ended  February 28, 2005** |
|   | **or**                                                                                                                                                |
| o      | **Transition report pursuant to Section 13 or  15(d) of the Securities Exchange Act of 1934 for the transition period  from to**            |

 

**Commission file number:  333-115996**

----

**CONCORDIA BUS NORDIC AB (publ)**(Exact Name of Registrant as Specified in its Charter)

**SWEDEN**(Jurisdictionof Incorporation or Organization)

**Solna Strandväg 78, 171-54 Solna, Sweden**(Addressof Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) ofthe Act:

**NONE**

Securities registered or to be registered pursuant to Section 12(g) ofthe Act:

**NONE**

Securities for which there is a reporting obligationpursuant to Section 15(d) of the Act:

**€130,000,0009.125% Senior Secured Notes due August 1, 2009**(Title of Class)

----

Indicate by check mark whetherthe Registrant:  (1) has filed allreports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past90 days.
| x  Yes | o  No |
|--------|-------|

 

Indicate by checkmark which financial statement item the registrant has elected to follow:
| x  Item 17 | o  Item 18 |
|------------|------------|

 

 

----

**TABLE OF CONTENTS**
| PART I |
|-------------|
| Item 1.     |   | Identity Of Directors, Senior Management And  Advisors |   | 1 |
| Item 2.     |   | Offer Statistics And Expected Timetable |   | 1 |
| Item 3.     |   | Key Information |   | 1 |
|        | A. |   | Selected Financial Data |   | 1 |
|        | B. |   | Capitalization And Indebtedness |   | 4 |
|        | C. |   | Reasons For The Offer And Use Of Proceeds |   | 4 |
|        | D. |   | Risk Factors |   | 4 |
| Item 4.     |   | Information On The Company |   | 16 |
|        | A. |   | History And Development Of The Company |   | 16 |
|        | B. |   | Business Overview |   | 17 |
|        | C. |   | Organizational Structure |   | 30 |
|        | D. |   | Property, Plant And Equipment |   | 31 |
| Item 5.     |   | Operating And Financial Review And Prospects |   | 32 |
|        | A. |   | Operating Results |   | 32 |
|        | B. |   | Liquidity And Capital Resources |   | 44 |
|        | C. |   | Research And Development, Patents, Licences, Etc. |   | 47 |
|        | D. |   | Trend Information |   | 47 |
|        | E. |   | Off-Balance Sheet Arrangements |   | 48 |
|        | F. |   | Tabular Disclosure of Contractual Obligations |   | 48 |
| Item 6.     |   | Directors, Senior Management And Employees |   | 49 |
|        | A. |   | Directors And Senior Management |   | 49 |
|        | B. |   | Compensation |   | 51 |
|        | C. |   | Board Practices |   | 51 |
|        | D. |   | Employees |   | 52 |
|        | E. |   | Share Ownership |   | 52 |
| Item 7.     |   | Major Shareholders And Related Party Transactions |   | 52 |
|        | A. |   | Major Shareholders |   | 52 |
|        | B. |   | Related Party Transactions |   | 53 |
|        | C. |   | Interests Of Experts And Counsel |   | 54 |
| Item 8.     |   | Financial Information |   | 54 |
|        | A. |   | Consolidated Statements And Other Financial  Information |   | 54 |
|        | B. |   | Significant Changes |   | 54 |

----

 
| Item 9.       |   | The Offer And Listing                                                         |                                   | 54     |
|---------------|--------|-------------------------------------------------------------------------------|----------------------------------------|--------|
|          | A.     |                                                                          | Market Price Information               |   | 55 |
|          | B.     |                                                                          | Markets                                |   | 55 |
| Item 10.      |   | Additional Information                                                        |                                   | 55     |
|          | A.     |                                                                          | Share Capital                          |   | 55 |
|          | B.     |                                                                          | Memorandum And Articles Of Association |   | 55 |
|          | C.     |                                                                          | Material Contracts                     |   | 55 |
|          | D.     |                                                                          | Exchange Controls                      |   | 59 |
|          | E.     |                                                                          | Taxation                               |   | 59 |
|          | F.     |                                                                          | Dividends And Paying Agents            |   | 63 |
|          | G.     |                                                                          | Statement By Experts                   |   | 63 |
|          | H.     |                                                                          | Documents On Display                   |   | 63 |
|          | I.     |                                                                          | Subsidiary Information                 |   | 63 |
| Item 11.      |   | Quantitative And Qualitative Disclosures About  Market Risk                   |                                   | 63     |
| Item 12.      |   | Description Of Securities Other Than Equity  Securities                       |                                   | 65     |
| PART II  |
| Item 13.      |   | Defaults, Dividend Arrearages And Delinquencies                               |                                   | 66     |
| Item 14.      |   | Material Modifications To The Rights Of Security  Holders And Use Of Proceeds |                                   | 66     |
| Item 15.      |   | Controls And Procedures                                                       |                                   | 66     |
| Item 16A.     |   | Audit Committee Financial Expert                                              |                                   | 66     |
| Item 16B.     |   | Code Of Ethics                                                                |                                   | 66     |
| Item 16C.     |   | Principal Accountant Fees And Services                                        |                                   | 67     |
| Item 16D.     |   | Exemptions From The Listing Standards For Audit  Committees                   |                                   | 67     |
| Item 16E.     |   | Purchases Of Equity Securities By The Issuer And  Affiliated Purchasers       |                                   | 67     |
| PART III |
| Item 17.      |   | Financial Statements                                                          |                                   | 68     |
| Item 18.      |   | Financial Statements                                                          |                                   | 68     |
| Item 19.      |   | Exhibits                                                                      |                                   | 68     |
|          |   | Signatures                                                                    |                                   | 72     |

 

----

**CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS**

This annual report includes forward looking statements.We have based these forward looking statements on our current expectations andprojections about future events. These forward looking statements can beidentified by the use of forward looking terminology, including the terms “believe,”“estimate,” “anticipate,” “expect,” “intend,” “continue,” “may,” “will” or “should”or, in each case, their negative, or other variations or comparable terminology.These forward looking statements include all matters that are not historicalfacts. They appear under subheading “D. Risk Factors” of “Item 3. KeyInformation” and “Item 5. Operating and Financial Review and Prospects” andelsewhere in this annual report and include statements regarding ourintentions, beliefs or current expectations concerning, among other things, ourresults of operations, financial condition, liquidity, prospects, growth,strategies and the industry in which we operate.

By their nature,forward looking statements involve risks and uncertainties because they relateto events and depend on circumstances that may or may not occur in the future. Wecaution you that forward looking statements are not guarantees of futureperformance and that our actual results of operations, financial condition andliquidity, and the development of the industry in which we operate may differmaterially from those made in or suggested by the forward looking statementscontained in this annual report. In addition, even if our results ofoperations, financial condition and liquidity, and the development of theindustry in which we operate are consistent with the forward looking statementscontained in this annual report, those results or developments may not be indicativeof results or developments in subsequent periods. Important factors that couldcause those differences include, but are not limited to:

·       oursubstantial leverage and our ability to meet our debt service obligations;

·       ourability to win and/or renew public contracts;

·       downwardpressure on prices resulting from competition in our industry;

·       ourexposure to cost increases that may not be sufficiently accounted for by theindexation terms in our contracts;

·       potentialchanges in the funding provided to transportation authorities by governments;

·       ourability to win contracts with a margin and return on capital commensurate withour cost structure;

·       ourability to forecast the costs associated with contracts successfully;

·       ourability to take advantage of terms in our lease agreements;

·       ourexposure to fluctuations in interest notes (leasing);

·       ourrelations with our employees;

·       ourexposure to fluctuations in fuel prices;

·       possiblefinancial losses pursuant to our hedging strategies; and

·       ourexposure to currency exchange rate fluctuations.

We undertake no obligationto update publicly or to revise any forward looking statements, whether as aresult of new information, future events or otherwise. Furthermore, theseforward looking statements may be materially impacted by the factors listedunder subheading “D. Risk Factors” of “Item 3. Key Information”. In light ofthese risks, uncertainties and assumptions, the forward looking eventsdiscussed in this annual report might not occur. You should not interpretstatements regarding past trends or activities as representations that thosetrends or activities will continue in the future.

i

----

**ENFORCEMENT OF CERTAIN CIVIL LIABILITIES**

Concordia Bus Nordic AB(publ) (“Concordia”) is organized under the laws of Sweden. All of ourdirectors, executive officers and our subsidiaries and the independent auditorsnamed in this annual report are non-residents of the United States. As aresult, it may not be possible for investors to effect service of processwithin the United States upon us or such persons or to enforce against any ofthem judgments of US courts predicated upon civil liabilities under US federalsecurities laws. Although we agree under the terms of the indenture relating tothe senior secured notes to accept service of process in the United States byan agent designated for such purpose, it may not be possible for investors to (i) effectservice of process within the United States upon our officers and directors andthe independent auditors named herein and to (ii) realize in the UnitedStates upon judgments against such persons obtained in such courts predicatedupon civil liabilities of such persons, including any judgments predicated uponUS federal securities laws to the extent such judgments exceed such person’s USassets. There is also doubt as to the enforceability in Sweden, in originalactions or in actions for enforcement, of judgments of US courts predicted uponthe civil liability provisions of the federal securities laws of the UnitedStates.

**CURRENCY AND FINANCIAL STATEMENT PRESENTATION**

Unless otherwise indicated, references in this annualreport to “SEK,” “Swedish Krona” or “Swedish Kronor” are to the lawful currencyof Sweden; references to “euro” or “€” are to the singlecurrency of the participating Member States in the Third Stage of EuropeanEconomic and Monetary Union of the Treaty Establishing the European Community,as amended from time to time; references to “Norwegian Kroner” or “NOK” are tothe lawful currency of Norway; and references to “US dollars” or “$” are to thelawful currency of the United States of America.

The consolidated financialstatements of Concordia are prepared in accordance with accounting principlesgenerally accepted in Sweden (“Swedish GAAP”), which differ in certain respectsfrom generally accepted accounting principles in certain other countries. Thesignificant differences between Swedish GAAP and accounting principlesgenerally accepted in the United States of America (“US GAAP”) are discussed inNote 32 to the consolidated financial statements of Concordia includedelsewhere in this annual report.

The 9.125% Senior SecuredNotes due 2009 were issued by Concordia Bus Nordic AB (publ) and wereguaranteed by the issuer’s immediate parent, Concordia Bus NordicHolding AB and by certain of the issuer’s subsidiaries. The issuer and theissuer’s subsidiaries guaranteeing the notes are all 100% owned by the issuer’simmediate parent. In addition, all guarantees are full and unconditional andjoint and several. Pursuant to Rule 3-10(d) of Regulation S-X underthe Securities Act of 1933, as amended, only the issuer’s parent would berequired to file the financial statements required by Regulation S-X inthis annual report on Form 20-F (provided that certain footnote disclosureregarding the issuer was provided). However, because of the limited amount ofmeaningful historical financial information regarding the issuer’s parentbecause the issuer’s parent was dormant prior to the issuance of the notes, weare providing financial statements with respect to both the issuer and theissuer’s parent. In addition, the discussion in “Item 5. Operating andFinancial Review and Prospects” is based on the issuer’s results, rather thanthe issuer’s parent’s results.

ii

----

**SUMMARY**

*Unless otherwise stated in this prospectus or unlessthe context otherwise requires, references to “Concordia”, “we,” or “our” areto Concordia Bus Nordic AB and, as the context may require, its subsidiaries ;references to “our indirect Parent” are to Concordia Bus AB (publ) and, as thecontext may require, its subsidiaries; references to “our direct Parent” or “theParent Guarantor” are to Concordia Bus Nordic Holding AB and, as the contextmay require, its subsidiaries; references to “Swebus” are to Swebus AB;references to “Concordia Finland” are to Concordia Bus Finland Oy Ab;references to “SBC” are to Ingeni&qout;r M.O. Sch&qout;yens Bilcentraler AS; referencesto “SG” or the “Sch&qout;yen Group” are to Sch&qout;yen Group; and references to “BusHoldings” are to Bus Holdings S.a.r.l.*

iii

----

**PART I**

**Item1*.   Identity of Directors, Senior Managementand Advisers***

Not applicable.

**Item2.*   Offer Statistics and Expected Timetable***

Not applicable.

**Item 3.*   Key Information***

**A.****                SelectedFinancial Data**

Previously, Concordia Bus Nordic Holding AB (“Holding”)was named Interbus Finans AB and was a wholly owned subsidiary of Concordia,which was wholly owned by Concordia Bus AB (“Bus”). In January 2004, areorganization was performed whereby Concordia transferred to Bus its 100%share ownership of Interbus Finans AB. Bus then transferred its shares inConcordia to Interbus Finans AB. Interbus Finans AB was then renamed ConcordiaBus Nordic Holding AB.

This reorganization had the effect of creating a newholding company for Concordia from one of its dormant subsidiaries. Holding isa non operating holding company that has no assets other than its shares inConcordia. For periods after the reorganization, the consolidated financialposition, results of operations and cash flows of Concordia are the same asthat of Holding. Since this was a reorganization of entities under commoncontrol, the consolidated financial statements contained in this annual reportare presented as if Holding was in existence as the shareholder of Concordiafor all periods presented.

The following tables set forth selected consolidatedfinancial data derived from audited financial statements as of and for theyears ended February 28, 2001, February 28, 2002, February 28,2003, February 29, 2004 and February 28, 2005.

This information should be read in conjunction withthe sections “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and the consolidated financial statements and the notesthereto included elsewhere in this annual report.

The consolidated financialstatements of Concordia have been prepared in accordance with Swedish GAAP,which differ in certain significant respects from US GAAP. The significantdifferences between Swedish GAAP and US GAAP are discussed in Note 32 to theconsolidated financial statements of Holding included elsewhere in this annualreport.

1

----

**CONCORDIA BUS NORDIC HOLDING ABSELECTED CONSOLIDATED FINANCIAL DATA(SEK in millions, except per share amount and ratios)**
| ** **                                              | ** ** | **As of and for  the year ended  February 28,** | ** ** | **As of and for  the year ended  February 29,** | ** ** | **As of and for the year  ended February 28** | ** ** |
|---------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                              | ** ** | **2005**                                                                      | ** ** | **2004**                                                                      | ** ** | **2003**                                                                         | ** ** | **2002** | ** ** | **2001**(a) | ** ** |
| **Statement of Operations**                             |       |                                                                          |       |                                                                          |       |                                                                             |       |   |   |   |   |   |   |   |   |
| Net revenue                                             |       |                                                                          | 4,812      |                                                                          |       |                                                                             | 4,761      |   |   | 4,758 |   | 4,226 |   | 3,576 |   |
| Operating expenses(g)                                   |       |                                                                          | (4,722     | )                                                                             |       |                                                                             | (4,544     | ) |   | (4,505 | ) | (3,999 | ) | (3,146 | )(b) |
| Gain (loss) on sale of  fixed assets                    |       |                                                                          | 4          |                                                                          |       |                                                                             | 6          |   |   | (4 | ) | 20 |   | 65 |   |
| Depreciation;  amortization and Write-downs             |       |                                                                          | (350       | )                                                                             |       |                                                                             | (331       | ) |   | (372 | ) | (362 | ) | (332 | ) |
| Operating profit (loss)                                 |       |                                                                          | (256       | )                                                                             |       |                                                                             | (108       | ) |   | (123 | ) | (115 | ) | 163 |   |
| Financial income and  expense, net(c)                   |       |                                                                          | (141       | )                                                                             |       |                                                                             | (146       | ) |   | (105 | ) | (104 | ) | (117 | ) |
| Income (loss) before  taxes                             |       |                                                                          | (397       | )                                                                             |       |                                                                             | (259       | ) |   | (228 | ) | (219 | ) | 46 |   |
| Income taxes                                            |       |                                                                          | 1          |                                                                          |       |                                                                             | 83         |   |   | 49 |   | 46 |   | (42 | ) |
| Net profit (loss)                                       |       |                                                                          | (396       | )                                                                             |       |                                                                             | (171       | ) |   | (179 | ) | (173 | ) | 4 |   |
| Net profit (loss) per  share (in thousands of SEK)      |       |                                                                          | (1,320     | )                                                                             |       |                                                                             | (572       | ) |   | (596 | ) | (577 | ) | 13 |   |
| **Balance  Sheet Data**                                 |       |                                                                          |       |                                                                          |       |                                                                             |       |   |   |   |   |   |   |   |   |
| Total fixed assets                                      |       |                                                                          | 1,514      |                                                                          |       |                                                                             | 1,827      |   |   | 2,127 |   | 2,321 |   | 2,925 |   |
| *Of which: buses*                                       | * *   | * *                                                                      | *1,228*    |                                                                          | * *   | * *                                                                         | *1,491*    |   | * * | *1,793* | * * | *1,971* | * * | *2,327* | * * |
| Total current assets                                    |       |                                                                          | 772        |                                                                          |       |                                                                             | 1,024      |   |   | 757 |   | 1,035 |   | 897 |   |
| Total assets                                            |       |                                                                          | 2,286      |                                                                          |       |                                                                             | 2,851      |   |   | 2,884 |   | 3,356 |   | 3,822 |   |
| Share capital                                           |       |                                                                          | 0          |                                                                          |       |                                                                             | 0          |   |   | 0 |   | 0 |   | 0 |   |
| Total shareholder’s equity  (deficit)              |       |                                                                          | (144       | )                                                                             |       |                                                                             | 235        |   |   | 412 |   | 692 |   | 940 |   |
| Total provisions                                        |       |                                                                          | 111        |                                                                          |       |                                                                             | 146        |   |   | 198 |   | 269 |   | 371 |   |
| Total non-current  liabilities                          |       |                                                                          | 1,188      |                                                                          |       |                                                                             | 1,216      |   |   | 858 |   | 1,652 |   | 1,563 |   |
| Total current  liabilities                              |       |                                                                          | 1,131      |                                                                          |       |                                                                             | 1,254      |   |   | 1,416 |   | 743 |   | 948 |   |
| Total debt                                              |       |                                                                          | 1,488      |                                                                          |       |                                                                             | 1,589      |   |   | 1,497 |   | 1,691 |   | 1,698 |   |
| *Of which: Subordinated  Shareholder Loan, net*(d)      | * *   | * *                                                                      | *292*      |                                                                          | * *   | * *                                                                         | *368*      |   | * * | *494* | * * | *631* | * * | *—* | * * |
| *Of which: senior debt*(e)                              | * *   | * *                                                                      | *1,196*    |                                                                          | * *   | * *                                                                         | *1,221*    |   | * * | *1,003* | * * | *1,060* | * * | *1,698* | * * |
| **US  GAAP:**                                           |       |                                                                          |       |                                                                          |       |                                                                             |       |   |   |   |   |   |   |   |   |
| Net loss                                                |       |                                                                          | (385       | )                                                                             |       |                                                                             | (127       | ) |   | (168 | ) | (188 | ) | N/A |   |
| Basic and diluted loss  per share (in thousands of SEK) |       |                                                                          | (1,283     | )                                                                             |       |                                                                             | (425       | ) |   | (560 | ) | (626 | ) | N/A |   |
| Total assets                                            |       |                                                                          | 3,006      |                                                                          |       |                                                                             | 3,561      |   |   | 3,579 |   | 4,041 |   | N/A |   |
| Shareholder’s equity,  end of year                 |       |                                                                          | 453        |                                                                          |       |                                                                             | 826        |   |   | 952 |   | 1,231 |   | N/A |   |
| **Cash  Flow Data**                                     |       |                                                                          |       |                                                                          |       |                                                                             |       |   |   |   |   |   |   |   |   |
| Cash flow from  operations                              |       |                                                                          | (99        | )                                                                             |       |                                                                             | 24         |   |   | (66 | ) | 39 |   | (19 | ) |
| Cash flow from investing  activities                    |       |                                                                          | (63        | )                                                                             |       |                                                                             | (11        | ) |   | (136 | ) | 274 |   | 55 |   |
| Cash flow from financing  activities                    |       |                                                                          | (8         | )                                                                             |       |                                                                             | 152        |   |   | (95 | ) | (78 | ) | 63 |   |
| ** **                                              | ** ** | ** **                                                                    | **2005**   | ** **                                                                    | ** ** | ** **                                                                       | **2004**   | ** ** | ** ** | **2003** | ** ** | **2002** | ** ** | **2001** | ** ** |
| Total capital  expenditures                             |       |                                                                          | 112        |                                                                          |       |                                                                             | 32         |   |   | 216 |   | 43 |   | 336 |   |
| *Of which: capital expenditures  on buses*              | * *   | * *                                                                      | *100*      |                                                                          | * *   | * *                                                                         | *15*       |   | * * | *182* | * * | *21* | * * | *321* | * * |
| **Other  Financial Data**                               |       |                                                                          |       |                                                                          |       |                                                                             |       |   |   |   |   |   |   |   |   |
| Net present value of operating leases(f)                |       |                                                                          | 875        |                                                                          |       |                                                                             | 957        |   |   | 1,003 |   | 748 |   | 348 |   |

----

(a)           In March/April 2000,Concordia Finland experienced a three day strike among its employees. Thisstrike resulted in losses of SEK 1.2 million.

2

----

(b)          Operating expenses forthe year ended February 28, 2001, include a refund from the administratorof one of the pension plans of SEK 175 million.

(c)           Includes financingcosts and other financial charges and unrealized exchange rate gains and losseson loans denominated in foreign currency. The net foreign currency exchangegains and losses represented SEK (20) million, SEK 3 million and SEK4 million for the years ended February 28, 2001, 2002 and 2003,respectively, SEK (7) million for the year ended February 29, 2004and SEK 19 for the year ended February 28, 2005.

(d)          The SubordinatedShareholder Loan (defined below), net, reflects the combination of the netbalance of the initial subordinated loan of SEK 501 million and aggregategroup contributions received by Bus from Holding and its subsidiaries inexchange for tax losses from Bus and cash payments from Holding to Bus relatingto servicing the €160,000,00011.0% Senior Subordinated Notes due 2010 issued by Bus. For a description ofthe Subordinated Shareholder Loan, see “Description of Other MaterialIndebtedness—Subordinated Shareholder Loan from Holding.”

(e)           Total senior debtincludes long term senior debt and the short-term portion of long term seniordebt to third parties including obligations under financial lease arrangementsbut excluding the Subordinated Shareholder Loan. Holding believes that totalsenior debt is a useful supplement to total debt and other balance sheet dataas it indicates the amount of debt Holding owes which ranked *pari passu* with the €130,000,000 9.125% SeniorSecured Notes due August 1, 2009 issued by Concordia on January 22,2004.

(f)             Net present value ofoperating leases represents the net present value of future minimum leasepayments for vehicles, real estate and certain other leased assets underoperating lease arrangements.

(g)           **Operating expenses**
| ** **                         | ** ** | **As of and for the  year ended  February 28,** | ** ** | **As of and for the  year ended  February 29,** | ** ** | **As of and for the year  ended February 28** | ** ** |
|------------------------------------|------------|-------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                         | ** ** | **2005**                                                                      | ** ** | **2004**                                                                      | ** ** | **2003**                                                                         | ** ** | **2002** | ** ** | **2001**(a) | ** ** |
| ** **                         | ** ** | ** **                                                                    | ** ** | **SEK**                                                                       | ** ** | **SEK**                                                                          | ** ** | **SEK** | ** ** | **SEK** | ** ** |
| Fuel, tires and  other consumables |       |                                                                          | (989       | )                                                                             |       |                                                                             | (929       | ) |   | (919 | ) | (805 | ) | (692 | ) |
| Other external  costs              |       |                                                                          | (1,127     | )                                                                             |       |                                                                             | (1,004     | )] |   | (989 | ) | (854 | ) | (478 | ) |
| Total Personnel  costs             |       |                                                                          | (2,606     | )                                                                             |       |                                                                             | (2,611     | ) |   | (2,597 | ) | (2,340 | ) | (1,976 | ) |
| Total Operating expenses  .        |       |                                                                          | (4,722     | )                                                                             |       |                                                                             | (4,544     | ) |   | (4,505 | ) | (3,999 | ) | (3,146 | ) |

 

3

----

Thetable below sets forth, for the periods and dates indicated, certaininformation concerning the exchange rate for the Swedish Krona against the USdollar based upon the noon buying rate in the City of New York for cabletransfers in Swedish Krona as announced by the Federal Reserve Bank of New Yorkfor customs purposes (the “SEK Noon Buying Rate”). We provide these ratesfor your convenience only, and they are not the rates of exchange we used toprepare our consolidated financial statements used elsewhere in this annualreport. We are not representing that Swedish Krona amounts have been or wouldbe converted into U.S. dollars at any of the exchange rates indicated. The SEKNoon Buying Rate expressed in US dollars as of August 26, 2005 was $7.5757.
| ** **                                  | ** ** | **Period End** | ** ** | **Average** | ** ** | **High** | ** ** | **Low** | ** ** |
|---------------------------------------------|------------|---------------------|------------|-------------|------------|----------|------------|---------|------------|
| **Fiscal Year**                             |       |                |       |        |       |     |       |    |       |   |   |
| Ended  February 28, 2001               |       |                | 9.8150     |        |       | 9.3723   | (a)        | 10.3600 |       | 8.5330 |   |
| Ended  February 28, 2002               |       |                | 10.4700    |        |       | 10.5832  | (a)        | 11.0270 |       | 9.6730 |   |
| Ended  February 28, 2003               |       |                | 8.5050     |        |       | 9.3218   | (a)        | 10.500  |       | 8.4100 |   |
| Ended  February 29, 2004               |       |                | 7.4330     |        |       | 7.8456   | (a)        | 8.7030  |       | 7.0850 |   |
| Ended  February 28, 2005               |       |                | 6.8275     |        |       | 7.3002   | (a)        | 7.7725  |       | 6.5939 |   |
| **Month**                                   |       |                |       |        |       |     |       |    |       |   |   |
| February 2005                          |       |                |       |        |       |     |       | 7.1114  |       | 6.8275 |   |
| March 2005                             |       |                |       |        |       |     |       | 7.0716  |       | 6.7312 |   |
| April 2005                             |       |                |       |        |       |     |       | 7.1627  |       | 7.0018 |   |
| May 2005                               |       |                |       |        |       |     |       | 7.4108  |       | 7.0850 |   |
| June 2005                              |       |                |       |        |       |     |       | 7.8114  |       | 7.4373 |   |
| July 2005                              |       |                |       |        |       |     |       | 7.9218  |       | 7.7225 |   |
| August (through  August 26, 2005) |       |                |       |        |       |     |       | 7.7121  |       | 7.4762 |   |

----

(a)           Theaverage of the SEK Noon Buying Rate on the last day of each month duringthe applicable period.

**B.**               Capitalizationand Indebtedness

Not applicable.

**C.**               ReasonsFor the Offer and Use of Proceeds

Not applicable.

**D.**              RiskFactors

***Our indirect parent, Bus, has entered into Swedishreorganization proceedings and Bus is insolvent. If the reorganization is notsuccessful, we may not be able to continue as a going concern.***

On July 22,2005 our indirect parent, Bus signed a restructuring agreement (**“the Restructuring Agreement”**) with amongother parties, holders of approximately 75% of Bus’ €160,000,000 11.0% Senior Subordinated Notes due 2010 (the **“Parent Notes”**). In connection withthat restructuring agreement Bus intends to enter into reorganizationproceedings in Sweden on or about September 1, 2005. These proceedings areintended to result in the conversion of Parent Notes into common shares of Bus.Such Holders who sign the restructuring agreement will be issued common sharesthat will represent approximately 97.5% of Bus’ outstanding common equity atthe time of issuance. Risks involving the reorganization include the following:

·       Therecan be no assurance that the Swedish court will approve the reorganizationplan.

4

----

·       Publicityand perception issues relating to the reorganization proceedings may adverselyaffect our business. We believe that any such adverse effects may worsen if theSwedish court does not approve the reorganization plan promptly.

·       Therecan be no assurance regarding any adverse actions that creditors orshareholders of Bus or other parties in interest in the reorganizationproceedings may take that could prevent or unduly delay confirmation of Busreorganization plan.

·       Therecan be no assurance that Bus reorganization will enable it to continue tooperate as a going concern over time.

·       Wemay be unable to retain top management and other key personnel through theprocess of reorganization.

The uncertainty regardingthe eventual outcome of Bus restructuring could threaten our ability tocontinue as a going concern. Continuing on a going concern basis is dependentupon, among other things, the success and court approval of Bus reorganizationplan, maintaining the support of key vendors and retaining key personnel, alongwith financial, business, and other factors, many of which are beyond are control.

***Concordia is a holding company with no revenuegenerating operations of its own as a result our financial condition could beadversely affected if our subsidiaries do not make distributions to us.***

Concordia is a holdingcompany. Our principal asset is our investment in our subsidiaries. We conductno business or operations except through direct and indirect subsidiaries. Ourability to service our indebtedness, including the €130,000,0009.125% Senior Secured Notes due August 1, 2009 (the “Senior Notes”), andour indebtedness to Bus of approximately SEK 292 million is entirely dependentupon the receipt of funds from our subsidiaries by means of dividends,interest, intercompany loans or otherwise. The ability of our subsidiaries tomake those funds available to us is subject to, among other things, applicablecorporate and other laws and restrictions contained in agreements to which suchsubsidiaries may be subject. We cannot assure you that our subsidiaries will bein a position to make funds available to us. Although the indenture related tothe Senior Notes limits the ability of such subsidiaries to enter intoconsensual restrictions on their ability to pay dividends and make otherpayments to us, such limitations are subject to a number of significantqualifications. Also, according to Swedish law, our subsidiaries may only paydividends to us to the extent that they have distributable earnings.  Their failure to have such distributableearnings in the future could have a material adverse effect on our financialcondition.

***We expect that Holding and Bus will seek to cause usto make funds available for interest payments in connection with theirindebtedness. The making of such distribution to our parent companies couldhave a material adverse effect on all results of operations or financialcondition.***

We are a wholly ownedindirect subsidiary of Bus. The terms of the Parent Notes require Bus to makesemi-annual interest payments which, in fiscal 2005, on an annualized basisequaled €17.6 million. Bus did not make its lastpayment and in connection with the restructuring expects that the Parent Noteswill be converted into common shares representing 97.5% of the common equity inBus and that the remainder will be reduced to 25% of their face value. Inconnection with that restructuring Holding has borrowed €25,000,000to pay for the expenses of the restructuring and Bus intends to borrow anadditional €45,000,000(together, the “Mezzanine Facility”) of which approximately €13,000,000Bus intends to contribute to us, via Holding, as an equity contribution. Aportion of the net proceeds received from the issuance of the Parent Notes wasloaned to us by Bus pursuant to a subordinated intercompany loan (the “SubordinatedShareholder Loan”) and which bears interest at a rate of 11% and matures on February 14,2010 and which, in connection with the restructuring, was transferred toHolding. As of February 28, 2005 the outstanding balance of theSubordinated Shareholder Loan is approximately SEK 167,000,000. 

5

----

Holdingwill have to make interest payments of approximately €857thousand in connection with its borrowing until it is repaid with the proceedsof the Mezzanine Facility and Bus will have to make substantial and greaterinterest payments once it had drawn down the Mezzanine Facility. The terms ofthe Senior Notes permit us to make distributions to our parent companies,whether in the form of dividends, distributions, advances or otherwise for thepurpose of making these semi-annual interest payments. To the extent allowed bySwedish law, we intend to make such distributions to our parent companies viadividends, by making interest payments on the Subordinated Shareholder Loan andthe Mezzanine Facility, or by repaying the principal on the SubordinatedShareholder Loan accordingly to Swedish law, however, we can only pay dividendsto our parent companies to the extent we have distributable earnings.

***To service our debt, we will require a significantamount of cash. If our subsidiaries do not generate sufficient cash, our parentcompanies may default on our respective debt which could have a materialadverse effect on our business.***

Our ability to make payments on and to refinance ourdebt, including the Senior Notes, will depend on our subsidiaries’ ability togenerate cash in the future and our subsidiaries’ ability to generatedistributable earnings or other funds available for that purpose. For the yearended February 28, 2005 we spent €11.9 million to serviceour debt. Our subsidiaries ability to generate cash is, to a certain extent, issubject to general economic, financial, competitive and other factors that arebeyond our control.

We sustained operating losses of SEK 256 millionfor the year ended February 28, 2005, SEK 108 million for theyear ended February 29, 2004 and SEK 123 million for the year ended February 28,2003. We sustained net losses of SEK 396 million for the year ended February 28,2005, SEK 171 million for the year ended February 29, 2004 andSEK 179 million for the year ended February 28, 2003.

We may need to refinance all or a portion of our andour subsidiaries’ debt, including the Senior Notes, on or before maturity. Wemay not be able to refinance any of such debt, including debt under the SeniorNotes, on commercially reasonable terms or at all, which could have a materialadverse effect on our business.

Further, our parentcompanies’ ability to make payments on the Mezzanine Facility is currentlywholly dependent upon our and our subsidiaries’ ability to make payments inconnection with the Subordinated Shareholder Loan and the Capital Contribution,as well as our and our subsidiaries’ ability to generate distributable earningsfor that purpose. Although we believe that, after making payments permitted inrespect of the Subordinated Shareholder Loan and the Capital Contribution, wewill have available distributable earnings to make payments in respect of theSenior Notes, we cannot assure you we will have sufficient distributableearnings to do so. Any failure to provide funds to our parent companies’sufficient to make interest payments on the Mezzanine Facility could result ina default under the Mezzanine Facility. A default on the Mezzanine Facilitycould result in an insolvency of Bus, which would accelerate payment on theSenior Notes in accordance with the terms of the indenture. Even if Bus did notsuffer an insolvency, such default could limit our ability to obtain funding oncommercially acceptable terms or at all, which could have a material adverseeffect on our business.

***Our substantial leverage could adversely affect ourability to run our business.***

We have now and will continue to have a significantamount of debt. As of February 28, 2005, our total consolidated debt wasapproximately SEK 1,488 million, of which total consolidated senior debtwas approximately SEK 1,196 million and our shareholders deficit wasSEK (144) million. We also have substantial payment obligations under ouroperating leases. The present value of future lease payments for our operatingleases February 28, 2005 was SEK 875 million, SEK957 million as of February 29, 2004 and SEK 1,003 million as of February 28,2003.

6

----

In addition, we expect that Holding and Bus will seekto cause us to make funds available to them, in excess of our obligations inrespect of the Subordinated Shareholder Loan and the Capital Contribution, inrespect of our parent companies’ interest payment obligations under theMezzanine Facility.

Our and oursubsidiaries’ substantial debt, and such need to provide funds to our parentcompanies, could have important consequences for you. For example, it couldamong other things:

·       makeit more difficult for us to satisfy our obligations under the Senior Notes;

·       limitour ability to fund our working capital, capital expenditures and generalcorporate requirements;

·       limitour ability to borrow additional funds;

·       limitour ability to enter into leases for buses;

·       requireus to dedicate a substantial portion of our cash flow from operations topayments on our debt, thereby reducing the funds available to us for otherpurposes;

·       makeus more vulnerable to economic downturns; and

·       reduceour flexibility to respond to changing business and economic conditions.

In addition, we and our subsidiaries may be able toincur substantial additional debt in the future. The terms of the indenturegoverning the Senior Notes restrict but do not fully prohibit us and oursubsidiaries from borrowing, and some of those borrowings may be secured. Further,if new debt is added to our and our subsidiaries’ current debt levels, therelated risks that we and they now face could intensify.

Any of the foregoing couldhave a material adverse effect on our business, our ability to make paymentsunder the Senior Notes and our ability to continue presenting our financialstatements under the assumption that we are a going concern.

***The terms of our indebtedness restrict our corporateactivities, if we fail to comply with these terms could result in a defaultunder our indebtedness.***

The indenture underwhich the Senior Notes were issued, restricts, and in some cases prohibits,among other things, our and our subsidiaries’ ability to:

·       incuradditional debt;

·       makeprepayments of certain debt;

·       paydividends;

·       makeinvestments;

·       engagein transactions with affiliates;

·       issuecapital stock;

·       createliens;

·       sellassets; and

·       engagein mergers and consolidations.

A failure to comply withthese covenants would result in a default under the Senior Notes, which in turncould result in an event of default under our other indebtedness.

7

----

***We may not have the ability to raise the fundsnecessary to finance the change of control offer or asset sale offers requiredby the indenture under which the Senior Notes were issued.***

Upon the occurrence ofspecific kinds of change of control events, we will be required to offer torepurchase all outstanding Senior Notes. Furthermore, a change of control mayresult in a default under and possibly acceleration of other senior debt we mayincur. Also, if we or our subsidiaries sell assets we may, subject toconditions, be required to offer to repurchase Senior Notes. It is possible,however, that we will not have sufficient funds at the time we are required tomake such an offer to make the required repurchase of Senior Notes.

***If we lose many local public transportationauthorities’ contracts as they are renewed or we are unable to win newcontracts, our business will be adversely affected. Further, if we experiencedifficulties in operating under our existing contracts, our business may beadversely affected.***

In the year ended February 28, 2005, ourcontracts with local public transportation authorities comprise approximately89.5% of our revenue. In Sweden, Norway and Finland, we operate under 113, 10and 37 contracts, respectively, with the largest contract accounting for 4.6%of our net revenue and the top 25 contracts accounting for approximately 43.8%of total revenue in the year ended February 28, 2005. These contractsusually have a five to eight year term. Local public transportation authoritiesconduct a competitive bidding process for each contract shortly before itterminates and the most important criteria for determining the success of thebid is usually price. See “Business—Sweden—Tendering Procedures” for a discussionof the competitive bidding process in Sweden. If we fail to continue to renewour local public transportation authorities contracts, our revenues will beadversely affected as our older local public transportation authoritiescontracts expire. This may affect our ability to satisfy our obligations underthe Senior Notes.

During the year ended February 28,2003, Swebus faced significant operating difficulty in the Stockholm andUppsala region, due largely to poor operational planning of summer and wintertraffic schedules, together with an exceptionally severe winter. Restrictionson our ability to manage inherited bus drivers under the new contracts due to agrace period of one year from March 4, 2002, and a shortage of driverscaused significant problems. This situation resulted in additional overtime,training costs, substantial payments due to the inconvenience of working hours,increased subcontracting costs, loss of revenues and contractual penalties. Ifsimilar difficulties were to be experienced under current contracts, ourbusiness would be adversely affected.

***If we do not retain or gain local publictransportation authority contracts, we may not benefit from the option to renewexisting operating lease agreements at a lower cost.***

As of February 28, 2005, we have entered intooperating leasing arrangements for 1,470 of our 3,730 buses. The contractsunder which these buses are leased are classified as operating leases whichmeans that no carrying values are recorded on our balance sheet. The term ofany given lease is established to match as far as possible with the duration ofthe underlying contract with the local public transportation authority,generally five to eight years.

Currently, the structure of the lease contract is suchthat at the inception of a new lease contract, the leasing fee is establishedbased on the purchase price paid by the lessor and residual value agreed withthe manufacturer for the period of the lease. At the end of each leasingcontract period each leasing contract can be renewed or terminated (and we havean obligation to renew the lease contracts for a certain aggregate number ofbuses). The lease payments for the second leasing period, which are based onthe agreed residual value at the date of the extension, are lower than thepayments during the initial term. If we are not successful in renewing orextending the local public transportation authority contracts, or inefficiently redeploying our buses elsewhere, we may not gain the benefit ofsuch lower costs.

8

----

Further, in the event ofan acceleration under the Senior Notes following a default, all or part of theleasing contracts covering a significant portion of our leases may beterminated at the option of the lessor. This could have a material adverseeffect on our business.

***Competition on price or other factors could adverselyaffect our business.***

It is our policy to focuson increasing our return on capital and cash generation. We believe that ourchange in focus toward higher, more appropriate tendering price levels has beenadopted by other major operators. Consolidation in the industry and this changein focus among the larger competitors from a tendering strategy based onincreasing market share to a strategy of seeking to maintain adequate marginshave recently resulted in more favorable pricing dynamics. For example, duringthe period fiscal 2002 to fiscal 2005, CPTAs awarded contracts to us on renewalwith prices between 10% and 54% above the prices in the previous contracts. However,no assurance can be given that the more favorable pricing trends will continuein the future for new tenders. For more information, see “Business—Sweden—Competitionin the Swedish Bus Transportation Market.”

***If indices in our contracts do not reflect our costincreases, our business could be adversely affected.***

Local public transportation authorities contractsprovide for a fee to be paid to us in return for providing bus operations forthe routes and schedules described in the contracts. The amount of the fee tobe paid each year is adjusted annually based on an index, or on severalindices, that are intended to compensate for changes in our costs. Historically,contracts with local public transportation authorities, which produce asubstantial portion of Swebus’ revenues in Sweden, have contained cost indicesprimarily based on consumer price indices.

While, as tenderedcontracts expire and new contracts are tendered, it is now becomingincreasingly common to include either (i) a price adjustment index whichreflects bus industry costs, or (ii) a combination of a consumer priceindex, a labor cost index and a diesel fuel price index, there can be noassurance this trend will continue. Should price adjustment indices containedin our existing or future local public transportation authorities contractsfail to reflect our actual cost structure, changes in our costs that are notreflected in the indices included in these contracts could adversely affect ouroperating margins.

***The local public transportation authorities rely ongovernment subsidies. Removal of these subsidies could drive down local publictransportation authorities’ contract fees.***

In Sweden and Norway,management believes that approximately 50% and 40%, respectively, of fees tobus operating companies paid by local public transportation authorities underlocal public transportation authorities contracts in fiscal 2005 were funded bygovernment subsidies (as opposed to bus ticket revenues). See “Business—Sweden—ContractualPublic Bus Transportation Service” for a discussion of these subsidies. ManyEuropean countries have sought to reduce subsidies in recent years. ShouldSweden more aggressively seek to reduce subsidies, fees from local publictransportation authorities contracts may decrease, and local public transportationauthorities could seek to renegotiate the scope of existing contracts. Adecision to reduce subsidies could have an adverse effect on potential feesunder local public transportation authorities contracts.

***Enforcement of the guarantees of the Senior Notes onthe collateral securing the Senior Notes may be subject to certain limitationsand could be deemed to be invalid if found to be in violation of Swedish,Finnish or Norwegian corporate benefit requirements.***

Underthe indenture related to the Senior Notes, some of our subsidiaries (the “Guarantors”)provided guarantees for the Senior Notes (the “Senior Note Guarantees”). Inaddition, under that indenture, pledges of collateral were made to secure theSenior Notes (the “Collateral”). Generally, claims 

9

----

of creditors of a subsidiary will have priority withrespect to the assets of such subsidiary over the claims of creditors of itsparent company. However, subject to the limitations and qualificationsdescribed below, holders of the Senior Notes will have direct claims againstthe Guarantors under the Senior Note Guarantees. Guarantors guaranteeing theSenior Notes at include:
| **Name**                                         | ** ** | ** ** | ** ** | **Jurisdiction of Incorporation** | ** ** |
|--------------------------------------------------|------------|------------|------------|---------------------------------------------|------------|
| Alpus AB                                         |       |       | Sweden     |                                        |       |
| Concordia Bus Nordic  Holding AB            |       |       | Sweden     |                                        |       |
| Enköping-Bålsta  Fastighetsbolag AB    |       |       | Sweden     |                                        |       |
| Interbus AB                                      |       |       | Sweden     |                                        |       |
| Malmfältens Omnibus AB                      |       |       | Sweden     |                                        |       |
| Swebus AB                                        |       |       | Sweden     |                                        |       |
| Swebus Busco AB                                  |       |       | Sweden     |                                        |       |
| Swebus Express AB                                |       |       | Sweden     |                                        |       |
| Swebus Fastigheter AB                            |       |       | Sweden     |                                        |       |
| IngeniØr M.O. SchØyens Bilcentraler AS |       |       | Norway     |                                        |       |
| Concordia Bus Finland Oy Ab                      |       |       | Finland    |                                        |       |

 

Enforcement of the SeniorNote Guarantees and Collateral may be limited in certain circumstances. Anysuch limitation would, if applicable, effectively subordinate the Senior Notesin right of payment to all indebtedness of the relevant Guarantor then existingirrespective of the granting of the Senior Note Guarantee.

*Swedish SubsidiaryGuarantees and Collateral.*

Enforcement of the SeniorNote Guarantees and Collateral may, in whole or in part, be limited to theextent that the undertaking by each respective subsidiary is deemed to be inconflict with the corporate interest of the respective subsidiary. Thecorporate interest shall be determined on the basis of whether the undertakingwas made for business reasons so as to involve corporate benefit for thesubsidiary and whether the guaranteed party is solvent for repayment of thesecured amount at the time of providing the security. The absence of businessreasons and corporate benefit would have the effect that the performance of theundertaking, or part thereof, would violate the Swedish Companies Act to theextent that it would result in a payment exceeding the distributable profit ofthe respective subsidiary at the time of providing the security. Upon suchviolation, the Senior Note Guarantees and Collateral would be invalid and anypayments made thereunder would be subject to recovery at least to the extentthey violate the above mentioned rules on corporate interest.

*Finnish SubsidiaryGuarantee and Collateral.*

The granting of guarantees and security is restrictedunder the Finnish Companies Act. Enforcement of the Senior Note Guarantees andCollateral issued or granted by Concordia Finland may, in whole or in part, belimited to the extent that the undertaking by such subsidiary is deemed to bein conflict with the limitations set out in the Finnish Companies Act,including the corporate interest of Concordia Finland. The determination shallbe made, *inter alia*, on the basis of whether theundertaking was made for reasons so as to involve corporate benefit for (and bejustified with grounds relating to the operations of) Concordia Finland andwhether the guaranteed party is solvent for repayment of the guaranteed amountduring the term of the undertaking. The absence of business reasons andcorporate benefit would have the effect that the performance of theundertaking, or a part thereof, would violate the Finnish Companies Act. Anysuch violation would render the Senior Note Guarantees and Collateral invalidand any payments made thereunder would be subject to recovery at least to theextent that they violate the Finnish Companies Act.

10

----

*NorwegianSubsidiary Guarantee and Collateral.*

The issuance of theSubsidiary Guarantee and the granting of the relevant security by the Norwegiansubsidiary may be invalid under Norwegian law if such issuance and granting arenot motivated by a legitimate business reason or corporate benefit for thatsubsidiary. In determining the sufficiency of the business reason or corporatebenefit, a Norwegian court will consider whether or not the granting of theguarantee or security supported the object and the operations of thatsubsidiary. We believe sufficient corporate benefit exists with respect to theSenior Note Guarantee and Collateral granted by the Norwegian subsidiary. However,there can be no certainty as to the sufficiency of the corporate benefit.]

***If we or our Swedish, Norwegian or Finnish operatingsubsidiaries incur substantial operating losses, we or they may be subject toliquidation under our respective national regimes.***

The respective companiesacts and insolvency and reorganization laws of Sweden, Norway and Finland applyto Concordia and its operating subsidiaries. Under these regimes, if lossesreduce the equity of these entities or any of their subsidiaries (includingConcordia itself on a stand alone rather than a consolidated basis) to an amountless than 50% of its registered share capital, or (in Norway only) if theequity becomes inadequate compared to the risks and the size of its business,the directors of such entity would be obligated by law to convene a generalshareholders meeting to resolve to liquidate such entity unless the directorswere able to balance the amount of such equity and the registered share capital(in Sweden, within eight months of such meeting, and in Finland, within twelvemonths of such meeting) by (1) increasing the equity in an amountsufficient to achieve such balance and, in the Norwegian scheme, to ensure thatits equity becomes adequate compared to the risks and the size of its business,or (2) reducing the share capital to pay off losses in an amount sufficientto achieve such balance. Due to these requirements, Concordia Finland convertedportions of its shareholder loan from Concordia into a subordinated loan in July 2001,in February 2003, 2004 and 2005 and also in July 2005. In May 2005,Swebus financial statement showed that the equity is negative and they willrequire a capital contribution from Concordia Bus Nordic. In addition, if weare not successful in our cost-cutting initiatives and our losses continue,this may cause our equity to decrease sufficiently to require an equityincrease or share capital reduction as described above. If we are unable toprocure such an equity increase or share capital reduction, it would have anadverse effect on our ability to continue presenting our financial statementsunder the assumption that we are a going concern. See “Management’s Discussionand Analysis of Financial Condition and Results of Operations—OperatingResults—Critical Accounting Policies—Going concern matters.”  In addition, if we are not successful in ourcost-cutting initiatives and our losses continue, this may cause our equity todecrease sufficiently to require an equity increase or share capital reductionas described above. If we are unable to procure such an equity increase orshare capital reduction, it would have an adverse effect on our ability tocontinue presenting our financial statements under the assumption that we are agoing concern. See “Management’s Discussion and Analysis of Financial Conditionand Results of Operations—Operating Results—Critical Accounting Policies—Goingconcern matters.”

***Your rights as a creditor may not be as strong underSwedish, Norwegian or Finnish insolvency laws as under other insolvency laws.***

Under Swedish, Norwegianor Finnish law, there is no consolidation of bankruptcies of the assets andliabilities of a group of companies. Each individual company would thus betreated separately by a bankruptcy administrator appointed by the localdistrict court. The assets of our subsidiaries would first be used to satisfythe debts of each respective subsidiary and only the remaining surplus (if any)of a subsidiary would benefit our creditors. As a result, your ability toprotect your interests as a creditor of a parent of such subsidiary may not beas strong under Swedish, Norwegian or Finnish law as it would be under the lawsof other countries.

11

----

*Sweden*

Under Swedish law, secured creditors enjoy aprivileged position in bankruptcy and similar proceedings. Such provisionsafford debtors and unsecured creditors only limited protection relative to theclaims of secured creditors.

The security in the floating charges pledged by Swebusattach to all of the relevant pledgor’s assets (including real estate property,cash and bank deposits) due to recent amendments in Swedish insolvency law. Accordingto the new rules, the floating charge will carry a general right of priority,which means that it may be enforced only in the event of bankruptcy orinsolvent liquidation. Furthermore, the right of priority that will attach tothe floating charge will be enforceable only against 55% of the value of theproperty remaining after distribution has been made to creditors with specificrights of priority.

The business reorganization laws of Sweden apply toConcordia. Under official business reorganization, creditors may under certaincircumstances be forced to approve the terms of the business reorganization. Duringa business reorganization, Concordia will not be allowed to fulfill anyobligations incurred before the reorganization without the permission of theadministrator appointed by the local district court.

Council Regulation (EC) No1346/2000 of 29 May 2000 on insolvency proceedings is applicable in Sweden.In certain circumstances, that regulation will govern determinations as to theappropriate jurisdiction and competent authority within the European Union withrespect to insolvency proceedings.

*Norway*

Noteholders’ rights with respect to the Senior NoteGuarantees and pledges of security from SBC may be compromised in an insolvencyproceeding with respect to SBC.

The Norwegian Bankruptcy Act 1984 sets out two mainprocedures that can be followed in respect of a company being illiquid orinsolvent:  debt settlement proceedings(voluntary or compulsory) and bankruptcy. Only the subject company can applyfor debt settlement proceedings.

The purpose of debt settlement proceedings is to givea debtor who is illiquid the opportunity to negotiate with its creditors for avoluntary composition or a compulsory composition under the protection of thecourts. In such a proceeding, the court will appoint a debt settlementcommittee composed preferentially of creditors’ representatives with a lawyeras chairman. If a voluntary debt settlement is opposed by any of the creditors,the alternatives are either compulsory debt settlement proceedings orbankruptcy. While in debt settlement proceedings a debtor is restricted withrespect to carrying on its business but remains in charge of its business underthe supervision of the committee. As a general rule, during the first threemonths of debt settlement proceedings, a bankruptcy petition cannot be filed.

During the first six months of the debt settlement orbankruptcy proceedings, security may only be enforced with the consent of thedebt settlement committee or the bankruptcy trustee (as the case may be).

In certain circumstances,liens by operation of law have priority ranking ahead of any contractuallyagreed pledges.

*Finland*

Under Finnish insolvency law, secured creditors enjoya privileged position in bankruptcy and similar proceedings. Such provisionsafford debtors and unsecured creditors only limited protection relative to theclaims of secured creditors. In addition to the priority given to secured debtsunder Finnish insolvency law, in certain circumstances, liens by operation oflaw have priority ranking ahead of contractually agreed first priority pledges.

12

----

Pledges over specific assets and certain liens byoperation of law have priority ranking ahead of pledged floating charges. Furthermore,in the event of bankruptcy proceedings, the proceeds remaining from the sale ofassets subject to the floating charge, after payment to creditors with higherpriority ranking, would be divided, with those remaining proceeds being paid (1) 50%to creditors whose claims are secured by the floating charge and (2) 50%to remaining creditors (including creditors secured by floating charge to theextent their claims are not satisfied pursuant to clause (1) above) prorata in relation to the respective amounts of their claims.

The business reorganization laws of Finland restrictthe actions that are allowed to be taken by either debtors or creditors duringbusiness reorganization proceedings.

Council Regulation (EC) No1346/2000 of 29 May 2000 on insolvency proceedings is applicable inFinland. In certain circumstances, that regulation will govern determinationsas to the appropriate jurisdiction and competent authority within the EuropeanUnion with respect to insolvency proceedings.

***Fraudulent conveyance laws of Sweden, Norway andFinland may protect our creditors to your disadvantage.***

*Sweden and Finland*

Under Swedish and Finnish law relating to fraudulentconveyance, it is possible that other creditors may claim that payments to youunder the Senior Notes or the Senior Note Guarantees or any recoveries withrespect to the pledged Collateral should be voided as fraudulent conveyances.

Under Swedish andFinnish law, in the case of bankruptcy or company reorganization proceedingsaffecting us, the payments to you under the Senior Notes or the Senior NoteGuarantees (of principal or interest or otherwise), which are made less thanthree months (or two years if effected to a related party) before theapplication for bankruptcy or company reorganization proceedings is filed withthe competent court may, in certain situations, be recovered if the payment iscarried out:

·       usingunusual means of payment;

·       prematurely;or

·       inan amount which, in light of a debtor’s financial position, is material.

Payments which are deemed to be customary are,however, permissible.

Furthermore, the security granted in respect of theSenior Notes or the Senior Note Guarantees, if granted less than three months(or two years, if effected to a related party) before the application forbankruptcy or company reorganization proceedings were filed with a competentcourt, may be recovered if the security was not a condition under suchindebtedness or was not pledged without delay after our accrual of suchindebtedness. Nonetheless, security provided that is deemed to be customary ispermissible.

A Swedish orFinnish court could also determine that a fraudulent conveyance has taken placeunder the general provision on recovery whereby a payment to you under theSenior Notes or the Senior Note Guarantees or the pledging of the Collateralcould be revoked if an agreement, transaction or other act, such as theissuance of the Senior Notes or the Senior Note Guarantees or the pledging ofthe Collateral is held to favor a creditor in an undue manner to the detrimentof another creditor or to transfer property out of the reach of the creditorsor to increase the debt to the detriment of the creditors, provided that:

·       thedebtor was insolvent at the time the agreement, transaction or other act wasconcluded or the debtor became insolvent as a result of the transaction, byitself or combined with other circumstances; and

·       theother party knew or should have known of the insolvency or over-indebtedness orof the impact of such payment on the debtor’s financing state as well as of thecircumstances due to which the 

13

----

payment under the SeniorNotes or the Senior Note Guarantees or the pledging of the Collateral wasundue.

However, under Swedish and Finnish law, if such anagreement, transaction or other act is concluded earlier than five years beforethe application for bankruptcy or company reorganization was filed, the paymentto you under the Senior Notes or the Senior Note Guarantees or the pledging ofthe Collateral could be revoked only if a party to the agreement, transactionor other act was someone related to the bankrupt or reorganized party, such asa group company.

Furthermore, under Finnish law, a gift may berecovered by the estate if it has been made within one year prior to the duedate. A gift that has been given before this, but within three years prior tothe due date may be recovered if it has been given to a person within thedebtor’s sphere of interest and it is not proven that the debtor was notexcessively indebted nor became excessively indebted as a result of the gift. Atransfer resulting from a sale, trade or any other agreement can likewise berecovered if it can be shown that the agreement was unbalanced to the extentthat the transfer should be regarded as a gift.

Under Swedish law, a gift may be recovered by theestate if it has been made within six months prior to the date of applicationfor bankruptcy or reorganization. A gift that has been given before this, butwithin one year prior to the date of application (or three years if effected toa related party) may be recovered if it is not proven that the debtor was notexcessively indebted nor became excessively indebted as a result of the gift. Atransfer resulting from a sale, trade or any other agreement can likewise berecovered if it can be shown that the agreement was unbalanced to the extentthat the transfer should be regarded as a gift.

In addition, if any of ourmajor subsidiaries in Sweden or Finland were to enter bankruptcy proceedings, acourt in that jurisdiction could prevent our subsidiaries from making paymentsto us, thereby possibly impairing our ability to pay the amounts due under theSenior Notes.

*Norway*

Under Norwegian insolvencylaws, the granting of security interests and unusual payments can be voided ifundertaken during the three month period prior to the commencement ofinsolvency proceedings. There are also other preference provisions such asfraudulent conveyance rules that can void any transaction that (a) inan improper way favors one creditor (even if such creditor was not party to thetransaction) at the expense of the other creditors, (b) otherwiserestricts the availability of debtor’s assets for the benefit of creditors, or (c) increasesthe debtor’s debt in a detrimental way for the creditors, in each case providedthat the debtor’s financial position was weak at the time of, or becamematerially weaker as a result of, the transaction and the other party knew orshould have known of the debtor’s financial difficulties (or othercircumstances which made the transaction improper).

***You may not be able to recover in civil proceedingsfor US securities laws violations.***

We are a public company with limited liabilityregistered under the laws of Sweden with our registered office in Stockholm,Sweden. The Guarantors are organized under the laws of Sweden, Norway andFinland. None of our directors or officers, nor those of the Guarantors, areresidents of the United States. Substantially all of our assets and, all theassets of the Guarantors and all of the assets of such persons are locatedoutside of the United States. There is doubt as to the enforceability inSweden, Norway and Finland, in original actions or in actions for theenforcement of judgments of US courts, of civil liabilities predicated solelyupon the federal securities laws of the United States.

Because there is no treaty between the United Statesand Sweden providing for the reciprocal recognition and enforcement ofjudgments, US judgments are not enforceable in Sweden. A US judgment will be ofsome persuasive authority as a matter of evidence before the courts of law,administrative 

14

----

tribunals or executive orother public authorities of Sweden. However, there is Swedish case law toindicate that a US judgment (i) that is based on contract among theparties excluding the jurisdiction of the courts of Sweden, (ii) that wasrendered under observance of due process, (iii) against which there liesno more appeal and (iv) the recognition of which would not manifestlycontravene fundamental principles of the legal order, or the public policy, ofSweden, should be acknowledged without retrial on the merits.

A final and conclusive judgment obtained in the stateor federal courts in the State of New York in respect of the indenture relatingto the Senior Notes would be enforced by the courts of Norway withoutexamination of the merits of the case, if (a) such judgment obtained isfinal and enforceable in and pursuant to the laws of the country or state where it has been passed, (b) thejudgment does not relate to an interest in land in Norway, and (c) enforcementof the judgment is in accordance with the mandatory provisions of the NorwegianEnforcement Act (1992).

A judgment obtained from acompetent court in the United States would not be enforceable by the Finnish courtsas such since there is no international convention to which both Finland andthe United States are parties. However, Finnish title for execution can besought for such enforcement and in requesting a Finnish court to make adecision to such effect, a judgment of a relevant court of the United Stateswill constitute evidence of the questions of the contents of the governing lawas applied to the matter in dispute and such judgment would generally, throughsuch proceedings, be recognized by a Finnish court to the extent it is finaland conclusive and not contrary to Finnish public policy or mandatoryprovisions of Finnish law.

***Our employees are heavily unionized. Bargaining powerand strikes can hurt our business.***

Personnel costsconstituted approximately 55% of our total operating expenses (excludingdepreciation and amortization) in the year ended February 28, 2005. Ourbus drivers and most of our other employees are unionized. Concordia’soperations could be adversely affected in the event that it were not able toreach agreement with any labor union representing Concordia’s employees or byan agreement with a labor union representing Concordia’s employees thatcontains terms that would prevent Concordia from competing effectively withother bus transportation companies. As in most labor intensive industries,strikes, work stoppages and other organized labor activities could alsohave significant adverse effects on operating and financial results. In thelast fiscal year, an industry wide strike in Finland interfered with theoperations of our Finnish operating company for several days.

***Fluctuation in price and availability of diesel fuelcould hurt our business.***

Significant changes infuel availability or costs would materially impact our business. Diesel fuelavailability and prices are affected by a number of factors, includingenvironmental legislation and global economic and political developments, overwhich we have little to no control. In addition, our costs are affected byannual increases in fuel taxes, which are largely offset by compensation fromindexation. In the event of a shortage in diesel fuel supply resulting from adisruption of oil imports, reduction in production or otherwise, we could facehigher diesel fuel prices or the curtailment of scheduled diesel fueldeliveries. Notwithstanding our hedging arrangements, in the year ended February 28,2005, our total cost of diesel fuel averaged SEK 6.27 per liter. For a furtherdiscussion of our response to fluctuations in prices or a decrease in fuelavailability, including our hedging policies, see “Management’s Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity and CapitalResources—Market Risk.”

***Variations in exchange rates may affect ourperformance.***

SBC, which comprised approximately 10% of our revenuein the year ended February 28, 2005, prepares its financial statements in,and its functional currency is, Norwegian Kroner. In preparing our consolidatedfinancial statements, we translate SBC’s financial statements into SwedishKronor at each 

15

----

fiscal year end. Consequently,our results from operations are affected by fluctuations in the rate ofexchange between Swedish Kronor and Norwegian Kroner.

Concordia Finland, which comprised approximately 9% ofour revenue in the year ended February 28, 2005, prepares its financialstatements in, and its functional currency is, the euro. In preparing ourconsolidated financial statements, we translate Concordia Finland’s financialstatements into Swedish Kronor at each reporting period. Consequently, ourresults from operations are affected by fluctuations in the rate of exchangebetween the Swedish Krona and the euro.

Further, we are alsoexposed to currency fluctuations on loans, as a result of having to make interestand principal payments in euro on the Senior Notes and the recalculation ofoutstanding debt, issued in other currencies than Swedish Krona, foremost the securednotes of €130 million. Furthermore, our parent company,Holdings has incurred €25,000,000 of indebtedness in connection withthe restructuring, and the interest rate on such indebtedness is variable. Ifthe restructuring is consummated, our ultimate parent, Bus, intends to borrow €45,000,000under the Mezzanine Facility, which an increase in interest rates wouldincrease the costs of servicing those debts, which we ultimately service withdividends up to our parents. We have entered into collar arrangements throughthe sale of puts and the purchase of calls with the same settlement dates. Whilethis arrangement caps the amount of benefit we can obtain from an appreciationof the Swedish Kronor against the euro, it also caps our potential increasedinterest costs through a depreciation of the Swedish Kronor against the Euro. Ourparent companies also face currency fluctuation risks on the Mezzanine Facilityand the Parent Notes.

**Item 4.   *Information on the Company***

**A.     History and Development of the Company**

Our legal name is Concordia Bus Nordic AB (publ) andour commercial name is Concordia. We were incorporated on December 22,1932. Concordia is domiciled in Sweden and is a public limited liabilitycompany. We are incorporated in Sweden and our registered address is SolnaStrandväg 78, SE 171 54, Solna, Sweden. Our financial year ends on the last dayof February. Our authorized and issued share capital is SEK 16,000,000 dividedinto 160,000 shares of one class with a nominal value of SEK 100 each. Theshare capital is fully paid. Our telephone number is +46 8 546 300 00. Ouragent for service of process is CT Corporation System, 111 Eighth Avenue, NewYork, New York 10011.

Previously, Concordia Bus Nordic Holding AB was namedInterbus Finans AB and was a wholly owned subsidiary of Concordia Bus Nordic AB(publ), which was wholly owned by Bus. In January 2004, a reorganizationwas performed whereby Concordia Bus Nordic AB (publ) transferred to Bus its100% share ownership of Interbus Finans AB. Bus then transferred its shares inConcordia Bus Nordic AB (publ) to Interbus Finans AB. Interbus Finans AB wasthen renamed Concordia Bus Nordic Holding AB.

This reorganization had the effect of creating a newholding company for Concordia Bus Nordic AB (publ) from one of its dormantsubsidiaries. Holding is a non operating holding company that has no assets otherthan its shares in Concordia Bus Nordic AB (publ).

In January 2000, Bus, backed by SG (the thenparent company of SBC) and certain private equity funds affiliated with GoldmanSachs International, acquired Concordia Bus Nordic. On February 28, 2001, weacquired SBC with effect from February 1, 2001.

Concordia and Busannounced on July 22, 2005 that, with their principal ultimateshareholders, an Ad Hoc Committee of holders of Parent Notes and an informalgroup of holders of Senior Notes, they signed the Restructuring Agreement torestructure the Parent Notes and strengthen the balance sheet of the Concordiagroup of companies. The Restructuring Agreement provides that, among otherthings, Bus will make an application for reorganization proceedings in theDistrict Court in Stockholm, Sweden. Those proceedings are expected to resultin the face amount of all the Parent Notes being reduced from 100% to 

16

----

25% andholders of Parent Notes who consent to the restructuring will then be required,pursuant to the Restructuring Agreement, to exchange their reduced debtsecurities (including all principal, all accrued and unpaid interest and anyother amounts due thereon) for ordinary shares of Bus, which will constitute97.5% of the issued ordinary share capital of Bus immediately following theconsummation of the proposed restructuring. Holders who do not consent to therestructuring will also have the face amount of their Parent Notes reduced to25% of their value. Concordia Bus AB would be required to settle this obligationwithin 12 months of the restructuring being consummated. However, Bus will notbe forced to make an application for reorganization if holders of 99% of the ParentNotes weren’t to exchange Parent Notes for ordinary shares of Bus.

**B.     Business Overview**

We provide public bustransportation services in Sweden, Norway and Finland, operating through ourthree main operating subsidiaries: Swebus, SBC and Concordia Finland, respectively. We also provide expressbus and coach hire services. In Sweden, we currently operate 2,989 buses, andare the largest operator through Swebus, with an estimated market share ofapproximately 29% of the public bus transportation market (measured by thenumber of buses in operation). Management believes that we are the largestoperator in Sweden as measured by number of buses because it has reviewed andanalysed publicly available material describing how many buses our competitorsoperate. This market share data has been calculated based on the share of totalnumber of buses, as provided by the relevant CPTA. In Norway, SBC currentlyoperates approximately 379 buses and has an estimated 20% market share of thepublic bus transportation market in southeastern Norway, which includes Osloand neighboring cities. This market share data has been calculated based on theshare of total number of buses, as provided by the relevant CPTA. In Finland,Concordia Finland currently operates 362 buses and is the second largestoperator in the greater Helsinki area with a market share of 24%. This marketshare data has been calculated based on the relative numbers of contractkilometers. This information is made available at each tendering which, as of February,2005, showed that we were the second largest operator in the greater Helsinki area.

For the year ended February 28,2005, we had net revenue of SEK 4,812 million. We sustained operatinglosses of SEK 256 million for the year ended February 28, 2005; SEK108 million for the year ended February 29, 2004 and SEK123 million for the year ended February 28, 2003. We sustained netlosses of SEK 396 million for the year ended February 28, 2005;  SEK 171 million for the year ended February 29,2004 and SEK 179 million for the year ended February 28, 2003.

**General**

Our core business isproviding bus services to local public transportation authorities in Sweden,Norway and Finland. In our markets, the substantial majority of bustransportation services are provided under long-term contracts (generally fiveto eight year terms) with local public transportation authorities, according towhich the bus operator provides services for a specific set of bus routes forfixed annual fees (subject to periodic adjustments based on price indices)which we refer to as “gross agreements.” These contracts provide us with steady revenue streams because wereceive a fixed annual amount from the respective public transportationauthorities rather than relying on passenger ticket receipts. Certaincontracts, called “net agreements,” include passenger numbers as part of theirpricing. Public transportation authorities have shown an excellent record ofpayment and have in the past rarely faced bankruptcy or insolvency. In the yearended February 29, 2004, we derived approximately 89.5% of our revenuefrom a combination of gross agreements and net agreements in Sweden, Norway andFinland. We operate under approximately 160 contracts with local publictransportation authorities, the largest of which accounted for only 4.6% of ournet revenue in the year ended February 28, 2005. The top 25 contractsaccounted for approximately 43.8% of net revenue in the year ended February 28,2005.

17

----

We also provide express bus services (scheduledintercity or long distance bus services) and coach hire services.

Following deregulation in1989, there was a wave of consolidation in the Swedish bus market. This hasresulted in three large operators who have a combined market share in thecontractual public bus transportation market in Sweden of approximately 60%(measured by the number of buses in operation). Swebus is the largest operatorwith a 29% market share. (Source: Svenska Lokaltrafikföreningen, the Swedishlocal traffic organization, or “SLTF”). Recent tenders for bus transportationcontracts provide evidence that consolidation in the industry in Sweden hasproduced a more favorable pricing environment. We expect this trend to continuein the near term. We also believe that a similar pattern of pricing dynamics isnow beginning to occur in Norway and Finland.

To prepare theorganization for continued need of cost efficiency and battle for newcontracts, a reorganization of the operating companies have been performed.This has lead to, among others, fewer management levels, key performancemetrics, ranking lists among depot’s decentralized P&L and increasedresources on contract tendering. Further improvement focus will be on tenderachievement, best practice efficiency, fleet management and financialsolutions.

Over the last two years,we have rolled out the initial phase of the Hastus software planning system atall our locations. We augment our use of Hastus software with the Sintoptsoftware, our proprietary logistics system. The Sintopt software uses higherlevel algorithms to enable us to achieve increased levels of optimization withour bus and driver schedules. In addition, we have also identified othersources of cost savings, including fuel consumption organization, purchasingcost savings, and reductions of employee sickness and absences.

The improved planning andscheduling described above, combined with an integrated plan for bus fleetutilization and maintenance, enable us to determine with a higher degree ofcertainty the optimal number of buses needed for our existing operations. Weare focusing our efforts on utilizing our existing fleet to provide newrevenues through alternative uses, such as local coach and school bus hire.

We have developed andimplemented a web-based system for our personnel (such as tracking absence formedical reasons) and a new Operational Management System (OMS). This system isthe last phase of our IT strategy and brings together operational data residingin our centralized database and provides several new ways for us to track ourbusiness operations, such as kilometer/fuel tracking, driver activity captureand daily production statistics. The system is now operational in a majority ofour locations.

As the largest operator ofbuses in the Nordic region, we have achieved significant savings bycentralizing more of our bulk/commodity purchasing. Management has concludedthat we are the largest operator of buses in the Nordic region by comparing andanalyzing our revenues with those of our competitors.

**Seasonality**

Our contracts with publictransportation authorities are typically structured such that the level ofmonthly fees depends on the contractually agreed volume of operations, whichvaries from month to month, and in many cases declines in the summer months. Inaddition, our express bus and coach hire services businesses usually experiencerelatively high revenues from April to September and during December ina given year, as customers tend to use these services during vacation periodsand periods having more favorable weather. Furthermore, as a result of ourcollective bargaining agreements, our personnel costs usually increase in thebeginning of each calendar year.

18

----

**Sweden**

***General***

As of February 28,2005, we operated 2,989 buses in three bus transportation markets in Sweden:

·       contractualpublic bus transportation;

·       expressbus services (scheduled intercity or long distance bus services); and

·       coachhire services.

Contractual public bustransportation services operated 2,825 buses, express bus services 97 buses andcoach hire services in Sweden operated 67 buses. Our Swedish operationsgenerated revenue of SEK 3,924 million for the year ended February 28,2005.

***Contractual PublicBus Transportation Service***

As of February 28,2005, we were operating 2,825 buses under 113 public bus transportationcontracts with local public transport authorities.

As of February 28,2005, we had a market share of approximately 29% (in terms of number of buses)of the Swedish contractual public bus transportation market. This market sharedata has been calculated based on the share of total number of buses, asprovided by the relevant CPTA. We have a relatively even distribution of ourcontract portfolio in terms of revenue among the southern, eastern and westernregions of Sweden. Due to the economics of the bus industry in the northernregion of Sweden, we have a smaller presence in this region. We intend to focuson areas of high urban concentration and to review our contract portfoliocritically with regard to smaller, less profitable contracts, particularlythose relating to areas of relatively low population density.

The greater city area ofStockholm, together with Halland, Malmö, Uppland and Västra Götaland, are ourmost important markets, and collectively account for approximately 65% of ourtotal revenue in Sweden.

Bus services are providedin the Swedish public bus transportation market according to publicly tenderedcontracts entered into by bus operators with local public transport authorities.See “—Regulation—Sweden Tendering Procedures.”

Most Swedish bus operatorshave similar cost bases, as most bus drivers are in the same unions and mostbuses meet similar specifications. We believe the difference in competitivepower comes from a bus operator’s ability to optimize its depot structure, itsskill in planning and scheduling, and its ability to solve the complexlogistical issues involved in meeting the requirements of the contracts. Havingaccess to a large fleet and being able to shift resources significantly benefitthe larger operators.

***Regulation***

In Sweden, theadministration of public transportation for a particular region is delegated tothe relevant local public transport authorities, which plan, price andcoordinate public transport within their geographical area and which enter intocontracts with both public and private operators. There are 24 independentlocal public transport authorities in Sweden, which cover the 21 provinces ofSweden and its five largest cities.

Prior to 1989, publictransportation contracts were not subject to competitive tendering proceduresand operators typically monopolized a particular public authority’sgeographical area of responsibility. In 1989, Sweden began requiring, subjectto specific exceptions, local public transport authorities purchasing busservices to conduct competitive tender procedures. This deregulation and theresulting price competition led to a reduction in contract prices by anestimated 20% to 30% in real terms in the decade after competitive tenderingrequirements were introduced in 1989. During this period, the underlying costsfor bus operators increased significantly due to increases in vehicle anddiesel fuel taxes and diesel fuel 

19

----

costs. Althoughoperators are compensated based on a consumer price index which takes fuelcosts into account, overall, in recent years, this index has not risensufficiently despite the increase in the component based on fuel costs toreflect the increase in our costs. Therefore, operators have not beencompensated in a manner allowing them to cover their increased costs fully. Thistrend led to consolidation in the industry and begun to produce a morefavorable pricing environment. As a result, commencing in 1998 and to a greaterextent in 2000 through 2004, we have renewed contracts at higher prices.

*Tendering Procedures*

Under Swedish lawimplementing European Union directives concerning public procurement, publicbus transportation contracts must be awarded on a commercial basis and, subjectto limited exceptions, must involve a competitive bidding process.

Typically, following astudy of the community’s transportation needs and input from transportationproviders, the local public transportation authorities determine the requiredbus routes, schedules, fares and other requirements. Invitations to tendercontain bid information packages which state the specific routes and timetablesto be covered by the operator and usually contain requirements regarding bustypes, technical standards (seats, age, design, etc.), exterior appearancerequirements, the environmental standards (such as types of fuel, emissionsstandards and requirements for exhaust filters) and quality requirements.

The local public transportauthorities are required to follow established criteria for awarding contracts,of which the single most important is typically price. Other factors may beconsidered, including the cost of adapting to a new operator and the level ofservice quality. In many cases, local public transport authorities choose tosubdivide procurement into a series of contracts, each with a specified portionof a community’s routes to avoid having a single operator dominating a largearea.

*Contracts*

While each publictransportation contract is different, there are many terms common to virtuallyall of them. These contracts, other than contracts for school bustransportation, are generally for five to eight year terms, although many haverecently provided for the extension of the term. In some cases, there areoptions which may be exercised by either Swebus or the local transportationauthority, but other options are exercisable only by the local transportationauthority. Extension options exercisable only by the local transportationauthorities generally provide for one or two year extensions.

The various criteria setforth in the bid information package, as described in the heading “TenderingProcedures” in this section, become part of the contracts. Bus operators mustthen seek to comply with these requirements as efficiently as possible. Inisolated cases, there are provisions that an incoming operator must purchaseused buses from the outgoing operator.

Public transportationcontracts in Sweden usually provide for fixed fees to be paid to the operatorin return for the contracted bus services, which fees are subject to monthly,quarterly, semi-annual or annual fee adjustments intended to account forchanges in costs incurred. At present, contracts with local publictransportation authorities that produce a substantial portion of Swebus’revenues in Sweden contain cost indices based on a consumer price index,although it is becoming increasingly common to negotiate indices which reflectbus industry costs or an index which contains a labor or fuel cost component. Althoughmanagement believes that Swebus’ indices will match bus operation industrycosts more closely than in the past, there can be no assurance this will be thecase. See the subheading “Risk Factors—Risks Related to the Company—If indicesin our contracts do not reflect our cost increases, our business could beadversely affected.”

Over 90% of the publictransport contracts subject to competitive bidding are gross agreements, whichmeans the operator receives a fixed amount (usually per vehicle kilometer) foroperating the routes and there is no direct financial benefit to the operatorfor increasing passenger volumes. The local public transportation authoritiesretain all ticketing revenues and set the fares.

20

----

***Express BusServices***

We operate an extensivenetwork of express bus services under the trade name “Swebus Express” whichoperates under a separate legal entity called “Swebus Express AB” and providespublic long distance transportation. In the year ended February 28, 2005,we employed approximately 97 buses on a full time basis for express busservices in Sweden. We operate daily and weekend services throughout Sweden, aswell as international routes between Stockholm and Copenhagen. Our expressbuses covered in aggregate approximately 354,000 kilometers per week during theyear ending February 28, 2005, and transported more than 3.0 millionpassengers last year.

For the year ended February 28,2005, express bus services in Sweden had total revenue of SEK 337 million.Providing an extensive national network and a seamless mode of transportbetween a large number of destinations has become Swebus’ main competitiveadvantage. Swebus Express sells tickets on the buses as well as in advancethrough ticket agencies. Swebus’ policy is to provide coaches for anypassengers who want to travel and who arrive at the applicable embarkationpoints at scheduled departure times. We do not allocate particular seats forpassengers. We offer discounts for children, students and pensioners as well asfor all passengers travelling on Mondays to Thursdays inclusive (subject tosome exceptions). Management believes that the increase in the amount ofpensioner travel on Swebus Express reflects pensioners’ growing demand forinexpensive flexibly scheduled travel.

Express bus services inSweden are generally deregulated so that an express bus service operator hasfull responsibility for all aspects of the service, including route planning,schedules and fares. In some regions, express bus services are combined withregional or local public bus services. In these circumstances the local publictransportation authorities compensates the express bus operators for making anumber of stops in proximity to a regular local public bus service within aregion.

We believe that theexpress bus service industry will enjoy continued growth as more routes aredeveloped and more passengers appreciate the price competitive service ascompared to rail and airline services and, more importantly, the high costs ofdriving private cars. Based on current demographic trends, we expect that thepotential passenger base for express bus services will expand as the number ofpeople engaged in long distance employment or studies increases.

***Coach Hire Services***

We also operate a coachhire service under the name “Interbus,” which operates under a separate legalentity called “Interbus AB.”  The coachhire market involves providing chartered bus services, as well as daily andweekend excursions, sightseeing tours and special events. Interbus operates acoach hire service business in the Stockholm, Gothenburg and Malmö areas. As ofFebruary 28, 2005, Interbus operated approximately 67 full-time coachesand additional express buses as needed.

For the year ended February 28,2005, we had total third party revenue of SEK 117 million from coach hireservices in Sweden. The Swedish coach hire market is concentrated primarily indensely populated areas, such as Stockholm, Gothenburg and Malmö. The customerbase for the coach hire market is diverse, ranging from small groups organizingprivate outings to organizers of major sporting events. During the year weacquired the business FO Resor in order to provide package tours for bothgroups and individuals.

Interbus’ typicalcustomers include major event planners, corporations and travel agencies. Swebus’coach fleet size enables it to meet the requirements of a wide range ofcustomers and to manage bus transportation for both small and large events. Weare one of a few major operators in Sweden which has the capacity to satisfylarger customers. A significant and growing portion of the coach hire serviceis related to cruise line operations. Our fleet size improves ourcompetitiveness in this market because cruise ships require operators withsignificant carrying capacity to ferry people between the ship and the relevantcity, or to provide sightseeing tours.

21

----

***Competition in the Swedish Bus Transportation Market***

*Contractual PublicBus Transportation*

Deregulation has changed the nature of competition inthe Swedish bus industry. Over the past several years, the Swedish contractualpublic bus transportation market has experienced intense price competition. Inthis competitive pricing environment benefited, large companies with advantagesof economies of scale such as Swebus and Connex, have enjoyed expansion at theexpense of relatively inefficient larger carriers (including operators owned bythe local public transport authorities) and smaller bus operators. As a resultof this competition there are currently three large private bus operators.

The Swedish contractual public bus transportationmarket features a few operators that hold large shares of the market and manysmall local operators. Management believes that the relative market shares ofthe three largest Swedish bus operators are Swebus (with approximately 29% ofthe market), Busslink, (with approximately 16% of the market) and Connex (withapproximately 17% of the market). This market share data has been calculatedbased on the share of total number of buses, according to the SLTP. Swebus,Busslink and Connex are the only national competitors.

In rural markets, and, in particular, in the northernregion of Sweden, large bus companies face stiff competition from small,privately owned local operators, who have formed into loose cooperativeventures in which bus fleets are pooled and who can operate very flexibleschedules and are not heavily unionized. These factors, combined with the lowerlevels of operations in northern areas that do not benefit large scaleoperators, allow these smaller operators to bid for services at prices that areoften not economically viable for larger operators such as Swebus.

In general, we believethat we face more competition on tenders that require fewer than 50 buses, asthere are more operators capable of servicing such requirements. In the tendersfor larger contracts, such as in the major cities, there is generally a maximumof four operators tendering.

*Express BusServices*

The express bus market in Sweden is fully open tocompetition and is highly fragmented. In the year ending February 28,2005, we had more than 50% market share of the Swedish express bus servicemarket, as measured by kilometers served, according to the SLTF. We operate 97buses in this market. The next largest operator is Säfflebussen, which operatesprimarily between Gothenburg and Stockholm and to Oslo. Säfflebussen has amarket share exceeding 20%, according to the SLTF. This market share data hasbeen calculated based on the share of total number of buses.

The third largest operatoris Svenska Buss, which is a joint venture among seven privately owned buscompanies and operates primarily in the south of Sweden. Svenska Buss has amarket share of about 10% and operates primarily between Stockholm and severalnorthern cities.

*Coach Hire Services*

The coach hire market isfully open to competition, and is more fragmented than the contractual publicbus transportation market. While we dedicate approximately 67 buses to coachhire services, the market is characterized primarily by small to medium sizedoperators. The medium sized operators typically have between 10 and 20 buses. Thesmall operators are usually private companies operating up to four buses, wherethe owners of the buses both drive and maintain the buses themselves. The smalloperators are cost efficient and highly competitive, but cannot bid for largercontracts due to their limited resources. Within the bus industry, the coachhire market is the segment that is most sensitive to general economicconditions, as tourism and attendance of special events are more directlyaffected by economic conditions than the basic transportation requirementsprovided by public contractual bus operators. 

22

----

Nevertheless,we have been able to adjust the scale of our coach hire operations, so that ouroperating margins in this segment have been less volatile than revenues intimes of downturns.

***Insurance***

Swebus carries thefollowing types of insurance:  generallegal and product liability, property and business travel insurance. Thosetypes of insurance do not cover damages to our own bus fleet. Swebus believesthat it carries types and levels of insurance that are consistent with thetypes and levels carried by other major bus operating companies in Europe. Swebusdoes not carry business interruption insurance, but this is common for manyEuropean businesses, particularly those (like Swebus) in which the risk ofmajor interruption of business is small.

***Environmental Matters and Other Regulations***

We are required to comply with a series of Swedish andEU environmental, health, and safety regulations. These regulations includerequirements regarding emission standards, safe storage of diesel fuel, andproper maintenance for the buses. In addition, public transportation contractsstipulate additional environmental standards relating to emission standards andthe maintenance of the bus fleet. We believe that Swebus materially complieswith these regulations and contract requirements.

***Intellectual Property***

Swebus has six registeredtrademarks in Sweden:  “Swebus Express,” “NepalResor,” “Resecentrum,” “Fjällexpressen,” “Helsingborgstrafiken,” “Swebus” andour company logo. In addition, “Swebus” is a registered trademark in theEuropean Union.

***Legal Proceedings***

Swebus has a claim on theCPTA in Stockholm regarding compensation for unfair indexes in some of thecontracts, starting from the year 2001. The CPTA has rejected the claim and thecase will be tried in the city court in Stockholm.

**Drivers and Other Personnel**

For the year ended February 28,2005, we had an average of 5,572 full-time employees in Sweden. Should acompany lose a public transportation authorities contract, it is often the casethat drivers will move to the company that wins the contract. The incomingoperator generally does not need to employ any of these drivers. However, undersome circumstances, such as if the new operator hires additional drivers toservice the routes on the contract, it must offer to hire from the pool ofdrivers previously employed by the outgoing operator before hiring elsewhere.

***Collective bargaining agreements***

The majority of our drivers and maintenance personnelin Sweden are members of trade unions. The principal union to which the driversand maintenance personnel belong is Svenska Kommunalarbetareföbundet (theSwedish Municipal Workers Union). A small minority of drivers belong to SvenskaTransportarbetareföbundet (the Swedish Transportation Workers Union).

In Sweden, wages and general working conditions aregenerally the subject of nationally negotiated collective bargaining agreements.The collective bargaining agreement generally applicable to our blue collaremployees expires on October 30, 2005. A separate collective bargainingagreement normally applies to operations under public tenders.

23

----

We believe that our relationshipswith our employees and unions are good. Swebus has only experienced oneindustrial disruption in the last five years, in February 1999. Thisstrike was industry-wide in Sweden and lasted for 13 days. See “RiskFactors—Risks Related to the Company—Our employees are heavily unionized. Bargainingpower and strikes can hurt our businesses.”

***Pensions***

In addition to the statesponsored pension scheme, we provide pension benefits, under the terms of ourcollective bargaining agreements, through two plans:  a defined benefit plan with Alecta covers themajority of our white collar employees; our blue collar employees are coveredunder a defined contribution plan with Fora.

**Property, Plant and Equipment**

We currently leaseour facilities, the majority of them for use by Swebus. Swebus conducts its busoperations out of a system of 45 depots and 74 parking areas located throughoutSweden. These divide as follows:

·       45depots, which include garages with full maintenance facilities, washingfacilities, parking, administrative offices and eating and changing facilitiesfor drivers and mechanics;

·       20sub-depots, which include washing facilities, parking, small administrativeoffices for payroll disbursement and limited facilities for drivers; and

·       74parking areas with limited staff facilities.

Some of the larger depots are located adjacent to busstations and Swebus rents portions of parking capacity to some externalcustomers. However, Swebus does not operate bus stations.

We generally select ourdepot sites according to their proximity to our routes. We intend to examineways to use sales and leasebacks of depots with flexible lease terms as a wayfor Swebus to change depots to adjust to its changing needs as publictransportation contracts are won and lost.

**Norway**

***Contractual Public Bus Transportation***

SBC is the seventh largest bus operator in Norway,with 379 buses and a market share in southeastern Norway of 20%, based onresults of competitive tenders. This market share data has been calculatedbased on the share of total number of buses, as provided by the relevant CPTA. SBC’soperations generated revenue of SEK 466 million(SEK 379 million) for the year ended February 28, 2005.

SBC operates principally in the contractual public bustransportation sector in the city of Oslo and the greater Oslo area of Akershus.SBC also operates in the counties of Vestfold, Oppland and Østfold in Southern Norway,SBC primarily operates under four traffic agreements, of which two have beenrenewed and amended on several occasions since their inception. In 1976, SBCentered into an agreement with Stor-Oslo Lokaltrafikk AS for publictransportation outside the city of Oslo. Stor-Oslo Lokaltrafikk AS iscontrolled by the local public transportation authorities in the county of Akershus.In the last two years we have won two contracts and have increased ourgeographic presence in southern Norway. In addition, we have lost a number ofcontracts, including one in Slemmestad and one in Romerike.

In 2005, managementestimates that the Norwegian market for contractual public bus transportationemployed approximately 7,000 buses and amounted to NOK 8.9 billion (SEK 9.9billion). There are 19 local public transport authorities in Norway each ofwhich is responsible for public bus transportation in one of Norway’s 19counties.

24

----

*Regulation*

The administration ofpublic transportation in Norway for a particular region is delegated to therelevant local public transportation authorities, which are responsible forplanning, pricing and coordinating public transport within their geographicalarea. Local public transport authorities in Norway may subject bus serviceprocurement to a competitive bidding process, but are not required by law to doso. As of February 28, 2005, only 11 of the 19 local public transportauthorities in Norway had opted to use competitive bidding methods as theirmeans of distributing public transportation contracts. SBC expects, however,that further local public transport authorities will follow suit because of thesignificant cost savings associated with putting a contract up for competitivetender. If competitive bidding is not used, bus operators negotiate with localpublic transport authorities to provide exclusive service for specific routesfor specified periods (up to ten years). Bus operators are aware that if theydo not offer competitive prices, the authorities will open bidding either in aformal tendering process or by simply requesting competitors to approach themwith offers. The threat of competitive bidding has also increased thebargaining power of the public authorities and caused prices to decrease. Thelevel of public subsidies varies largely from province to province in Norway,and management estimates that the average level of subsidies in Norway isapproximately 40%. SBC believes that the general trend is that the level ofsubsidies is generally decreasing. For further information relating tosubsidies, see the subheading “Risk Factors—Risks Related to the Company—Thelocal public transport authorities rely on government subsidies. Removal ofthese subsidies could drive down local public transportation authorities’contract fees.”

*Competition*

In Norway, the public transportation market has begunto experience developments similar to those that have occurred in Sweden. Thesedevelopments include price competition and consolidation. Nevertheless, theNorwegian bus industry remains fragmented with approximately 227 bus companiesoperating a total of approximately 7,600 buses in 2004. Almost 60% of Norwegianbus operators had fleets averaging fewer than ten buses. In contrast to Sweden,competitive bidding is not prevalent and has instead been used for smallercontracts to obtain a “signal price,” which is then used as a target forrenegotiating the entire contract portfolio.

SBC is a major operator in Southeastern Norway. On anational level, both Norgesbuss AS and Nettbuss AS (owned by Norges StatsbanerBA, the state railway operator) have significantly larger fleets than SBC, butneither of them are dominant in any single region.

Since 1989, contracts withpublic transport authorities in Norway to provide bus services have beenpotentially subject to competitive bidding procedures. The ability to compelcompetitive bidding has increased the bargaining power of the publicauthorities, particularly in recent periods, and they have been able to obtainprice reductions in their contracts with SBC and increased the risk that SBCwill lose its contracts for bus routes. For further information about risksrelating to our current contracts see “Risk Factors—Risks Related to theCompany—If we lose many local public transportation authorities’ contracts asthey are renewed or we are unable to win new contracts, our business will beadversely affected. Further, if we experience difficulties in operating underour existing contracts, our business may be adversely affected.”

*Operating leases*

In order to meet SBC’srequirements for new buses, SBC intends to continue to enter into operatingleases. In addition, SBC benefits from a residual value guarantee arrangementfor buses purchased from the SchØyen Group on July 1, 1999. SchØyen Group entered into anagreement with Evobus permitting the SchØyen Group to return buses to Evobus according tostipulated residual value schedules (which are subject to adjustments). Evobushas made available all the benefits under this agreement to SBC. The 

25

----

arrangementprovides for limitations in specific circumstances on the number of buses thatmay be returned in any year and on the aggregate number of buses that may bereturned in a multi-year period.

***Drivers and Other Personnel***

For the year ended February 28, 2005, SBC had anaverage of 611 full-time employees.

Nearly all of SBC’s employees are represented byunions under the terms of industry-wide collective bargaining agreements. Allunion agreements are renegotiated every two years. The largest collectivebargaining agreement, which covers drivers and maintenance personnel, expireson March 31, 2006.

SBC considers itsrelations with its employees and the unions to be good.

***Environmental Matters and Other Regulations***

All persons and entitiesgoverned by Norwegian law are obliged to comply with the Norwegianenvironmental, health and safety acts, regulations and public orders. Healthand safety requirements are to a large extent the implementation into Norwegianlaw of various European Union regulations. The relevant legislation for ouroperations includes the Pollution and Waste Act 1981, the Worker Protection andWorking Environment Act 1977, the Planning and Construction Act 1985, the Fireand Explosion Protection Act 2002 and the Neighbouring Properties Act 1961. Theseacts, and the connected provisions of orders based on these acts, includeprovisions regarding environmental permits, emission standards, storage andhandling of fuels and other hazardous substances, waste management, technicalprovisions regarding maintenance of buses and requirements regarding theenvironmental safety standards of fuel distribution stations.

***Legal Proceedings***

SBC is not currentlyinvolved in any material legal proceedings.

**Finland**

***Contractual Public Bus Transportation***

We operate a Finnish public bus transportationbusiness through our principal subsidiary in Finland, Concordia Finland. ConcordiaFinland is a major bus operator in Finland with approximately 362 buses inoperation as of February 28, 2005, and approximately 37 public bustransportation contracts with local public transport authorities. Our Finnishoperations generated revenue of SEK 422 million for the year ended February 28,2005. Concordia Finland operates only in the Finnish contractual public bustransportation sector in the greater Helsinki area in the cities of Helsinki,Vantaa and Espoo, and does not offer either express bus or coach hire services.

Management estimates that in 2004, the Finnish busmarket employed approximately 8,800 buses and included approximately 400operators. The Finnish bus market is well developed in both rural and urbanareas. Finland’s geography and low population density make bus transportationvery competitively priced as compared to railway services. Additionally, thepassenger railway network is centered on Helsinki and is being reduced in ruralareas. This situation provides an advantage to bus operators because they canoffer bus passengers the possibility to make more convenient cross countrytrips than on the railways.

The greater Helsinki area,with a total population of approximately one million, is Finland’s largestmarket for contractual public bus transportation. The greater Helsinki area andTurku are the only markets currently subject to competitive bidding. Significantprice pressure has led to consolidation in these areas. Except for the greaterHelsinki and Turku areas, local traffic in most cities is largely provided bylocal operators.

26

----

*Regulation*

As in Sweden, the administration of publictransportation in Finland for a particular region is the responsibility of thelocal transportation authority. In greater Helsinki and Turku, publictransportation authorities have opened their local public transportationcontracts to competitive bidding. In 1994, the Helsinki Metropolitan AreaCouncil (commonly known as the YTV), which is the authority that regulatesinter region public transport traffic between the three cities of Helsinki,Espoo, and Vantaa, was the first to initiate competitive bidding in Finland. Althoughthe YTV and the public transport authorities regulating public transporttraffic within the cities of Helsinki, Espoo, Vantaa and Turku represent the onlyregions currently open to competition, the EU directives concerning publicprocurement, along with the prospect of cost savings for local authorities, isexpected to increase the number of regions open to competitive bidding. ConcordiaFinland expects an increase in the number of regions subject to competitivetendering in the near future.

Currently, in areas otherthan those referenced above, the local public transport authorities havegranted independent operators licenses to run bus services, which essentiallygives each operator a monopoly position. Licenses are normally granted for athree to ten year period and are usually renewed with the same operator. We donot have any contractual public bus services agreements in areas not subject tocompetitive bidding.

*Contracts andContract Tendering*

In the YTV region, andother areas in which competitive bidding has been instituted, the contractstructure and bidding and procurement procedures closely resembles that of thelocal public transportation authorities contracts in Sweden described in thesubheading “Sweden—Tendering Procedures” and “Sweden—Contracts” in this section.Typically, the public transportation contracts have four to five year terms andunder these contracts all ticket revenues are forwarded to the local publictransportation authorities and the operator receives fixed fees. Thecompensation is adjusted periodically by reference to an index intended tocover cost items that relate to the bus transportation industry such as drivers’wages, cost of buses and fuel.

***Drivers and Other Personnel***

For the year ended February 28, 2005, ConcordiaFinland had an average of 766 employees.

All of Concordia Finland’s employees are representedby unions under the terms of industry-wide collective bargaining agreements. Thelargest collective bargaining agreement, which covers drivers and maintenancepersonnel, expires on February 1, 2006.

Concordia Finlandconsiders its relations with its employees and the unions to be good. See “RiskFactors—Risks Related to the Company—Our employees are heavily unionized. Bargainingpower and strikes can hurt our business.”

***Environmental Regulation and Other Regulations***

Concordia Bus Finland is required to comply with theFinnish environmental, health and safety regulation, a large part of whichoriginates from the European Union regulations implemented into Finnish law. Theapplicable legislation (i.e. the Environmental Protection Act and theEnvironmental Protection Decree, the Chemicals Act and the related regulations,and the Waste Act) and other regulations include provisions regardingenvironmental permits, emission standards, storage and handling of fuels andother hazardous substances, waste management, technical provisions regardingmaintenance of buses and requirements regarding the environmental safetystandard of fuel distribution stations.

27

----

In addition, the publictransportation contracts entered into with various public entities in theHelsinki area provide that the buses have to fulfil, certain technical and otherrequirements.

***Legal Proceedings***

Concordia Finland is notcurrently involved in on-going legal proceedings.

**Business Management**

In Sweden we have structured autonomous operations foreach business line—the contractual public bus transportation business, theexpress bus business and coach hire. Each operating unit is responsible forpreparing and securing and integrating new business, operational management,and long term planning. We provide overall business direction policies andcontrol systems, and financial, information technology, and property and assetmanagement services and funding. In addition, we are responsible for StrategicBusiness Development of each unit and responsible for key investment decisions.

We are the largest operator of buses in the Nordicregion. Our size permits us to seek favorable terms from suppliers in theNordic region and elsewhere. Consequently, we are not dependent on any onesupplier to meet our bus requirements. We have entered into frameworkagreements with Volvo and Evobus for the supply of our buses going forward. Asfar as possible, we will continue to acquire vehicles under operating leasearrangements to meet our bus fleet needs. Our fleet investments are dependenton compliance with fleet age requirements under our existing contracts andfleet specification changes at the time of retendering.

We have entered into operating lease agreements tofinance a portion of our bus fleet. As of February 28, 2005, 1,470 of our3,730 buses were financed through operating lease arrangements. The net presentvalue of outstanding obligations for buses as of February 28, 2005, wasSEK 829 million (the net present value of our outstanding obligationsunder leases relating to real estate as of February 28, 2005, was SEK46 million).

The large majority of lease terms for buses includeresidual value guarantees from the bus manufacturer, whereby we retain anoption to return the buses to the manufacturer without cost to us. The numberof buses that can be returned under these agreements is subject to certainlimitations.

The structure of the lease contract is such that atthe inception of a new lease contract, the leasing fee is established based onthe purchase price paid by the lessor and the residual value agreed with themanufacturer for the period of the lease. At the end of each leasing contractperiod each leasing contract can be renewed or terminated. The lease paymentsfor the second leasing period are always at terms based on the fair value atthe date of the extension which are usually lower than the payments during theinitial term. If we are successful in renewing or extending a local publictransportation authority contract, our leasing contract can be renewed at termsbased on the fair value at the date of the extension. This is likely to resultin lease payments which are substantially lower than the payments during theinitial term.

We centralize our fuel purchases in order to benefitfrom bulk purchases. We obtain most of our diesel fuel requirements from asingle major petroleum company in the Nordic region. In the year ended February 28,2005, we used approximately 97 million litres of diesel fuel. Our contract withthis supplier currently ends June 30, 2006, but will automatically renewfor two years unless notice is provided by either party three months prior tothe end date. The price is based on the prevailing spot price for diesel fuelat the time of purchase. In addition, we hedge a portion of our diesel fuelpurchases.

See “Management’s Discussion and Analysis of FinancialCondition and Results of Operations—Quantitative and Qualitative DisclosuresAbout Market Risk—Fuel Prices”. We believe that, if necessary, we could find analternative supplier for our diesel fuel requirements. However during thequarter ended February 28, 2005, none of Concordia’s fuel usage was hedgedthrough diesel swaps.

28

----

We rent our tires fromMichelin. Rental fees are charged on a per kilometer basis. Michelin providesall necessary maintenance with respect to the tires. Our current contract withMichelin expires December 31, 2008. Under the contract, Michelin isrequired to supply us with all the tires that we may require for our buses. Webelieve that, if necessary, we could find an alternative supplier of tires forour buses.

**Information Technology**

We have standardized, modernized and centralized ourhardware and software applications across our operations, and the completefunction is now run internally (after previously being outsourced). Wecurrently have four standardized core applications covering financialreporting, traffic planning, fleet maintenance, and administrative planning. OurFinnish and Norwegian operations and the vast majority of our locations inSweden are connected to the Stockholm head office by permanent, high-speedconnections. We have established a training center in the head office to ensurea smooth roll-out of the system.

We are in the final stages of implementing OMS, ourOperational Management System. We have in place a “production barometer,” asystem which enables us to examine production activity at each of our locationson a day by day basis against budgeted hours.

29

----

**C.   Organizational Structure**

Thefollowing chart sets forth the corporate structure of Concordia, beforerestructuring.

****

----

(a)           Bus Holdings is an affiliateof Goldman Sachs International.

30

 

----

(b)          Underthe terms of a management services agreement, Concordia Bus Management ASagreed with Concordia Bus BV to provide specified management services toConcordia Bus BV and its subsidiaries until February 28, 2005. That agreementended on February 28, 2005 and since then we have been managed by our ownemployees. See “Item 7. Major Shareholders and Related Party Transactions” fora description of the management services agreement.

(c)           Pursuantto an intercompany loan agreement entered into on February 28, 2002, asamended and restated on January 16, 2004 and again on July 22, 2005Bus provided a shareholder loan (the “Subordinated Shareholder Loan”) toConcordia originally in the amount of SEK 501 million in aggregateprincipal amount, comprising a portion of the net proceeds of the SeniorSubordinated Notes issued in 2002. The most recent amendment novated theSubordinated Shareholder Loan to Holding and as of February 28, 2005, theoutstanding amount is SEK 167 million. The terms of this SubordinatedShareholder Loan, as so amended and restated, provide that (i) interestaccrues at a rate of 11% per annum, (ii) the loan is payable on demand and(iii) payments in respect of the Subordinated Shareholder Loan aresubordinated to Concordia Bus Nordic’s obligations under the Senior Notes. Anaddition to the Subordinated Shareholder Loan, Concordia owes Bus SEK 125million in connection with other liabilities for a net outstanding liability ofSEK 292million.

(d)          TheSenior Notes benefit from (i) a pledge by Holding of the shares inConcordia, (ii) a pledge by Concordia of the shares of all of its operatingsubsidiaries, (iii) certain other security, including a pledge by SwebusBusco AB of all of the buses it owns (with a book value at February 28,2005, of approximately SEK 1 billion), which represents substantiallyall of the tangible fixed assets of Concordia and its operating subsidiaries,and a pledge by Swebus AB of a floating charge over its assets securing anamount up to SEK 115 million and (iv) a pledge by Concordia ofcertain secured intercompany loans to Swebus AB and Swebus Busco AB, in the amountsof SEK 200 million and SEK 800 million, respectively,pursuant to which a second ranking security interest over certain assets ofthose Guarantors has been granted to Concordia. The indenture in respect of theSenior Notes includes certain intercreditor arrangements between Concordia andthe trustee with respect to the collateral securitising such intercompany loans.The laws of certain jurisdictions may limit recovery over security constitutingthe collateral.

(e)           Holding,Swebus AB, Swebus Busco AB, Swebus Express AB, Interbus AB,Ingeni&qout; M.O., Sch&qout;yens Bilcentraler AS, Concordia BusFinland Oy Ab, Swebus Fastigheter AB, Alpus AB, MalmfältensOmnibus AB and Enköping-Bõlsta Fastighetsbolag AB.

(f)             Thesecompanies are dormant and have no material assets. As Concordia has designatedArlanda Buss AB, Billingens Trafik AB, Enköping-BõlstaTrafik AB, Gälve Trafik AB, Hälsinge Wasatrafik AB,AB Härnösandsbuss, Karlstadsbuss AB, AB Kristinehamns Omnibusstrafik,Saltsjöbuss AB, Swebus Service AB, Swebus Västerõs AB, TumlareBuss AB, Wasabuss AB and Wasatrafik AB as unrestrictedsubsidiaries these companies do not guarantee the Senior Notes.

**D.**   Property,Plants and Equipment

Concordia operated 3,730buses at February 28, 2005, of which 1,470 were operated under operatinglease agreements with the other 2,260 buses being either legally owned byConcordia or operated under financing lease agreements. At February 28,2005 we operated 2,989 buses, 379 buses and 362 buses in Sweden, Norway andFinland, respectively.

At February 29, 2004,we operated 3,156 buses, 405 buses (of these 405 buses, 94 had been purchasedpursuant to a contract entered into in January of 2004 and included in theFebruary 2004 year end totals, though these 94 buses were not delivered toSBC until March of 2004) and 347 buses in Sweden, Norway and Finland,respectively.

31

 

----

As of February 28,2003 Concordia’s bus fleet consisted of a total of 3,949 buses, of which 1,156buses were under operating leasing arrangements and 2,793 were owned or underfinance leases.

The average age of ourfleet was ten years for buses owned by Concordia or operated under financelease agreements and four years for buses operated under operating leaseagreements for the fiscal year ended February 28, 2005, ten years for busesowned by Concordia or operated under finance lease agreements and three yearsfor buses operated under operating lease agreements for the fiscal year andended February 29, 2004 and nine years for buses owned by Concordia oroperated under finance lease agreements and two years for buses operated underoperating lease agreements for the fiscal year ended February 28, 2003.

Those of our buses whichare subject to operating lease agreements are also subject to residual valueguarantees from our bus suppliers, Volvo and Mercedes/SETRA. The residual valueguarantees enable Concordia to return those buses to our suppliers at nofurther cost to us at the end of the first lease period of the operating leaseagreement. The first lease period must be at least 48 months for Mercedes/SETRAbuses and at least 60 months for Volvo buses.

The return conditions,stated in the residual value guarantees, include that the buses must be inroadworthy condition and fulfill a kilometer allowance. If the buses do notmeet these conditions, Concordia may have to compensate the suppliers for theextra cost.

The residual valueguarantees also include a limitation regarding the number of buses that can bereturned to the suppliers. For Volvo buses, the return is limited to a total numberof vehicles per calendar year corresponding to 30 percent of the averagepurchases of new Volvo buses during the past three calendar years. ForMercedes/SETRA buses the return of buses is limited to the annual average (20%of the overall amount) per year of the deliveries of Mercedes/SETRA busesbetween 2000 and 2004. The Mercedes/SERTA buses are provided pursuant to theEvobus framework agreement.

Wecurrently lease our facilities, the majority of them for use by Swebus. Swebusconducts its bus operations out of a system of 45 depots and 74 parking areaslocated throughout Sweden. These divide as follows:

·       45depots, which include garages with full maintenance facilities, washingfacilities, parking, administrative offices and eating and changing facilitiesfor drivers and mechanics;

·       20sub-depots, which include washing facilities, parking, small administrativeoffices for payroll disbursement and limited facilities for drivers; and

·       74parking areas with limited staff facilities.

Some of the larger depotsare located adjacent to bus stations and Swebus rents portions of parkingcapacity to some external customers. However, Swebus does not operate busstations.

We generally select ourdepot sites according to their proximity to our routes. We intend to examineways to use sales and leasebacks of depots with flexible lease terms as a wayfor Swebus to change depots to adjust to its changing needs as publictransportation contracts are won and lost.

Concordia has no materialproperties in Norway or Finland.

**Item5.**   *Operating and FinancialReview and Prospects*

**A.   OperatingResults**

*The following should be read in conjunction with ourconsolidated financial statements and the consolidated financial statements ofour direct Parent included in this annual report starting on page F-1.Our consolidated financial statements are prepared in accordance with SwedishGAAP, which differ in various significant respects from US GAAP. Thesignificant differences between Swedish GAAP and US GAAP are*

32

 

----

*discussed in Note 33 to the consolidatedfinancial statements of Concordia included elsewhere in this annual report.*

**Overview**

Concordia Bus Nordic ABwas incorporated on December 22, 1932. In January 2000, Bus, backedby SG (the then parent company of SBC) and certain private equity funds affiliatedwith Goldman Sachs International, acquired Concordia Bus Nordic. In connectionwith the acquisition, SG agreed to contribute its bus operating subsidiary,SBC, to Bus by no later than March 1, 2002, pursuant to mutual options. OnFebruary 28, 2001, we acquired SBC with effect from February 1, 2001.

We provide public bustransportation services in Sweden, Norway and Finland, through our three mainoperating subsidiaries:  Swebus, SBC andConcordia Finland, respectively. We also provide express bus and coach hireservices. In Sweden, we currently operate 2,989 buses, and are the largestoperator through Swebus, with an estimated market share of approximately 29% ofthe public bus transportation market (measured by the number of buses inoperation). This market share data has been calculated based on the share oftotal number of buses, as provided by the CPTA. In Norway, SBC currentlyoperates approximately 379 buses and has an estimated 20% market share of thepublic bus transportation market in southeastern Norway, which includes Osloand neighboring cities. This market share data has been calculated based on theshare of total number of buses, as provided by the CPTA. In Finland, ConcordiaFinland currently operates 362 buses and is the second largest operator in thegreater Helsinki area with a market share of 24%. This market share data hasbeen calculated based on the relative numbers of contract kilometers. Thisinformation is made available at each tendering.

The operating results forConcordia Bus Nordic during the fiscal years 2003 to 2005 have been negative,mostly due to loss making contracts in the CPTA segment. The consolidatedstatements of operations for Concordia Bus Nordic for the year ended February 28,2005 shows that earnings generated by the underlying businesses during theperiod March 1, 2004–February 28,2005 have not been sufficient to cover Holding’s costs. Concordia and itssubsidiaries are continuing to implement changes in the operations, changes tothe administrative structure and certain changes in the capital structures. Changesin operations and administrative structure are made to improve traffic planningand make the usage of buses and staff more efficient.

Nordic and Bus announcedon July 22, 2005 that, with their principal ultimate shareholders, an AdHoc Committee of holders of Parent Notes and an informal group of holders ofSenior Notes, they signed the Restructuring Agreement to restructure the ParentNotes and strengthen the balance sheet of the Concordia group of companies. TheRestructuring Agreement provides that, among other things, Bus will make anapplication for reorganization proceedings in the District Court in Stockholm,Sweden. Those proceedings are expected to result in the face amount of all theParent Notes being reduced from 100% to 25% and holders of Parent Notes whoconsent to the restructuring will then be required, pursuant to theRestructuring Agreement, to exchange their reduced debt securities (includingall principal, all accrued and unpaid interest and any other amounts duethereon) for ordinary shares of Bus, which will constitute 97.5% of the issuedordinary share capital of Bus immediately following the consummation of the proposedrestructuring; subject to a management incentive plan.

In connection with therestructuring, Holding has borrowed €25,000,000, of which €24,055,000has been contributed to Concordia as an equity capital contribution to pay forthe expenses of the restructuring and to cover its capital needs. If therestructuring is successfully completed Bus intends to borrow an additional €45,000,000under the Mezzanine Facility. It intends to use €25,000,000 to repay theHolding borrowing and contribute approximately €13,000,000 to Concordia,via Holding, as an equity contribution. The remaining amount will be used tocover expenses of the restructuring.

33

 

----

Our contracts with publictransportation authorities are typically structured such that the level ofmonthly fees depends on the contractually agreed volume of operations, whichvaries from month to month, and in many cases declines in the summer months. Inaddition, our express bus and coach hire services businesses usually experiencerelatively high revenues from April to September and during December ina given year, as customers tend to use these services during vacation periodsand periods having more favorable weather. Furthermore, as a result of ourcollective bargaining agreements, our personnel costs usually increase in thebeginning of each calendar year.

***Critical AccountingPolicies***

The preparation of ourconsolidated financial statements requires management to make certain estimatesand assumptions that affect the reported amounts of assets and liabilities atthe date of the consolidated financial statements and the reported amounts ofrevenues and expenses during the periods presented. The following paragraphsinclude descriptions of some accounting areas that require a higher degree ofcomplexity and/or judgment in making estimates.

*Recoverability of tangible and intangible fixed assetsincluding goodwill.*

Impairment reviews oftangible and intangible fixed assets, including goodwill, are performedwhenever there is an indication of possible impairment. The carrying values offixed assets, including goodwill related to those assets, are not considered tobe recoverable when the expected discounted cash flows from those assets areless than their carrying values. An impairment loss is determined based on theamount by which the carrying value exceeds the fair value of those assets. Losseson fixed assets to be disposed of are determined in a similar manner, takinginto account the selling price reduced by the costs of disposal.

One of our significantassets is our goodwill in our subsidiary SBC. If future cash flows do notdevelop favorably, there is a risk that goodwill may be impaired and need to bewritten-down. Goodwill is accounted for in accordance with Swedish GAAP whichin certain areas differs from US GAAP. Please see Note 32 item (a), “Goodwillamortization,” to the consolidated financial statements of Holding filed as partof this annual report for a description of those differences.

In addition to goodwill,we also have significant investments in buses. As of February 28, 2005,the carrying value of buses was SEK 1,228 million. The depreciation ofthese buses is based on a straight-line basis over their estimated usefullives, which range from three to 14 years depending on the type of bus. Recoverabilityof these assets being held and used is measured by a comparison of the carryingamount of the asset to the future net cash flows expected to be generated bythe asset. If such assets are considered impaired, the impairment lossrecognized is measured as the amount by which the carrying value of the assetexceeds the fair value of the asset. If we are not successful in renewing ourcontracts at a level that keeps our buses in service, we may have excess buscapacity and therefore may desire to sell these buses to third parties. In sucha situation the carrying value of these buses may exceed the amount that can berecovered in a sales transaction.

*Loss making contracts.*

Most of our contracts arefive to eight year contracts with municipalities to provide bus services in aparticular area. Under the terms of these contracts, revenues are generallyindexed at a rate corresponding to a consumer price index or a price indexwhich more closely corresponds to the company’s actual cost structure inproviding its services, such as an index that considers the significance ofchanges in diesel prices, payroll costs and other expenses. Due to the factthat the contracted price level on some of our older contracts has proven to betoo low to fully cover the costs of those contracts, certain contracts havebecome loss making. Provisions have been recorded on an individual CPTA basis. Wemay be required to record additional provisions for loss making contracts inthe future if the increase in revenue from the underlying contracts does notoffset the actual increase in costs.

34

 

----

*Deferred income taxes.*

Considering our recenthistory of losses, we have not recorded any deferred tax asset for ouroperating loss carry forward, or temporary tax differences.

***Going ConcernMatters***

Concordia has over timeaccumulated significant losses, whereby shareholder equity has become negativeand cash and bank balances have decreased, even though additional cash wascontributed through the refinancing project consummated in February 2004. Thegroup’s long term ability to continue its operations is dependent on asuccessful future tendering process and continuing cost cutting initiatives aswell as an improvement in cash flows.

TheCompany is highly leveraged as a result of the Notes outstanding, significantoperational lease obligations and group internal financing in the form ofliabilities due to Concordia Bus AB. This leverage has put additional pressureon the Company’s cash flows and has limited the Company’s ability to seekadditional external funds. Existing cash and bank balances are not expected tobe sufficient to cover future cash needs for potential operating losses, normalcapital expenditures, mandatory interest payments and amortization on debt owedto Concordia Bus AB.

Absent a restructuring, wemay not be able to continue as a going concern. Concordia and Bus announced on July 22,2005 that, with their principal ultimate shareholders, an Ad Hoc Committee ofholders of Parent Notes and an informal group of holders of Senior Notes, theyhad signed the Restructuring Agreement to restructure the Parent Notes andstrengthen the balance sheet of the Concordia group of companies. TheRestructuring Agreement provides that, among other things, Bus will make anapplication for reorganization proceedings in the District Court in Stockholm,Sweden. Those proceedings are expected to result in a reduction of the faceamount of all the Parent Notes from 100% to 25% and that the holders of ParentNotes who consent to the restructuring will be required, pursuant to theRestructuring Agreement, to exchange their reduced debt securities (includingall principal, all accrued and unpaid interest and any other amounts duethereon) for ordinary shares of Bus, which will constitute 97.5% of the issuedordinary share capital of Bus immediately following the consummation of theproposed restructuring, subject to a management incentive plan representing a maximumof 5% of the issued ordinary shares. In connection with the restructuring,Holding has borrowed €25,000,000, of which €24,055,000has been contributed to Concordia as an equity capital contribution to pay forthe expenses of the restructuring and to cover its capital needs. Bus intendsto borrow an additional €45,000,000 pursuant to the MezzanineFacility, of which approximately €13,000,000 Bus intends tocontribute to Concordia, via Holding, as an equity contribution. The remainingamount is to be used to repay Holding’s loan of €25,000,000 and to coverrestructuring expenses.

Concordia hasapproximately SEK 1,188 million of long-term debt due to third parties,including long-term finance lease obligations but excluding operating leaseobligations. Our ability to service the existing debt, including amortizationand interest, is dependent on the underlying businesses generating sufficientcash flow and distributable earnings. Furthermore our ability to service ourexisting debt and the debt of Holding and Bus (pursuant, for example to Holding’s recentborrowing of €25,000,000 and Bus’ future borrowings under theMezzanine Facility), or the debt we may acquire in connection with the proposedrestructuring, is dependent on the ability to transfer profit from Concordiathrough Holding to Bus. The non-restricted equity in the underlying companies,available for dividends, has been reduced during the year due to losses, whichfurthermore limits our ability to receive dividends from subsidiaries.

The group profit and lossstatement for February 28, 2005 shows that earnings generated by theunderlying businesses during the period March 1, 2004 - February 28,2005 have not been sufficient to cover our costs.

35

 

----

The management of Concordia believes that if theproposed restructuring is consummated Concordia will be able to continue as agoing concern primarily as a result of reduction of reduce the group’s totalindebtedness and consequently improvements on Concordia’s cash flow. Furthermore,Concordia and its subsidiaries are continuing to implement changes in theoperations, changes to the administrative structure as well as certain changesin the capital structures. In addition, the improvements in compensation levelsin new tenders with public transport authorities are continuing. Thesefinancial statements have been prepared assuming that the restructuring will beconsummated and that Bus, Holding, Concordia and Concordia’s subsidiaries willbe successful in their initiatives and, consequently, they have been preparedassuming that we will continue as a going concern.

These financial statements have also been prepared underthe assumption that during the 12 month period following the release of thesefinancial statements: (i) Concordia will be in compliance with itscovenants associated with its senior secured notes, and (ii) Bus will notbecome insolvent or bankrupt. If Concordia were to be in breach of one or moreof those covenants, and if the lenders so elected, the SEK 1,188 million seniorsecured notes, which are classified as long term as of February 28, 2005,would become immediately due and payable.

Further, in the event ofan acceleration under the Senior Notes following a default, all or part of theleasing contracts covering a significant portion of our leases may beterminated at the option of the lessor. This could have a material adverse effecton our business.

**NewAccounting Principles in 2005 for Swedish GAAP**

During the year ended February 28,2005, the recommendation Employee Benefits (RR 29) issued by the SwedishFinancial Accounting Standards Council, became effective. The change has positivelyaffected consolidated equity as of March 1, 2004 by SEK 5 million, net ofdeferred taxes.

**InternationalFinancial Reporting Standards**

Effective January 1, 2005, all listed EuropeanUnion companies are required to present their consolidated financial statementsin accordance with International Financial Reporting Standards (“IFRS”). Thelatest date for transitioning for Concordia will be the year ended February 28,2007, which means that the first full set of financial statements will be theCompany’s financial reports for the year ending February 29, 2008.

Concordia is currently in the process of assessing theimplications of the adoption of IFRS. The impact that these new standards willhave on the Company’s net loss and financial position has not yet beenassessed.

Major disclosuredifferences based on the current IFRS status relate to the followingareas:  judgments, assumptions, risks andinformation regarding acquisition of companies. Major accounting differencesbased on the current IFRS status includes, but are not limited to, thefollowing areas:

·       Intangibleassets—Goodwill amortization will no longer be allowed;

·       Sharebased payment—The fair value of awards is recognized in equity at the grantdate and expensed during the vesting period;

·       Financialinstruments—In general, to be reported at fair value and depending onclassification, to be taken either through the income statement or directly toshareholders’ equity;

·       Component method ofdepreciation.

36

----

**NewAccounting Principles in 2005 for US GAAP**

***Consolidation of Variable Interest Entities***

In December 2003, the U.S. Financial AccountingStandards Board (“FASB”) issued FASB Interpretation No. 46 (revised December 2003),“Consolidation of Variable Interest Entities,” (“FIN 46R”) which addressesthe consolidation of variable interest entities by business enterprises.Variable interest entities are entities in which either the equity investmentat risk is not sufficient to absorb the probable losses without additionalsubordinated financial support from other parties, or the investors with equityat risk lack certain essential characteristics of a controlling interest. UnderFIN 46R, an entity must consolidate any variable interest entity in which theentity holds variable interests and is deemed the primary beneficiary. Portionsof the requirements of FIN 46R were required to be adopted during the yearended February 29, 2004, while other portions were required to be adoptedduring the year ended February 28, 2005 under the transition rules. The adoptionof the remaining provisions of FIN 46R during the year ended February 28,2005 did not have a significant effect on our consolidated financial positionor results of operations reported in accordance with US GAAP.

In May 2003, the Emerging Issues Task Force ofthe FASB reached a consensus on Issue No. 00-21 “Revenue Arrangements withMultiple Deliverables” (“EITF 00-21”), providing further guidance on how toaccount for multiple element contracts. EITF 00-21 was effective for allarrangements entered into by us on or after March 1, 2004. The adoption ofthe EITF 00-21 during the year ended February 28, 2005 did not have asignificant effect on our consolidated financial position or results ofoperations reported in accordance with US GAAP.

In December 2004, the FASB issued SFAS No. 153,“Exchanges of Non-Monetary Assets—an amendment of APB Opinion No. 29” (“SFAS153”). Accounting Principles Board (“APB”) Opinion No. 29, “Accounting forNonmonetary Transactions” provided an exception to the basic fair-valuemeasurement principle for exchanges of similar productive assets. Thatexception required that some nonmonetary exchanges, although commerciallysubstantive, be recorded on a carryover basis. SFAS 153 eliminates theexception to fair value for exchanges of similar productive assets and replacesit with a general exception to fair-value measurement for exchange transactionsthat do not have commercial substance—that is, transactions that are notexpected to result in significant changes in the cash flows of the reportingentity. SFAS 153 is effective prospectively for us in accounting fornonmonetary asset exchanges which occur on or after March 1, 2006 for USGAAP purposes.

In May 2005, the FASBissued SFAS No. 154, “Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3”**(“SFAS 154”). SFAS 154 applies to all voluntary changes inaccounting principle, and changes the requirements for accounting for andreporting of a change in accounting principle. SFAS 154 requires retrospectiveapplication to prior periods’ financial statements of a voluntary change inaccounting principle unless it is impracticable. APB Opinion No. 20, “AccountingChanges” previously required that most voluntary changes in accounting principlebe recognized by including in net income of the period of the change thecumulative effect of changing to the new accounting principle. SFAS 154 iseffective for accounting changes and corrections of errors made by us on orafter March 1, 2006 for US GAAP purposes, except that SFAS 154 does notchange the transition provisions of any existing accounting pronouncement,including those that are in a transition phase as of March 1, 2006.

37

----

**Results of Operations**

Thefollowing table sets forth our results of operations for the years indicated interms of amounts as well as a percentage of net revenue.
| ** **                                       | ** ** | **Year ended   February 28, 2005**        | ** ** | **Year ended   February 29, 2004** | ** ** | **Year ended   February 28, 2003** | ** ** |
|--------------------------------------------------|------------|---------------------------------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                       | ** ** | **Amount**                                                    | ** ** | **%**                                                  | ** ** | **Amount**                                             | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** |
| ** **                                       | ** ** | **(in millions SEK, except percentages)** | ** ** |
| Net revenue                                      |       |                                                          | 4,812      |                                                   |       | 100.0                                                  | %          |   | 4,761 |   |   | 100.0 | % |   | 4,758 |   |   | 100.0 | % |
| Operating  expenses(a)                           |       |                                                          | (4,722     | )                                                      |       | (98.1                                                  | )%         |   | (4,544 | ) |   | (95.4 | )% |   | (4,505 | ) |   | (94.7 | )% |
| Gain (loss) on  sale of fixed assets             |       |                                                          | 4          |                                                   |       | 0.1                                                    | %          |   | 6 |   |   | 0.1 | % |   | (4 | ) |   | (0.1 | )% |
| Depreciation; amortization  and write-down  |       |                                                          | (350       | )                                                      |       | (7.3                                                   | )%         |   | (331 | ) |   | (7.0 | )% |   | (372 | ) |   | (7.8 | )% |
| Operating loss                                   |       |                                                          | (256       | )                                                      |       | (5.3                                                   | )%         |   | (108 | ) |   | (2.3 | )% |   | (123 | ) |   | (2.6 | )% |
| Financial income  and expenses, net              |       |                                                          | (141       | )                                                      |       | (2.9                                                   | )%         |   | (146 | ) |   | (3.1 | )% |   | (105 | ) |   | (2.2 | )% |
| Income taxes                                     |       |                                                          | 1          |                                                   |       | 0.02                                                   | %          |   | 83 |   |   | 1.7 | % |   | 49 |   |   | 1.0 | % |
| Net loss                                         |       |                                                          | (396       | )                                                      |       | (8.2                                                   | )%         |   | (171 | ) |   | (3.6 | )% |   | (179 | ) |   | (3.8 | )% |

----

(a)           **Operating expenses**
| ** **                         | ** ** | **As of and for   the year ended   February 28,   2005 ** | ** ** | **As of and for   the year ended   February 29,   2004 ** | ** ** | **As of and for   the year ended   February 28   2003 ** | ** ** |
|------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------|------------|
| ** **                         | ** ** | ** **                                                                                                  | ** ** | **SEK**                                                                                                     | ** ** | **SEK**                                                                                                    | ** ** |
| Fuel, tires and  other consumables |       |                                                                                                        | (989       | )                                                                                                           |       |                                                                                                       | (929       | ) |   |   | (919 | ) |   |
| Other external  costs              |       |                                                                                                        | (1,127     | )                                                                                                           |       |                                                                                                       | (1,004     | ) |   |   | (989 | ) |   |
| Personnel costs                    |       |                                                                                                        | (2,606     | )                                                                                                           |       |                                                                                                       | (2,611     | ) |   |   | (2,597 | ) |   |
| Total operating expenses  .        |       |                                                                                                        | (4,722     | )                                                                                                           |       |                                                                                                       | (4,544     | ) |   |   | (4,505 | ) |   |

 

Thefollowing table sets forth our revenues, in terms of amounts as well as apercentage of revenues, and operating profit (loss), in terms of amounts and asa percentage of total operating profit (loss), on the basis of each of ourbusinesses:
| ** **                                                | ** ** | **Year ended  February 28,  2005**                          | ** ** | **Year ended  February 29,  2004** | ** ** | **Year ended  February 28,  2003** | ** ** |
|-----------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                | ** ** | **Amount**                                                            | ** ** | **%**                                        | ** ** | **Amount**                                   | ** ** | **%** | ** ** | **Amount** | ** ** | **%** | ** ** |
| ** **                                                | ** ** | **(in millions of SEK, except percentages)** | ** ** |
| Revenues:                                                 |       |                                                                  |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Bus services for local  public transportation authorities |       |                                                                  | 4,272      |                                         |       | 88.8                                         | %          |   | 4,242 |   |   | 89.1 | % |   | 4,243 |   |   | 89.2 | % |
| Express bus operations                                    |       |                                                                  | 337        |                                         |       | 7.0                                          | %          |   | 327 |   |   | 6.9 | % |   | 295 |   |   | 6.2 | % |
| Coach hire operations                                     |       |                                                                  | 117        |                                         |       | 2.4                                          | %          |   | 110 |   |   | 2.3 | % |   | 127 |   |   | 2.6 | % |
| Other                                                     |       |                                                                  | 86         |                                         |       | 1.8                                          | %          |   | 82 |   |   | 1.7 | % |   | 93 |   |   | 2.0 | % |
| Net revenue                                               |       |                                                                  | 4,812      |                                         |       | 100.0                                        | %          |   | 4,761 |   |   | 100.0 | % |   | 4,758 |   |   | 100.0 | % |
| Operating profit (loss):                                  |       |                                                                  |       |                                         |       |                                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Bus services for local  public transportation authorities |       |                                                                  | (187       | )                                            |       | —                                       |       |   | (92 | ) |   | — |   |   | (86 | ) |   | — |   |
| Express bus operations                                    |       |                                                                  | 29         |                                         |       | —                                       |       |   | 34 |   |   | — |   |   | 25 |   |   | — |   |
| Coach hire operations                                     |       |                                                                  | 4          |                                         |       | —                                       |       |   | 3 |   |   | — |   |   | 5 |   |   | — |   |
| Other                                                     |       |                                                                  | (102       | )                                            |       | —                                       |       |   | (53 | ) |   | — |   |   | (67 | ) |   | — |   |
| Total operating loss                                      |       |                                                                  | (256       | )                                            |       | —                                       |       |   | (108 | ) |   | — |   |   | (123 | ) |   | — |   |

 

38

----

**Fullyear ended February 28, 2005 compared to the full year ended February 29,2004**

The following sectionprovides an analysis of our results of operations between the actual numbersfor the year March 1, 2004 - February 28, 2005 as compared withyear March 1, 2003 - February 29, 2004.

***Revenues***

Revenues increased SEK 51 million or 1% from SEK4,761 million for the year ended February 29, 2004 to SEK4,812 million for the year ended February 28, 2005.

Revenues from the provision of bus services for localpublic transportation authorities increased by SEK 30 million, or 1%, fromSEK 4,242 million for the year ended February 29, 2004 to SEK4,272 million for the year ended February 28, 2005. The increase inrevenue is principally due to our winning of new contracts, which provided anincrease of SEK 411 million which was offset by the impact from lostcontracts of SEK 410 million and a strike in Finland in November 2004that caused a loss of revenues of SEK 13 million during the year ended February 28,2005. In the fiscal year 2004 we had a retroactive compensation from theStockholm CPTA in May 2003 of SEK 28 million as a result of a lawrequiring more frequent breaks for drivers, which had a positive impact on theyear ended February 29, 2004. The net impact from the volume and pricechanges on the existing contracts was positive by SEK 70 million duringthe year ended February 28, 2005.

Revenues from express bus services increased by SEK10 million, or 3%, from SEK 327 million for the year ended February 29,2004 to SEK 337 million for the year ended February 28, 2005. Thisincrease is largely due to a higher yield from passenger tickets of SEK5 million, attributable to an increase in passenger traffic of SEK2 million and an increase in prices of SEK 3 million.

Revenues from coach hire services increased by SEK7 million, or 6%, from SEK 110 million for the year ended February 29,2004 to SEK 117 million for the year ended February 28, 2005. Therevenue increase is mainly due to the acquisition of the companies FO Resor andMarstrand Hermansby Buss, which increased revenue by SEK 9 million.

Other revenue increased bySEK 4 million from SEK 82 million for the year ended February 29,2004, to SEK 86 million for the year ended February 28, 2005. Otherrevenue largely consist of sales of diesel fuel, and maintenance and repairservices to third parties.

***Operating Costs***

Operating costs consist primarily of personnel costs(which includes wages, salaries, social security fees and pension costs for busdrivers, mechanics and other employees), fuel, tires and other consumablescosts, and other external costs, which include depot costs and head officeadministrative costs. Operating external costs also include operating leasecharges. Operating costs increased by SEK 178 million, or 4%, from SEK4,544 for the year ended February 29, 2004 to SEK 4,722 million forthe year ended February 28, 2005. This increase was due to a number offactors, which are explained below.

Fuel, tires and other consumable costs have increasedby SEK 60 million or 6% to SEK 989 million for the year ended February 28,2005 from SEK 929 million for the year ended February 29, 2004. Theincrease is largely due to a high diesel price during the second and thirdquarter resulting in increased fuel costs of SEK 50 million, partiallyoffset by reduced number of kilometers driven causing a reduced cost of SEK17 million. The increase was also due to higher maintenance costs of totalSEK 22 million and due to a SEK 5 million increase in costs ofwashing and cleaning.

Personnel costs decreased by SEK 5 million or0.2% to SEK 2,606 million for the year ended February 28, 2005compared to SEK 2,611 million for the year ended February 29, 2004. Thedecrease mainly resulted from a reduction of drivers due to net loss of numberof contracts and productivity 

39

----

improvements of SEK 108 millionand a reduction of pension costs due to lower pension premiums of SEK22 million. This was offset by an effective increase in salary of SEK83 million and social charges of SEK 35 million. In addition, therestructuring of Concordia Bus resulted in a provision for personnel costs ofSEK 7 million.

Operating lease charges increased by SEK40 million, or 10%, from SEK 388 million for the year ended February 29,2004 to SEK 428 for the year ended February 28, 2005. This increase wasprincipally a result of our increased use of operating leases for buses. Thetotal number of buses under operating leases was 1,470 as of February 28,2005, compared to 1,317 as of February 29, 2004.

Other external costsincreased by SEK 83 million to SEK 699 million for the year ended February 28,2005 from SEK 616 million for the year ended February 29, 2004. Thiswas mainly due to costs related to the restructuring of Concordia Bus which hasresulted in other external costs of SEK 120 million. These costs containprovision for claim on CPTA of SEK 73 million, bad debt provision ofreceivable due from parent and management company of SEK 33 million andprofessional fees of SEK 14 million. We also had increased damage andother operational costs of SEK 18 million. This was partially offset byutilization of provisions for loss making contracts which was lower by SEK59 million for the year ended February 28, 2005.

***Depreciation; Amortization and Write-down***

Depreciation andamortization charges comprise principally the depreciation of buses and othervehicles but also relate to the depreciation of tools, fixtures and fittings,buildings and computer equipment. In addition, amortization of goodwillresulting from acquisitions of bus operations is also included. Depreciation andamortization costs increased by SEK 19 million, or 6%, from SEK331 million for the year ended February 29, 2004 to SEK350 million for the year ended February 28, 2005 principally as aresult of the write-down of surplus buses to expected market value at year-endof SEK 42 million, offset by a shift from owned buses to a larger numberof leased buses. Total goodwill amortization remained constant at SEK13 million for the years ended February 28, 2005 and February 29,2004.

***Operating profit/loss***

Operating loss was SEK 256 million for the yearended February 28, 2005, compared to SEK 108 million for theyear ended February 29, 2004.

Operating loss from bus operations for local publictransportation authorities was SEK 187 million for the year ended February 28,2005, compared to an operating loss of SEK 92 million for the year ended February 29,2004, mainly due to higher fuel costs and increased operating lease charges.

Operating profit from express bus services decreasedby SEK 5 million to SEK 29 million for the year ended February 28,2005 compared to SEK 34 million for the year ended February 29, 2004.

Operating profit from coach hire services was SEK4 million for the year ended February 28, 2005, compared to anoperating profit of SEK 3 million for the year ended February 29,2004.

Head office costs andothers items increased from SEK 53 million for the year ended February 29,2004, to SEK 102 million for the year ended February 28, 2005, mainlydue to costs in connection with the restructuring of Concordia Bus.

***Financial Income and Expenses***

Financial income and expenses includes interest incomefrom cash and cash equivalents and interest expense from loans made by banksand other financial indebtedness. Financial income and expenses 

40

----

decreased by SEK5 million from a financial expense of SEK 146 million for the yearended February 29, 2004 to SEK 141 million for the year ended February 28,2005.

This result can beprimarily attributed to a write-off of deferred financing costs by SEK21 million in January 2004 in connection with refinancing the olderbank facilities, and replacing them with the secured notes, a positive effectof SEK 25 million, resulting from a foreign exchange loss of SEK7 million for the year ended February 29, 2004 to a foreign exchangegain of SEK 18 million for the year ended February 28, 2005 mostlyattributable to foreign exchange fluctuations on secured notes denominated ineuro, as well as decreased interest income of SEK 2. This was offset by higherinterest payments and other financial charges of SEK 39 million due tohigher interest rate. The average calculated interest expenses on third partyliabilities for the year ended February 28, 2005 was 9,0% compared to 7.3% for the year ended February 29,2004.

***Taxes***

The standard rate oftaxation in Sweden is 28%. Concordia was in taxable loss position in 2005, andits effective tax rate for the year ended February 28, 2005 was 0%,primarily because of the valuation allowance on deferred tax assetsattributable to net operating losses.

**Yearended February 29, 2004, compared to Year ended February 28, 2003**

***Revenues***

Revenues increased SEK 3 million, or 0.1%, fromSEK 4,758 million for the year ended February 28, 2003 to SEK4,761 million for the year ended February 29, 2004.

Revenues from the provision of bus services for localpublic transportation authorities decreased by SEK 1 million, from SEK4,243 million for the year ended February 28, 2003 to SEK4,242 million for the year ended February 29, 2004.

The SEK 3 million increase is due to newcontracts worth SEK 202 million. This was offset by lost contracts worthSEK 276 million. The remaining increase of SEK 77 million is due to acombination of an increase from indexation adjustments amounting to SEK17 million with the balance due largely to volume and price movements uponrenewal of contracts.

Revenues from express bus services increased by SEK32 million, or 11%, from SEK 295 million for the year ended February 28,2003 to SEK 327 million for the year ended February 29, 2004. Therevenue increase derives primarily from an increase in the number of passengerscarried, from 2.7 million passengers during the year ended February 28,2003 to 3.0 million passengers during the year ended February 29,2004 and from a per-passenger price increase of 4% effective from July 1,2003.

Revenues from coach hire services declined by SEK17 million, or 13%, from SEK 127 million for the year ended February 28,2003 to SEK 110 million for the year ended February 29, 2004. Therevenue decline is a direct result of a lower level of business activities anddecreased tourism, mainly due to the general recession in the economy.

Other revenues decreased by SEK 11 million, or11.8%, from SEK 93 million for the year ended February 28, 2003 toSEK 82 million for the year ended February 29, 2004 largely as aresult of lower inter segmental sales.

During the year ended February 29,2004, revenues of SEK 3,986 million were generated in Sweden, revenues ofSEK 379 million were generated in Norway, and revenues of SEK396 million were generated in Finland. During the year ended February 28,2003, revenues of SEK 3,902 million were generated in Sweden, revenues of SEK457 million were generated in Norway, and revenues of SEK 399 millionwere generated in Finland.

41

----

***Operating Costs***

Operating costs consist primarily of personnel costs(which includes wages, salaries, social security fees and pension costs of busdrivers, mechanics and other employees), fuel, tires and other consumablescosts, and other external costs, which include depot costs and head officeadministrative costs. Operating costs also include operating lease charges. Operatingexternal costs increased by SEK 39 million, or 0.9%, from SEK4,505 million for the year ended February 28, 2003 to SEK4,544 million for the year ended February 29, 2004. The increase ofSEK 39 million is due to a number of factors, which are outlined below.

Fuel, tires and other consumable costs have increasedby SEK 10 million, or 1%, to SEK 929 million for the year ended February 29,2004 from SEK 919 million for the year ended February 28, 2003. Theincrease is largely due to a high diesel price during the first quarterresulting in increased costs by SEK 14 million and higher maintenancecosts in the first quarter of SEK 10 million. This has been offset by thelower volumes as a result of lost contracts, which resulted overall in a lowercost of SEK 14 million.

Personnel costs have increased by SEK 14 million,or 0.5%, from SEK 2,597 for the year ended February 28, 2003 to SEK 2,611for the year ended February 29, 2004. Personnel costs did not decrease inproportion to the reduction in personnel numbers because of the costsassociated with terminating employees.

The increase of SEK 14 million is due to areduction of drivers in our lost contracts resulting in lower wage costs of SEK171 million, productivity gains in Stockholm of SEK 16 million andother reductions of SEK 6 million. This was offset by an effective payincrease of 4.0% resulting in higher wage costs of SEK 95 million andhigher wage costs due to impact of operating new contracts of SEK112 million.

Other external costs increased by SEK 15 millionto SEK 1,004 million for the year ended February 29, 2004 from SEK989 million for the year ended February 28, 2003. The increase wasmainly due to that operating lease charges increased by SEK 38 million. Thisincrease was principally a result of our increased use of operating leases forbuses. The increase is also due to higher operational costs such as insuranceand marketing costs of SEK 25 million. This was partly offset due to areduction of subcontractors of SEK 38 million and decreased administrationcosts of SEK 9 million due to the return of a more normal level ofoperations in Stockholm.

The total number of busesunder operating leases was 1,317 as of February 29, 2004, compared to1,156 as of February 28, 2003.

***Depreciation; Amortization and Write-down***

Depreciation andamortization charges comprise principally the depreciation of buses and othervehicles but they also relate to the depreciation of tools, fixtures andfittings, buildings and computer equipment. In addition, amortization ofgoodwill resulting from acquisitions of bus operations is also included. Depreciationand amortization costs decreased by SEK 41 million, or 11%, from SEK372 million for the year ended February 28, 2003 to SEK331 million for the year ended February 29, 2004 principally as aresult of the shift towards increased operational leasing of buses and awayfrom ownership. Total goodwill amortization was SEK 13 million for theyear ended February 29, 2004, which remained constant as compared to theyear ended February 28, 2003.

***Operating loss***

Operating loss decreased by SEK 15 million, or12.2% from a loss of SEK 123 million for the year ended February 28,2003 to a loss of SEK 108 million for the year ended February 29,2004 due to overhead cost reductions and higher contribution from the new andrenewed contracts.

42

----

Operating loss from bus operations for local publictransportation authorities increased by SEK 6 million, or 7% from aloss of SEK 86 million for the year ended February 28, 2003 to a lossof SEK 92 million for the year ended February 29, 2004.

Operating profit from express bus services increasedby SEK 9 million, or 36%, to an operating profit of SEK 34 millionfor the year ended February 29, 2004 compared to a profit of SEK25 million the year ended February 28, 2003. During the year ended February 29,2004, revenues have increased more than costs have increased compared to theyear ended February 28, 2003. A consistent marketing approach, mainly withan improved homepage on the Internet has had a major impact on the revenuedevelopment. The number of passengers with Swebus Express was 3.0 millionduring the year ended February 29, 2004 compared to 2.7 million inthe prior year.

Operating profit from coach hire services decreased bySEK 2 million, or 40% from SEK 5 million for the year ended February 28,2003, to SEK 3 million for the year ended February 29, 2004.

The increased operating loss from bus operations forlocal public transportation authorities was largely caused by the provisionsfor losses on contracts, which to some extent have been offset by recovery ofrevenues due to indexation adjustments.

The decreased profit from coach hire services ismainly due to a slow down in the Swedish economy. This, in combination with thefact that SJ (the largest Swedish train company) decided to make otherarrangements for overflow traffic, has led to decreased volume. The impact fromdecreased volumes has been offset by reductions in operating costs, mainly inreduced subcontracting and wages.

Head office costs andother items decreased by SEK 14 million, or 21% from SEK 67 millionfor the year ended February 28, 2003, to SEK 53 million for the yearended February 29, 2004 due largely to termination compensation paymentsof SEK 7 million included in the year ended February 28, 2003.

***Financial Income and Expenses***

Financial income andexpenses includes interest income from cash and cash equivalents and interestexpense from loans received by investors and affiliated companies and otherfinancial indebtedness. Financial expenses increased by SEK 36 million, or31% from a financial expense of SEK 115 million for the year ended February 28,2003 to SEK 151 million for the year ended February 29, 2004. Theincrease can be partly explained by an increase of depreciation of deferredfinancing costs by SEK 23 million due to the write off costs related tosenior debt and the refinancing of syndicated loans with secured senior notesat 9.125%. The refinancing resulted both in higher effective interest rates andincreased total debt. Our foreign exchange losses for the year ended February 29,2004 were also SEK 11 million higher compared to the year ended February 28,2003.

***Taxes***

No income taxes were paid during the years ended February 28,2003 and February 29, 2004. The statutory rate of taxation in Sweden is28%. However, the company recorded income tax benefits of SEK 83 millionfor the year ended February 29, 2004, reflecting an effective tax rate of32%, compared to income tax benefits of SEK 49 million for the year ended February 28,2003, reflecting an effective tax rate of 21%.

43

----

The effective tax rate of 32% for the year ended February 29,2004 differed from the statutory rate of 28% due to the fact that goodwillamortization was not tax deductible, decreasing the effective tax rate by 2%,offset by the utilization of previously unrecognized tax loss carry forwards,increasing the effective tax rate by 6%.

The effective tax rate of21% for the year ended February 28, 2003 differed from the statutory rateof 28% due to the fact that goodwill amortization was not tax deductible, decreasingthe effective tax rate by 2%, in addition to the fact that valuation allowanceswere recorded against deferred tax assets, decreasing the effective rate by 5%.

**Market Risk**

We currently have no hedges in place for diesel fuelcosts for the period from March 1, 2005, to February 28, 2006. Howeversome protection is provided through the diesel fuel price indexation provisionsin many of our contracts, covering approximately 55% of our projected dieselfuel costs in fiscal year 2006. See “—Quantitative and Qualitative DisclosureAbout Market Risk—Fuel Prices.”

As of the date hereof, SEK 1,176 million of ourloans were denominated in euros. See“—Quantitative and Qualitative Disclosures About Market Risk—Interest Rates”and “—Foreign Exchange.”

Many of our contracts are with local public transportauthorities which rely on government subsidies for funding. Many Europeancountries have sought to reduce subsidies in recent years. Should Sweden,Norway or Finland more aggressively seek to reduce subsidies, fees from localpublic transportation authorities contracts may decrease, and local publictransportation authorities could seek to renegotiate the scope of existingcontracts. A decision to reduce subsidies could have an adverse effect onpotential fees under local public transportation authorities contracts.

Inflation had no materialimpact on our operations during the year ended February 28, 2005. However,due to the nature of our contractual business where cost increases arecompensated through movements in agreed indices (elements of total inflation)we are currently subject to under compensation due to a mismatch between ourindustry costs and our relative level of compensation from the indices whichthe local transportation authorities use to compensate us.

**B.**   Liquidity andCapital Resources

Historically, our liquidity requirements ariseprimarily from our need to fund lease payments, purchase buses, service our andBus’ debt obligations, fund our working capital requirements and expand ourbusiness.

For the next twelve months, beginning March 1,2005, our expected funds needed for lease payments (financial and operational)amount to SEK 418 million, for bus purchases SEK 33 million and for interestpayments on our own debt of SEK 108 million. Furthermore, both Bus andHolding, our parent companies, have significant cash requirements in order toservice their own indebtedness, including, for example, Bus’ intended futureborrowing of approximately €45,000,000 under theMezzanine Facility and Holding’s recent borrowing of €25,000,000.See “—Holding and Bus’ Debt” below for a discussion of their borrowings. Theadditional borrowing will require additional cash in order to service theinterest payments on these facilities. The Company expects that its workingcapital requirements during the 2006 fiscal year will not be materiallysignificant. However, our short-term liquidity requirements can fluctuate by upto SEK 200 million from month-to-month. We have historically relied upon cashgenerated from operations and capital contributions from our parent Holding. Aswe are a holding company, our principal asset is our investment in oursubsidiaries. We conduct no business or operations except through direct andindirect subsidiaries.

44

----

Following the issuance ofthe Senior Notes in January 2004, our indebtedness and debt serviceobligations increased significantly. Absent a restructuring of the ParentNotes, we do not believe our working capital is sufficient for our presentrequirements. For information about our proposed restructuring, see thesub-heading “Going Concern Matters” in the section “Operating and FinancialReview and Prospects.”

***Historical Cash Flow***

*Net cash flowsprovided by/used in operations*

Net cash flows from operating activities was negativeSEK 98 million for the year ended February 28, 2005, compared to positivecash flow from operating activities of SEK 24 million for the year ended February 29,2004. The difference was mainly due to higher fuel prices in operations of SEK33 million, payment of SEK 15 million in restructuring fees in the last quarter.We also had a retroactive compensation adjustment from the Stockholm CPTA in May 2003of SEK 28 million as a result of a law requiring more frequent breaks fordrivers, which had a positive impact on the year ended February 29, 2004.

Net cash flows fromoperating activities increased to SEK 24 million for the year ended February 29,2004 compared with negative SEK 66 million for the year ended February 28,2003.

*Net cash flowsprovided by/used in investing activities*

Net cash flows from investing activities was negativeSEK 63 million for the year ended February 28, 2005, compared withnegative SEK 11 million for the year ended February 29, 2004. Investmentsin tangible fixed assets were SEK 112 million for the year ended February 28,2005, compared to SEK 32 million for the year ended February 29, 2004. Ofthe total capital expenditure SEK 29 million was attributable to purchase ofused buses in relation to a new tender in Hedmark, which started in April 2004,SEK 23 million relate to purchase of used buses for the Skaraborg region, andSEK 13 million are attributable to buses we have purchased and sold during theyear. SEK 11 million was attributable to purchase of buses within a newbusiness in Interbus. The remaining capital expenditure was for purchase ofequipment in Sweden and Norway. During the year ended February 28, 2005 wesold buses for SEK 44 million, of which SEK 13 million were purchased and soldduring the same year. We have also sold apartments in Finland for SEK 10million.

Net cash flows frominvesting activities increased to negative SEK 11 for the year ended February 29,2004 compared with negative SEK 136 million for the year ended February 28,2003. Investments in tangible fixed assets were SEK 32 million for the 2004financial year, compared to SEK 216 million for the 2003 financial year. Thehigh capital expenditures in the 2003 financial year are primarily due to a SEK151 million investment in buses for the new Stockholm contracts during thefirst quarter of that financial year. During the financial year ended February 29,2004, asset sales proceeds of SEK 21 million were generated from the sale ofused buses.

*Net cash flowsprovided by/used in financing activities*

Net cash flows from financing activities decreased tonegative SEK 8 million for the year ended February 28, 2005 from SEK 152million for the year ended February 29, 2004. This decrease was primarilythe result of receiving the proceeds of the Senior Notes in the 2004 financialyear, net of repaying the senior bank facilities. Except for paying costsincurred in connection with the refinancing, the net proceeds were used toinvest in additional buses in fiscal year 2005.

45

----

Net cash flows fromfinancing activities increased to SEK 152 million for the financial year ended February 29,2004 from negative SEK 95 million for the year ended February 28, 2003. Thisincrease was primarily the result of receiving the proceeds of the Senior Notesdiscussed above.

***Debt***

As of February 28, 2005 we had total netindebtedness, as defined in footnote 21 of the financial statement, of SEK1,021 million after the deduction of cash balance of SEK 175 million. Theinterest expense for the three months ended February 28, 2005 was SEK 29million.

The outstanding amount of the Senior Notes as of February 28,2005 was €130 million (SEK 1,176 million). The SeniorNotes will mature on August 1, 2009 and carry a fixed interest rate of9.125% per annum, including SEK 1,176 million in notes payable, andSEK 20 million in financing lease obligation.

The indenture under which the Senior Notes were issuedrestrict, and in some cases prohibit, among other things, our and oursubsidiaries’ ability to incur additional debt, make prepayments of certaindebt, pay dividends, make investments, engage in transactions with affiliates,issue capital stock, create liens, sell assets, significantly alter the focusand structure of their business and engage in mergers and consolidations. Certainof these limitations could impair our operations and limit our ability toimplement certain of our strategies. Concordia and its subsidiaries may not incuradditional debt, except in certain limited circumstances, unless it meets acoverage ratio test that has not been met by the Concordia group for severalyears. Continued inability to meet this test inhibits our ability to acquirefunding, which may limit our ability to take advantage of possibleopportunities. Concordia and its subsidiaries may not prepay or retireindebtedness, except in certain limited circumstances, which could inhibit ourability to take advantage of changes in market interest rates or otherfavorable market conditions. Other covenants narrow the scope of investmentsConcordia and its subsidiaries may make, which could inhibit our ability topursue possible opportunities. Concordia and its subsidiaries also face certainrestrictions on their ability to create liens on or sell its assets, furtherlimiting access to possible funding sources. Concordia and its subsidiaries maynot significantly alter the focus and structure of its business, which couldlimit our ability to diversify our lines of business. Lastly, failure to complywith these covenants could result in a default under the Senior Notes, which inturn could result in an event of default under our other indebtedness, or anevent of default under the indebtedness of Bus.

We have entered into interest and foreign exchangehedging arrangements in accordance with the terms of its hedge policy. See thesub-heading “Foreign Exchange” in the section “Quantitative and QualitativeDisclosure about Market Risk.”

We have applied our hedgesfor SEK interest rates towards exposure on the operating lease debt. Weestimate approximately 6% of the operating lease exposure is covered by ourinterest caps and swaps.

***Leases***

We have entered into operating lease agreements coveringa portion of our bus fleet. As of February 28, 2005, 1,470 of our 3,730buses were under operating lease arrangements. The net present value ofoutstanding obligations for buses as of February 28, 2005, was SEK 829million (the net present value of our outstanding obligations under leasesrelating to real estate as of February 28, 2005, was SEK 46 million).

The large majority of lease terms for buses includeresidual value guarantees from the bus manufacturer, whereby we retain an optionto return the buses to the manufacturer without cost to us. The number of busesthat can be returned under these agreements is subject to limitation.

The structure of the lease contract is such that atthe inception of a new lease contract, the leasing fee is established based onthe purchase price paid by the lessor and the residual value agreed with the 

46

----

manufacturer for theperiod of the lease. At the end of each leasing contract period each leasingcontract can be renewed or terminated. The lease payments for the secondleasing period are always at terms based on the fair value at the date of theextension which are lower than the payments during the initial term. If we aresuccessful in renewing or extending a local public transportation authority contract,our leasing contract can be renewed at terms based on the fair value at thedate of the extension. This is likely to result in lease payments which aresubstantially lower than the payments during the initial term.

In a situation where we are not able to payoutstanding lease fees, the lessor has the right to retain the buses at ourexpense and also obtain additional compensation based on the outstandingleasing fees at the time when the non-payment situation occurred. Further, inthe event of an acceleration under the Senior Notes following a default, all orpart of the leasing contracts covering a significant portion of our leases maybe terminated at the option of the lessor. This could have a material adverseeffect on our business.

We have applied our hedgesfor SEK interest rates towards exposure on the operating lease debt. Weestimate approximately 6% of the operating lease exposure is covered by ourinterest caps and swaps.

***Holding and Bus’ Debt***

Our liquidity requirementsalso include the requirement that we service Holding and Bus’ indebtedness. Busdid not pay its last interest payment on the Parent Notes and if the proposedrestructuring is successfully completed almost all of the Parent Notes will beconverted into equity in Bus. However, in connection with the restructuring,Holding has incurred €25,000,000 of indebtednessand if the restructuring is successfully completed Bus intends to incur €45,00,000of indebtedness under the Mezzanine Facility. Although part of the MezzanineFacility will be used to repay the €25,000,000 borrowed byHolding, until that repayment we expect to be required by Holding to distributeto it sufficient funds to enable it to service that debt and after therestructuring Bus will require us to distribute sufficient funds to it servicethe Mezzanine Facility. We estimate that we will have to distribute €857thousand to Holding to service its debt under its €25,000,000 borrowingbefore it is repaid, and after that we expect to distribute  €6.8 million indirectly toBus in twelve months following the first draw down on the Mezzanine Facility toenable Bus to service its debt under the Mezzanine Facility.

**C.   Researchand Development, Patents, Licences, etc.**

Not applicable.

**D.   Trend Information**

During the year ended February 28, 2005, we havesubmitted tenders for 1,027 out of the 1,442 buses that were open forcompetitive tenders, which included contracts for routes where we alreadyoperated 421 buses. We have retained 78 buses out of the 421 buses we operatedand won 143 from our competitors. Lost Units include our Oslo contract, whichwas for 65 buses,  Helsinborg contract,which was for 52 buses and several small contracts in Southern Sweden amountingto 79 buses. In addition we won a total of 143 units from our competitors.

We anticipate tenders for approximately 2,043 busesduring the financial year ending February 28, 2006, of these buses weoperate 369 buses in Sweden, 60 buses in Norway and 68 buses in Finland.

We believe that the favorable pricing environment inSweden in urban city areas and moderate price increases in Finland willcontinue in the next fiscal year. Pricing development in Norway is stillirrational with some contracts still being tendered at uneconomical prices.

During the year ended February 29, 2004, wesubmitted tenders for 1,346 buses out of the 1,999 buses that were open forcompetitive tenders, which included contracts for routes where we alreadyoperated 573 buses. Of these 1,346 units results for 1,318 units have beenannounced. We retained 203 buses out of the 

47

----

573 buses we operated. Lostunits include our Gothenburg contract, which was for 140 buses. In addition, wewon a total of 354 units from our competitors. We currently await results on afurther 28 units, of which Concordia operates 16 units. We currently await theresults of a tender relating to 70 buses, of which we operate 62 buses. Thisoutstanding tender relates to Karlstad in Sweden, where we have lodged acomplaint against the CPTA for unfair practice as our bid was lower bySEK 1 million compared to the announced winner. The court hastemporarily suspended the CPTA’s award of the contract to the announced winnerpending its determination of the merits of our complaint and we await outcomeof the proceedings. We have prolonged our contracts on Karlstad for one yearfollowing a recent court decision upholding our complaint.

Pricing on contracts won was higher by 27%. Our biggestloss was our contracts in Gothenburg, totaling 140 buses, due to highlycompetitive pricing by one of our competitors. We believe that the resultingimpact of these gains by the new operator will not harm our competitiveposition as the Gothenburg contracts were won by a company located inGothenburg and are owned by the CPTA that we believe has no intention ofexpanding its business beyond the city of Gothenburg.

We have finalized contractual agreements with ourunions for fiscal 2005, which will lead to an effective pay increase of 2.26%. Inaddition, effective January 1, 2003, our pension costs have increased by2%. It is not clear at the present time whether the indexation on our CPTAcontracts will fully compensate us for these cost increases.

We believe that thefavorable pricing environment in Sweden in urban city areas and moderate priceincreases in Finland will continue in the next fiscal year.

**E.   Off-balance Sheet Arrangements**

Concordia does not haveany off-balance sheet arrangements (as defined in the rules to this Item5.E.) which have or are reasonably likely to have a current or future negativeeffect on Concordia’s financial condition, changes in financial condition,revenues or expenses, results of operations, liquidity, capital expenditures,or capital resources that is material to investors.

**F.   TabularDisclosure of Contractual Obligations**

Thefollowing table summarizes our contractual obligations and the expectedsettlement dates for the different obligations as of February 28, 2005:
| ** **                       | ** ** | **Payments due by period:** | ** ** |
|----------------------------------|------------|--------------------------------------------|------------|
| ** **                       | ** ** | **Total**                                  | ** ** | **less than 1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **after 5 years** | ** ** |
| ** **                       | ** ** | **(in millions of SEK)**    | ** ** |
| **Contractual  obligations:**    |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term  debt(a)(c)            |       | 1,176                                      |       |   | — |   |   |   | — |   |   |   | — |   |   |   | 1,176 |   |   |
| Debt to  affiliated companies(b) |       | 292                                        |       |   | 292 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Operating leases                 |       | 1,935                                      |       |   | 393 |   |   |   | 608 |   |   |   | 440 |   |   |   | 494 |   |   |
| Interest on notes                |       | 491                                        |       |   | 109 |   |   |   | 218 |   |   |   | 164 |   |   |   | — |   |   |
| Financial leases                 |       | 20                                         |       |   | 8 |   |   |   | 8 |   |   |   | 3 |   |   |   | 1 |   |   |
| Total contractual  obligations   |       | 3,904                                      |       |   | 802 |   |   |   | 834 |   |   |   | 607 |   |   |   | 1,671 |   |   |

----

(a)           This amount representsthe Senior Notes (€130 million)translated into SEK at the rate of €1.00 = SEK 9.0475, therate published by the Swedish central bank for February 28, 2005. The debtbears interest at an annual rate of 9.125%.

(b)          Represents theSubordinated Shareholder Loan of SEK 501 million due to our parent Holdingnet of repayments made where there are no contractual requirements to repay thedebt at a specified date. 

48

----

Our parent companies,holding companies without any cash of their own, have obligations to payinterest on the Mezzanine Facility at a variable rate.

(c)           Asdescribed in “Management’s Discussion and Analysis of Financial Condition andResults of Operations—Going Concern Matters,” violations of related debtcovenants could cause the entire amount of debt to become due and payable inany period earlier than shown in this table.

**Item6.   *Directors, Senior Management and Employees***

**A.   Directors and Senior Management**

**Board of Directors**

Under the Swedish Companies Act of 1975, our Board ofDirectors has ultimate responsibility for our organization and the managementof our affairs. Our Articles of Association provide for a Board of Directorselected by our shareholders of not fewer than four nor more than ten directors.Under Swedish law, the chief executive officer of a company and at least halfof the members of the Board of Directors must be resident in an European EconomicArea country unless the Swedish government or an authority appointed by theSwedish government grants an exemption. In a public limited liability company,like Concordia, the chief executive officer may not also serve as the Chairmanof the Board of Directors. Concordia Bus BV, a company incorporated under thelaws of the Netherlands, is not subject to this limitation under Swedish law.

Informationconcerning the Directors of Concordia is set forth below.
| **Name**            | ** ** | ** ** | ** ** | **Age** | ** ** | **Position**                    | ** ** |
|---------------------|------------|------------|------------|---------|------------|---------------------------------|------------|
| Chris Hughes        |       |       | 56         |    |       | Director and Chairman |       |
| Ragnar Norbäck |       |       | 49         |    |       | Director                        |       |
| Antonio Alvarez     |       |       | 39         |    |       | Director                        |       |

 

*Chris Hughes*was appointed a director of Nordic on 8 June 2005.He is a partner in the firm Kroll Talbot Hughes. He qualified as a CharteredAccountant in 1973, with the United Kingdom practice of Coopers and Lybrand,becoming a partner in that firm (subsequently PricewaterhouseCoopers) in 1982,leaving that firm in 2000 to form his own firm/practice which has since beenacquired by the Kroll Group. He holds a Master of Arts degree from CambridgeUniversity.

*Ragnar Norbäck* was appointed Chief ExecutiveOfficer of Concordia Bus and director of Concordia on June 30, 2004. Heinitially joined Concordia Bus’s senior management as Chief Operating Officerin February 2004. His most recent position was with American Express asHead of Corporate Travel Nordic and Country Manager Nordic, a position he hadheld since October 2000. From 1990 to 1996, he was COO of Linjebuss. Hethen joined Volvo Aero as a Business Area Manager from 1996 through 1999. Heholds a Master of Science Degree from Chalmers University.

*Antiono Alvare*z was appointed a director ofCondordia on July 22, 2005. He is also a Managing Director at Alvarez &Marsal Europe Limited, has built and led the A&M Europe practice since2001. Mr. Alvarez received his B.A. from the University of Notre Dame andan MBA from Cornell University.

The Shareholders Agreement between SchØyen Group, Bus Holdings andother parties (discussed in the section “Principal Shareholders and RelatedParty Transactions”) provides that specified significant business decisions byConcordia Bus BV or its subsidiaries, including Concordia, such as mergers,substantial changes to its business activities and incurrence of indebtedness,require that at least one supervisory board member nominated by both SchØyen Group and Bus Holdingsapprove the transaction. The supervisory board of Concordia Bus BV is comprisedof five members:  two elected by SG, twoelected 

49

----

by Bus Holdings, and oneindependent member nominated by Bus Holdings and acceptable to SchØyen Group.

The address of the members of our Board of Directorsis Solna Strandväg 78, SE 171 54, Solna, Sweden.

**Senior Management**

Day today management of Concordia has been delegated by Concordia Bus BV under theshareholders’ agreement between SchØyen Group, Bus Holdings and otherparties (discussed in the section “Principal Shareholders and Related PartyTransactions”) to Concordia Bus BV’s management board, which is comprised ofthe following persons:
| **Name**            | ** ** | ** ** | ** ** | **Age**                           | ** ** | **Position** | ** ** | **Year First Employed** |
|---------------------|------------|------------|------------|-----------------------------------|------------|--------------|------------|-----------------------------------|
| Ragnar Norbäck |       | 49         |       | Chief Executive Officer |       | 2004         |
| Per Skargard        |       | 48         |       | Chief Financial Officer |       | 2004         |

 

*Ragnar Norbäck* is both Chief Executive Officer anda director. You should read the information under the heading “Board ofDirectors” for information regarding Mr. Norbäck.

*Per Skargard* joined Concordia’s ExecutiveManagement team as Chief Financial Officer in November 2004. His recentposition was at DHL/Danzas/ASG Nordic as CFO since 2001. Per has a Bachelor ofBusiness Administration and has practice CFO and Finance Director intransportation, telecom and retail business.

*Ragnar Norbäck* was appointed Chief ExecutiveOfficer of Concordia Bus and director of Concordia on June 30, 2004. Heinitially joined Concordia Bus’s  seniormanagement as Chief Operating Officer in February 2004. His most recentposition was with American Express as Head of Corporate Travel Nordic andCountry Manager Nordic, a position he had held since October 2000. From1990 to 1996, he was COO of Linjebuss. He then joined Volvo Aero as a BusinessArea Manager from 1996 through 1999. He holds a Master of Science Degree fromChalmers University.

The following are membersof our senior management that are not members of Concordia Bus BV’s managementboard:
| **Name**    | ** ** | ** ** | ** ** | **Age**                                      | ** ** | **Position** | ** ** | **Year First Employed** |
|-------------|------------|------------|------------|----------------------------------------------|------------|--------------|------------|-----------------------------------|
| Jan Bosaeus |       | 45         |       | Managing Director (Swebus AB) |       | 2002         |

 

*JanBosaeus* is the Managing Director of Swebus AB. He has beenthe Managing Director of Swebus since mid October 2002. From May 2002he worked as Director of Asset Management in Swebus. From 1999 to 2002 he wasin the senior management team of Kalmar LMV Sweden AB, with responsibility forafter sales. He received a Business Degree from IHM Business School in 1997.
| **Name**           | ** ** | ** ** | ** ** | **Age**                                                   | ** ** | **Position** | ** ** | **Year First Employed** |
|--------------------|------------|------------|------------|-----------------------------------------------------------|------------|--------------|------------|-----------------------------------|
| Stefan Carlén |       | 48         |       | Managing Director (Swebus Express AB) |       | 1983         |

 

*Stefan Carlén* is the Managing Director of Swebus Express AB. Stefan hasextensive experience within the bus industry. He joined SJ Buss in 1983 and hasheld different positions both within SJ Buss and Swebus. In 1999 Stefan becamedirector of Express Division in Swebus.
| **Name**         | ** ** | ** ** | ** ** | **Age**                                        | ** ** | **Position** | ** ** | **Year First Employed** |
|------------------|------------|------------|------------|------------------------------------------------|------------|--------------|------------|-----------------------------------|
| Per-Erik Ericson |       | 59         |       | Managing Director (Interbus AB) |       | 1975         |

 

50

----

*Per-ErikEricson* is the Managing Director of Interbus AB. Per-Erikjoined Interbus in 1975 and has been Managing Director since 1983. He has 31years of bus industry experience.
| **Name** | ** ** | ** ** | ** ** | **Age**                                                       | ** ** | **Position** | ** ** | **Year First Employed** |
|----------|------------|------------|------------|---------------------------------------------------------------|------------|--------------|------------|-----------------------------------|
| Tom Ward |       | 49         |       | Managing Director (Concordia Bus Finland) |       | 2004         |

 

*Tom Ward* is the ManagingDirector of Concordia Bus Finland. He has been the Managing Director since December 2004.Mr. Ward has a long career in transportation industry. He previouslyworked as a Director of a profit centre in Oy Scan-Auto Ab.

The senior management ofSBC is composed of the following person:
| **Name**     | ** ** | ** ** | ** ** | **Age**                           | ** ** | **Position** | ** ** | **Year First Employed** |
|--------------|------------|------------|------------|-----------------------------------|------------|--------------|------------|-----------------------------------|
| Sjur Brenden |       | 44         |       | Managing Director (SBC) |       | 2001         |

 

*Sjur Brenden*received an MBA in 1989 in Sundsvall, Sweden. He became the Managing Directorof SBC in 2001, prior to which he was Managing Director of Sporveisbussene AS. From1989 to 1997, Mr. Brenden held different management positions in LinjebussSverige AB in Sweden.

The address of the membersof our senior management is c/o Concordia Bus Nordic AB, Solna Strandväg 78, SE171 54, Solna, Sweden.

**B.   Compensation**

During the year ended February 28, 2005, ourboard of directors received from us an aggregate remuneration of approximatelySEK 0.8 million. During the year ended February 28, 2005, members ofour senior management received from us an aggregate remuneration ofapproximately SEK 8.9 million.

In addition, our directors and senior management mayreceive options under Concordia Bus BV’s share option plan. This option planprovides that the management board of Concordia Bus BV may grant share optionsto officers, directors or employees of any of Concordia Bus BV or itssubsidiaries, including Concordia, at market value on their date of issuerelating to up to 2.5% of the issued ordinary share capital of Concordia Bus BV.No options have been granted to directors or senior management under the optionplan.

We have a bonus plan forour senior executives based on achieving annual objectives, and established bythe Board of Directors. This bonus can be worth up to 100% of the executive’sbase salary.

**C.   Board Practices**

Our directors are electedfor a period of one year, with the possibility for re-election each year at theannual general shareholders meeting. There are no benefits upon termination ofemployment. Our ultimate parent company, Concordia Bus BV has a SupervisoryBoard comprised of two members elected by SchØyen Group and two members elected by BusHoldings, with a chairman chosen as a fifth member by Bus Holdings and acceptedby SchØyen Group. ThisSupervisory Board sets the yearly remuneration for both the directors and themanagement of Bus. We have no formal audit committee. Our Board of Directorsreceives monthly reports from management as to financial condition and asub-group of our Board meets with management approximately every two months todiscuss the financial results. In addition, our auditors present their findingsand discuss any material audit issues with our Board of Directors at leastannually and with the Supervisory Board of Concordia Bus BV once a year aswell.

51

----

**D.   Employees**

Theaverage number of persons (including executive directors) employed by us duringeach of the last three fiscal years was:
| ** **                                 | ** ** | **Sweden** | ** ** | **Finland** | ** ** | **Norway** | ** ** |
|--------------------------------------------|------------|------------|------------|-------------|------------|------------|------------|
| For the year ended  February 28, 2003 |       |       | 5,950      |        |       |       | 759        |   |   |   | 775 |   |   |
| For the year ended  February 29, 2004 |       |       | 6,182      |        |       |       | 750        |   |   |   | 580 |   |   |
| For the year ended February 28, 2005  |       |       | 5,572      |        |       |       | 766        |   |   |   | 611 |   |   |

 

There was a significantdecrease in the number of our employees in Sweden for the 2005 financial year. Oneof the reasons for this decrease was the reduction in number of employees as aresult of the loss of the Gothenburg contract serving approximately 140 busesin 2004.

Concordia considers itsrelations with its employees and unions to be good.

**E.   ShareOwnership**

No member of the Board ofDirectors or of Management beneficially owns at least one percent of theordinary shares. See “Compensation” above, for a discussion of the share optionplan available to our directors and senior management.

**Item 7.   *Major Shareholders and Related Party Transactions***

**A.     Major Shareholders**

Concordia Bus BV, acompany organized under the laws of The Netherlands, owns 100% of the sharecapital of Concordia Bus Holding AB, which owns 100% of the share capital ofBus, which owns 100% of the share capital of Holding, which owns 100% of theshare capital of Concordia. Through its ownership of Concordia Bus Holding AB,Bus and Holding, Concordia Bus BV indirectly controls Concordia.

As of August 26,2005, the issued ordinary shares of Concordia Bus BV are owned approximately51.00% by Bus Holdings, an affiliate of Goldman Sachs International, 47.15% bythe Sch&qout;yen Group, and 1.85% by members of management and others.

If the proposedrestructuring of Bus is successfully completed pursuant to the terms andconditions of the Restructuring Agreement, Goldman Sachs International and Sch&qout;yen Group will ownindirectly no more than 2.5% of Concordia. 97.5% of Bus will become owned byholders of Bus’ Parent Notes, subject to a management incentive plan.

**Subscriptionand Shareholders’ Agreement**

If the proposedrestructuring of Bus is successfully completed pursuant to the terms andconditions of the Restructuring Agreement, Goldman Sachs International andSch&qout;yen Group will own indirectly no more than 2.5% of Concordia. 97.5% of Buswill become owned by holders of Bus’ Parent Notes, subject to a managementincentive plan.

Sch&qout;yen Group, Bus Holdings and other parties haveentered into a subscription and shareholders’ agreement as the shareholders ofConcordia Bus BV. The shareholders’ agreement provides, among other things,that the supervisory board of Concordia Bus BV, which is ultimately responsiblefor management of its affairs, be comprised of five members:  two elected by Sch&qout;yen Group, two elected byBus Holdings, and one independent member nominated by Bus Holdings andacceptable to Sch&qout;yen Group. Specified significant business decisions byConcordia Bus BV or its subsidiaries, including Concordia, such as mergers, anychanges to the share capital or the grant of options, any incurrence of (otherthan inter company indebtedness incurred on an arms length basis) changes to orrepayment of indebtedness in excess of a material amount or giving of aguarantee in respect of indebtedness, the approval of or changes 

52

----

to anannual budget or approval of any significant expenditure which has not beenprovided for in such annual budget, changing the terms of employment orremuneration of senior executives, management or officers, adopting any materialemployee benefit or compensation plan or collective bargaining agreement,entrance into any material joint venture, partnership or strategic alliance orsubscribing for equity capital in any person, changing the constitutionaldocuments of any subsidiary, removing auditors or materially changing theirarrangement, purchasing, leasing, acquiring or disposing of any materialamounts of securities or assets, making distributions to shareholders,commencing proceedings for bankruptcy, effecting a dissolution of Concordia BusBV or its subsidiaries, disposal of all or substantially all of its assets,engaging in related party transactions, commencement, termination or settlementof any material litigation, approval of any transfer of any shares of ConcordiaBus BV by its shareholders, substantial changes to its business activities orentering into any contract, agreement, arrangement or commitment to do any ofthe foregoing require that at least one supervisory board member nominated bySch&qout;yen Group and one supervisory board member nominated by Bus Holdingsapprove the transaction. Day to day management of Concordia Bus BV and itssubsidiaries has been delegated to a management board comprised of five memberswho are jointly appointed by Sch&qout;yen Group and Bus Holdings. The members ofthis management board are members of senior management of Concordia. Forfurther information about management see “Management—Senior Management.”  The shareholders’ agreement also provides forspecified transfer restrictions, rights of first offer, tag-along rights andbring along rights, and provisions regarding change of control. If specifiedconditions are met, the tag-along rights require a proposing shareholder toallow other shareholders to dispose of their shares under the same terms andconditions as the proposing shareholder and the bring along rights requireother shareholders to dispose of their shares under the same terms andconditions as the selling shareholder.

The current supervisoryboard members are:  Harald Arnkvaern,Richard Sharp, Robert George Doumar Jr. and Colin Longhurst. Previously therewas a fifth member, Bjorn Wolrath, who resigned on October 24, 2001. HaraldArnkvaern and Bjorn Wolrath were nominated by Sch&qout;yen Gruppen A.S., RichardSharp and Robert George Doumar Jr. were nominated by Bus Holding S.a.r.l. andColin Longhurst was nominated by both.

In conjunction with theshareholders’ agreement, Sch&qout;yen Group and Bus Holdings caused Concordia Bus BVto create a share option plan and enter into a management services agreementwith Concordia Bus Management AS, a wholly owned subsidiary of Concordia BusBV, and caused Concordia Bus Management AS to enter into service agreementswith members of Concordia Bus BV’s management board who are members of seniormanagement of Concordia. For further information about these agreements and theoptions plan see “—Related Party Transactions,” below.

**B.     Related Party Transactions**

Two of the supervisoryboard members of Concordia Bus BV, the ultimate parent company of Holding, areappointed by Sch&qout;yen Gruppen A/S and two are appointed by Bus Holdings S.A.R.l,an affiliate of Goldman Sachs International. Each director may receivecompensation for services in that capacity. Erik Linnarsson is a partner atAdvokatfirman Lindahl HB, which acts as legal counsel to Concordia and is adirector of certain of Concordia’s operating subsidiaries.

Under a lease arrangementbetween Sch&qout;yen Group and Ingeni&qout;r M.O. Sch&qout;yens Bilcentraler A/S, Sch&qout;yenGroup has leased depots and other real property to SBC AB, a subsidiary ofConcordia, for a period of ten years ending in 2009. The rentals paid were SEK14 million, SEK 13 million, and SEK 15 million for the yearsended February 28, 2005, February 29, 2004, and February 28,2003, respectively.

Concordia Bus ManagementA/S, an affiliated company 100% owned by Concordia Bus BV, has providedmanagement services to Concordia and its subsidiaries. A management fee hasbeen charged to Concordia and their subsidiaries for these services amountingto SEK 11 million, SEK 15 million, and SEK 23 million foryears ended February 28, 2005, February 29, 2004, and February 28,2003, respectively.

53

----

Within the Concordia BusBV group external debt has been issued by Holding and its direct parent, Bus. Suchexternal debts are partly used to finance operations within the group. Holdinghas a net current liability to affiliated companies amounting to SEK292 million on February 28, 2005. Interest has been paid amounting toSEK 32 million, SEK 24 million and SEK 27 million for the years endedFebruary 28, 2005, February 29, 2004, and February 28, 2003,respectively from Holding to companies within the Concordia Bus BV group.

On February 28, 2005we have made a valuation allowance of an aggregate of SEK 33,000,000 for loansthat Concordia Bus BV and Concordia Bus Management AS owed to Concordia. Thereceivables still exist and action will be taken to get them collected, howevergiven the ongoing restructuring process and the financial status of these twocompanies, Concordia has chosen a prudent view when determining collectability.

For a description of theSubordinated Shareholder Loan, see “Description of Other MaterialIndebtedness—Subordinated Shareholder Loan from Concordia Bus AB.”

As noted in “Informationon the Company—History and Development of the Company”, on July 22, 2005we entered into the Restructuring Agreement with affiliates of our ultimateshareholders, Goldman Sachs International and Sch&qout;yen Gruppen AS, our parentcompanies Holding and Bus, and holders of Bus’ Parent Notes. If therestructuring is successfully completed holders of Parent Notes who consent tothe restructuring will become our ultimate shareholders. Goldman SachsInternational and Sch&qout;yen Gruppen AS will retain a 2.5% indirect ownership of Concordia,subject to a management incentive plan. Furthermore, we agreed to pay GoldmanSachs International and Sch&qout;yen Gruppen AS a total of €1,500,000 once therestructuring is completed in connection with unwinding the Concordia group ofcompanies’ current corporate structure.

Since the beginning of the2005 fiscal year we paid Sch&qout;yen Gruppen AS a total of NOK 1,005 thousand tosettle certain loans in connection with the termination of certain keyemployees. Subsequent to year end these loans have been repaid.

**C.     Interests of Experts and Counsel**

Not applicable.

**Item8.   *Financial Information***

**A.     Consolidated Statements and Other FinancialInformation**

See Item 17.

**Legal Proceedings**

None, except as set forthunder subheading “B. Business Overview—Sweden—Legal Proceedings” under “Item 4.Information on the Company.”

**DividendDistribution Policy**

Not applicable.

**B.     Significant Changes**

None.

**Item 9.   *The Offer and Listing***

Not applicable

54

----

**A.     Market Price Information**

Not applicable.

**B.     Markets**

Not applicable.

**Item10.   *Additional Information***

**A.     Share Capital**

Not applicable.

**B.     Memorandum and Articles of Association**

Incorporated by referencefrom the registration statement on Form F-4 filed with theCommission on August 12, 2004 by Concordia.

**C.     Material Contracts**

(a)           Amanagement services agreement, by and among, Concordia Bus Management A/S,CB Bus AB (publ)*, Ingenior M.O. Sch&qout;yens Bilcentraler A/S andConcordia Bus BV, dated January 14, 2000, for the purpose ofproviding management services to Concordia and for detailing the terms of theservice contracts, including the provision of a share option plan for thegranting of options to officers and directors of Concordia Bus BV and itssubsidiaries relating to 2.5% of the issued ordinary share capital of ConcordiaBus BV.

(b)          Subscriptionand Shareholders’ Agreement, dated October 27, 1999, by and amongConcordia Bus B.V., Sch&qout;yen Gruppen A/S, Bus Holdings S.a.r.l.,and Goldman Sachs International. This agreement provides, among other things,that the supervisory board of Concordia Bus BV, which is ultimatelyresponsible for management of its affairs be comprised of five members:  two elected by Sch&qout;yen Group, two elected byBus Holdings, and one independent member nominated by Bus Holdings andacceptable to Sch&qout;yen Group. Specified significant business decisions byConcordia Bus BV or its subsidiaries, including Concordia, such as mergers,substantial changes to its business activities and incurrence of indebtednessrequire that at least one supervisory board member nominated by Sch&qout;yen Groupand one supervisory board member nominated by Bus Holdings approve thetransaction. Day to day management of Concordia Bus BV and its subsidiaries hasbeen delegated to a management board comprised of five members who are jointlyappointed by Sch&qout;yen Group and Bus Holdings. The members of this managementboard are members of senior management of Concordia. In addition, Sch&qout;yen Grouphas agreed in the shareholders’ agreement that the board of directors of SBC isto be comprised of five members:  threeelected by Sch&qout;yen Group and two by Bus Holdings. Specified significantbusiness decisions of SBC require the approval of at least one of the boardmembers nominated by Bus Holdings. The shareholders’ agreement also providesfor specified transfer restrictions, rights of first offer, tag-along rightsand bring along rights, and provisions regarding change of control. Ifspecified conditions are met, the tag-along rights require a proposingshareholder to allow other shareholders to dispose of their shares under thesame terms and conditions as the proposing shareholder and the bring alongrights require other shareholders to dispose of their shares under the sameterms and conditions as the selling shareholder.

(c)           Indenture,dated January 22, 2004 between Concordia Bus Nordic AB (publ) and DeutscheBank Trust Company Americas in respect of Concordia Bus Nordic AB (publ)’s130,000,000 9.125% Senior Secured Notes due August 1, 2009 issued on January 16,2004. The net proceeds from this offering were approximately €124 millionincluding expenses incurred in connection with the offering. The 

55

----

Senior Notes mature on August 1, 2009. Intereston the Senior Notes accrues at the rate of 9.125% per annum and is payableevery six months. They rank senior to existing and future indebtedness that isexpressly subordinated in right of payment to the Senior Notes and will rank atleast *pari passu* with allexisting and future unsecured liabilities that are not so subordinated. Theywill effectively rank senior in right of payment to our unsecured liabilitieswith respect to the value of the collateral securing the Senior Notes and theguarantees securing the Senior Notes (subject to any priority rights for suchunsecured liabilities pursuant to applicable law). The guarantees rank seniorin right of payment to any existing and future indebtedness that is expresslysubordinated in right of payment to the guarantors and will be at least *pari passu* to existing and futureunsubordinated unsecured liabilities of the respective Guarantors. They willrank effectively senior in right of payment to the unsecured liabilities ofthose guarantors with respect to the value of the collateral securing theSenior Notes (subject to any priority rights for such unsecured liabilitiespursuant to applicable law). The Senior Notes are redeemable at our option inwhole or in part at any time, on and after February 1, 2007, at thefollowing redemption prices (expressed as percentages of the principal amount)if redeemed during the twelve month period commencing on February 1 of theyear set forth below, plus, in each case, accrued and unpaid interest thereonto the date of redemption:
| **Year**            | ** ** | ** ** | ** ** | **Percentage** | ** ** |
|---------------------|------------|------------|------------|----------------|------------|
| 2007                |       |       | 104.563    | %              |       |
| 2008                |       |       | 102.281    | %              |       |
| 2009 and thereafter |       |       | 100.000    | %              |       |

 

In addition, on or priorto February 1, 2007, we may on one or more occasions redeem the SeniorNotes in an aggregate principal amount not to exceed 35% of the aggregateprincipal amount of the notes originally issued with the net cash proceeds ofone or more public equity offerings (as defined in the indenture) at aredemption price of 109.125% of the principal amount thereof, plus accrued andunpaid interest and any special interest or additional amounts (as defined inthe Exchange and Registration Rights Agreement) to the redemption date;provided, however, that after any such redemption at least 65% of the aggregateprincipal amount of the Senior Notes originally issued must be outstanding andthe redemption must occur within 90 days of the date of the closing ofsuch public equity offering.

Under the indenture, inthe event of a change of control event (as defined in the indenture) eachholder of Senior Notes will have the right to require us to repurchase, inwhole or in part, such holder’s Senior Notes at a purchase price equal to101.0% of their principal amount, plus accrued and unpaid interest and anyspecial interest or additional amounts, if any, to the date of repurchase.

The indenture containscertain restrictive covenants which, among other things, impose limitations(subject to certain exceptions) on us and certain restricted subsidiary (asdefined in the indenture) with respect to, *inter alia*, thepayment of dividends or other distributions on capital, the purchase,redemption, or the acquisition or retiring for value of share capital or anywarrants, options or other rights for share capital, the incurrence, repaymentor otherwise acquisition of or retirement for value of certain indebtedness,sales of assets, sales and leasebacks by us or our subsidiaries and various mattersin respect of the conduct of our business, including the merger or sale of allor substantially all of our assets.

Upon the happening ofcertain events of default specified in the indenture, the trustee for theSenior Notes or the holders of at least 25% in principal amount of the thenoutstanding Senior Notes may declare the Senior Notes to be due and payableimmediately. Upon the happening of certain other events of default specified inthe indenture, the outstanding Senior Notes will automatically become due andpayable without any action by the trustee or the holders of the Senior Notes.

56

----

We may terminate ourobligations under the indenture except as to any surviving rights ofregistration of transfer or exchange of the Senior Notes, by (i) irrevocablydepositing with the trustee as trust funds in trust for the purpose an amountsufficient to pay and discharge the entire indebtedness as well as any specialinterest or additional amounts on such Senior Notes not previously delivered tothe trustee or any paying agent for cancellation, and which have become due andpayable, for all sums payable by us under the indenture, or to the statedmaturity or redemption date, as the case may be, together with instructionsfrom us directing the trustee to apply such funds to the payment thereof atmaturity or redemption, as the case may be, and by (ii) paying all othersums payable under the indenture and delivering to the trustees an officer’scertificate and opinion of counsel, each stating that all conditions in theindenture relating to satisfaction and discharge have been complied with andopinions from counsel with respect to certain tax matters.

On August 25, 2005, asupplemental indenture with respect to the above-described indenture wasentered into. The supplemental indenture amends certain terms and conditions ofthe indenture and removes several negative covenants.

(d)          Exchangeand Registration Rights Agreement dated January 22, 2004, betweenConcordia Bus Nordic, Goldman Sachs International, J.P. Morgan Securities, Ltd.and the Guarantors for the purpose of registering the Senior Notes with theSecurities and Exchange Commission in the United States.

(e)           SecurityTrustee Agreement, dated January 22, 2004, by and among Deutsche TrusteeCompany Limited as security trustee, Deutsche Bank Trust Company Americas astrustee and the Guarantors for the purpose of defining the rights, duties,authority and responsibilities of the security trustee with respect to thecollateral securing the Senior Notes.

(f)             Amendedand Restated Subordinated Loan Agreement, signed on February 28, 2002,replaced by agreement dated December 22, 2003 and amended and restated on January 22,2004, between Concordia Bus, as the lender, Concordia Bus Nordic and DeutscheBank Trust Company amended for the purpose of subordinating the subordinatedloan to the Senior Notes.

(g)           AgreementRelating to First Ranking Pledge of Buses, dated January 22, 2004, betweenSwebus Busco AB as pledgor and Deutsche Trustee Company Limited assecurity trustee for the purpose of securing the Senior Notes.

(h)          AgreementRelating to Second Ranking Pledge of Buses, dated January 22, 2004,between Swebus Busco AB as pledgor and Concordia Bus Nordic for thepurpose of securing the Senior Notes.

(i)             SharePledge Agreement, dated January 22, 2004, between SwebusFastigheter AB as pledgor and Deutsche Trustee Company Limited as securitytrustee regarding shares in Alpus AB, Enköping BõlstaFastighetsbolag AB and Malmfältens Omnibus AB for the purpose ofsecuring the Senior Notes.

(j)              SharePledge Agreement, dated January 22, 2004, between Holding as pledgor andDeutsche Trustee Company Limited as security trustee in respect of shares inConcordia Bus Nordic for the purpose of securing the Senior Notes.

(k)          SharePledge Agreement, dated January 22, 2004, between Concordia Bus Nordic aspledgor and Deutsche Trustee Company Limited as security trustee in respect ofshares in Swebus Express AB, Interbus AB, Swebus AB, SwebusFastigheter AB and Swebus Busco AB for the purpose of securing theSenior Notes.

(l)             SharePledge Agreement, dated January 22, 2004, between Concordia Bus Nordic aspledgor and Deutsche Trustee Company Limited as security trustee in respect ofshares in Concordia Bus Finland for the purpose of securing the Senior Notes.

57

----

(m)      FirstPriority Pledge of Shares, dated January 22, 2004, between Concordia BusNordic as pledgor and Deutsche Trustee Company Limited as security trustee inrespect of shares in SBC for the purpose of securing the Senior Notes.

(n)          PledgeAgreement, dated January 22, 2004, between Concordia Bus Finland aspledgor and Deutsche Trustee Company Limited as security trustee in respect offloating charge and bearer notes for the purpose of securing the Senior Notes.

(o)          FirstRanking Pledge of Floating Charge, dated January 22, 2004, betweenAlpus AB as pledgor and Deutsche Trustee Company Limited as securitytrustee in respect of floating charge for the purpose of securing the SeniorNotes.

(p)          FirstRanking Pledge of Floating Charge, dated January 22, 2004, betweenEnköping Bõlsta Fastighetsbolag AB as pledgor and Deutsche Trustee CompanyLimited as security trustee in respect of floating charge for the purpose ofsecuring the Senior Notes.

(q)          FirstRanking Pledge of Floating Charge, dated January 22, 2004, betweenMalmfältens Omnibus AB as pledgor and Deutsche Trustee Company Limited assecurity trustee in respect of floating charge for the purpose of securing theSenior Notes.

(r)            FirstRanking Pledge Agreement, dated January 22, 2004, between Swebus ABas pledgor and Deutsche Trustee Company Limited as security trustee in respectof floating charge for the purpose of securing the Senior Notes.

(s)            SecondPledge of Floating Charge, dated January 22, 2004, between Swebus ABas pledgor and Concordia Bus Nordic in respect of floating charge for thepurpose of securing the Senior Notes.

(t)             Pledgeof Accounts, dated January 22, 2004, between SBC as pledgor and DeutscheTrustee Company Limited as security trustee in respect of floating charge forthe purpose of securing the Senior Notes.

(u)          IntragroupLoan Pledge Agreement, dated January 22, 2004, between Concordia BusNordic as pledgor and Deutsche Trustee Company Limited as security trustee forthe purpose of securing the Senior Notes.

(v)           Declarationof Pledge of SBC of certain trade receivables, dated January 22, 2004for the purpose of securing the Senior Notes.

(w)   On July 22, 2005, Concordia entered into a purchase agreement withcertain holders of the Parent Notes (the “Offerors”). The agreement was enteredinto in connection with the restructuring agreement. It provides that theOfferors undertake to conduct a tender offer at par of all of the Senior Notesnot held by holders of Parent Notes that signed the restructuring agreement. Italso provides that the Offerors will conduct a change of control offer thatConcordia must make or have made when the restructuring is consummated. Holdersof Senior Notes that consented to the consent solicitation are not eligible toparticipate in the change of control offer. Approximately 99% of the SeniorNotes were consented to in the consent solicitation. 

(x)    On July 22, 2005, Concordia entered into a restructuringagreement with the Offerors. The agreement will require Bus to make anapplication for reorganization proceedings in the District Court in Stockholm,Sweden. The proceedings are expected to result in the face amount of all of thesubordinated notes issued by Bus being reduced from 100% to 25%, and therestructuring agreement requires holders of subordinated notes that consent tothe restructuring (the “Consenting Noteholders”) to exchange their reduced debtsecurities for ordinary shares of Bus, which will constitute, subject to theterms of a management incentive plan, 97.5% of the issued ordinary sharecapital of Bus.

----

*                    InMay 2000, CB Bus AB (publ) changed its name to ConcordiaBus AB (publ).

58

----

**D.     Exchange Controls**

There are currently noSwedish laws or regulations that restrict the import or export of capital orthe remittance of dividends or interest to non-resident holders of oursecurities.

**E.     Taxation**

The following discussionsummarizes certain Swedish and United States tax consequences of the ownershipand disposition of the Senior Notes. This discussion is based on laws currentlyin force, as interpreted and applied as of the date of this annual report. Thoselaws are subject to change after the date of this annual report, possibly withretroactive effect. This discussion does not purport to describe all of the taxconsiderations that may be relevant to you in light of your particularcircumstances. You are advised to consult with your own tax advisors as to theSwedish and United States tax consequences to you of the purchase, ownershipand disposition of the Senior Notes, including the effect of any state or localtax laws or the laws of any other country.

**Swedish Tax Considerations**

The following is asummary of certain principal Swedish income, wealth, inheritance and gift taxconsiderations for purchasers of the Senior Notes. The purpose of the summaryis to generally outline certain Swedish tax consequences to Non-Swedish Holders(defined below). This summary does not discuss all aspects of Swedish income,wealth, inheritance and gift taxation that may apply to particular investorsbecause of their individual investment circumstances. In addition, this summarydoes not discuss any foreign tax considerations. As used herein, a “Non-SwedishHolder” is a beneficial owner of a Senior Note that is:

·  anindividual who is not a resident of Sweden and who has no connection to Swedenunder Swedish law other than his or her investment in the Senior Notes; or

·  anentity not organized under the laws of Sweden.

Under Swedish law,payments of any principal or interest to a Non-Swedish Holder will not besubject to Swedish income tax unless the Non-Swedish Holder carries on a tradeor business in Sweden where the payments of principal or interest areattributable to a permanent establishment. In addition, neither the SeniorNotes nor any Non-Swedish Holder thereof will be subject to Swedish inheritanceor gift tax unless the Non-Swedish Holder:

·  atthe time of his or her death or the gift was a citizen of Sweden or was marriedto a Swedish citizen; and

·  wasa resident of Sweden at any time within ten years preceding his or her death,or the time of receipt of the gift, respectively.

Sweden does not levy any inheritance tax on the estateof a Non-Swedish Holder. No Non-Swedish Holder of the Senior Noteswill be subject to Swedish wealth tax.

Swedish law does not impose withholding tax onpayments of principal or interest to a Non-Swedish Holder of any Senior Note.

Under Swedish law, capitalgains realized on a sale of a Senior Note by a Non-Swedish Holder will not besubject to Swedish income tax unless the Non-Swedish Holder carries on a tradeor business in Sweden where the capital gains are attributable to a permanentestablishment.

59

----

**UnitedStates Federal Tax Considerations**

The following discussion is a summary of certain USfederal income tax consequences of the purchase, ownership and disposition ofthe Senior Notes by US Holders (as defined below). This summary is not acomplete analysis or description of all potential tax consequences to USHolders and does not address all tax considerations that may be relevant to allcategories of potential purchasers (such as banks, financial institutions,insurance companies, dealers in securities or commodities, tax-exemptinvestors, investors whose functional currency is not the US dollar, investorsthat hold Senior Notes as part of a “straddle” or “conversion transaction” andother investors subject to special rules).

You are urged to consult your own tax advisorsconcerning the US federal, state and local tax consequences, as well as anyapplicable foreign tax consequences, of the purchase, ownership and dispositionof the Senior Notes.

This summary is based on the Internal Revenue Code of1986, as amended, judicial decisions, administrative pronouncements, andexisting and proposed Treasury regulations, changes or differinginterpretations to any of which after the date of this annual report couldapply on a retroactive basis and affect the tax consequences described herein.

As used herein, “USHolder” is a beneficial owner of a Senior Note that (1) holds the SeniorNote as a capital asset and (2) is, for US federal income tax purposes:

·       acitizen or resident of the United States,

·       acorporation (or other entity treated as a corporation for US federal income taxpurposes) created or organized in or under the laws of the United States or anypolitical subdivision thereof,

·       anestate the income of which is subject to US federal income taxation regardlessof its source, or

·       atrust the administration of which is subject to the primary supervision of acourt within the United States and for which one or more US persons have theauthority to control all substantial decisions or that has a valid election ineffect under applicable US Treasury Regulations to be treated as a UnitedStates person.

In the case of anypartnership (or other entity treated as a partnership for US federal income taxpurposes), it will be considered a US Holder to the extent that its partnersare described above.

***Payments of Interest***

Subject to the discussion under “Amortizable BondPremium” below, payments of interest on a Senior Note will be includible in thegross income of a US Holder as ordinary income from foreign sources at the timeit is received or accrued, in accordance with the US Holder’s method ofaccounting for US federal income tax purposes, under the following rules:

In the case of a US Holder that is not required toaccrue interest income prior to the receipt thereof (for example, an individualUS Holder who uses a cash method of accounting), the amount of interest incomein respect of any interest payment will be determined by translating suchpayment into US dollars at the spot exchange rate in effect on the date suchinterest payment is received. No exchange gain or loss will be realized withrespect to the receipt of such interest payment, other than exchange gain orloss that is attributable to the actual disposition of the euros received.

In the case of a US Holderthat is required to accrue interest income prior to receipt thereof (forexample, because the US Holder uses an accrual method of accounting), theamount of any interest income accrued during any accrual period will generallybe determined by translating the accruals into US dollars at the average spotexchange rate applicable to the accrual period. Such US Holder willadditionally realize exchange gain or loss with respect to any interest incomeaccrued on the date such interest income 

60

----

isreceived (or on the date the Senior Note is disposed of) in an amount equal tothe difference between (x) the amount determined by converting the amountof the payment received into US dollars at the spot exchange rate in effect onthe date such payment is received and (y) the amount of interest incomeaccrued in respect of such payment according to the rule set forth in theprior sentence. Notwithstanding the prior two sentences, a US Holder that isrequired to accrue interest income prior to receipt thereof may alternativelymake an election to apply a “spot accrual convention” that effectively allowsthe US Holder to translate accrued interest into US dollars at a single spotexchange rate, as set forth in Treasury regulations section 1.988-2(b)(2)(iii)(B).Exchange gain or loss is treated as ordinary income or loss for US federalincome purposes.

***Amortizable Bond Premium***

A US Holder that purchased a Senior Note for an amountgreater than the Senior Note’s stated principal amount will be considered tohave purchased the Senior Note with “amortizable bond premium” equal to theexcess of the purchase price over the stated principal amount. Such US Holdermay elect to amortize such premium as an offset to payments of interest on theSenior Note, effectively reducing the amount of interest income in the hands ofsuch US Holder.

If a US Holder makes this election, the US Holder mustamortize the premium using a “constant yield method” (i.e., a fixedyield-to-maturity) to determine the amount of premium that offsets its interestincome each year. This results in the amount of deductible premium steadilygrowing over the term of the Senior Note. Because Concordia may redeem theSenior Notes under certain circumstances, an electing US Holder must amortizethe premium based on the expected term of the Senior Notes assuming thatConcordia will or will not exercise its right to redeem Senior Notes in amanner that will minimize the yield on the Senior Notes. Concordia believes,based on the additional amounts that it will have to pay in order to redeemSenior Notes under different circumstances that it is significantly more likelythan not that the Senior Notes will not be redeemed prior to their maturity. Accordingly,an electing US Holder should use the entire scheduled term of the Senior Noteas the expected term of the Senior Notes for purposes of amortizing the premium.Each time a premium reduces an electing US Holder’s taxable income, the holdermust decrease its tax basis in the Senior Note by the amount of such premium.

A US Holder makes this election by claiming adeduction (or interest offset) on its US federal income tax return for theacquisition premium for the first taxable year to which the US Holder wishesthe election to apply, and by attaching a statement to the return to the effectthat the holder is making the election under Treasury regulation section 1.171-4.Once made, the election applies to all taxable debt obligations held by the USHolder during or after the taxable year for which the election is made and maybe revoked only with the consent of the US Internal Revenue Service.

Bond premium on a Senior Note will be computed in theapplicable foreign currency. With respect to a US Holder that elects toamortize the premium, the amortizable bond premium will reduce interest incomein the applicable foreign currency. At the time bond premium is amortized,exchange gain or loss (which is generally ordinary income or loss) will berealized based on the difference between spot rates at such time and at thetime of acquisition of the Senior Note. A US Holder that does not elect toamortize bond premium will translate the bond premium, computed in theapplicable foreign currency, into US dollars at the spot rate on the maturitydate and such bond premium will constitute a capital loss which may be offsetor eliminated by exchange gain.

You should consult yourown tax advisors regarding the applicability and effect of the amortizable bondpremium rule described above.

61

----

***Market Discount***

If a US Holder purchased a Senior Note for an amountthat is less than its stated redemption price at maturity, the amount of thedifference will be treated as “market discount” for United States federalincome tax purposes, unless such difference is less than a specified *de minimis* amount. Under the marketdiscount rules, a US holder will be required to treat any principal payment on,or any gain on the sale, exchange, retirement or other disposition of, theSenior Note, as ordinary income to the extent of the market discount which hasnot previously been included in income and is treated as having accrued on suchSenior Note at the time of such payment or disposition. In addition, the USHolder may be required to defer, until the maturity of the Senior Note or itsearlier disposition in a taxable transaction, the deduction of all or a portionof the interest expense on any indebtedness incurred or continued to purchaseor carry such note.

Any market discount will be considered to accrueratably during the period from the date of acquisition to the maturity date ofthe Senior Note, unless the US Holder elects to accrue on a constant interestmethod. This election to accrue market discount on a constant interest methodis to be made for the taxable year in which the US Holder acquired the SeniorNote, applies only to that Senior Note, and may not be revoked without theconsent of the IRS. A US Holder of a note may elect to include market discountin income currently as it accrues (on either a ratable or constant interestmethod), in which case the rule described above regarding deferral ofinterest deductions will not apply. This election to include market discount inincome currently, once made, applies to all market discount obligationsacquired on or after the first day of the first taxable year to which theelection applies and may not be revoked without the consent of the IRS. Asdiscussed above, an electing US Holder should use the entire scheduled term ofthe Senior Note as the expected term of the Senior Notes for purposes ofaccruing market discount.

The amount of marketdiscount includible in income will generally be determined by translating themarket discount determined in the foreign currency into US dollars at the spotrate on the date the Senior Note is retired or otherwise disposed of. If the USHolder has elected to accrue market discount currently, then the amount whichaccrues is determined in the foreign currency and then translated into USdollars on the basis of the average exchange rate in effect during such accrualperiod. A US Holder will recognize exchange gain or loss with respect to marketdiscount which is accrued currently using the approach applicable to theaccrual of interest income as described above.

***Sale, Exchange, Retirement and Other Disposition ofthe Senior Notes***

Upon the sale, exchange,retirement or other disposition of a Senior Note, a US Holder will generallyrecognize taxable gain or loss equal to the difference between the amountrealized, generally based on the spot rate on the date of sale, exchange orretirement (not including any amounts received that are attributable to accruedand unpaid interest or market discount, which will be taxable as ordinaryinterest income, and exchange gain or loss as set forth above) and the USHolder’s tax basis in the Senior Note. A US Holder’s tax basis in a Senior Notegenerally will be its cost in US dollars as determined using the spot rate onthe date of acquisition (as adjusted to account for any amortizable bondpremium, as set forth above). Gain or loss will be capital gain or loss andwill be long-term capital gain or loss if the Senior Note was held from morethan one year at the time of the disposition. Gain or loss recognized by a USHolder generally will be treated as US source income or loss.

***Backup Withholding and Information Reporting***

US backup withholding and information reportingrequirements generally will apply to certain payments to certain non-corporateUS Holders of Senior Notes. Information reporting requirements will apply tointerest on, and to proceeds from the sale, redemption or other disposition ofSenior Notes paid to a US Holder (other than an “exempt recipient,” including acorporation and certain other persons who, 

62

----

when required, demonstratetheir exempt status). We will be required to backup withhold a portion ofinterest on, and the proceeds from the sale, redemption or other dispositionof, Senior Notes paid by a US paying agent or other US intermediary to a USHolder (other than an “exempt recipient”) if such US Holder fails to furnishits correct taxpayer identification number or certification of exempt status orfails to report all interest and dividends required to be shown on its USfederal income tax returns.

Backup withholding is nota separate tax. The amount of any backup withholding from a payment to a USHolder will be allowed as a credit against the US Holder’s US federal incometax liability and may entitle the US Holder to a refund, provided that therequired information is provided to the US Internal Revenue Service. US Holdersof the Senior Notes should consult their own tax advisors regarding theapplication of the backup withholding and information reporting requirements.

***Tax Return Disclosure and Investor List Requirements***

US Treasury regulations(the “Tax Shelter Regulations”) intended to address so called tax shelters andother potentially tax motivated transactions require participants in a “reportabletransaction” to disclose certain information about the reportable transactionon IRS Form 8886 and retain information relating to the reportabletransaction. Organizers and sellers of a reportable transaction are required tomaintain lists identifying the investors participating in the reportabletransaction and furnish to the IRS upon demand such investor information aswell as detailed information regarding the reportable transaction. Atransaction may be a “reportable transaction” based upon any of several indicia(including the existence of confidentiality agreements, certain indemnity arrangementsand certain loss transactions) and require reporting of transactions that aregenerally not considered tax shelters, including certain foreign currencytransactions. Investors should consult their tax advisors concerning anypossible disclosure obligation with respect to their investment in the SeniorNotes and should be aware that Concordia intends to comply with the disclosureand list maintenance requirements under the Tax Shelter Regulations as theydetermine apply to them with respect to any such reportable transaction.

**F.**       Dividends and Paying Agents

Not applicable.

**G.**              Statementby Experts

Not applicable.

**H.**              Documentson Display

The annual report, itsexhibits and schedules, reports and other information that we have filed withor furnished to the Commission may be inspected and copied at the publicreference facilities maintained by the Commission at Room 1580, 100 FStreet, N.E., Washington, D.C. 20549. You can obtain copies of this material bymail from the Public Reference section of the Commission, 100 F Street,N.E., Washington, D.C., 20549, at prescribed rates.

**I.**          Subsidiary Information

Not applicable.

**Item11*.   Quantitative and Qualitative DisclosuresAbout Market Risk***

The principalmarket risks (i.e., the risk of loss arising from adverse changes in marketrates and prices) to which we are exposed are:

·       interestrates on debt;

63

----

·       foreignexchange rates;

·       fuelprices; and

·       inflation.

The following riskmanagement discussion and the estimated amounts generated from analyticaltechniques are forward looking statements of the market risk assuming certainmarket conditions occur. Our actual results in the future may differ materiallyfrom these projected results due to actual developments in the global financialmarkets.

***Interest Rate Risk***

Interest rate risk refers to the risk that changes inthe market rate of interest adversely affects Concordia’s interest cost. Howfast a change in the interest rate will influence the net interest depends onthe borrowings fixed interest term.

Concordia is mainly exposed to interest rate risk inits operational leases which are based on among other things a floating marketinterest rate. We currently hedge parts of our exposure to interest ratefluctuations on our lease debt through the use of derivative instruments. Wehave entered into Swedish Kronor interest rate swaps and caps to fix a portionof the interest within the lease payments we make under the lease debt.

Based on the nominal valueof the operational lease debt including optional extension terms at February 28,2005 of SEK 1,935 million, a 1% change in interest rates would increase leasecharges and thereby reduce earnings by approximately SEK 19.3 million per annum.Senior secured notes and subordinated shareholder loan outstanding at February 28,2005 with a carrying value of SEK 1,176 million, and SEK 167 millionrespectively, have been excluded from the above interest rate sensitivityanalysis because the expected cash outflows related to those financialinstruments will not change in response to changes in interest rates as theybear a fixed rate of interest. Our future interest expenses will however changedepending on currency fluctuations between Swedish Kronor and the Euro (seesection about Foreign Exchange).

***Foreign Exchange***

We are exposed to currency fluctuations on loans, as aresult of having to make interest payments in Euro on our senior note loan andbecause our outstanding long-term liabilities (primarily the Senior Note loan)are denominated in Euro. We estimate that a 10% depreciation in the value ofthe Swedish Krona against the Euro would increase our interest costs and reduceearnings by approximately SEK 10.7 million per annum (not considering theeffects of off-setting financial instruments). A 10% depreciation in the valueof the Swedish Krona against the Euro would increase our long-term liabilitiesby approximately SEK 118 million, affecting both net income and Total Equity.

Our foreign subsidiariesin Norway and Finland are consolidated using the current rate method.Fluctuation in NOK and Euro against SEK is not considered to have a materialeffect on the consolidated financial statements of the company, considering thelevel of profits/losses made by these companies.

***Fuel Prices***

We are exposed tocommodity price risk through its requirements for diesel fuel. Diesel fuel ispriced in the international commodity markets in US dollars. We purchase ourdiesel fuel requirements out of our operating revenue, which is largelydenominated in Swedish Kronor. Therefore, we are exposed to currencyfluctuation risk between the dollars and the Swedish Kronor. We currently haveno diesel derivatives in place; however, Concordia Bus has hedged 55% of itsdiesel consumption through index 

64

----

compensationin the agreements with the CPTA’s. We estimate that a 10% depreciation in thevalue of the Swedish Kronor against the dollar would increase our diesel fuelcosts and thereby reduce earnings by approximately SEK 9 million per annum. Weestimate that a diesel price increase of 1 dollar per ton would increase ourdiesel fuel costs by SEK 0.2 million per annum. The net result of the dieselhedging contracts have positively affected the diesel expenses for the fiscalyear 2005, the fiscal year 2004 and fiscal year 2003 with SEK 17.4, SEK 0.2million and SEK 6.2 million respectively.

***Inflation***

Inflation had no materialimpact on our operations during the year ended February 28, 2005 or theyear ended February 29, 2004. However, due to the nature of ourcontractual business where cost increases are compensated through movements inagreed indices (elements of total inflation) we are subject tounder-compensation due to a mismatch between our industry costs and ourrelative level of compensation from the indices which the local transportationauthorities use to compensate us.

**Item12.*   Description of Securities other than EquitySecurities***

Not applicable.

65

----

**PART II**

**Item13.   *Defaults, Dividend Arrearages and Delinquencies***

Not applicable.

**Item14.   *Material Modifications to the Rights of SecurityHolders and Use of Proceeds***

Not applicable.

**Item 15.   *Controls and Procedures***

**Evaluationof Disclosure Controls and Procedures**

As of the end of our fiscal year, we carried out anevaluation, under the supervision and with the participation of our chiefexecutive officer and chief financial officer, of the effectiveness of thedesign and operation of our disclosure controls and procedures. Based on thisevaluation, our chief executive officer and chief financial officer haveconcluded that our disclosure controls and procedures are effective in timelyalerting them to material information required to be included in our periodicreports to the Securities and Exchange Commission.

There are inherentlimitations to the effectiveness of any system of disclosure controls andprocedures, including the possibility of human error and the circumvention oroverriding of such controls and procedures. In addition, we have limitedinfluence over the controls and procedures of entities in which we hold aminority interest. Accordingly, even effective disclosure controls andprocedures can only provide reasonable assurance of achieving their controlobjectives.

**Changes in Internal Controls**

There were no significantchanges in our internal control over financial reporting during the fiscal yearthat have materially affected, or are reasonably likely to materially affect,our internal control over financial reporting.

**Item16A.   *Audit Committee Financial Expert***

The independent members ofour Supervisory Board of Directors act as our Audit Committee. Our AuditCommittee does not include a financial expert because it is not mandatory tohave one under Swedish law.

**Item 16B.   *Code of Ethics***

We have not adopted aformal corporate code of ethics regarding Concordia’s chief executive officer,chief financial officer and controller because we are not required to have oneunder Swedish law.

66

----

**Item16C.   *Principal Accountant Fees and Services***

Theselection of our independent registered public accounting firm was approved bythe audit committee. Following is a summary of the fees to our independentregistered public accounting firm for the years ended February 28, 2005and February 29, 2004 in millions of SEK:
| ** **          | ** ** | **Year ended   February 28, 2005** | ** ** | **Year ended  February 29, 2004** | ** ** |
|---------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------|------------|
| Audit Fees          |       |                                                   | 2          |                                             |       |   | 2 |   |   |
| Audit-Related  Fees |       |                                                   | 1          |                                             |       |   | 2 |   |   |
| Tax Fees            |       |                                                   | —     |                                             |       |   | — |   |   |
| All Other Fees      |       |                                                   | —     |                                             |       |   | — |   |   |
| Total Fees          | ** ** | ** **                                             | **3**      |                                             | ** ** | ** ** | **4** |   |   |

 

Concordia’s AuditCommittee has adopted pre-approval policies and procedures in compliance withparagraph (c)(7)(i) of Rule 2-01 of Regulation S-Xthat require the Audit Committee to approve the appointment of the independentauditor of Concordia before such auditor is engaged and approve each of theaudit and non-audit related services to be provided by such auditor under suchengagement by Concordia. 100% services provided by the principal auditor duringthe year ended February 29, 2004 were approved by the Audit Committeepursuant to the pre-approval policy. Audit related fees comprise fees incurredas part of the refinancing project carried out during end of fiscal year ended2004 and the following F-4 Registration Statement in August 2004.

**Item16D.   *Exemptions from the Listing Standards for AuditCommittees***

Not applicable.

**Item16E.   *Purchases of Equity Securities by the Issuer andAffiliated Purchasers***

Not applicable.

67

----

**PART III**

**Item 17.   *Financial Statements***

See pages F-1 to F-88.

**Item 18.   *Financial Statements***

Not applicable.

**Item 19.   *Exhibits***
| **1.1.  |   | Articles of Association of Concordia Bus Nordic AB  (publ).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **1.2.  |   | Articles of Association  of Concordia Bus Nordic Holding AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **1.3.  |   | Articles of Association  of Swebus AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **1.4.  |   | Articles of Association  of Swebus Busco AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **1.5.  |   | Articles of Association  of Swebus Express AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **1.6.  |   | Articles of Association  of Interbus AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.7.  |   | Articles of Association  of IngeniØr  M.O. SchØyens  Bilcentraler AS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **1.8.  |   | Articles of Association  of Concordia Bus Finland Oy Ab.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.9.  |   | Articles of Association  of Swebus Fastigheter AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.10. |   | Articles of Association  of Alpus AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **1.11. |   | Articles of Association  of Enköping-Bõlsta Fastighetsbolag AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **1.12. |   | Articles of Association  of Malmfältens Omnibus AB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **4.1.  |   | Indenture, dated  January 22, 2004, between Concordia Bus Nordic AB (publ), Swebus Express  Bus AB, Interbus AB, IngeniØr M.O. SchØyens  Bilcentraler A.S., Concordia Bus Finland Oy Ab, Swebus Fastigheter AB, Alpus  AB, Enköping-Bõlsta Fastighetsbolag AB, and Malmfältens Omnibus AB and  Deutsche Bank Trust Company Americas, in respect of Concordia Bus Nordic AB’s  €130,000,000  9.125% Senior Secured Notes due August 1, 2009.                                                                                  |
| **4.2   |   | Form of 9.125%  Senior Secured Notes due 2009 (included in Exhibit 4.1).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **4.3   |   | Exchange and  Registration Rights Agreement dated January 22, 2004, between Concordia  Bus Nordic AB (publ), Goldman Sachs International, J.P. Morgan Securities,  Ltd., Swebus AB, Swebus Busco AB, Swebus Express Bus AB, Interbus AB, IngeniØr M.O. SchØyens Bilcentraler A.S., Concordia Bus  Finland Oy Ab, Swebus Fastigheter AB, Alpus AB, Enköping-Bõlsta  Fastighetsbolag AB, and Malmfältens Omnibus AB in respect of €130,000,000  9.125% Senior Secured Notes due August 1, 2009, of Concordia Bus Nordic  AB (publ). |
| *4.4    |   | Subscription and  Shareholders’ Agreement, dated October 27, 1999, by and among Concordia  Bus B.V., SchØyen  Gruppen A/S, Bus Holdings S.a.r.l and Goldman Sachs International.                                                                                                                                                                                                                                                                                                                                                                 |
| 4.5     |   | Purchase Agreement dated  as of July 28, 2005 between Concordia Bus Nordic AB (publ) and other  parties relating to the purchase of up to €130,000,0000,  9.125% Senior Secured Notes due August 1, 2009.                                                                                                                                                                                                                                                                                                                                                  |
| 4.6.    |   | Mezzanine Facility Agreement  dated as of July 20, 2005 between Concordia Bus AB (publ), Concordia Bus  Nordic Holding AB, Deutsche Bank Luxembourg S.A. (acting as Facility  Agent) & Citicorp Trustee Company Limited (as Security Agent).                                                                                                                                                                                                                                                                                                                |
| 4.7.    |   | First Ranking Pledge  Agreement of a shareholders’ contribution loan dated as of July 18, 2005  between Concordia Bus Nordic Holding AB (as Pledgor) and Citicorp Trustee Co.  Limited (as Security Agent).                                                                                                                                                                                                                                                                                                                                                     |

68

----

 
| 4.8.     |   | First Ranking Pledge  Agreement of a shareholders’ contribution loan, dated as of July 18,  2005 between Concordia Bus Nordic Holding AB and Citicorp Trustee Co. Ltd.                                                                                                                                                                                                                                                                                                                                           |
|----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.9.     |   | Second Ranking Pledge  Agreement of a subordinated shareholder loan, dated as of July 18, 2005  between Concordia Bus Nordic Holding AB and Concordia Bus AB (publ).                                                                                                                                                                                                                                                                                                                                                  |
| 4.10.    |   | Second Ranking Pledge  Agreement of a shareholders’ contribution loan, dated as of July 18,  2005 between Concordia Bus Nordic Holding AB and Concordia Bus AB (publ).                                                                                                                                                                                                                                                                                                                                           |
| 4.11.    |   | Sale and Assignment  Agreement and limited recourse Note, dates as of July 18, 2005 between  Concordia Bus AB, Concordia Bus Nordic Holding AB and Concordia Bus Nordic AB  (publ).                                                                                                                                                                                                                                                                                                                                   |
| 4.12.    |   | Amendment Restated  Subordinated Shareholder Loan Amendment dated as of July 18, 2005  between Concordia Bus Nordic AB, Concordia Bus Nordic Holding AB and Deutsche  Bank Trust Company Americas (as Trustee).                                                                                                                                                                                                                                                                                                       |
| 4.13.    |   | Subordination statement  of a Subordinated shareholder loan, dated as of July 18, 2005 between  Concordia Bus Nordic Holding AB, Concordia Bus Nordic AB, Concordia Bus AB  (publ) and Deutsche Bank Trust Company Americas (as Trustee).                                                                                                                                                                                                                                                                             |
| 4.14.    |   | Sale and Assignment  Agreement of a Shareholders’ Contribution Loan Agreement dated as of  July 18, 2005, between Concordia Bus AB (publ), Concordia Bus Nordic AB  (publ) and Concordia Bus Nordic Holding AB.                                                                                                                                                                                                                                                                                                  |
| 4.15.    |   | Shareholder’s  Contribution Loan Agreement dated as of July 18, 2005, between Concordia  Bus Nordic AB, Concordia Bus Holding AB.                                                                                                                                                                                                                                                                                                                                                                                |
| ***4.16. |   | Restructuring Agreement  dated as of July 22, 2005 between Concordia Bus AB, Concordia Bus Nordic  AB, Concordia Bus Holding AB, Concordia Bus BV, GS Capital Partners III  Offshore, L.P., Goldman Sachs and Co. Verwaltungs, GMbH, Sch&qout;yen Gruppen AS,  Centaurous Capital Limited, Citigroup Global Markets Limited, JP Morgan  Chase, N.A. as Agent and The Consenting Noteholders signatories.                                                                                                              |
| 4.17     |   | First Supplemental  Indenture (copy) dated as of August 25, 2005, among Concordia Bus Nordic  AB (publ), with Deutsche Bank Trust Company Americas as trustee.                                                                                                                                                                                                                                                                                                                                                        |
| 4.18     |   | Deed of Pledge dated as  of July 18, 2005, between Concordia Bus Nordic Holding AB and Citigroup  Trustee Company Limited.                                                                                                                                                                                                                                                                                                                                                                                            |
| *4.19.   |   | Purchase Agreement,  dated January 16, 2004, by and among Goldman Sachs International, J.P.  Morgan Securities, Ltd., Swebus AB, Swebus Busco AB, Swebus Express Bus AB,  Interbus AB, IngeniØr  M.O. SchØyens  Bilcentraler A.S., Concordia Bus Finland Oy Ab, Swebus Fastigheter AB, Alpus  AB, Enköping-Bõlsta Fastighetsbolag AB, and Malmfältens Omnibus AB in  respect of €  130,000,000 9.125% Senior Secured Notes due August 1, 2009, of Concordia  Bus Nordic AB (publ). |
| *4.20.   |   | Security Trustee  Agreement, dated January 22, 2004, by and among Deutsche Trustee Company  Limited as Security Trustee, Deutsche Bank Trust Company Americas as Trustee,  Concordia Bus Nordic Holding AB, Swebus AB, Swebus Busco AB, Swebus Express  Bus AB, Interbus AB, IngeniØr M.O. SchØyens  Bilcentraler A.S., Concordia Bus Finland Oy Ab, Swebus Fastigheter AB, Alpus  AB, Enköping-Bõlsta Fastighetsbolag AB, and Malmfältens Omnibus AB.                                       |
| *4.21.   |   | Amended and Restated  Subordinated Loan Agreement, dated December 22, 2003 and amended and  restated on January 22, 2004, between Concordia Bus AB (publ), Concordia  Bus Nordic AB (publ) and Deutsche Bank Trust Company.                                                                                                                                                                                                                                                                                      |
| *4.22.   |   | Amended and Restated  Subordinated Loan Agreement dated January 21, 2004 between Concordia Bus  Nordic AB (publ), Concordia Bus AB and Deutsche Trustee Company Limited as  Security Trustee.                                                                                                                                                                                                                                                                                                                         |

69

----

 
| *4.23. |   | Agreement Relating to  First Ranking Pledge of Buses, dated January 22, 2004, between Swebus  Busco AB as Pledgor and Deutsche Trustee Company Limited as Security Trustee.                                                                                                  |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.24. |   | Agreement Relating to  Second Ranking Pledge of Buses, dated January 22, 2004, between Swebus  Busco AB as Pledgor and Concordia Bus Nordic AB (publ).                                                                                                                       |
| *4.25. |   | Share Pledge Agreement,  dated January 22, 2004, between Swebus Fastigheter AB as Pledgor and  Deutsche Trustee Company Limited as Security Trustee regarding shares in  Alpus AB, Enköping-Bõlsta Fastighetsbolag AB and Malmfältens Omnibus  AB.            |
| *4.26. |   | Share Pledge Agreement,  dated January 22, 2004, between Concordia Bus Nordic Holding AB as  Pledgor and Deutsche Trustee Company Limted as Security Trustee in respect of  shares in Concordia Bus Nordic AB (publ).                                                        |
| *4.27. |   | Share Pledge Agreement,  dated January 22, 2004, between Concordia Bus Nordic AB (publ) as  Pledgor and Deutsche Trustee Company Limited as Security Trustee in respect  of shares in Swebus Express AB, Interbus AB, Swebus AB, Swebus Fastigheter AB  and Swebus Busco AB. |
| *4.28. |   | Share Pledge Agreement,  dated January 22, 2004, between Concordia Bus Nordic AB (publ) as  Pledgor and Deutsche Trustee Company Limited as Security Trustee in respect  of shares in Concordia Bus Finland Oy Ab.                                                           |
| *4.29. |   | First Priority Pledge of  Shares, dated January 22, 2004, between Concordia Bus Nordic AB (publ)  as Pledgor and Deutsche Trustee Company Limted as Security Trustee in respect  of shares in IngeniØr  M.O. SchØyens  Bilcentraler A.S.                           |
| *4.30. |   | Pledge Agreement, dated  January 22, 2004, between Concordia Bus Finland Oy Ab as Pledgor and  Deutsche Trustee Company Limited as Security Trustee in respect of floating  charge and bearer notes.                                                                         |
| *4.31. |   | First Ranking Pledge of  Floating Charge, dated January 22, 2004, between Alpus AB and Deutsche  Trustee Company Limited as Security Trustee in respect of floating charge.                                                                                                  |
| *4.32. |   | First Ranking Pledge of  Floating Charge, dated January 22, 2004, between Enköping-Bõlsta  Fastighetsbolag AB and Deutsche Trustee Company Limited as Security Trustee  in respect of floating charge.                                                             |
| *4.33. |   | First Ranking Pledge of  Floating Charge, dated January 22, 2004, between Malmfältens Omnibus AB  and Deutsche Trustee Company Limited as Security Trustee in respect of  floating charge.                                                                              |
| *4.34. |   | First Ranking Pledge  Agreement, dated January 22, 2004, between Swebus AB and Deutsche  Trustee Company Limited as Security Trustee in respect of floating charge.                                                                                                          |
| *4.35. |   | Second Pledge of  Floating Charge, dated January 22, 2004, between Swebus AB and Concordia  Bus Nordic AB (publ) in respect of floating charge.                                                                                                                              |
| *4.36. |   | Pledge of Accounts,  dated January 22, 2004, between IngeniØr M.O. SchØyens Bilcentraler A.S. and Deutsche  Trustee Company Limited as Security Trustee in respect of floating charge.                                                                             |
| *4.37. |   | Intragroup Loan Pledge  Agreement, dated January 22, 2004, between Concordia Bus Nordic AB  (publ), as Pledgor, and Deutsche Trustee Company Limited, as Security  Trustee.                                                                                                  |
| *4.38. |   | Declaration of Pledge of  IngeniØr  M.O. SchØyens  Bilcentraler A.S. of Trade Receivables, dated January 22, 2004.                                                                                                                                                 |
| *8.1.  |   | Subsidiaries of  registrant.                                                                                                                                                                                                                                                      |
| 12.1   |   | Certificate of Chief  Financial Officer pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange  Act of 1934                                                                                                                                                          |
| 12.2   |   | Certificate of  Chief Executive Officer pursuant to Rule 13a-15(e) and 15d-15(e) of the  Securities Exchange Act of 1934                                                                                                                                                          |

70

----

 
| 13.1 |   | Certificate of  Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  |
|------|--------|----------------------------------------------------------------------------------------------------|
| 13.2 |   | Certificate of  Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of  2002 |

----

*                                 Incorporatedby reference from the Registrant’s Registration Statement on Form F-4,filed with the Commission on May 15, 2000.

**                          Incorporatedby reference from Concordia Bus Nordic AB (publ)’s Registration Statement on Form F-4,filed with the Commission on May 28, 2004.

***                   Confidentialtreatment requested with respect to portions of this exhibit.

71

----

**SIGNATURES**

Theregistrant hereby certifies that it meets all of the requirements for filing onForm 20-F and that it has duly caused and authorized the undersignedto sign this annual report on its behalf.
|        | CONCORDIA BUS NORDIC AB (publ) |
|--------|--------------------------------|
|   | By:                            | /s/ Per Skärgård |
|   |                           | Per Skärgård*Chief Financial Officer and Director* |

 

Date:  August 31,2005

72

----

**INDEXTO FINANCIAL STATEMENTS**
| ***Financial Statements of Concordia Bus Nordic  Holding AB******(1)***                                                                                         |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Report of Independent Registered Public Accounting  Firm                                                                                                        |   | F-2    |   |
| Consolidated Statements of Operations for the years  ended February 28, 2005, February 29, 2004 and February 28,  2003                           |   | F-3    |   |
| Consolidated Balance Sheets as of February 28,  2005 and February 29, 2004                                                                            |   | F-4    |   |
| Consolidated Statements of Changes in Shareholder’s  Equity for the years ended February 28, 2005, February 29, 2004 and  February 28, 2003 |   | F-6    |   |
| Consolidated Statements of Cash Flows for the years  ended February 28, 2005, February 29, 2004 and February 28,  2003                           |   | F-7    |   |
| Notes to Consolidated Financial Statements                                                                                                                      |   | F-8    |   |
| ***Financial  Statements of Swebus AB******(2)***                                                                                                               |   |   |   |
| Report of Independent Registered Public Accounting  Firm                                                                                                        |   | F-50   |   |
| Statements of Operations for the years ended  February 28, 2005, February 29, 2004 and February 28, 2003                                         |   | F-51   |   |
| Balance Sheets as of February 28, 2005 and  February 29, 2004                                                                                         |   | F-52   |   |
| Statements of Cash Flows for the years ended  February 28, 2005, February 29, 2004 and February 28, 2003                                         |   | F-54   |   |
| Notes to Financial Statements                                                                                                                                   |   | F-55   |   |
| ***Financial  Statements of Ingeni******Ør M.O. Sch******Øyens  Bilcentraler AS******(2)***                                                           |   |   |   |
| Report of Independent Registered Public Accounting  Firm                                                                                                        |   | F-72   |   |
| Statements of Operations for the years ended  February 28, 2005, February 29, 2004 and February 28, 2003                                         |   | F-73   |   |
| Balance Sheets as of February 28, 2005 and February 29,  2004                                                                                         |   | F-74   |   |
| Statements of Cash Flows for the years ended  February 28, 2005, February 29, 2004 and February 28, 2003                                         |   | F-75   |   |
| Notes to Financial Statements                                                                                                                                   |   | F-76   |   |

----

(1)          Previously, ConcordiaBus Nordic Holding AB was named Interbus Finans AB and was a wholly owned subsidiaryof Concordia Bus Nordic AB (publ), which was wholly owned by Concordia BusAB. In January 2004, a reorganization was performed whereby Concordia BusNordic AB (publ) transferred to Concordia Bus AB its 100% shareownership of Interbus Finans AB. Concordia Bus AB then transferredits shares in Concordia Bus Nordic AB (publ) to Interbus Finans AB.Interbus Finans AB was then renamed Concordia Bus Nordic Holding AB.

Such reorganization had the effect of creating a newholding company for Concordia Bus Nordic AB (publ) from one of its dormantsubsidiaries. Concordia Bus Nordic Holding AB is a non-operating holdingcompany that has no assets other than its shares in Concordia Bus Nordic AB(publ). Since this was a reorganization of entities under common control, theconsolidated financial statements contained in this annual report are presentedas if Concordia Bus Nordic Holding AB was in existence as the shareholderof Concordia Bus Nordic AB (publ) for all periods presented.

Subsequent to thereorganization, the consolidated financial position, results of operations andcash flows of Concordia Bus Nordic AB (publ) are the same as that ofConcordia Bus Nordic Holding AB.

(2)          The audited financialstatements of this subsidiary of Concordia Bus Nordic Holding AB areincluded in this Form 20-F to comply with Section 3-16 ofRegulation S-X of U.S. federal securities laws.

F-1

----

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

To the Board of Directors andShareholder ofConcordia Bus Nordic Holding AB

We have audited the accompanying consolidated balancesheets of Concordia Bus Nordic Holding AB and subsidiaries (formerly InterbusFinans AB) (the “Company”) as of February 28, 2005 and February 29,2004, and the related consolidated statements of operations, changes inshareholder’s equity, and cash flows for each of the three years in the periodended February 28, 2005. These consolidated financial statements are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal control over financial reporting. Our auditincluded consideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statementspresent fairly, in all material respects, the financial position of ConcordiaBus Nordic Holding AB and subsidiaries as of February 28, 2005 and February 29,2004, and the results of their operations and their cash flows for each of thethree years in the period ended February 28, 2005, in conformity withaccounting principles generally accepted in Sweden.

The accompanying consolidated financial statementshave been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 29 to the consolidated financial statements, the Company’srecurring operating losses, stockholder’s capital deficiency, negative cashflows from operations, inability to make certain interest payments onoutstanding borrowings, and violations of borrowing covenants raise substantialdoubt about its ability to continue as a going concern. Management’s plansconcerning these matters are also described in Note 29. The consolidatedfinancial statements do not include any adjustments that might result from theoutcome of this uncertainty.

Accounting principlesgenerally accepted in Sweden vary in certain significant respects fromaccounting principles generally accepted in the United States of America.Information relating to the nature and effect of such differences is presentedin Note 32 to the consolidated financial statements.

Deloitte & ToucheABStockholm, SwedenAugust 31, 2005

F-2

----

**CONCORDIABUS NORDIC HOLDING AB AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(all amounts in millions of SEK, except share and per share amounts)**
| ** **                                    | ** ** | **Note** | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-----------------------------------------------|------------|----------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Net revenue                                   |       | 2,3,4    |       |                                             | 4,812      | ** **                                       |       |                                             | 4,761      | ** ** |   |   | 4,758 | ** ** |   |
| Fuel, tires and  other consumables            |       | 5        |       |                                             | (989       | )                                                |       |                                             | (929       | ) |   |   | (919 | ) |   |
| Other external  costs                         |       | 5,6      |       |                                             | (1,127     | )                                                |       |                                             | (1,004     | ) |   |   | (989 | ) |   |
| Personnel costs                               |       | 5,7      |       |                                             | (2,606     | )                                                |       |                                             | (2,611     | ) |   |   | (2,597 | ) |   |
| Gain (loss) on  sale of fixed assets          |       |     |       |                                             | 4          |                                             |       |                                             | 6          |   |   |   | (4 | ) |   |
| Depreciation,  amortization and write-downs   |       | 2,5,8    |       |                                             | (350       | )                                                |       |                                             | (331       | ) |   |   | (372 | ) |   |
| **Operating  loss**                           |       | 2        | ** ** | ** **                                       | **(256**   | **)**                                            | ** ** | ** **                                       | **(108**   | **)** | ** ** | ** ** | **(123** | **)** |   |
| Interest income                               |       | 9        |       |                                             | 3          | ** **                                       |       |                                             | 5          | ** ** |   |   | 10 | ** ** |   |
| Interest expense  and similar items           |       | 10       |       |                                             | (144       | )                                                |       |                                             | (151       | ) |   |   | (115 | ) |   |
| **Financial  income and expenses**            |       |     | ** ** | ** **                                       | **(141**   | **)**                                            | ** ** | ** **                                       | **(146**   | **)** | ** ** | ** ** | **(105** | **)** |   |
| **Loss before income taxes**                  |       |     | ** ** | ** **                                       | **(397**   | **)**                                            | ** ** | ** **                                       | **(254**   | **)** | ** ** | ** ** | **(228** | **)** |   |
| Income taxes                                  |       | 11       |       |                                             | 1          | ** **                                       |       |                                             | 83         | ** ** |   |   | 49 | ** ** |   |
| **Net  loss**                                 |       |     | ** ** | ** **                                       | **(396**   | **)**                                            | ** ** | ** **                                       | **(171**   | **)** | ** ** | ** ** | **(179** | **)** |   |
| Weighted average number of shares outstanding |       |     |       |                                             | 300        | ** **                                       |       |                                             | 300        | ** ** |   |   | 300 | ** ** |   |
| **Net loss per share (in  thousands of SEK)** |       | 26       | ** ** | ** **                                       | **(1,320** | **)**                                            | ** ** | ** **                                       | **(572**   | **)** | ** ** | ** ** | **(596** | **)** |   |

 

The accompanyingnotes are an integral part of these consolidated financial statements.

F-3

----

**CONCORDIABUS NORDIC HOLDING AB AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(all amounts in millions of SEK)**
| ** **                                        | ** ** | **Note** | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------------|------------|----------|------------|---------------------------------|------------|---------------------------------|------------|
| **ASSETS**                                        | ** ** |     | ** ** | ** **                      |       |                            | ** ** | ** ** |   |   | ** ** | ** ** |   |
| **Fixed  assets**                                 |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Goodwill                                          |       |     | 12         | ** **                      |       |                            | 209        | ** ** |   |   | 213 | ** ** |   |
| **Total  intangible fixed assets**                |       |     |       | ** **                      |       |                            | **209**    | ** ** |   |   | **213** | ** ** |   |
| Buildings and land                                |       |     | 13         | ** **                      |       |                            | 2          | ** ** |   |   | 2 | ** ** |   |
| Equipment, tools,  fixtures and fittings          |       |     | 13         | ** **                      |       |                            | 27         | ** ** |   |   | 34 | ** ** |   |
| Vehicles                                          |       |     | 13         | ** **                      |       |                            | 1,228      | ** ** |   |   | 1,491 | ** ** |   |
| **Total  tangible fixed assets**                  |       |     |       | ** **                      |       |                            | **1,257**  | ** ** |   |   | **1,527** | ** ** |   |
| Receivables due from affiliated companies         |       |     | 14         | ** **                      |       |                            | —     | ** ** |   |   | 29 | ** ** |   |
| Other long-term  investments                      |       |     | 15         | ** **                      |       |                            | —     | ** ** |   |   | 5 | ** ** |   |
| Other financial  fixed assets                     |       |     | 16         | ** **                      |       |                            | 48         | ** ** |   |   | 53 | ** ** |   |
| **Total  financial fixed assets**                 |       |     |       | ** **                      |       |                            | **48**     | ** ** |   |   | **87** | ** ** |   |
| **Total  fixed assets**                           |       |     |       | ** **                      |       |                            | **1,514**  | ** ** |   |   | **1,827** | ** ** |   |
| **Current  assets**                               |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Inventories                                       |       |     | 17         | ** **                      |       |                            | 33         | ** ** |   |   | 30 | ** ** |   |
| **Current  receivables and other current assets** |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Accounts  receivables                             |       |     | 33         | ** **                      |       |                            | 345        | ** ** |   |   | 310 | ** ** |   |
| Other current  receivables                        |       |     |       | ** **                      |       |                            | 76         | ** ** |   |   | 100 | ** ** |   |
| Accrued income  and prepaid expenses              |       |     | 18         | ** **                      |       |                            | 143        | ** ** |   |   | 238 | ** ** |   |
| **Total  receivables and other current assets**   |       |     |       | ** **                      |       |                            | **564**    | ** ** |   |   | **648** | ** ** |   |
| **Cash  and bank balances**                       |       |     | 19         | ** **                      |       |                            | **175**    | ** ** |   |   | **346** | ** ** |   |
| **Total  current assets**                         |       |     |       | ** **                      |       |                            | **772**    | ** ** |   |   | **1,024** | ** ** |   |
| **TOTAL ASSETS**                                  |       |     | 2,3        | ** **                      |       |                            | **2,286**  | ** ** |   |   | **2,851** | ** ** |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

F-4

----

**CONCORDIABUS NORDIC HOLDING AB AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(all amounts in millions of SEK, except share and per share amounts)**
| ** **                                                     | ** ** | **Note** | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------------------------------|------------|----------|------------|---------------------------------|------------|---------------------------------|------------|
| **SHAREHOLDER’S EQUITY (DEFICIT)  AND LIABILITIES**       | ** ** |     | ** ** | ** **                      |       |                            | ** ** | ** ** |   |   | ** ** | ** ** |   |
| **Shareholder’s equity**                                  |       |     | 25         | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Restricted equity                                              |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Share capital  (300 shares at par value SEK 1,000)             |       |     |       | ** **                      |       |                            | 0          | ** ** |   |   | 0 | ** ** |   |
| Restricted  reserves                                           |       |     |       | ** **                      |       |                            | 132        | ** ** |   |   | 242 | ** ** |   |
| **Total  restricted equity**                                   | ** ** |     | ** ** | ** **                      |       |                            | **132**    | ** ** |   |   | **242** | ** ** |   |
| Non-restricted  equity                                         |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Retained earnings                                              |       |     |       | ** **                      |       |                            | 120        | ** ** |   |   | 164 | ** ** |   |
| Net loss for the  year                                         |       |     |       | ** **                      |       |                            | (396       | **)** |   |   | (171 | **)** |   |
| **Total  non-restricted equity (deficit)**                     |       |     |       | ** **                      |       |                            | **(276**   | **)** |   |   | **(7** | **)** |   |
| **Total  shareholder’s equity (deficit)**                 |       |     |       | ** **                      |       |                            | **(144**   | **)** |   |   | **235** | ** ** |   |
| **Liabilities**                                                |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Provisions                                                     |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Provisions for  pensions and similar commitments               |       |     | 20         | ** **                      |       |                            | 51         | ** ** |   |   | 60 | ** ** |   |
| Other provisions                                               |       |     | 24         | ** **                      |       |                            | 60         | ** ** |   |   | 86 | ** ** |   |
| **Total  provisions**                                          |       |     |       | ** **                      |       |                            | **111**    | ** ** |   |   | **146** | ** ** |   |
| Non-current  liabilities                                       |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Notes payable                                                  |       |     | 21         | ** **                      |       |                            | 1,176      | ** ** |   |   | 1,198 | ** ** |   |
| Long-term  debt to affiliated companies                        |       |     | 21         | ** **                      |       |                            | —     | ** ** |   |   | 2 | ** ** |   |
| Finance lease  obligations                                     |       |     | 21         | ** **                      |       |                            | 12         | ** ** |   |   | 16 | ** ** |   |
| **Total  non-current liabilities**                             |       |     |       | ** **                      |       |                            | **1,188**  | ** ** |   |   | **1,216** | ** ** |   |
| Current  liabilities                                           |       |     |       | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Short-term  portion of long-term liabilities                   |       |     | 21         | ** **                      |       |                            | 8          | ** ** |   |   | 7 | ** ** |   |
| Short-term  portion of long-term debt to affiliated companies  |       |     | 21         | ** **                      |       |                            | 292        | ** ** |   |   | 366 | ** ** |   |
| Accounts payable                                               |       |     |       | ** **                      |       |                            | 216        | ** ** |   |   | 292 | ** ** |   |
| Other current  liabilities                                     |       |     |       | ** **                      |       |                            | 157        | ** ** |   |   | 151 | ** ** |   |
| Accrued expenses  and deferred income                          |       |     | 22         | ** **                      |       |                            | 458        | ** ** |   |   | 438 | ** ** |   |
| **Total  current liabilities**                                 |       |     |       | ** **                      |       |                            | **1,131**  | ** ** |   |   | **1,254** | ** ** |   |
| **TOTAL  SHAREHOLDER’S EQUITY (DEFICIT) AND LIABILITIES** |       |     |       | ** **                      |       |                            | **2,286**  | ** ** |   |   | **2,851** | ** ** |   |
| **PLEDGED ASSETS AND CONTINGENT LIABILITIES**                  |       |     | 23         | ** **                      |       |                            |       | ** ** |   |   |   | ** ** |   |
| Pledged assets                                                 |       |     |       | ** **                      |       |                            | 1,613      | ** ** |   |   | 2,238 | ** ** |   |
| Contingent  liabilities                                        |       |     |       | ** **                      |       |                            | —     | ** ** |   |   | 22 | ** ** |   |
| **Total pledged assets and contingent  liabilities**           | ** ** |     | ** ** | ** **                      |       |                            | **1,613**  | ** ** |   |   | **2,260** | ** ** |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

F-5

----

**CONCORDIABUS NORDIC HOLDING AB AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY (DEFICIT)(all amounts in millions of SEK)**
| ** **                                               | ** ** | **Share capital** | ** ** | **Restricted  reserves** | ** ** | **Non-restricted  equity** | ** ** | **Total  shareholder’s  equity** | ** ** |
|----------------------------------------------------------|------------|------------------------|------------|--------------------------|------------|----------------------------|------------|---------------------------------------|------------|
| **Balance,  March 1, 2002**                         | ** ** |                   | **0**      | ** **               |       |                       | **548**    | ** **                            |       |   | **144** | ** ** |   |   | **692** | ** ** |   |
| Group contribution to shareholder                        |       |                   | —     | ** **               |       |                       | —     | ** **                            |       |   | (141 | ) |   |   | (141 | ) |   |
| Income tax effect  on group contribution to shareholder  |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | 39 |   |   |   | 39 |   |   |
| Transfer between  restricted and non-restricted reserves |       |                   | —     | ** **               |       |                       | (159       | )                                     |       |   | 159 |   |   |   | — |   |   |
| Change in  cumulative translation adjustment             |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | 1 |   |   |   | 1 |   |   |
| Net loss for the  year                                   |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | (179 | ) |   |   | (179 | ) |   |
| **Balance,  February 28, 2003**                     | ** ** |                   | **0**      | ** **               |       |                       | **389**    |                                  |       |   | **23** | ** ** |   |   | **412** | ** ** |   |
| Transfer between restricted and non-restricted  reserves |       |                   | —     | ** **               |       |                       | (147       | )                                     |       |   | 147 | ** ** |   |   | — | ** ** |   |
| Change in  cumulative translation adjustment             |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | (6 | ) |   |   | (6 | ) |   |
| Net loss for the  year                                   |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | (171 | ) |   |   | (171 | ) |   |
| **Balance,  February 29, 2004**                     | ** ** |                   | **0**      | ** **               |       |                       | **242**    |                                  |       |   | **(7** | **)** |   |   | **235** |   |   |
| Transfer between restricted and non-restricted  reserves |       |                   | —     | ** **               |       |                       | (112       | )                                     |       |   | 112 | ** ** |   |   | — |   |   |
| Change in  cumulative translation adjustment             |       |                   | —     | ** **               |       |                       | 2          |                                  |       |   | 10 |   |   |   | 12 |   |   |
| Net loss for the  year                                   |       |                   | —     | ** **               |       |                       | —     |                                  |       |   | (396 | ) |   |   | (396 | ) |   |
| **Balance, February 28, 2005**                      | ** ** |                   | **0**      | ** **               |       |                       | **132**    | ** **                            |       |   | **(276** | **)** |   |   | **(144** | **)** |   |

 

The accompanyingnotes are an integral part of these consolidated financial statements.

F-6

----

**CONCORDIABUS NORDIC HOLDING AB AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(all amounts in millions of SEK)**
| ** **                                                                            | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Cash flows from operations**                                                        |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Loss before  income taxes                                                             |       |                                             | (397       | )                                                |       |                                             | (254       | ) |   |   | (228 | ) |   |
| Depreciation,  amortization and write downs                                           |       |                                             | 350        |                                             |       |                                             | 331        |   |   |   | 372 |   |   |
| Amortization of  deferred financing costs                                             |       |                                             | 10         |                                             |       |                                             | 31         |   |   |   | 8 |   |   |
| (Gain) / loss on  sale of fixed assets                                                |       |                                             | (4         | )                                                |       |                                             | (6         | ) |   |   | 4 |   |   |
| Foreign currency  exchange gains and losses                                           |       |                                             | (14        | )                                                |       |                                             | 17         |   |   |   | — |   |   |
| Change in pension  provision                                                          |       |                                             | (2         | )                                                |       |                                             | (9         | ) |   |   | 1 |   |   |
| Change in  provision for loss making contracts and restructuring                      |       |                                             | (26        | )                                                |       |                                             | 40         |   |   |   | 15 |   |   |
| Change in  interest receivable                                                        |       |                                             | 11         |                                             |       |                                             | (10        | ) |   |   | 5 |   |   |
| Change in interest  liability                                                         |       |                                             | (6         | )                                                |       |                                             | (12        | ) |   |   | 26 |   |   |
| Income taxes  received (paid)                                                         |       |                                             | (1         | )                                                |       |                                             | 1          |   |   |   | 2 |   |   |
| **Change  in working capital**                                                        |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| (Increase)  decrease in inventories                                                   |       |                                             | (2         | )                                                |       |                                             | 5          |   |   |   | (4 | ) |   |
| (Increase)  decrease in current receivables                                           |       |                                             | 118        |                                             |       |                                             | (100       | ) |   |   | (27 | ) |   |
| Increase  (decrease) in current liabilities                                           |       |                                             | (135       | )                                                |       |                                             | (10        | ) |   |   | (240 | ) |   |
| **Net  cash flows provided by (used in) operations**                                  | ** ** | ** **                                       | **(98**    | **)**                                            | ** ** | ** **                                       | **24**     | ** ** | ** ** | ** ** | **(66** | **)** |   |
| **Cash  flows from investing activities**                                             |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Investments in  buildings and land, vehicles, equipment, tools, fixtures and fittings |       |                                             | (112       | )                                                |       |                                             | (32        | ) |   |   | (216 | ) |   |
| Sale of buildings  and land, vehicles, equipment, tools, fixtures and fittings        |       |                                             | 44         |                                             |       |                                             | 21         |   |   |   | 75 |   |   |
| Sale of financial  fixed assets                                                       |       |                                             | 5          | ** **                                       |       |                                             | —     | ** ** |   |   | 5 | ** ** |   |
| **Net  cash flows provided by (used in) investing activities**                        | ** ** | ** **                                       | **(63**    | **)**                                            | ** ** | ** **                                       | **(11**    | **)** | ** ** | ** ** | **(136** | **)** |   |
| **Cash  flows from financing activities**                                             |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Proceeds from  borrowings                                                             |       |                                             | 3          | ** **                                       |       |                                             | 1,191      |   |   |   | — |   |   |
| Repayment of long-term  borrowings                                                    |       |                                             | —     | ** **                                       |       |                                             | (984       | ) |   |   | (84 | ) |   |
| Payment of  financial lease obligation                                                |       |                                             | (6         | )                                                |       |                                             | (6         | ) |   |   | (9 | ) |   |
| Costs incurred in  connection with debt refinancing                                   |       |                                             | (5         | )                                                |       |                                             | (49        | ) |   |   | (2 | ) |   |
| **Net  cash flows provided by (used in) financing activities**                        | ** ** | ** **                                       | **(8**     | **)**                                            | ** ** | ** **                                       | **152**    | ** ** | ** ** | ** ** | **(95** | **)** |   |
| **INCREASE (DECREASE) IN CASH AND BANK BALANCES**                                     | ** ** | ** **                                       | **(169**   | **)**                                            | ** ** | ** **                                       | **165**    | ** ** | ** ** | ** ** | **(297** | **)** |   |
| **CASH  AND BANK BALANCES AT BEGINNING OF YEAR**                                      | ** ** | ** **                                       | **346**    | ** **                                       | ** ** | ** **                                       | **180**    | ** ** | ** ** | ** ** | **480** | ** ** |   |
| **Translation  difference**                                                           | ** ** | ** **                                       | **(2**     | **)**                                            | ** ** | ** **                                       | **1**      | ** ** | ** ** | ** ** | **(3** | **)** |   |
| **CASH AND BANK BALANCES AT END  OF YEAR**                                            | ** ** | ** **                                       | **175**    | ** **                                       | ** ** | ** **                                       | **346**    | ** ** | ** ** | ** ** | **180** | ** ** |   |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-7

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (All amounts in millions of SEK unless otherwise stated)**

**Note1.   Organization and accounting principles**

**Organization**

Concordia Bus Nordic Holding AB and its subsidiaries (“ConcordiaBus Group” or “Concordia”) is a Swedish registered limited liability company,wholly owned by Concordia Bus AB (reg no 556574-8240) with itsregistered office in Stockholm, Sweden. The final operational parent company ofthe group is Concordia Bus BV, a company domiciled in the Netherlands.

Previously, Concordia Bus Nordic Holding AB was namedInterbus Finans AB and was a wholly owned subsidiary of Concordia BusNordic AB (publ), which was wholly owned by Concordia Bus AB. In January 2004,a reorganization took place whereby Concordia Bus Nordic AB (publ)transferred to Concordia Bus AB its 100% share ownership of InterbusFinans AB. Concordia Bus AB then transferred its shares in ConcordiaBus Nordic AB (publ) to Interbus Finans AB. Interbus Finans ABwas then renamed Concordia Bus Nordic Holding AB.

Such reorganization had the effect of creating a newholding company for Concordia Bus Nordic AB from one of its dormantsubsidiaries. Concordia Bus Nordic AB is thus now a 100% owned subsidiary ofConcordia Bus Nordic Holding AB. Concordia Bus Nordic Holding AB is a non-operatingholding company that has no independent assets or operations other than itsshares in Concordia Bus Nordic AB. Subsequent to the reorganization, theconsolidated financial position, results of operations and cash flows ofConcordia Bus Nordic AB are the same as that of Concordia Bus Nordic HoldingAB. Since this was a reorganization of entities under common control, theconsolidated financial statements are presented as if Concordia Bus NordicHolding AB was in existence as the shareholder of Concordia Bus Nordic AB forall periods presented.

The operations of Concordiaconsist of providing regular bus services under contract through itssubsidiaries to transit authorities in Sweden, Norway and Finland. In additionto contracted services, Concordia also supplies extensive express bus servicesover major portions of Sweden, as well as charter and tour bus services, mainlyin Gothenburg and Stockholm. In addition to the contracted services, Concordiaalso operates extensive intercity express bus services between major cities ofSweden, as well as charter and tour bus services, mainly in Gothenburg, Malmöand Stockholm regions. The operations are conducted through wholly-ownedsubsidiaries of Concordia Bus Nordic AB. Concordia Bus Nordic ABhas no independent assets or operations other than its shares in thesesubsidiaries.

**Accounting principles**

The consolidated financialstatements of the Concordia Bus Group have been prepared in accordance withgenerally accepted accounting principles in Sweden (“Swedish GAAP”) and thushave been prepared in accordance with recommendations issued by the SwedishFinancial Accounting Standards Council (“Redovisningsrådet”). The Concordia BusGroup is required to reconcile its financial statements to accountingprinciples generally accepted in the United States of America (“U.S. GAAP”).Significant differences between Swedish GAAP and U.S. GAAP are describedin Note 32.

The same accounting policies and methods ofcomputation are followed for the year ended February 28, 2005 consolidatedfinancial statements as compared with the most recent annual financial 

F-8

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

statements except that theCompany as of March 1, 2004 has adopted the Swedish Accounting StandardsCouncil’s recommendation RR29—Employee benefits.

There has been a gradualtransition in recent years to new Swedish recommendations of the SwedishFinancial Accounting Standards Council which are based on and comply with IFRS.From March 1, 2007, Concordia Bus Nordic Holding AB is required to presentits consolidated financial statements fully in accordance with InternationalFinancial Reporting Standards (IFRS). Concordia has not yet assessed thefinancial implications of adopting these new standards.

***Currency***

These financial statementshave been prepared in SEK. References to “SEK”, “Swedish krona” or “Swedishkronor” are to Swedish currency.

***Consolidated Financial Statements***

The Consolidated Financial Statements have beenprepared in accordance with the recommendations of the Swedish FinancialAccounting Standards Board (“Redovisningsrådet”) concerning consolidatedfinancial statements. The consolidated Statement of Operations and BalanceSheets of Concordia include all companies in which the Concordia Bus NordicHolding AB, directly or indirectly, holds more than 50 percent of thevoting rights.

Acquisitions have been accounted for using the purchasemethod. This means that the assets and liabilities, including deferred taxes,of acquired subsidiaries are recorded at fair value at the date of theacquisition. If the purchase price exceeds the estimated fair value of thecompany’s net assets, the difference is reported as goodwill, which isamortized over its estimated useful life. Income from companies acquired duringthe year is included in the Consolidated Financial Statements from the date ofacquisition. Net income from companies sold is included up to the date of thesale.

Internal profits and inter-companytransactions within the group are eliminated in the Consolidated FinancialStatements.

***Translation of investments in foreign subsidiaries***

Concordia uses the currentrate method to translate the financial statements of foreign subsidiaries, inaccordance with the suggested recommendations of the Swedish FinancialAccounting Standards Board (“Redovisningsrådet”). In applying this method,subsidiaries are reported as independent units with operations conducted inforeign currencies and in which the Company has a net investment. This meansthat the assets and liabilities of the foreign subsidiaries are translated atthe exchange rate as of the Balance Sheet date. The Income Statements are translatedat the average rate for the year.

***Revenue recognition***

The majority of Concordia’s revenues arise fromcontracts with local public transportation authorities having contract terms of5-8 years (“CPTA contracts”).

CPTA contracts generally provide Concordia with fixedfee revenue in return for the contracted bus services. Accordingly, all ticketrevenues collected by Concordia on such contracts, referred to as gross 

F-9

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

agreements, are forwardedto the local public transportation authorities, and Concordia receives itsfixed fees regardless of the number of passengers transported. Under somecontracts, Concordia receives fees from the local transportation authorityafter providing services. Under other contracts, Concordia receives fees inadvance of providing services. Regardless of the timing of receiving the feesfrom the local public transportation authorities, Concordia recognizes revenueon a straight-line basis over the period of the contract and, accordingly,accrues for earned fee revenue or defers unearned fee revenue as appropriate.Such fixed fees are generally subject to periodic adjustments for certainchanges in costs incurred or cost indices. In recognizing the fee revenue overthe period of the contract, Concordia records adjustments to the fee revenueduring the contract period based on the agreed cost adjustment mechanismcontained in the contracts. Revenues earned by Concordia on certain other CPTAcontracts, referred to as net agreements, are based on or consider the numberof passengers transported. Revenues for these contracts are recognized on thedate of travel by the passenger.

Revenues from express bus services are derived frompassenger ticket revenue received, and revenues from coach hire services arederived from the agreed price for hire of the buses. Concordia recognizesexpress bus service revenue and coach hire service revenue as services areprovided. Express bus service revenues are recognized on the date of travel bythe passenger. Coach hire service revenues are recognized on a straight-linebasis over the period of hire.

Revenue also includes rental income, sale of fuel anddiesel and from engineering services. The revenue resulting from otheroperating activities is recognized when the product is delivered or the serviceis performed or, in terms of revenues from leasing arrangements underoperational leases, on a straight-line basis over the term of lease.

Where appropriate, revenueamounts are shown net of value-added taxes.

***Income Taxes***

The total tax expense of the Concordia Bus Groupconsists of current and deferred taxes. Deferred tax primarily consists ofestimated tax on changes in untaxed reserves for the year and unused portion ofincome tax loss carry forwards to the extent that these losses can be used in thenear future for taxable reduction of future taxable income. The deferred incometax position is calculated using the enacted tax rate for each countryrespectively.

In the consolidated incomestatement taxes are reported as if the group companies were separate taxablelegal entities, in accordance with current taxation legislation for all periodsreported.

F-10

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

***Depreciation***

Depreciationand amortization is computed based on an asset’s expected useful life and itsdepreciable amount. The depreciable amount is computed as the differencebetween cost of acquisition and the expected residual value of the asset at theend of its useful life. Depreciation is computed using a straight-line methodbased on the following percentages:
| Goodwill                                   |   | 5–20    | % |
|--------------------------------------------|--------|--------------|---|
| Equipment, tools,  fixtures and fittings   |   | 10–33   | % |
| Public Service  Vehicles (“PSV”) |   | 7.15–33 | % |
| Buildings                                  |   | 3.33–5  | % |
| Land improvements                          |   | 3.75–5  | % |

 

Goodwill pertaining to the acquisition of IngeniØr M.O SchØyens Bilcentraler A/S is amortized over20 years, which is based on the company’s strong strategic position in theNorwegian marketplace and its well established brand in this market.

Deferred financing feesare amortized straight-line over the life of the debt.

***Tangible fixed assets***

Tangible fixed assets arevalued at cost, less accumulated depreciation and impairment charges.

***Impairment of tangible and intangible fixed assets***

Impairment reviews oftangible and intangible fixed assets, including goodwill, are performedwhenever there is an indication of possible impairment. The carrying values offixed assets, including goodwill related to those assets, are not considered tobe recoverable when the expected discounted cash flows from those assets areless than their carrying values. An impairment loss is determined based on theamount by which the carrying value exceeds the fair value of those assets.Losses on fixed assets to be disposed of are determined in a similar manner,taking into account the selling price reduced by the costs of disposal.

***Receivables and payables***

Receivables and payablesare recorded on an individual basis at the amounts, which is estimated to bereceived/paid.

***Receivables and payables in foreign currencies***

Receivables and payablesin foreign currencies are valued using the rate at the balance sheet date.Gains and losses on trade receivables and payables are reported under operatingprofit (loss). Gains and losses related to other receivables and payables arereported under financial income and expenses.

F-11

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

***Inventories***

Inventory is valued at thelower of cost, using the first in first out method, and market value afterprovision for obsolescence.

***Loss making contracts***

A significant portion ofConcordia’s revenues are derived from five to eight- year contracts withmunicipalities to provide bus services in a particular area. Under the terms ofthe contracts, the revenues are generally indexed at a rate corresponding to aconsumer price index or a net price index. Due to changes in circumstances andbecause costs have generally increased more quickly than revenues, suchcontracts may become loss making. Concordia records a provision for such lossmaking contracts at the lowest level for which there are separate identifiablecash flows. Losses are recognized in the period in which management determinesthat cumulative losses will be incurred on a particular contract. The loss iscomputed after taking into account direct and indirect costs related to theservice provided under the contract including depreciation on the related buseswhich will be used to meet the service obligation. Concordia Bus normally hasmultiple contracts with the CPTAs (Contract Public Transportation Authority).In most of the cases the different contracts with the same CPTA are closelyconnected to each other. The contracts share the same resources (staff,equipment, vehicles and premises). Often the contracts also are related forother reasons. Concordia signs several contracts at the same time where someare loss making and some are profit making. In instances where the cash flows fromsuch contracts are interrelated, provisions for loss making contracts aremeasured by group contracts, however in no instance on a higher level than byCPTA. Concordia also signs contracts to maximize the usage of the capacity inthe resources. The provision is calculated as the difference between theestimated costs to fulfill the contractual commitment and the contractualrevenues.

***Derivative contracts***

Currency derivatives (currency forwards and currencyswaps) entered into in order to secure the currency exposure in interestpayable for issued debt are accounted for as hedging securities, that is, thegains and losses attributed to these derivatives are recorded when the currencyexchange rate differences on the underlying commercial flows are realised.Derivatives that do not qualify for hedge accounting are accounted for at thelower of acquisition cost or market value, where unrealised losses areaccounted for as a financial cost in the statement of operations.

Interest rate derivatives (interest rate swaps)entered into in order to obtain a fixed interest rate with the preferredmaturity in the lease obligation are accounted for as hedging securities, thatis, the gains and losses attributed to these derivatives is recorded at thesame time as the hedged item is recorded. Interest rate derivatives that do notqualify for hedge accounting are accounted for at the lower of acquisition costor market value, where unrealised losses are accounted for as a financial costin the statement of operations.

Diesel derivatives enteredinto in order to obtain a more secure price level are accounted for as hedgingsecurities, that is, the gains and losses attributed to these derivatives arerecorded at the same time as the hedged item is recorded. Diesel derivativesthat do not qualify for hedge accounting are accounted 

F-12

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

for atthe lower of acquisition cost or market value, where unrealised losses areaccounted for as an operating cost in the statement of operations.

***Restructurings***

Concordia recordsprovisions for restructurings and related activities only after the detailedformal plan for the restructuring has been formulated and either theimplementation commences or the main features of the plan have been announcedto those affected by it. Provisions for restructurings include only the directexpenditures arising from the restructuring, which are those that are bothnecessarily entailed by the restructuring and not associated with thecontinuing activities of the enterprise.

***Leasing***

Leases are classified inthe consolidated financial statements as either financial leases or operatingleases. A finance lease transfers to the lessee the significant economic risksand rewards of ownership. If this is not the case, the lease is classified asan operating lease. For each finance lease, a fixed asset is reported in thebalance sheet and a corresponding lease obligation is recorded as a liability.In the statement of operations, the costs of financial leases are reported asdepreciation and interest expense. Under operating leases no asset or liabilityis recorded in the balance sheet. In the statement of operations, the costs ofoperating leases are charged to the income statement on a straight-line basis.

***Cash flow statement***

The cash flow statement isderived from the statement of operating income and other changes between theopening and closing balance sheets, eliminating the effect of currencytranslation differences. The cash and bank balances in the cash flow statementinclude securities, time deposits and other short term deposits.

***Retirement indemnities***

Concordia has both definedcontribution plans (covering mostly active employees) and defined benefit plans(covering mostly former employees). The costs under the defined contributionplans are calculated based on agreed contributions specified under the terms ofeach plan while costs under defined benefit plans are actuarially determinedand recognized when services are rendered.

***Use of estimates***

The preparation offinancial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities to the date of the financial statements and the reportedamounts of revenues and expense during the reporting period. Actual resultscould differ from those estimates.

**Segment information**

Concordia operates within three bus transportationmarkets which are Concordia’s main reportable segments: contractual public bustransportation “CPTA”, scheduled intercity bus services (express bus 

F-13

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

services); and coach hireservices. In Norway and Finland the group operates within the contractualpublic bus transportation segment only.

The contractual public bus transportation divisionoperates throughout Sweden and in the major urban areas in Norway and Finland.The majority of revenues are generated from contractual agreements withmunicipalities whereby Concordia receives fixed revenues for providing thecontracted services.

Swebus Express conducts its business on certain routesall over Sweden. Revenues are derived from ticket sales to passengers.

Coach hire services (Interbus) operate hire andexcursion engagements, primarily in the three major cities in Sweden,Stockholm, Gothenburg and Malmö, but also in other bigger cities in the Nordiccountries.

The management and reporting of results of Concordia’soperations is based upon the reportable segments rather than the legalstructure. Concordia’s operating decision-making group is the Board ofDirectors. Each segment is managed separately because each business requiresspecialized industry knowledge and strategies.

The accounting policies for the reportable segmentsare the same as those used in the consolidated financial statements.

Concordia Bus Nordic ABevaluates performance based upon the operating profit or loss before tax ofeach reportable segment and generally accounts for inter-segment salesand transfers as if the sales or transfers were to third parties at currentmarket prices. Sales are attributed to geographical areas based on the locationof the assets producing the revenue.

**Note 2.**   Primarysegments—market types

Revenueby segment:
| ** **                                 | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 29, 2003** | ** ** |
|--------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| CPTA—Sweden                           |       |                                             | 3,407      |                                             |       |                                             | 3,486      |   |   |   | 3,407 |   |   |
| CPTA—Sweden,  sales to other segments |       |                                             | 34         |                                             |       |                                             | 37         |   |   |   | 51 |   |   |
| *Total  CPTA—Sweden*                  |       |                                             | *3,441*    |                                             | * *   | * *                                         | *3,523*    |   | * * | * * | *3,458* |   |   |
| CPTA—Norway                           |       |                                             | 450        |                                             |       |                                             | 365        |   |   |   | 442 |   |   |
| CPTA—Finland                          |       |                                             | 415        |                                             |       |                                             | 391        |   |   |   | 394 |   |   |
| *Total CPTA*                               | * *   | * *                                         | *4,306*    |                                             | * *   | * *                                         | *4,279*    |   | * * | * * | *4,294* |   |   |
| Express                                    |       |                                             | 337        |                                             |       |                                             | 327        |   |   |   | 295 |   |   |
| Interbus—external  customers          |       |                                             | 117        |                                             |       |                                             | 110        |   |   |   | 127 |   |   |
| Interbus—sales to  other segments     |       |                                             | 25         |                                             |       |                                             | 27         |   |   |   | 26 |   |   |
| *Total  bus operations*                    | * *   | * *                                         | *4,785*    |                                             | * *   | * *                                         | *4,743*    |   | * * | * * | *4,742* |   |   |
| Other revenue and group elimination        |       |                                             | 27         |                                             |       |                                             | 18         |   |   |   | 16 |   |   |
| **Total revenue**                          | ** ** | ** **                                       | **4,812**  |                                             | ** ** | ** **                                       | **4,761**  |   | ** ** | ** ** | **4,758** |   |   |

 

F-14

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Operatingprofit (loss) by segment:
| ** **                       | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| CPTA—Sweden(1)              |       |                                             | (162       | ***)***                                          |       |                                             | (57        | ***)*** |   |   | (27 | ***)*** |   |
| CPTA—Norway(2)              |       |                                             | (7         | ***)***                                          |       |                                             | (11        | ***)*** |   |   | (36 | ***)*** |   |
| CPTA—Finland(3)             |       |                                             | (18        | ***)***                                          |       |                                             | (24        | ***)*** |   |   | (23 | ***)*** |   |
| *Total  CPTA*                    | * *   | * *                                         | *(187*     | ***)***                                          | * *   | * *                                         | *(92*      | ***)*** | * * | * * | *(86* | ***)*** |   |
| Express                          |       |                                             | 29         | *** ***                                     |       |                                             | 34         | *** *** |   |   | 25 | *** *** |   |
| Interbus                         |       |                                             | 4          | *** ***                                     |       |                                             | 3          | *** *** |   |   | 5 | *** *** |   |
| *Total  Express and Interbus*    | * *   | * *                                         | *33*       | *** ***                                     | * *   | * *                                         | *37*       | *** *** | * * | * * | *30* | *** *** |   |
| *Total  bus operations*          | * *   | * *                                         | *(154*     | ***)***                                          | * *   | * *                                         | *(55*      | ***)*** | * * | * * | *(56* | ***)*** |   |
| Head office items  and others(4) |       |                                             | (102       | ***)***                                          |       |                                             | (53        | ***)*** |   |   | (67 | ***)*** |   |
| **Total operating loss**         | ** ** | ** **                                       | **(256**   | ***)***                                          | ** ** | ** **                                       | **(108**   | ***)*** | ** ** | ** ** | **(123** | ***)*** |   |

----

Total operating loss, above,includes net costs for loss making contracts and restructuring costs of SEK 127,SEK 40 and SEK 15, respectively, for the years ended February 28,2005, February 29, 2004 and February 28 2003.

(1)          Includes SEK 90, SEK 47and SEK 6, respectively, costs for loss making contracts and restructuringcosts for the years ended February 28, 2005, February 29, 2004 and February 282003.

(2)          Includes SEK (7), SEK (8) andSEK 5, respectively, of costs for loss making contracts, net of reversal,for the years ended February 28, 2005, February 29, 2004 and February 282003.

(3)          Includes SEK (3), SEK 1and SEK 4, respectively, of costs for loss making contracts, net ofreversal, for the years ended February 28, 2005, February 29, 2004and February 28 2003.

(4)          Includes SEK 47 ofrestructuring costs for the year ended February 28, 2005.

Identifiableassets by segment:
| ** **                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| CPTA—Sweden                           |       |                            | 1,287      |                            |       |   | 1,665 |   |   |
| CPTA—Norway                           |       |                            | 354        |                            |       |   | 310 |   |   |
| CPTA—Finland                          |       |                            | 194        |                            |       |   | 232 |   |   |
| *Total  CPTA*                              | * *   | * *                        | *2,110*    |                            | * *   | * * | *2,446* |   |   |
| Express                                    |       |                            | 157        |                            |       |   | 155 |   |   |
| Interbus                                   |       |                            | 57         |                            |       |   | 59 |   |   |
| *Subtotal  Express and Interbus*           | * *   | * *                        | *214*      |                            | * *   | * * | *214* |   |   |
| *Total  bus operations*                    | * *   | * *                        | *2,324*    |                            | * *   | * * | *2,660* |   |   |
| Real estate                                |       |                            | 1          |                            |       |   | 2 |   |   |
| Head Office  assets and group eliminations |       |                            | 239        |                            |       |   | 428 |   |   |
| **Total assets**                           | ** ** | ** **                      | **2,286**  |                            | ** ** | ** ** | **2,851** |   |   |

 

F-15

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Identifiableliabilities by segment:
| ** **                         | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| CPTA—Sweden                   |       |                            | 655        |                            |       |   | 653 |   |   |
| CPTA—Norway                   |       |                            | 59         |                            |       |   | 59 |   |   |
| CPTA—Finland                  |       |                            | 78         |                            |       |   | 84 |   |   |
| *Total  CPTA*                      | * *   | * *                        | *792*      |                            | * *   | * * | *796* |   |   |
| Express                            |       |                            | 40         |                            |       |   | 41 |   |   |
| Interbus                           |       |                            | 29         |                            |       |   | 22 |   |   |
| *Subtotal  Express and Interbus*   | * *   | * *                        | *69*       |                            | * *   | * * | *63* |   |   |
| *Total  bus operations*            | * *   | * *                        | *861*      |                            | * *   | * * | *859* |   |   |
| Head Office and group eliminations |       |                            | 1,569      |                            |       |   | 1,757 |   |   |
| **Total liabilities**              | ** ** | ** **                      | **2,430**  |                            | ** ** | ** ** | **2,616** |   |   |

 

Investmentsin intangible, tangible and financial fixed assets by segment:
| ** **                                                                | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| CPTA—Sweden                                                          |       |                                             | 55         |                                             |       |                                             | 19         |   |   |   | 202 |   |   |
| CPTA—Norway                                                          |       |                                             | 35         |                                             |       |                                             | 3          |   |   |   | 1 |   |   |
| CPTA—Finland                                                         |       |                                             | 0          |                                             |       |                                             | 0          |   |   |   | 0 |   |   |
| *Total  CPTA*                                                             | * *   | * *                                         | *90*       |                                             | * *   | * *                                         | *22*       |   | * * | * * | *203* |   |   |
| Express                                                                   |       |                                             | 4          |                                             |       |                                             | 1          |   |   |   | 1 |   |   |
| Interbus                                                                  |       |                                             | 11         |                                             |       |                                             | 0          |   |   |   | 16 |   |   |
| *Total  Express and Interbus*                                             | * *   | * *                                         | *15*       |                                             | * *   | * *                                         | *1*        |   | * * | * * | *17* |   |   |
| *Total  bus operations*                                                   | * *   | * *                                         | *105*      |                                             | * *   | * *                                         | *23*       |   | * * | * * | *220* |   |   |
| Head office items  and others                                             |       |                                             | 12         |                                             |       |                                             | 58         |   |   |   | (2 | ) |   |
| **Total investments in  intangible, tangible and financial fixed assets** | ** ** | ** **                                       | **117**    |                                             | ** ** | ** **                                       | **81**     |   | ** ** | ** ** | **218** |   |   |

 

Reconciliationto statements of cash flows:
| ** **                                                                         | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Investments in  buildings, land, vehicles, equipment, tools, fixtures and fittings |       |                                             | 112        |                                             |       |                                             | 32         |   |   |   | 216 |   |   |
| Costs incurred  and capitalized in connection with debt refinancing                |       |                                             | 5          |                                             |       |                                             | 49         |   |   |   | 2 |   |   |
|                                                                               | ** ** | ** **                                       | **117**    |                                             | ** ** | ** **                                       | **81**     |   | ** ** | ** ** | **218** |   |   |

 

F-16

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Depreciation,amortization and write-downs by segment:
| ** **                    | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| CPTA—Sweden              |       |                                             | 249        |                                             |       |                                             | 226        |   |   |   | 242 |   |   |
| CPTA—Norway              |       |                                             | 42         |                                             |       |                                             | 29         |   |   |   | 37 |   |   |
| CPTA—Finland             |       |                                             | 30         |                                             |       |                                             | 28         |   |   |   | 31 |   |   |
| *Total  CPTA*                 | * *   | * *                                         | *321*      |                                             | * *   | * *                                         | *283*      |   | * * | * * | *310* |   |   |
| Express                       |       |                                             | 13         |                                             |       |                                             | 18         |   |   |   | 15 |   |   |
| Interbus                      |       |                                             | 10         |                                             |       |                                             | 10         |   |   |   | 12 |   |   |
| *Total  Express and Interbus* | * *   | * *                                         | *23*       |                                             | * *   | * *                                         | *28*       |   | * * | * * | *27* |   |   |
| *Total  bus operations*       | * *   | * *                                         | *344*      |                                             | * *   | * *                                         | *311*      |   | * * | * * | *337* |   |   |
| Buildings                     |       |                                             | 0          |                                             |       |                                             | 0          |   |   |   | 0 |   |   |
| Head office items  and others |       |                                             | 6          |                                             |       |                                             | 20         |   |   |   | 35 |   |   |
| **Total depreciation**        | ** ** | ** **                                       | **350**    |                                             | ** ** | ** **                                       | **331**    |   | ** ** | ** ** | **372** |   |   |

 

**Note 3.   Secondarysegments—marketing areas**

Revenueby country:
| ** **        | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Revenue**       |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Sweden            |       |                                             | 3,924      |                                             |       |                                             | 3,986      |   |   |   | 3,902 |   |   |
| Norway            |       |                                             | 466        |                                             |       |                                             | 379        |   |   |   | 457 |   |   |
| Finland           |       |                                             | 422        |                                             |       |                                             | 396        |   |   |   | 399 |   |   |
| **Total revenue** | ** ** | ** **                                       | **4,812**  |                                             | ** ** | ** **                                       | **4,761**  |   | ** ** | ** ** | **4,758** |   |   |

 

Assetsby country:
| ** **       | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Assets**       |       |                            |       |                            |       |   |   |   |   |
| Sweden           |       |                            | 1,738      |                            |       |   | 2,310 |   |   |
| Norway           |       |                            | 354        |                            |       |   | 309 |   |   |
| Finland          |       |                            | 194        |                            |       |   | 232 |   |   |
| **Total assets** | ** ** | ** **                      | **2,286**  |                            | ** ** | ** ** | **2,851** |   |   |

 

F-17

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Investmentsin intangible, tangible and financial fixed assets by country:
| ** **                                                                | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Investments**                                                           |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Sweden                                                                    |       |                                             | 82         |                                             |       |                                             | 78         |   |   |   | 217 |   |   |
| Norway                                                                    |       |                                             | 35         |                                             |       |                                             | 3          |   |   |   | 1 |   |   |
| Finland                                                                   |       |                                             | 0          |                                             |       |                                             | 0          |   |   |   | 0 |   |   |
| **Total investments in  intangible, tangible and financial fixed assets** | ** ** | ** **                                       | **117**    |                                             | ** ** | ** **                                       | **81**     |   | ** ** | ** ** | **218** |   |   |

 

Reconciliationto statements of cash flows:
| ** **                                                                         | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Investments in  buildings, land, vehicles, equipment, tools, fixtures and fittings |       |                                             | 112        |                                             |       |                                             | 32         |   |   |   | 216 |   |   |
| Costs incurred  and capitalized in connection with debt refinancing                |       |                                             | 5          |                                             |       |                                             | 49         |   |   |   | 2 |   |   |
|                                                                               | ** ** | ** **                                       | **117**    |                                             | ** ** | ** **                                       | **81**     |   | ** ** | ** ** | **218** |   |   |

 

F-18

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 4.**   Netrevenue

Netrevenue is comprised of revenue from bus services, rental income, sale of fuelincluding diesel and revenues from engineering services provided to externalcustomers.
| ** **                                      | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Revenue by type**                             |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Revenue from  regular bus services              |       |                                             | 4,726      |                                             |       |                                             | 4,663      |   |   |   | 4,665 |   |   |
| Rent, external  engineering and diesel revenues |       |                                             | 34         |                                             |       |                                             | 47         |   |   |   | 40 |   |   |
| Other revenues                                  |       |                                             | 52         |                                             |       |                                             | 51         |   |   |   | 53 |   |   |
| **Total revenues**                              | ** ** | ** **                                       | **4,812**  |                                             | ** ** | ** **                                       | **4,761**  |   | ** ** | ** ** | **4,758** |   |   |

 

**Note 5.**   Costsof services provided

Directcosts of services provided are included, along with other costs, in thefollowing cost categories in the statements of operations: fuel, tires andother consumables; other external costs; personnel costs; depreciation andamortization. The direct costs of services included in these cost categorieswere as follows:
| ** **                                               | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Driver’s costs                                      |       |                                             | 2,287      |                                             |       |                                             | 2,290      |   |   |   | 2,265 |   |   |
| Depreciation of  PSV and operating lease charges         |       |                                             | 736        |                                             |       |                                             | 676        |   |   |   | 676 |   |   |
| Fuel, tires,  other consumables and other direct   costs |       |                                             | 1,254      |                                             |       |                                             | 1,170      |   |   |   | 1,165 |   |   |
| **Total costs of services  provided**                    | ** ** | ** **                                       | **4,277**  |                                             | ** ** | ** **                                       | **4,136**  |   | ** ** | ** ** | **4,106** |   |   |

 

**Note 6.   Otherexternal costs**
| ** **                            | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Audit fees (in thousands of  SEK)** |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| **Deloitte & Touche AB**     |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Audit and audit  related fees         |       |                                             | 2,738      |                                             |       |                                             | 4,144      |   |   |   | 1,527 |   |   |
| Other services                        |       |                                             | —     |                                             |       |                                             | —     |   |   |   | 260 |   |   |
| **Total**                             | ** ** | ** **                                       | **2,738**  |                                             | ** ** | ** **                                       | **4,144**  |   | ** ** | ** ** | **1,787** |   |   |

 

F-19

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Auditand audit related fees represent the independent auditors’ examination of thefinancial statements and quarterly reports. The audit and audit related feesalso represents fees in conjunction with the auditor’s examination ofsignificant decisions, actions taken and circumstances of Concordia in order tobe able to determine the possible liability to the Company of any Board Memberor the Managing Director or whether they have in some other way acted incontravention of the Companies Act, the Annual Accounts Act or the Articles ofAssociation. Audit and audit related fees also include professional services inconnection with the offering of debt securities of Concordia. All other servicesprovided are included in “other services”.
| ** **                                       | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Leasing charges**                              |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Leasing charges  for the year (operating leases) |       |                                             | 428        |                                             |       |                                             | 388        |   |   |   | 350 |   |   |
| **Total**                                        | ** ** | ** **                                       | **428**    |                                             | ** ** | ** **                                       | **388**    |   | ** ** | ** ** | **350** |   |   |

 

For the years ended February 28,2005, February 29, 2004 and February 28, 2003, Concordia had 1,470,1,317, and 1,156 buses, respectively, under operational leasing contracts.Future lease payments for these buses amounts to SEK 1,934 for the year ended February 28,2005, SEK 1,952 for the year ended February 29, 2004, and SEK 1,849for the year ended February 28, 2003. Concordia also has properties underoperational leasing contracts in which it conducts business.

Totalfuture minimum lease payments discounted for each of the periods are asfollows:
| ** **             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| —Vehicles (Buses) |       |                            | 829        |                            |       |   | 905 |   |   |
| —Properties       |       |                            | 46         |                            |       |   | 52 |   |   |
| **Total**              | ** ** | ** **                      | **875**    |                            | ** ** | ** ** | **957** |   |   |

 

Thepresent value of the future leasing payments at February 28, 2005 ispayable as follows:
| ** **             | ** ** | **Total**  | ** ** | **Less than  a year** | ** ** | **1-3  years** | ** ** | **3-5  years** | ** ** | **More than  5 years** | ** ** |
|------------------------|------------|------------|------------|---------------------------------|------------|----------------|------------|----------------|------------|----------------------------------|------------|
| —Vehicles (Buses) |       |       | 829        |                            |       |           | 322        |           |       |                             | 369        |   |   |   | 129 |   |   |   | 9 |   |   |
| —Properties       |       |       | 46         |                            |       |           | 7          |           |       |                             | 15         |   |   |   | 17 |   |   |   | 7 |   |   |
| **Total**              | ** ** | ** ** | **875**    |                            | ** ** | ** **     | **329**    |           | ** ** | ** **                       | **384**    |   | ** ** | ** ** | **146** |   | ** ** | ** ** | **16** |   |   |

 

Thefollowing is a schedule, by year, of future gross rental payments underoperating leases as of February 28, 2005, should we keep our currentoperational but leases through all contractual terms.
| **Years Ending:**       |       |      |       |
|-------------------------|------------|-----------|------------|
| February 28,  2006 |       | 393       |       |
| February 28,  2007 |       | 336       |       |
| February 29,  2008 |       | 272       |       |
| February 28,  2009 |       | 231       |       |
| February 28,  2010 |       | 209       |       |
| Later years             |       | 494       |       |
| **Total**               | ** ** | **1,935** | ** ** |

 

F-20

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

 

**Note 7.   Personnelcosts**
| ** **                                                              | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **AVERAGE  NUMBER OF EMPLOYEES**                                        | ** ** |                                             | ** ** | ** **                                       |       |                                             | ** ** | ** ** |   |   | ** ** | ** ** |   |
| **Total  company of which:**                                            | ** ** |                                             | **6,949**  | ** **                                       |       |                                             | **7,512**  | ** ** |   |   | **7,484** | ** ** |   |
| Men                                                                     |       |                                             | 6,101      | ** **                                       |       |                                             | 6,467      | ** ** |   |   | 6,603 | ** ** |   |
| Women                                                                   |       |                                             | 848        | ** **                                       |       |                                             | 1,045      | ** ** |   |   | 881 | ** ** |   |
| **Finland of which**                                                    | ** ** |                                             | **766**    | ** **                                       |       |                                             | **750**    | ** ** |   |   | **759** | ** ** |   |
| Men                                                                     |       |                                             | 725        | ** **                                       |       |                                             | 723        | ** ** |   |   | 722 | ** ** |   |
| Women                                                                   |       |                                             | 41         | ** **                                       |       |                                             | 27         | ** ** |   |   | 37 | ** ** |   |
| **Norway of which**                                                     | ** ** |                                             | **611**    | ** **                                       |       |                                             | **580**    | ** ** |   |   | **775** | ** ** |   |
| Men                                                                     |       |                                             | 577        | ** **                                       |       |                                             | 531        | ** ** |   |   | 728 | ** ** |   |
| Women                                                                   |       |                                             | 34         | ** **                                       |       |                                             | 49         | ** ** |   |   | 47 | ** ** |   |
| **Sweden  of which:**                                                   | ** ** |                                             | **5,572**  | ** **                                       |       |                                             | **6,182**  | ** ** |   |   | **5,950** | ** ** |   |
| Men                                                                     |       |                                             | 4,799      | ** **                                       |       |                                             | 5,213      | ** ** |   |   | 5,153 | ** ** |   |
| Women                                                                   |       |                                             | 773        | ** **                                       |       |                                             | 969        | ** ** |   |   | 797 | ** ** |   |
| **SALARIES AND OTHER  REMUNERATIONS**                                   |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Board of Directors and President*                                       |       |                                             | 5          | ** **                                       |       |                                             | 5          | ** ** |   |   | 4 | ** ** |   |
| Other employees in Sweden                                               |       |                                             | 1,450      | ** **                                       |       |                                             | 1,476      | ** ** |   |   | 1,454 | ** ** |   |
| ** **                                                              | ** ** |                                             | **1,455**  | ** **                                       |       |                                             | **1,481**  | ** ** |   |   | **1,458** | ** ** |   |
| **Subsidiaries  abroad**                                                |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Finland, Board of Directors and President                               |       |                                             | 2          | ** **                                       |       |                                             | 1          | ** ** |   |   | 1 | ** ** |   |
| Finland, other employees                                                |       |                                             | 205        | ** **                                       |       |                                             | 197        | ** ** |   |   | 195 | ** ** |   |
| Norway, Board of Directors and President                                |       |                                             | 2          | ** **                                       |       |                                             | 2          | ** ** |   |   | 1 | ** ** |   |
| Norway, other employees                                                 |       |                                             | 232        | ** **                                       |       |                                             | 183        | ** ** |   |   | 204 | ** ** |   |
| **TOTAL**                                                               | ** ** |                                             | **1,896**  | ** **                                       |       |                                             | **1,864**  | ** ** |   |   | **1,859** | ** ** |   |
| **Employer’s contribution for national social  security purposes** | ** ** |                                             | **672**    | ** **                                       |       |                                             | **708**    | ** ** |   |   | **700** | ** ** |   |
| Of which pension costs to other employees                               |       |                                             | 124        | ** **                                       |       |                                             | 161        | ** ** |   |   | 132 | ** ** |   |
| Of which pension  costs to Board of Directors and President             |       |                                             | 2          | ** **                                       |       |                                             | 2          | ** ** |   |   | 5 | ** ** |   |

----

*                    Numbersfor the group represent Board of Directors and presidents in all Swedishsubsidiaries. Remunerations to the former president of Concordia Bus Nordic ABwas paid out by Concordia Bus Management AS and was included as corporate costscharged to Concordia Bus Nordic AB, and therefore not included in the abovetable as personnel costs for the years ended in February 2003 and 2004. Asof June 2004 the president was employed by Concordia Bus Nordic AB andtherefore included in the above table as personnel costs for the year ended February 28,2005.  The former CFO resigned fromConcordia Bus on June 30, 2004. He received a termination payment of SEK 2million.

F-21

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

 
| ** **                                                  | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                                  | ** ** | **Number**                      | ** ** | **Thereof  men**                | ** ** | **Number** | ** ** | **Thereof  men** | ** ** |
| **Board members and senior management** |       |                            |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Board members                                               |       |                            | 24         |                            |       |   | 100 | % |   |   | 13 |   |   |   | 100 | % |   |
| Managing directors and  other members of senior management  |       |                            | 28         |                            |       |   | 88 | % |   |   | 21 |   |   |   | 90 | % |   |

 

**Note 8.   Depreciation, amortization and write-downs**
| ** **                               | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Goodwill                                 |       |                                             | 13         |                                             |       |                                             | 13         |   |   |   | 13 |   |   |   |
| Buildings and  land                      |       |                                             | 0          |                                             |       |                                             | 0          |   |   |   | 0 |   |   |   |
| Equipment, tools,  fixtures and fittings |       |                                             | 18         |                                             |       |                                             | 20         |   |   |   | 23 |   |   |   |
| Vehicles                                 |       |                                             | 319        |                                             |       |                                             | 298        |   |   |   | 336 |   |   |   |
| **Total**                                | ** ** | ** **                                       | **350**    |                                             | ** ** | ** **                                       | **331**    |   | ** ** | ** ** | **372** |   |   |   |

 

For information concerning the useful lives of theassets, please see Note 1. Organization and AccountingPrinciples—Depreciation.

**Note 9.   Interestincome**
| ** **                                 | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Interest income  from affiliated companies |       |                                             | —     |                                             |       |                                             | —     |   |   |   | 1 |   |   |
| Other interest  income                     |       |                                             | 3          |                                             |       |                                             | 5          |   |   |   | 9 |   |   |
| **Total**                                  | ** ** | ** **                                       | **3**      |                                             | ** ** | ** **                                       | **5**      |   | ** ** | ** ** | **10** |   |   |

 

Of the total interestincome above, SEK 4, SEK 5, and SEK 16 has been received during the years endedFebruary 28, 2005, February 29, 2004, and February 28, 2003,respectively.

**Note 10.**   Interestexpense and other similar items
| ** **                                          | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-----------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Interest expense  on loan from affiliated companies |       |                                             | (32        | **)**                                            |       |                                             | (24        | **)** |   |   | (27 | **)** |   |
| Interest expense  on loans from credit institutions |       |                                             | (1         | **)**                                            |       |                                             | (70        | **)** |   |   | (73 | **)** |   |
| Interest expense  on senior secured notes           |       |                                             | (108       | **)**                                            |       |                                             | (11        | **)** |   |   | — | ** ** |   |
| Amortization of  deferred financing fees            |       |                                             | (10        | **)**                                            |       |                                             | (6         | **)** |   |   | (8 | **)** |   |
| Write-off of  unamortized deferred financing fees   |       |                                             | —     | ** **                                       |       |                                             | (25        | **)** |   |   | — | ** ** |   |
| Exchange rate  gains and losses, net                |       |                                             | 18         | ** **                                       |       |                                             | (7         | **)** |   |   | 4 | ** ** |   |
| Other financial  costs                              |       |                                             | (11        | **)**                                            |       |                                             | (8         | **)** |   |   | (11 | **)** |   |
| **Total**                                           | ** ** | ** **                                       | **(144**   | **)**                                            | ** ** | ** **                                       | **(151**   | **)** | ** ** | ** ** | **(115** | **)** |   |

 

Of the total interest expense above, SEK 136, SEK 163and SEK 90 and has been paid during the years ended February 28, 2005, February 29,2004, and February 28, 2003, respectively.

F-22

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 11.   Incometaxes**
| ** **                           | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Income taxes paid  / (repaid)        |       |                                             | (1         | )                                                |       |                                             | 1          |   |   |   | 1 |   |   |
| Income taxes on  group contributions |       |                                             | —     |                                             |       |                                             | —     |   |   |   | (39 | ) |   |
| Deferred income  taxes               |       |                                             | 2          |                                             |       |                                             | 82         |   |   |   | 87 |   |   |
| **Total**                            | ** ** | ** **                                       | **1**      |                                             | ** ** | ** **                                       | **83**     |   | ** ** | ** ** | **49** |   |   |

 

Differencebetween statutory income tax rate and effective rate of income tax benefit:
| ** **                                                                                   | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Loss before  income taxes                                                                    |       |                                             | (397       | )                                                |       |                                             | (254       | ) |   |   | (228 | ) |   |
| Tax at Swedish  statutory rate of 28%                                                        |       |                                             | 111        |                                             |       |                                             | 71         |   |   |   | 64 |   |   |
| Tax effect  regarding non-taxable items                                                      |       |                                             | (1         | )                                                |       |                                             | 1          |   |   |   | 1 |   |   |
| Tax effect  regarding goodwill amortisation                                                  |       |                                             | (4         | )                                                |       |                                             | (4         | ) |   |   | (4 | ) |   |
| Tax effect of tax  losses from previous years not previously recognized in the balance sheet |       |                                             | —     |                                             |       |                                             | 15         |   |   |   | — |   |   |
| Tax loss carry  forwards for which no deferred tax asset has been recognized                 |       |                                             | (105       | )                                                |       |                                             | —     |   |   |   | (12 | ) |   |
| **Total income tax benefit**                                                                 | ** ** | ** **                                       | **1**      |                                             | ** ** | ** **                                       | **83**     |   | ** ** | ** ** | **49** |   |   |

 

The income tax rates in Sweden, Norway and Finland are28%. The tax loss carry forward is based on the loss before tax withadjustments for non deductible/non-taxable revenues/costs. Concordia BusNordic Holding AB group had unrecorded accumulated tax loss carry forwardsamounting to SEK 252 and SEK 65 at February 28, 2005 and February 29,2004, respectively. The losses can only be used in the countries where theyarise and in Sweden they can be used without time limitation. The indirectsubsidiary Concordia Bus Finland Oy Ab has accumulated tax loss carry forwardsof SEK 50 of which SEK 10 can be used until 2011, SEK 4 until2012, SEK 14 until 2013 and SEK 22 until 2014. The indirect subsidiaryIngeniØr M.O. SchcØyens Bilcentraler AS does not have anytax loss carry forwards.

Temporarydifferences arise in instances where assets or liabilities are valueddifferently for tax purposes. Temporary differences have resulted in deferredtax assets as follows:
| ** **                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accelerated  depreciation for tax purposes |       |                            | —     |                            |       |   | (28 | ) |   |
| Provision for  loss making contracts       |       |                            | 16         |                            |       |   | 22 |   |   |
| Tax loss carry  forward                    |       |                            | 71         |                            |       |   | 18 |   |   |
| Valuation on  receivables                  |       |                            | 23         |                            |       |   | 2 |   |   |
| Other temporary  differences               |       |                            | 2          |                            |       |   | 3 |   |   |
| Valuation  allowance                       |       |                            | (112       | )                               |       |   | (17 | ) |   |
| **Total deferred income tax asset**        | ** ** | ** **                      | **—** |                            | ** ** | ** ** | **—** |   |   |

 

F-23

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 12.   Intangibleassets**
| ** **                         | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Goodwill**                       |       |                            |       |                            |       |   |   |   |   |
| **Acquisition cost**               |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                  |       |                            | 302        |                            |       |   | 308 |   |   |
| Translation  difference            |       |                            | 10         |                            |       |   | (6 | ) |   |
| Ending balance                     |       |                            | 312        |                            |       |   | 302 |   |   |
| **Accumulated depreciation**       |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                  |       |                            | (89        | )                               |       |   | (76 | ) |   |
| Depreciation for  the year         |       |                            | (13        | )                               |       |   | (13 | ) |   |
| Translation  difference            |       |                            | (1         | )                               |       |   | 0 |   |   |
| Ending balance                     |       |                            | (103       | )                               |       |   | (89 | ) |   |
| **Net book value, ending balance** | ** ** | ** **                      | **209**    |                            | ** ** | ** ** | **213** |   |   |

 

**Note 13.   Tangibleassets**
| ** **                          | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Buildings and land**              |       |                            |       |                            |       |   |   |   |   |
| **Acquisition cost**                |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                   |       |                            | 3          |                            |       |   | 3 |   |   |
| Purchases                           |       |                            | 0          |                            |       |   | 1 |   |   |
| Sales/Disposals                     |       |                            | 0          |                            |       |   | (1 | ) |   |
| Ending balance                      |       |                            | 3          |                            |       |   | 3 |   |   |
| **Accumulated depreciation**        |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                   |       |                            | (1         | )                               |       |   | (1 | ) |   |
| Sales/Disposals                     |       |                            | 0          |                            |       |   | 0 |   |   |
| Depreciation for  the year          |       |                            | (0         | )                               |       |   | (0 | ) |   |
| Ending balance                      |       |                            | (1         | )                               |       |   | (1 | ) |   |
| **Net  book value, ending balance** | ** ** | ** **                      | **2**      |                            | ** ** | ** ** | **2** |   |   |
| Tax assessment value                |       |                            | —     |                            |       |   | — |   |   |

 

F-24

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Thetax assessment value is the basis used by the tax authorities for computingproperty taxes. Several of the subsidiary Swebus Fastigheter AB’s buildings areclassified as transportation buildings and as such are exempt from propertytaxes.
| ** **                                   | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Equipment, tools, fixtures and  fittings** |       |                            |       |                            |       |   |   |   |   |
| **Acquisition cost**                         |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                            |       |                            | 245        |                            |       |   | 232 |   |   |
| Purchases                                    |       |                            | 12         |                            |       |   | 16 |   |   |
| Sales/Disposals                              |       |                            | (22        | )                               |       |   | (1 | ) |   |
| Translation  difference                      |       |                            | —     |                            |       |   | (2 | ) |   |
| Ending balance                               |       |                            | 235        |                            |       |   | 245 |   |   |
| **Accumulated depreciation**                 |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                            |       |                            | (211       | )                               |       |   | (194 | ) |   |
| Sales/Disposals                              |       |                            | 21         |                            |       |   | 1 |   |   |
| Depreciation for  the year                   |       |                            | (18        | )                               |       |   | (20 | ) |   |
| Translation  difference                      |       |                            | —     |                            |       |   | 2 |   |   |
| Ending balance                               |       |                            | (208       | )                               |       |   | (211 | ) |   |
| **Net book value, ending balance**           | ** ** | ** **                      | **27**     |                            | ** ** | ** ** | **34** |   |   |

 
| ** **                         | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Vehicles**                       |       |                            |       |                            |       |   |   |   |   |
| **Acquisition cost**               |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                  |       |                            | 3,526      |                            |       |   | 3,707 |   |   |
| Purchases                          |       |                            | 100        |                            |       |   | 15 |   |   |
| Sales/Disposals                    |       |                            | (306       | )                               |       |   | (183 | ) |   |
| Translation  difference            |       |                            | (2         | )                               |       |   | (13 | ) |   |
| Ending balance                     |       |                            | 3,318      |                            |       |   | 3,526 |   |   |
| **Accumulated depreciation**       |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                  |       |                            | (2,035     | )                               |       |   | (1,914 | ) |   |
| Sales/Disposals                    |       |                            | 265        |                            |       |   | 168 |   |   |
| Depreciation for  the year         |       |                            | (319       | )                               |       |   | (298 | ) |   |
| Translation  difference            |       |                            | (1         | )                               |       |   | 9 |   |   |
| Ending balance                     |       |                            | (2,090     | )                               |       |   | (2,035 | ) |   |
| **Net book value, ending balance** | ** ** | ** **                      | **1,228**  |                            | ** ** | ** ** | **1,491** |   |   |

 

Included as purchasesduring the year ended February 28, 2005, are SEK 4 and during theyear ended February 29, 2004 SEK 0.8, of additions that have beenfinanced under financial lease arrangements.

F-25

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 14.   Receivablesdue from affiliates**
| ** **               | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Acquisition cost**     |       |                            |       |                            |       |   |   |   |   |
| Beginning balance        |       |                            | 29         |                            |       |   | 26 |   |   |
| Changes during  the year |       |                            | —     |                            |       |   | 3 |   |   |
| Valuation  allowance     |       |                            | (29        | )                               |       |   | — |   |   |
| **Ending balance**       | ** ** | ** **                      | **—** |                            | ** ** | ** ** | **29** |   |   |

 

**Note 15.   Otherlong-term investments**
| ** **                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Shares in other  companies |       |                            | —     |                            |       |   | 5 |   |   |
| **Total**                  | ** ** | ** **                      | **—** |                            | ** ** | ** ** | **5** |   |   |

 
| ** **           | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Acquisition cost** |       |                            |       |                            |       |   |   |   |   |
| Beginning balance    |       |                            | 5          |                            |       |   | 5 |   |   |
| Sale of assets       |       |                            | (5         | )                               |       |   | — |   |   |
| **Ending balance**   | ** ** | ** **                      | **—** |                            | ** ** | ** ** | **5** |   |   |

 

**Note 16.   Otherfinancial fixed assets**
| ** **                                     | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Capitalized financing costs**                |       |                            |       | ** **                      |       |   |   | ** ** |   |
| **Acquisition cost**                           |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                              |       |                            | 49         | ** **                      |       |   | 53 | ** ** |   |
| Write-off  for early repayment of debt         |       |                            | —     | ** **                      |       |   | (53 | **)** |   |
| Costs incurred in  connection with refinancing |       |                            | 5          | ** **                      |       |   | 49 | ** ** |   |
| Ending balance                                 | ** ** | ** **                      | **54**     | ** **                      | ** ** | ** ** | **49** | ** ** |   |
| **Accumulated amortization**                   |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                              |       |                            | (1         | **)**                           |       |   | (22 | **)** |   |
| Write-off  for early repayment of debt         |       |                            | —     | ** **                      |       |   | 28 | ** ** |   |
| Amortization                                   |       |                            | (10        | **)**                           |       |   | (7 | **)** |   |
| Ending balance                                 | ** ** | ** **                      | **(11**    | **)**                           | ** ** | ** ** | **(1** | **)** |   |
| Total                                          | ** ** | ** **                      | **43**     | ** **                      | ** ** | ** ** | **48** | ** ** |   |

 
| ** **                             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Operating lease deposit**            |       |                            |       |                            |       |   |   |   |   |
| **Acquisition cost**                   |       |                            |       |                            |       |   |   |   |   |
| Beginning balance                      |       |                            | 5          |                            |       |   | — |   |   |
| Increase /  (decrease) during the year |       |                            | —     |                            |       |   | 5 |   |   |
| **Ending balance**                     | ** ** | ** **                      | **5**      |                            | ** ** | ** ** | **5** |   |   |

 

F-26

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 17.**   Inventories
| ** **     | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------|------------|---------------------------------|------------|---------------------------------|------------|
| Finished goods |       |                            | 33         |                            |       |   | 30 |   |   |
| **Total**      | ** ** | ** **                      | **33**     |                            | ** ** | ** ** | **30** |   |   |

 

Finished goods primarilycomprise fuel and spare-parts.

**Note 18.   Accruedincome and prepaid expenses**
| ** **                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accrued income—CPTA                   |       |                            | 87         |                            |       |   | 156 |   |   |
| Other prepaid  expenses and accrued income |       |                            | 56         |                            |       |   | 82 |   |   |
| **Total**                                  | ** ** | ** **                      | **143**    |                            | ** ** | ** ** | **238** |   |   |

 

**Note 19.   Cashand bank balances**

Included as cash and bankbalances is the outstanding balance for the cheque account connected to thegroup cheque account, where Concordia Bus Nordic AB is the contractingpart with the bank.
| ** **              | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **MSEK**                |       |                            |       |                            |       |   |   |   |   |
| Cash and bank  balances |       |                            | 124        |                            |       |   | 292 |   |   |
| Restricted cash*        |       |                            | 51         |                            |       |   | 54 |   |   |
| **Total**               | ** ** | ** **                      | **175**    |                            | ** ** | ** ** | **346** |   |   |

----

*                    Restrictedcash consists of refundable deposits in relation to guarantees made by a bankas security for the pension liability and commitments for three trafficcontracts in Oslo, Norway.

**Note 20.   Provisionsfor pensions and other commitments**
| ** **                      | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Beginning balance               |       |                            | 60         |                            |       |   | 69 |   |   |
| Change in  accounting principle |       |                            | (7         | )                               |       |   | — |   |   |
| Change in  provision            |       |                            | (2         | )                               |       |   | (9 | ) |   |
| **Ending balance**              | ** ** | ** **                      | **51**     |                            | ** ** | ** ** | **60** |   |   |

 
| ** **                   | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accrued pension  obligations |       |                            | 48         |                            |       |   | 54 |   |   |
| Other pensions  commitments  |       |                            | 3          |                            |       |   | 6 |   |   |
| **Total**                    | ** ** | ** **                      | **51**     |                            | ** ** | ** ** | **60** |   |   |

 

The Concordia Bus Group funds pension obligationsbased on the advice of external actuaries and makes payments to a segregatedfund managed by a specialist financial institution.

F-27

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Pension plans for active personnel are funded under amultiemployer plan and through defined contribution plans. The total pensioncost for the year was SEK 126, SEK 163 and SEK 137 for the years ended February 28,2005, February 29, 2004, and February 28, 2003, respectively, ofwhich SEK 10, SEK 12 and SEK 11 relates to costs for pension plans where theCompany has a defined benefit obligation during the years ended February 28,2005, February 29, 2004, and February 28, 2003, respectively.

Concordia’s employees in Norway and certain retiredemployees of Swebus AB received pension benefits under a defined benefitplans.  Such plans are unfunded and,accordingly, pension benefits paid to such employees are charged against theprovision.

For this financial year, a discount rate of 5.25 -5.5% (5.4 - 6%) has been used to calculate the accrued benefit obligationdepending on in which country the obligations are held.

Pensionexpense has been included in staff costs and is comprised of the following:
| ** **                                 | ** ** | **February 28, 2005** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|
| Current service  cost                      |       |                            | 5          |   |   |
| Interest cost                              |       |                            | 10         |   |   |
| Expected return  on plan assets            |       |                            | (7         | ) |   |
| Net actuarial  losses (gains)              |       |                            | 1          |   |   |
| Past service cost                          |       |                            | —     |   |   |
| Employers  contribution to social security |       |                            | 1          |   |   |
| Net pension cost                           | ** ** | ** **                      | **10**     |   |   |

 

Thefollowing table reconciles the funded status of defined benefit plans to theamounts recognised in the balance sheet:
| ** **                                 | ** ** | **February 28, 2005** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|
| Present value of  funded obligations       |       |                            | 176        |   |   |
| Present value of  unfunded obligations     |       |                            | 20         |   |   |
| Unrecognised  actuarial losses             |       |                            | (20        | ) |   |
| Unrecognised past  service cost            |       |                            | —     |   |   |
| Fair value of  plan assets                 |       |                            | (127       | ) |   |
| Employers  contribution to social security |       |                            | 1          |   |   |
| Other                                      |       |                            | 1          |   |   |
| Amount at end of the  year                 | ** ** | ** **                      | **51**     |   |   |

 

F-28

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Themovements in the liability recognised in the balance sheet were as follows:
| ** **                                  | ** ** | **February 28, 2005** | ** ** |
|---------------------------------------------|------------|---------------------------------|------------|
| At the beginning  of year                   |       |                            | 53         |   |   |
| Exchange  differences                       |       |                            | (3         | ) |   |
| Net periodic cost                           |       |                            | 9          |   |   |
| Expected pension  payments                  |       |                            | (10        | ) |   |
| Employment  contribution to social security |       |                            | 0          |   |   |
| Other                                       |       |                            | 2          |   |   |
| At the end of year                          | ** ** | ** **                      | **51**     |   |   |

 

Principalactuarial assumptions used to determine pension obligations were as follows:
| ** **                         | ** ** | **February 28, 2005** | ** ** |
|------------------------------------|------------|---------------------------------|------------|
| Discount rates                     |       |                            | 5.25-5.5   | % |   |
| Expected return  on plan assets    |       |                            | 6.5        | % |   |
| Expected rate of  salary increases |       |                            | 2.0-3.0    | % |   |
| Future pension increase            |       |                            | 2.0        | % |   |

 

**Note 21.   Long-termliabilities to credit institutions and financial lease obligations**
| ** **                                          | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-----------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Non-current liabilities**                         | ** ** |                            | ** ** | ** **                      |       |   | ** ** | ** ** |   |
| Senior secured  notes (Euro 130 million)            |       |                            | 1,176      | ** **                      |       |   | 1,198 | ** ** |   |
| Loans due to  affiliated companies                  |       |                            | 292        | ** **                      |       |   | 368 | ** ** |   |
| Other  liabilities—financial lease obligations |       |                            | 20         | ** **                      |       |   | 23 | ** ** |   |
| Less: short-term  portion                           |       |                            | (300       | )                               |       |   | (373 | ) |   |
| **Total**                                           | ** ** |                            | **1,188**  | ** **                      |       |   | **1,216** | ** ** |   |

 

Long-term liabilities include Euro 130 million ofsenior secured notes of Concordia Bus Nordic AB. The notes have a fixedannual interest rate of 9.125%, which is paid semi-annually (February 1and August 1). The bonds mature in August 2009.

As a consequence of the Euro 130 million ofnotes, Concordia Bus Nordic Holding AB and its subsidiaries are obligated tofollow certain financial restrictions which limit entering financial leaseagreements or sale- and lease back agreements, making certain kinds ofinvestments, disposing of assets and paying dividends to Concordia’sshareholder except in instances to enable such shareholder to fulfill its owndebt service obligations.

The issuer of the senior secured notes, Concordia BusNordic AB (publ), is a 100% owned subsidiary of Concordia Bus Nordic HoldingAB. Concordia Bus Nordic Holding AB has fully and unconditionally guaranteedthe payment of the notes. Concordia Bus Nordic AB (publ) is the parent companyowning 100% of the shares in the operating subsidiaries of the Concordia BusGroup. Concordia Bus Nordic AB (publ) has no independent assets or operations.All subsidiaries of Concordia Bus Nordic AB (publ), other than minor dormantsubsidiaries, have also fully and unconditionally guaranteed the payment of thenotes. 

F-29

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

The guarantees of thesubsidiaries and of Concordia Bus Nordic Holding AB are joint and several. Asdescribed in more detail in Note 23, the subsidiaries have also given pledgesof certain collateral (both specific and floating charge certificates) assecurity for the senior secured notes.

The senior secured notes are classified as long-termliabilities because they are not in default. The senior subordinated notesissued by Concordia Bus AB (not reflected in the table in this note 21) areclassified as a current liability because Concordia Bus AB did not make itslatest interest payment.

Subsequent to February 28,2005 Concordia has borrowed €25,000,000. Managementexpects that this amount will be repaid by a future intended borrowing of €45,000,000by Concordia Bus AB.

*Swedish SubsidiaryGuarantees and Collateral.*

Enforcement of the noteguarantees and collateral may, in whole or in part, be limited to the extentthat the undertaking by each respective subsidiary is deemed to be in conflictwith the corporate interest of the respective subsidiary. The corporateinterest shall be determined on the basis of whether the undertaking was made forbusiness reasons so as to involve corporate benefit for the subsidiary andwhether the guaranteed party is solvent for repayment of the secured amount atthe time of providing the security. The absence of business reasons andcorporate benefit would have the effect that the performance of theundertaking, or part thereof, would violate the Swedish Companies Act to theextent that it would result in a payment exceeding the distributable profit ofthe respective subsidiary at the time of providing the security. Upon suchviolation, the note guarantees and collateral would be invalid and any paymentsmade thereunder would be subject to recovery at least to the extent theyviolate the above mentioned rules on corporate interest.

*Finnish SubsidiaryGuarantee and Collateral.*

The granting of guaranteesand security is restricted under the Finnish Companies Act. Enforcement of thenote Guarantees and Collateral issued or granted by Concordia Finland may, inwhole or in part, be limited to the extent that the undertaking by suchsubsidiary is deemed to be in conflict with the limitations set out in theFinnish Companies Act, including the corporate interest of Concordia Finland.The determination shall be made, *inter alia*,on the basis of whether the undertaking was made for reasons so as to involvecorporate benefit for (and be justified with grounds relating to the operationsof) Concordia Finland and whether the guaranteed party is solvent for repaymentof the guaranteed amount during the term of the undertaking. The absence ofbusiness reasons and corporate benefit would have the effect that theperformance of the undertaking, or a part thereof, would violate the FinnishCompanies Act. Any such violation would render the note guarantees andcollateral invalid and any payments made thereunder would be subject torecovery at least to the extent that they violate the Finnish Companies Act.

*NorwegianSubsidiary Guarantee and Collateral.*

The issuance of thesubsidiary guarantee and the granting of the relevant security by the Norwegiansubsidiary may be invalid under Norwegian law if such issuance and granting arenot motivated by a legitimate business reason or corporate benefit for thatsubsidiary. In determining the sufficiency of the business reason or corporatebenefit, a Norwegian court will consider whether or not the granting of theguarantee or security supported the object and the operations of thatsubsidiary. We have been advised by Norwegian counsel that they believesufficient corporate benefit exists with respect to the note guarantee 

F-30

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

andcollateral granted by the Norwegian subsidiary. However, there can be nocertainty as to the sufficiency of the corporate benefit.

**Loans due to affiliated companies**

The subordinatedshareholder loan due to affiliated companies of SEK 292 mllion matures in 2010but can be repaid before then if demanded by the shareholder. Accordingly, ithas been classified as short term. The subordinated shareholder loan wassimilarly classified as short term at February 29, 2004. Concordia paysinterest semi-annually at an annual interest rate of 11%.

**Other liabilities**
| ** **                       | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Financial  lease obligations** | ** ** |                            | ** ** | ** **                      |       |   | ** ** | ** ** |   |
| Payable within 2-5  years        |       |                            | 12         | ** **                      |       |   | 15 | ** ** |   |
| Payable after  five years        |       |                            | 0          | ** **                      |       |   | 1 | ** ** |   |
| **Total  long-term**             | ** ** |                            | **12**     | ** **                      |       |   | **16** | ** ** |   |
| Short-term  portion              |       |                            | 8          | ** **                      |       |   | 7 | ** ** |   |
| **Total**                        | ** ** |                            | **20**     | ** **                      |       |   | **23** | ** ** |   |

 

During the financial year ended February 28,2005, Interbus AB has entered into financial lease arrangements regarding twobuses. The duration of one of the agreements is 25 months and 61 monthsfor the second. The lease cost is based on the depreciation according to anannuity method and a floating interest rate.

Thefollowing is a schedule by years of future minimum gross lease payments underfinance leases together with the present value of the net minimum leasepayments as of February 28, 2005:
| **Year  ending**                             | ** ** | ** ** | ** ** |
|----------------------------------------------|------------|------------|------------|
| February 28,  2006                      |       | 8          |       |
| February 28,  2007                      |       | 5          |       |
| February 29,  2008                      |       | 4          |       |
| February 28,  2009                      |       | 2          |       |
| February 28,  2010                      |       | 2          |       |
| Later years                                  |       | 1          |       |
| **Total  minimum gross lease payments**      | ** ** | **22**     | ** ** |
| Less: Amount  representing interest          |       | (2         | )          |
| **Present value of minimum lease  payments** | ** ** | **20**     | ** ** |

 

F-31

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 22.   Accruedexpenses and deferred income**
| ** **                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Deferred  income—CPTA |       |                            | 125        |                            |       |   | 90 |   |   |
| Accrued employee  costs    |       |                            | 235        |                            |       |   | 278 |   |   |
| Accrued interest  expenses |       |                            | 8          |                            |       |   | 12 |   |   |
| Other accrued  expenses    |       |                            | 90         |                            |       |   | 58 |   |   |
| **Total**                  | ** ** | ** **                      | **458**    |                            | ** ** | ** ** | **438** |   |   |

 

**Note 23.   Pledgedassets and contingent liabilities**
| ** **                                                              | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-------------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Pledged  shares and contingent liabilities for senior secured notes** |       |                            |       |                            |       |   |   |   |   |
| Pledged shares in  subsidiaries                                         |       |                            | 382        |                            |       |   | 709 |   |   |
| Other pledged  assets                                                   |       |                            | 1,099      |                            |       |   | 1,351 |   |   |
| Floating charge  certificates                                           |       |                            | 132        |                            |       |   | 119 |   |   |
| **Other  pledged shares and contingent liabilities**                    |       |                            |       |                            |       |   |   |   |   |
| Other pledged  assets                                                   |       |                            | —     |                            |       |   | 59 |   |   |
| Guarantees and  other contingent liabilities                            |       |                            | —     |                            |       |   | 22 |   |   |
| **Total**                                                               | ** ** | ** **                      | **1,613**  |                            | ** ** | ** ** | **2,260** |   |   |

 

In January 2004 a refinancing of the ConcordiaBus Group’s then existing credit facilities was completed through the issuanceof EUR 130 million of bonds. The proceeds received when issuing the bondswas used to repay existing credit facilities. In connection with therefinancing, Concordia wrote off SEK 25 million of unamortized capitalizedfinancing costs and terminated the related euro interest rate derivatives at acost of SEK 14 million.

As security for the bonds, Concordia has pledged theshares in the operating subsidiaries, the foreign subsidiaries and thereal-estate companies, the buses owned by Swebus Busco AB and IngeniØr M.O. SchØyens Bilcentraler AS (“SBC”), theoperating receivables and fixed assets of SBC, and two internal loans to SwebusBusco AB and Swebus AB amounting to € 87 million and €22 million respectively. The subsidiaries have pledged floating chargecertificates amounting to SEK 119 million and have given guaranteesrelating to the bonds. See Note 21 regarding certain limitations on theenforcement of such guarantees and collateral pledges.

F-32

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

Thefollowing shares have been pledged for existing long-term liabilities:
| ** **                                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Concordia Bus  Nordic AB                              |       |                            | 0          |                            |       |   | 44 |   |   |
| Shares in Swebus  Fastigheter AB                           |       |                            | 21         |                            |       |   | 26 |   |   |
| Shares in Swebus AB                                        |       |                            | 31         |                            |       |   | 253 |   |   |
| Shares in Swebus  Express AB                               |       |                            | 14         |                            |       |   | 15 |   |   |
| Shares in  Interbus AB                                     |       |                            | 20         |                            |       |   | 20 |   |   |
| Shares in  Concordia Bus Finland Oy Ab                     |       |                            | 50         |                            |       |   | 34 |   |   |
| Shares in Swebus  Busco AB                                 |       |                            | 1          |                            |       |   | 68 |   |   |
| Shares in IngeniØr M.O. SchØyens Bilcentraler AS |       |                            | 245        |                            |       |   | 249 |   |   |
| Dormant companies                                          |       |                            | —     |                            |       |   | — |   |   |
| **Total**                                                  | ** ** | ** **                      | **382**    |                            | ** ** | ** ** | **709** |   |   |

 

**Note 24.   Otherprovisions**
| ** **                                | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** | **February 28, 2003** | ** ** |
|-------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Provisions  for loss-making contracts** |       |                            |       |                            |       |                            |       |   |   |   |   |   |   |
| Beginning balance                         |       |                            | 80         |                            |       |                            | 46         |   |   |   | 31 |   |   |
| Change in  provision during the year      |       |                            | (27        | )                               |       |                            | 34         |   |   |   | 15 |   |   |
| **Ending balance**                        | ** ** | ** **                      | **53**     |                            | ** ** | ** **                      | **80**     |   | ** ** | ** ** | **46** |   |   |

 

Provisionsfor loss making contracts have been made on an individual or aggregated basisdepending on interdependency of cash flows for the contracts where contractualrevenues do not cover the estimated costs. The provision is calculated as thedifference between the estimated costs to fulfill the contractual commitmentand the contractual revenues.
| ** **                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** | **February 28, 2003** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Restructuring  costs**                   |       |                            |       |                            |       |                            |       |   |   |   |   |   |   |
| Beginning balance                          |       |                            | 6          |                            |       |                            | —     |   |   |   | — |   |   |
| Provisions for  restructuring              |       |                            | 7          |                            |       |                            | 6          |   |   |   | — |   |   |
| Provisions  reversed against restructuring |       |                            | (6         | )                               |       |                            | —     |   |   |   | — |   |   |
| **Ending balance**                         | ** ** | ** **                      | **7**      |                            | ** ** | ** **                      | **6**      |   |   |   | — |   |   |

 

Restructuring costs during financial year ended February 28,2004 were primarily for employee termination benefits relating to theGothenburg, Sweden depots which were closed during the financial year ended February 28,2005.

The balance as of February28, 2005 of SEK 7 million relates to costs for employees that have beenterminated and for services rendered during the financial year ended February 28,2005.

F-33

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 25.   Changesin shareholder’s equity (deficit)**
| ** **                                                                 | ** ** | **Share capital** | ** ** | **Restricted  reserves** | ** ** | **Non-restricted  reserves** | ** ** | **Total**  | ** ** |
|----------------------------------------------------------------------------|------------|------------------------|------------|--------------------------|------------|------------------------------|------------|------------|------------|
| **Balance  March 1, 2002**                                            | ** ** |                   | **0**      | ** **               |       |                         | **548**    | ** ** |       |   | **144** | ** ** |   | **692** | ** ** |
| Group  contribution                                                        |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (141 | **)** |   | (141 | ) |
| Tax effect on  group contribution                                          |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | 39 | ** ** |   | 39 |   |
| Transfer between  restricted and non-restricted reserves                   |       |                   | —     | ** **               |       |                         | (159       | )          |       |   | 159 | ** ** |   | — |   |
| Change in  cumulative translation adjustments                              |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | 1 | ** ** |   | 1 |   |
| Net loss for the  year                                                     |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (179 | ) |   | (179 | ) |
| **Balance  February 28, 2003**                                        | ** ** |                   | **0**      | ** **               |       |                         | **389**    | ** ** |       |   | **23** | ** ** |   | **412** | ** ** |
| Transfer between  restricted and non-restricted reserves                   |       |                   | —     | ** **               |       |                         | (147       | )          |       |   | 147 | ** ** |   | — |   |
| Change in  cumulative translation adjustments                              |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (6 | **)** |   | (6 | ) |
| Net loss for the  year                                                     |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (171 | ) |   | (171 | ) |
| **Balance  February 29, 2004**                                        | ** ** |                   | **0**      | ** **               |       |                         | **242**    | ** ** |       |   | **(7** | **)** |   | **235** | ** ** |
| Effect of change  in accounting principles                                 |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | 7 | ** ** |   | 7 |   |
| Effect of change  in accounting principles, tax effect                     |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (2 | ) |   | (2 | ) |
| Opening balance  March 1, 2004, after change in accounting principles |       |                   | 0          | ** **               |       |                         | 242        | ** ** |       |   | (2 | ) |   | 240 |   |
| Transfer between  restricted and non-restricted reserves                   |       |                   | —     | ** **               |       |                         | (112       | **)**      |       |   | 112 | ** ** |   | — |   |
| Change in  cumulative translation adjustments                              |       |                   | —     | ** **               |       |                         | 2          | ** ** |       |   | 10 | ** ** |   | 12 |   |
| Net loss for the  year                                                     |       |                   | —     | ** **               |       |                         | —     | ** ** |       |   | (396 | ) |   | (396 | ) |
| **Balance February 28, 2005**                                         | ** ** |                   | **0**      | ** **               |       |                         | **132**    | ** ** |       |   | **(276** | **)** |   | **(144** | **)** |

 

Restricted reserves referto equity, which according to the Swedish Companies Act is not distributable. Annualtransfers between restricted and unrestricted reserves represent annual changesin the reserves and relate mainly to annual changes in statutory untaxedreserves of individual companies within the Concordia Bus Group.

**Note 26.   Netloss per share**
| ** **                                         | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Shares issued and  outstanding                     |       |                                             | 300        | ** **                                       |       |                                             | 300        | ** ** |   |   | 300 | ** ** |   |
| Net loss  (millions)                               |       |                                             | (396       | )                                                |       |                                             | (171       | ) |   |   | (179 | ) |   |
| **Net loss per share (in  thousands of SEK)** | ** ** | ** **                                       | **(1,320** | **)**                                            | ** ** | ** **                                       | **(572**   | **)** | ** ** | ** ** | **(596** | **)** |   |

 

Net loss per share iscomputed by dividing net loss by the weighted- average number of sharesoutstanding during the year. There were no dilutive securities outstandingduring the periods presented and the number of shares has been unchanged.

F-34

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

**Note 27.   Financialrisk management and financial derivatives**

The principalmarket risks (i.e., the risk of loss arising from adverse changes in marketrates and prices) to which Concordia is exposed are:

·       Interestrates on debt;

·       Creditand counterparty risk;

·       Foreignexchange rates;

·       Fuelprices; and

·       Inflation.

Risk management isconducted centrally in accordance with the finance policy adopted by the board.The Concordia Bus Group uses derivatives as part of its financial riskmanagement in order to limit the foreign exchange, interest rate and dieselprice exposure. As of February 28, 2005, we have not complied with thispolicy, due to lack of credit facilities. As of February 28, 2005 we havenot complied with this policy concerning the items foreign exchange contractsand diesel hedges. The reason being that the company, due to its weak financialsituation during the financial year ending February 28, 2005, has not beenable to get the necessary credit facilities in place in order to enterderivatives contracts.

***Interest Rate Risk***

Interest rate risk refers to the risk that changes inthe market rate of interest adversely affect Concordia’s interest cost. Howfast a change in the interest rate will influence the net interest depends onthe borrowings fixed interest term.

Concordia is mainly exposed to interest rate risk inits leases which are based on among other things a floating market interestrate. To reduce the interest exposure in the lease portfolio, Concordia hasentered into interest rate derivatives which hedge the interest for a portionof the lease commitment. The outstanding interest rate derivatives havenotional amounts totaling SEK 77.5 million at February 28, 2005. Allinterest rate derivatives mature in 2005.

Based on the nominal valueof the operational lease commitment at February 28, 2005, ofSEK 1,935 million, a one basis point change in interest rates wouldincrease lease charges by approximately SEK 19.3 million per annum.

***Credit and Counterparty Risk***

Concordia’s financial transactions lead to creditrisks towards financial counterparties. Concordia’s financial policy statesthat credit risk shall be reduced through only accepting counterparties withhigh credit rating and through fixed credit limits. On February 28, 2005,Concordia had limited counterparty exposure concerning its derivatives, sincethey do not have any material outstanding contracts.

Commercial credit risksare limited through a diversified customer base with high credit ratings. Aprovision has been recorded for accounts receivables, which have been estimatedto be doubtful of collection.

F-35

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (All amounts in millions of SEK unless otherwise stated)**

***Foreign Exchange Risk***

Foreign exchange risk arises through cash flows inforeign currency (transaction exposure) and through the recalculation ofoutstanding debt, issued in other currencies than the Swedish Krona (foremostthe senior secured Notes of €130 million) and of theforeign subsidiaries’ balance sheets and statements of operations to Swedishkronor (translation difference exposure).

*Transaction exposure*—TheConcordia Bus Group is exposed to foreign exchange differences relating to theEUR 130 million senior secured notes, which are issued in euro. To limit thetransaction risk, related to the interest rate payments on the notes, Concordiahas entered into currency derivatives having a notional amount of EUR 4.4million. Concordia is currently undertaking a review of their interest rateforeign exchange policy. Concordia has hedges in place for 37% of the totalinterest payable during the financial year ending February 28, 2006.

Based on Concordia Bus Nordic’s interest payments ofEUR 11.9 million on the senior secured notes for the 12-month periodbeginning March 1, 2005, the interest cost would increase by SEK 10.7million if the Swedish currency would depreciate 10 percent against theeuro compared to the euro exchange rate at February 28, 2005.

The group is also exposed to foreign exchange ratechanges through the purchase of diesel fuel. Diesel fuel is priced in theinternational commodity markets in US dollars. Concordia receives compensationfor a portion of changes in diesel prices through revenue indexes in thecontracts with the CPTA’s. It is estimated that this index compensation reduces55% of the exposure to diesel price changes. Based on the budgeted dieselconsumption, a 10 percent depreciation of the Swedish Krona against the USdollar would increase the diesel costs by SEK 9.1 million for the comingfinancial year beginning March 1, 2005. The calculation includes theeffects of the computed index compensation.

*Translationdifference exposure*—Concordia’s exposure to translationdifferences has historically not been hedged.

***Fuel Price Risk***

Concordia is also exposed to commodity price riskthrough its requirements for diesel fuel. Diesel fuel is priced in theinternational commodity markets in US dollars. Concordia receives compensationfor a portion of changes in diesel prices through revenue indexes in thecontracts with the CPTA’s. It is estimated that this index compensation reduces55% of the exposure to diesel price changes.

Based on the budgeteddiesel consumption, an increase of one US dollar/ton would increase dieselcosts by SEK 0.2 million for the 12-month period beginning March 1,2005.

***Inflation***

Inflation had no materialimpact on our operations during the year ended February 28, 2005. However,due to the nature of our contractual business where cost increases arecompensated through movements in agreed indices (elements of total inflation)we are currently subject to under-compensation due to a mismatch betweenour industry costs and our relative level of compensation from the indiceswhich the local transportation authorities use to compensate us.

F-36

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 28.**   Fairvalue of financial instruments

Outstandinginterest rate swaps on February 28, 2005:
| ** **              | ** ** | **Notional amount** | ** ** | **Fixed  interest rate** | ** ** | **Maturity date** | ** ** | **Market value** | ** ** |
|-------------------------|------------|--------------------------|------------|-------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **              | ** ** | ** **               | ** ** | ** **                    | ** ** | ** **             | ** ** | **(KSEK)**            | ** ** |
| Interest rate  swap SEK |       |                     | 18,750,000 |                          |       |                   | 5.68       | %                     |       | 19 May, 2005 |   |   | (161 | ) |   |
| Interest rate cap  SEK  |       |                     | 40,000,000 |                          |       |                   | 6.00       | %                     |       | 20 June, 2005 |   |   | 0 | ** ** |   |
| Interest rate  swap SEK |       |                     | 18,750,000 |                          |       |                   | 5.73       | %                     |       | 19 July, 2005 |   |   | (332 | ) |   |
|                    |       |                     |       |                          |       |                   |       |                  |       |   | ** ** | ** ** | **(493** | **)** |   |

 

The market value net of accrued interest of thesefinancial instruments has been expensed in the statement of operations as theydo not qualify for hedging accounting.

Outstandingforeign exchange options on February 28, 2005:
| ** **             | ** ** | **Amount** | ** ** | **Strike rate** | ** ** | **Maturity date** | ** ** | **Market value** | ** **       |
|------------------------|------------|------------|------------|----------------------|------------|------------------------|------------|-----------------------|------------------|
| ** **             | ** ** | ** ** | ** ** | ** **           | ** ** | ** **             | ** ** | **(KSEK)**            | ** **       |
| Purchased call  option |       | €     | 4,400,000  |                 |       | 10.92                  |       |                  | 10 August, 2005  |   |   | 0 |   |   |
| Issued put option      |       | €     | 4,400,000  |                 |       | 8.70                   |       |                  | 10 August, 2005  |   |   | (47 | ) |   |
| Purchased call  option |       | €     | 4,400,000  |                 |       | 11.45                  |       |                  | 9 February, 2006 |   |   | 0 |   |   |
| Issued put option      |       | €     | 4,400,000  |                 |       | 8.83                   |       |                  | 9 February, 2006 |   |   | (320 | ) |   |
| Purchased call  option |       | €     | 4,400,000  |                 |       | 10.78                  |       |                  | 8 August, 2006   |   |   | 0 |   |   |
| Issued put option      |       | €     | 4,400,000  |                 |       | 8.50                   |       |                  | 8 August, 2006   |   |   | (133 | ) |   |
|                   |       |       |       |                 |       |                   |       |                  |             |   | **(500** | **)** |   |

 

**Note 29.   Going concern matters**

Concordia has over time accumulated significantlosses, whereby shareholder equity has become negative and cash and bankbalances have decreased, even though additional cash was contributed throughthe refinancing project consummated in February 2004. The group’s long termability to continue its operations is dependent on a successful futuretendering process and continuing cost cutting initiatives as well as animprovement in cash flows.

The Company is highly leveraged as a result of theNotes outstanding, significant operational lease obligations and group internalfinancing in the form of liabilities due to Concordia Bus AB. This leverage hasput additional pressure on the Company’s cash flows and has limited theCompany’s ability to seek additional external funds. Existing cash and bankbalances are not expected to be sufficient to cover future cash needs forpotential operating losses, normal capital expenditures, mandatory interestpayments and amortization on debt owed to Concordia Bus AB.

Absent the restructuring described below, Concordiamay not be able to continue as a going concern. Concordia Bus Nordic AB andConcordia Bus AB announced on July 22, 2005 that, with their principalultimate shareholders an Ad Hoc Committee of holders of Concordia Bus AB’s €160,000,00011% senior subordinated notes due February 15, 2010 (the “Parent Notes”)and an informal group of holders of Concordia Bus Nordic AB’s €130,000,0009.125% senior secured notes due August 1, 2009 had signed a RestructuringAgreement with Concordia Bus Nordic’s principal ultimate shareholders torestructure the 

F-37

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Parent Notes andstrengthen the balance sheet of the Concordia group of companies. TheRestructuring Agreement provides that, among other things, Concordia Bus ABwill make an application for reorganization proceedings in the District Courtin Stockholm, Sweden. Those proceedings are expected to result in a reductionof the face amount of all the Parent Notes from 100% to 25% and that theholders of Parent Notes who consent to the restructuring will be required,pursuant to the Restructuring Agreement, to exchange their reduced debtsecurities (including all principal, all accrued and unpaid interest and anyother amounts due thereon) for ordinary shares of Concordia Bus AB, which willconstitute 97.5% of the issued ordinary share capital of Concordia Bus ABimmediately following the consummation of the proposed restructuring, subjectto a management incentive plan representing a maximum of 5% of the issuedordinary shares. In connection with the restructuring subsequent to February28, 2005, Concordia has borrowed €25,000,000, of which €24,055,000has been contributed to Concordia Bus Nordic AB as an equity capitalcontribution to pay for the expenses of the restructuring and to cover itscapital needs. Concordia Bus AB intends to borrow an additional €45,000,000pursuant to a Mezzanine Facility it entered into in connection with therestructuring and from which it can draw once the restructuring is completed. ConcordiaBus AB intends to contribute approximately €13,000,000 to ConcordiaBus Nordic AB, via Concordia, as an equity contribution. The remaining amountis to be used to repay Concordia’s loan of €25,000,000 and to coverrestructuring expenses.

Concordia has approximately SEK 1,188 million oflong-term debt due to third parties, including long-term finance leaseobligations but excluding operating lease obligations. Its ability to servicethe existing debt, including amortization and interest, is dependent on theunderlying businesses generating sufficient cash flow and distributableearnings. Furthermore its ability to service its existing debt and the debt ofConcordia Bus AB (pursuant, for example to Concordia Bus AB’ future borrowingsunder the Mezzanine Facility), is dependent on the ability to transfer profitfrom Concordia Bus Nordic AB to Concordia and to Concordia Bus AB. Thenon-restricted equity in the underlying companies, available for dividends, hasbeen reduced during the year due to losses, which furthermore limits itsability to receive dividends from subsidiaries.

The consolidated statements of operations for the yearended February 28, 2005 shows that earnings generated by the underlyingbusinesses during the period March 1, 2004 - February 28, 2005 havenot been sufficient to cover Concordia’s costs. The management of Concordiabelieves that if the proposed restructuring is consummated Concordia will beable to continue as a going concern primarily as a result of reduction of thegroup’s total indebtedness and consequently improvement in Concordia’s cashflow used in financing activities. Furthermore, Concordia and its subsidiariesare continuing to implement changes in the operations, changes to theadministrative structure as well as certain changes in the capital structures. Inaddition, the improvements in compensation levels in new tenders with publictransport authorities are continuing.

These financial statements have been prepared assumingthat the restructuring will be consummated and that Concordia Bus AB,Concordia, Concordia Bus Nordic AB and their subsidiaries will be successful intheir initiatives and, consequently, they have been prepared assuming thatConcordia will continue as a going concern. These financial statements havealso been prepared under the assumption that during the 12 month periodfollowing the release of these financial statements: (i) Concordia BusNordic AB will be in compliance with its covenants associated with its seniorsecured notes, and (ii) Concordia Bus AB will not become insolvent orbankrupt. If Concordia Bus Nordic AB were to be in breach of one or more of 

F-38

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

those covenants, and ifthe lenders so elected, the SEK 1,188 million senior secured notes, which areclassified as long term as of February 28, 2005, would become immediatelydue and payable.

Further, in the event of an acceleration under thesenior secured notes following a default, all or part of the leasing contractscovering a significant portion of Concordia Bus Nordic AB’s leases may beterminated at the option of the lessor. This could have a material adverseeffect on Concordia’s business.

**Note 30.   Subsidiaries of Concordia**

Concordiahas the following wholly owned subsidiaries:
| ** **                                              | ** ** | **Company’s  registration  number** | ** ** | **Number of shares** | ** ** | **Participation  (%)** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------|------------|--------------------------------|------------|------------------------|------------|
| **Operating companies**                                 |       |                                     |       |                           |       |                   |       |   |   |   |   |
| Concordia Bus  Nordic AB                                |       | 556031-8569                              |       |                           | 160,000    |                   |       |   | 100 |   |   |
| —Interbus AB                                       |       | 556097-8990                              |       |                           | 5,000      |                   |       |   | 100 |   |   |
| —Swebus AB                                         |       | 556057-0128                              |       |                           | 3,000      |                   |       |   | 100 |   |   |
| —Swebus Busco AB                                   |       | 556583-0527                              |       |                           | 1,000      |                   |       |   | 100 |   |   |
| —Swebus Express  AB                                |       | 556358-3276                              |       |                           | 5,000      |                   |       |   | 100 |   |   |
| **Foreign subsidiaries**                                |       |                                     |       |                           |       |                   |       |   |   |   |   |
| —Concordia Bus  Finland Oy AB                      |       | 0505988-8                                |       |                           | 2,000      |                   |       |   | 100 |   |   |
| —IngeniØr M.O. SchØyens Bilcentraler A/S |       | 915768237                                |       |                           | 750        |                   |       |   | 100 |   |   |
| **Real estate companies**                               |       |                                     |       |                           |       |                   |       |   |   |   |   |
| —Swebus  Fastigheter AB                            |       | 556031-3354                              |       |                           | 10,000     |                   |       |   | 100 |   |   |
| —Subsidiaries to Swebus  Fastigheter AB:           |       |                                     |       |                           |       |                   |       |   |   |   |   |
| —Alpus AB                                          |       | 556011-6571                              |       |                           | 10,000     |                   |       |   | 100 |   |   |
| —Malmfältens  Omnibus AB                      |       | 556032-0359                              |       |                           | 960        |                   |       |   | 100 |   |   |
| —Enköping-Bålsta  Fastighetsbolag AB     |       | 556012-9388                              |       |                           | 1,500      |                   |       |   | 100 |   |   |
| **Dormant companies**                                   |       |                                     |       |                           |       |                   |       |   |   |   |   |
| —Arlanda buss AB                                   |       | 556030-5335                              |       |                           | 1,000      |                   |       |   | 100 |   |   |
| —Billingens  Trafik AB                             |       | 556027-3137                              |       |                           | 14,000     |                   |       |   | 100 |   |   |
| —Enköping-Bålsta  Trafik AB              |       | 556410-2894                              |       |                           | 1,000      |                   |       |   | 100 |   |   |
| —Gävle Trafik AB                              |       | 556031-1812                              |       |                           | 70,000     |                   |       |   | 100 |   |   |
| —Hälsinge  Wasatrafik AB                      |       | 556039-2622                              |       |                           | 1,550      |                   |       |   | 100 |   |   |
| —AB  Härnösandsbuss                      |       | 556029-8258                              |       |                           | 3,000      |                   |       |   | 100 |   |   |
| —Karlstadsbuss AB                                  |       | 556051-2039                              |       |                           | 3,000      |                   |       |   | 100 |   |   |
| —AB Kristinehamns  Omnibusstrafik                  |       | 556043-6445                              |       |                           | 9,000      |                   |       |   | 100 |   |   |
| —Saltsjöbuss AB                               |       | 556210-1500                              |       |                           | 2,500      |                   |       |   | 100 |   |   |
| —Swebus Service  AB                                |       | 556041-6736                              |       |                           | 1,000      |                   |       |   | 100 |   |   |
| —Swebus Västerås  AB                     |       | 556115-9988                              |       |                           | 5,100      |                   |       |   | 100 |   |   |
| —Tumlare Buss AB                                   |       | 556068-5975                              |       |                           | 1,010      |                   |       |   | 100 |   |   |
| —Wasabuss AB                                       |       | 556416-2419                              |       |                           | 1,000      |                   |       |   | 100 |   |   |
| —Wasatrafik AB                                     |       | 556048-9188                              |       |                           | 2,400      |                   |       |   | 100 |   |   |

 

F-39

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 31.   Relatedparty transactions**

Two of the supervisory board members of Concordia BusBV, the ultimate parent company of Concordia Bus Nordic Holding AB, areappointed by SchØyen Gruppen A/S (“SchØyen Group”) and two are appointed by BusHoldings S.A.R.l, an affiliate of Goldman Sachs International. Each directormay receive compensation for services in that capacity. Erik Linnarsson is apartner at Advokatfirman Lindahl HB, which acts as legal counsel to Concordiaand is a director of certain of Concordia’s operating subsidiaries.

Under a lease arrangement between SchØyen Group and IngeniØr M.O.SchØyens Bilcentraler A/S, SchØyenGroup has leased depots and other real property to SBC AB, a subsidiary ofConcordia, for a period of ten years ending in 2009. The rentals paid were SEK 14million, SEK 13 million, and SEK 15 million for the years ended February 29,2005, February 28, 2004, and February 28, 2003, respectively.

Concordia Bus Management A/S, an affiliated company100% owned by Concordia Bus BV, has provided management services to Concordiaand its subsidiaries. A management fee has been charged to Concordia and theirsubsidiaries for these services amounting to SEK 11 million, SEK 15million, and SEK 23 million for years ended February 28, 2005, February 29,2004, and February 28, 2003, respectively.

Within the Concordia Bus BV group external debt hasbeen issued by Concordia Bus Nordic AB and its direct parent, Concordia Bus AB.Such external debts are partly used to finance operations within the group. ConcordiaBus Nordic Holding AB has a net current liability to affiliated companiesamounting to SEK 292 million on February 29, 2005. Interest has beenpaid amounting to SEK 32 million, SEK 24 million and SEK 26 forthe years ended February 29, 2005, February 28, 2004, and February 28,2003, respectively from Concordia Bus Nordic Holding AB to companies within theConcordia Bus BV group.

In connection with the termination of certain keyemployees during the years, Concordia Bus Nordic AB has transferred funds tothe SchØyenGroup at an amount of NOK 1,005 thousand to settle certain shareholder loans.In August 2005 these shareholder loans have been repaid at its nominalamount by the SchØyenGroup.

On February 28, 2005 we have made a valuationallowance of an aggregate of SEK 33,000,000 for loans that Concordia BusBV and Concordia Bus Management AS owed to Concordia. The receivables stillexist and actions will be taken to get them collected however given the ongoingrestructuring process and the financial status of these two companies Concordiahas chosen a prudent view when determining collectability.

For a description of theSubordinated Shareholder Loan, see “Description of Other MaterialIndebtedness—Subordinated Shareholder Loan from Concordia Bus AB.”

F-40

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 32.   Reconciliationto accounting principles generally accepted in the United States of America**

Accountingpolicies used by the Concordia Bus Nordic Holding AB and subsidiaries conformwith accounting Swedish GAAP which differs in certain significant respects fromU.S. GAAP. Below are descriptions of these differences and a reconciliation ofnet loss, shareholder’s equity and cash flows to U.S. GAAP.
| ** **                                                                             | ** ** | **Note** | ** ** | **Year ended  February 28, 2005** | ** ** | **Year ended  February 29, 2004** | ** ** | **Year ended  February 28, 2003** | ** ** |
|----------------------------------------------------------------------------------------|------------|----------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Net  loss under Swedish GAAP**                                                       |       |     |       | ** **                                       |       |                                             | **(396**   | )                                                |       |   | **(171** | ) |   |   | **(179** | ) |   |
| Adjustments:                                                                           |       |     |       | ** **                                       |       |                                             |       | ** **                                       |       |   |   | ** ** |   |   |   | ** ** |   |
| Goodwill  amortization                                                                 |       |     | (a)        | ** **                                       |       |                                             | 13         | ** **                                       |       |   | 13 | ** ** |   |   | 13 | ** ** |   |
| Pensions                                                                               |       |     | (c)        | ** **                                       |       |                                             | 0          | ** **                                       |       |   | 2 | ** ** |   |   | 1 | ** ** |   |
| Derivative  financial instruments                                                      |       |     | (e)        | ** **                                       |       |                                             | 1          | ** **                                       |       |   | 26 | ** ** |   |   | (11 | ) |   |
| Sale-leaseback  of real estate                                                         |       |     | (f)        | ** **                                       |       |                                             | 4          | ** **                                       |       |   | 15 | ** ** |   |   | 7 | ** ** |   |
| Lease  classification                                                                  |       |     | (g)        | ** **                                       |       |                                             | (4         | )                                                |       |   | (6 | ) |   |   | (8 | ) |   |
| Restructuring                                                                          |       |     | (h)        | ** **                                       |       |                                             | (6         | )                                                |       |   | 6 | ** ** |   |   | — | ** ** |   |
| Tax effect of  U.S. GAAP adjustments                                                   |       |     |       | ** **                                       |       |                                             | 3          | ** **                                       |       |   | (12 | ) |   |   | 9 | ** ** |   |
| **Net  loss under U.S. GAAP**                                                          |       |     |       | ** **                                       |       |                                             | **(385**   | **)**                                            |       |   | **(127** | **)** |   |   | **(168** | **)** |   |
| Weighted-average  number of shares outstanding                                         |       |     |       | ** **                                       |       |                                             | 300        | ** **                                       |       |   | 300 | ** ** |   |   | 300 | ** ** |   |
| **Primary and diluted net loss  per share under U.S. GAAP (in thousands of SEK)** |       |     |       | ** **                                       |       |                                             | **(1,283** | **)**                                            |       |   | **(425** | **)** |   |   | **(560** | **)** |   |

 
| ** **                                        | ** ** | **Note**   | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------------|------------|------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Shareholder’s  equity under Swedish GAAP** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                      | **(144**   | **)** | ** ** | ** ** | **235** | ** ** |   |
| Adjustments:                                      |       |       |       |                            |       |                            |       |   |   |   |   |   |   |
| Goodwill  amortization                            |       |       | (a)        |                            |       |                            | 32         |   |   |   | 19 |   |   |
| Push down  accounting                             |       |       | (b)        |                            |       |                            | 570        |   |   |   | 570 |   |   |
| Pensions                                          |       |       | (c)        |                            |       |                            | (10        | ) |   |   | (5 | ) |   |
| Refund from  defined contribution pension plan    |       |       | (d)        |                            |       |                            | 54         |   |   |   | 54 |   |   |
| Derivative financial  instruments                 |       |       | (e)        |                            |       |                            | 1          |   |   |   | — |   |   |
| Sale leaseback of  real estate                    |       |       | (f)        |                            |       |                            | (31        | ) |   |   | (35 | ) |   |
| Lease  classification                             |       |       | (g)        |                            |       |                            | (21        | ) |   |   | (17 | ) |   |
| Restructuring                                     |       |       | (h)        |                            |       |                            | —     |   |   |   | 6 |   |   |
| Tax effect of  U.S. GAAP adjustments              |       |       |       |                            |       |                            | 2          |   |   |   | (1 | ) |   |
| **Shareholder’s equity under U.S.  GAAP**    | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                      | **453**    | ** ** | ** ** | ** ** | **826** | ** ** |   |

 

Under Swedish GAAP, Concordia’s consolidatedstatements of cash flow are presented in accordance with the Swedish FinancialAccounting Standards Council’s recommendation No. 7, which differs fromU.S. Statement of Financial Accounting Standards (“SFAS”) No. 95, “Statementof Cash Flows,” in the manner in which certain information is presented.

F-41

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Areconciliation of Concordia’s operating, investing and financing activities,classified in accordance with U.S. GAAP, from the amounts shown in the SwedishGAAP cash flow statement, are as follows:
| ** **                                                             | ** ** | **Note** | ** ** | **Year ended  February 28, 2005** | ** ** | **Year ended  February 29, 2004** | ** ** | **Year ended  February 28, 2003** | ** ** |
|------------------------------------------------------------------------|------------|----------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Cash flows  provided by (used in) operating activities, Swedish GAAP   |       |     |       |                                             |       |                                             | (98        | )                                                |       |   | 24 |   |   |   | (66 | ) |   |
| Lease  classification                                                  |       |     | (g)        |                                             |       |                                             | 12         | ** **                                       |       |   | 12 |   |   |   | 12 | ** ** |   |
| Cash flows  provided by (used in) operating activities, U.S. GAAP |       |     |       |                                             |       |                                             | (86        | )                                                |       |   | 36 |   |   |   | (54 | ) |   |
| Cash flows used  in investing activities, Swedish GAAP                 |       |     |       |                                             |       |                                             | (63        | )                                                |       |   | (11 | ) |   |   | (136 | ) |   |
| Restricted cash                                                        |       |     | 19         |                                             |       |                                             | (51        | )                                                |       |   | — |   |   |   | — | ** ** |   |
| Cash flows used  in investing activities, U.S. GAAP               |       |     |       |                                             |       |                                             | (114       | )                                                |       |   | (11 | ) |   |   | (136 | ) |   |
| Cash flows  provided by (used in) financing activities, Swedish GAAP   |       |     |       |                                             |       |                                             | (8         | )                                                |       |   | 152 |   |   |   | (95 | ) |   |
| Lease  classification                                                  |       |     | (g)        |                                             |       |                                             | (12        | )                                                |       |   | (12 | ) |   |   | (12 | ) |   |
| Cash flows  provided by (used in) financing activities, U.S. GAAP |       |     |       |                                             |       |                                             | (20        | )                                                |       |   | 140 |   |   |   | (107 | ) |   |
| **Net increase (decrease) in cash  and bank balances**                 |       |     |       |                                             | ** ** | ** **                                       | **(220**   | **)**                                            | ** ** | ** ** | **165** |   | ** ** | ** ** | **(297** | **)** |   |

 

There were no significantnon-cash investing or financing activities during either of the three yearspresented above other than that Concordia entered into capital leases resultingin the recognition of capitalized vehicle costs and related capital leaseobligations of SEK 4 for the year ended February 28, 2005, SEK 1 millionfor the year ended February 29, 2004 and SEK 37 million for the yearended February 28, 2003.

**(a)   Goodwill amortization**

For Swedish GAAP, Concordia amortizes goodwillbalances based on their estimated economic lives and assesses the balances forimpairment whenever there is an indicator that the assets may be impaired.Effective March 1, 2002, Concordia adopted SFAS No. 142, “Goodwilland Other Intangible Assets,” for U.S. GAAP purposes. SFAS No. 142requires goodwill to no longer be amortized, but instead be tested forimpairment upon adoption of SFAS No. 142, as well as on an annual basis,and more frequently if circumstances indicate a possible impairment. If thecarrying value of goodwill exceeds its fair value, an impairment loss isrecognized. Prior to adopting SFAS No. 142, for U.S. GAAP purposes,Concordia amortized goodwill balances over their estimated economic lives, notto exceed 20 years, and assessed the balances for impairment whenever events orchanges in circumstances indicated that the carrying amounts may not berecoverable.

Upon the adoption of SFAS No. 142, the transitionprovisions of SFAS No. 141, “Business Combinations,” also became effectiverequiring, in certain circumstances, the reclassification of amounts betweenrecognized goodwill and other intangibles relating to previous businesscombinations. The 

F-42

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

transition provisions ofSFAS No. 141 did not affect any of Concordia’s previously reportedgoodwill under U.S. GAAP.

Under SFAS No. 142, the U.S. GAAP goodwillimpairment test is performed at the reporting unit level and is comprised oftwo steps. The initial step is designed to identify potential goodwillimpairment by comparing an estimate of the fair value of the applicablereporting unit to its carrying value, including goodwill. Concordia’smeasurement of fair value is based on an evaluation of both future discountedcash flows, consistent with those utilized in Concordia’s annual planningprocess, and public company trading multiples. If the carrying value exceedsfair value, a second step is performed, which compares the implied fair valueof the applicable reporting unit’s goodwill with the carrying amount of thatgoodwill, to measure the amount of goodwill impairment, if any. Subsequentreversal of a recognized impairment loss is prohibited.

Upon adoption of SFAS No. 142,Concordia performed transitional impairment tests of goodwill under U.S. GAAP.As a result of these impairment tests, no impairment charges were recognized atthe date of adoption. Subsequent annual impairment tests are performed, at aminimum, on goodwill in conjunction with Concordia’s annual planning process. Noimpairments were recorded under U.S. GAAP as a result of the annual impairmenttests.

**(b)   Push-down accounting**

A greater amount ofgoodwill is recorded under U.S. GAAP compared to Swedish GAAP. The greateramount of goodwill for U.S. GAAP purposes is primarily a result of the factthat approximately SEK 680 million of goodwill, which was createdwhen Concordia’s shareholder acquired Concordia on January 14, 2000, wasnot required to be pushed down to the financial statements of Concordia inaccordance with Swedish GAAP. U.S. GAAP requires such goodwill be pushed downsince Concordia became wholly owned by one shareholder as a result of theacquisition. That greater amount of goodwill was amortized under U.S. GAAPuntil February 28, 2002 at which time amortization was ceased as describedin (a) above.

**(c)**    Pensions

Both Swedish GAAP and U.S. GAAP have the sameobjective, which is the accrual for the projected cost of providing suchpension benefits. There are certain differences with U.S. GAAP being more prescriptive,requiring the use of the projected unit credit method; whereas under SwedishGAAP, the accrued benefit obligation is calculated. Other areas of differencesinclude the actuarial assumptions, the treatment of actuarial gains and lossesand plan changes. Concordia has pension arrangements under two defined benefitplans for its employees in Norway and one defined benefit plan for retiredemployees in Sweden.

Concordia’s defined benefit pension plan for Swedishretirees is unfunded and has 568 plan participants at February 28, 2005.

Prior to January 1, 2004, Concordia offered twodefined benefit pension plans to employees in Norway. One of the plans was foremployees who begin work with Concordia before the age of 58 years. Suchplan is funded and has 528 plan participants at February 28, 2005. Theplan assets are invested in a combination of equity securities, governmentguaranteed bonds, real estate and other high-grade 

F-43

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

long-terminvestments. The other plan was for employees who begin work at the age of58 years or later. Such plan is not funded and includes 424 planparticipants at February 28, 2005. Beginning January 1, 2004, the twodefined benefit plans were closed to new enrollments. Instead, new employeesmust enroll in SBC’s defined contribution plan.

Theamounts computed in accordance with U.S. GAAP as shown below relate to thedefined benefit pension plans described previously:
| ** **                                              | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** |
|---------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| **Change in benefit obligation:**                       |       |     |       |     |       |     |       |
| Benefit  obligation beginning of the year               | ** ** | **192**  | ** ** | **196**  | ** ** | **191**  | ** ** |
| Service cost                                            |       | 5        |       | 4        |       | 6        |       |
| Interest cost                                           |       | 10       |       | 11       |       | 13       |       |
| Actuarial (gains)  losses                               |       | (6       | )          | (1       | )          | 1        |       |
| Benefits paid                                           |       | (15      | )          | (16      | )          | (15      | )          |
| Other                                                   |       | 8        |       | (2       | )          | —   |       |
| Benefit  obligation end of the year                     | ** ** | **194**  | ** ** | **192**  | ** ** | **196**  | ** ** |
| **Change in plan assets:**                              |       |     |       |     |       |     |       |
| Fair value of  plan assets at the beginning of the year | ** ** | **116**  | ** ** | **116**  | ** ** | **112**  | ** ** |
| Actual return on  plan assets                           |       | 7        |       | 7        |       | 8        |       |
| Employer  contributions                                 |       | 4        |       | 4        |       | 11       |       |
| Benefits paid                                           |       | (9       | )          | (6       | )          | (15      | )          |
| Other                                                   |       | 9        |       | (5       | )          | —   |       |
| Fair value of  plan assets at the end of the year       | ** ** | **127**  | ** ** | **116**  | ** ** | **116**  | ** ** |
| Funded status                                           |       | (67      | )          | (76      | )          | (80      | )          |
| Unrecognized net  actuarial loss                        |       | 9        |       | 14       |       | 9        |       |
| Accrued benefit  obligation                             | ** ** | **(58**  | **)**      | **(62**  | **)**      | **(71**  | **)**      |
| **Components of net pension cost:**                     |       |     |       |     |       |     |       |
| Service cost                                            |       | 5        |       | 4        |       | 6        |       |
| Interest cost                                           |       | 10       |       | 11       |       | 13       |       |
| Expected return  on plan assets                         |       | (7       | )          | (7       | )          | (8       | )          |
| Amortization of  net actuarial gain                     |       | —   |       | —   |       | (1       | )          |
| Social charges                                          |       | 1        |       | —   |       | 1        |       |
| Net pension cost                                        | ** ** | **9**    | ** ** | **8**    | ** ** | **11**   | ** ** |
| **Weighted-average  assumptions at year end:**          |       |     |       |     |       |     |       |
| Discount rates                                          |       | 5.3-6.5  | %          | 5.5-7.0  | %          | 5.5-7.0  | %          |
| Expected return  on plan assets                         |       | 5.5      | %          | 6.0      | %          | 7.0      | %          |
| Rate of  compensation increases                         |       | 3.3      | %          | 3.0      | %          | 3.0      | %          |
| Inflation rates                                         |       | 2.0      | %          | 2.0      | %          | 2.0      | %          |

 

F-44

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Areconciliation of the above disclosures, which are combined for Concordia’sthree defined benefit plans, to the amounts recorded in the balance sheet is asfollows:
| ** **                                     | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Norwegian plan  with net prepaid pension asset |       |                            | 9          | ** **                      |       |   | 11 | ** ** |   |
| Norwegian plan  with net pension obligation    |       |                            | (15        | )                               |       |   | (16 | ) |   |
| Swedish plan with  net pension obligation      |       |                            | (52        | )                               |       |   | (57 | ) |   |
| Additional  liability under US GAAP            |       |                            | (9         | )                               |       |   | — |   |   |
| **Net accrued pension benefit  obligation**    | ** ** | ** **                      | **(67**    | **)**                           | ** ** | ** ** | **(62** | **)** |   |

 

Inregards to the plans having a net pension obligation, the following is thefunded status of those plans on a combined basis, before consideration ofunrecognized items:
| ** **                      | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accumulated  benefit obligation |       |                            | (194       | )                               |       |   | (192 | ) |   |
| Fair value of  plan assets      |       |                            | 127        | ** **                      |       |   | 116 | ** ** |   |
| **Funded status**               | ** ** | ** **                      | **(67**    | **)**                           | ** ** | ** ** | **(76** | **)** |   |

 

For other active employees the entities in the Swebusgroup have individual plans or participate in plans administered outsideConcordia. These pension plans are generally non-contributory for the employeesand cover substantially all of Swebus employees.

Concordia recognizedadditional liability of SEK 19 million as of February 28, 2005.  Such amount represented the excess of thedifference between the accumulated benefit obligation of SEK 194 million andthe fair value of plan assets of SEK 127 million, and the recorded liabilityunder Swedish GAAP of SEK 48 million.

**(d)**   Refundfrom defined contribution pension plan

Swedish companiesparticipate in a collectively bargained pension plan for all Swedish white-collaremployees (a multiemployer pension plan). Required contributions to the planare charged to earnings as they become due and payable for purposes of bothSwedish GAAP and U.S. GAAP. In 1998, the plan administrator (“SPP”) announced asignificant surplus in the plan and that the surplus would be refunded to planparticipants. In 1999, the plan administrator announced how much each employerwould receive. In 2000, actual payment terms were announced, which include aninitial cash refund based on a formula (which resulted in a refund of 20% ofthe calculated share of surplus for many companies) with the remainder appliedas a credit against future premiums or potentially transferred to anotherentity. Until the surplus was refunded to participating companies, it was thelegal property of the pension plan. Under Swedish GAAP, the refund wasrecognized as an asset as part of the net assets of which were acquired by itsshareholder on January 14, 2000. Such accounting treatment differs fromthe accounting treatment under U.S. GAAP, where any refunds under a definedcontribution plan are recognized as income in the period when the refund canactually be utilized. Thus, under U.S. GAAP, no asset for this refund wasrecognized in connection with the acquisition of Concordia by its shareholder.As of February 28, 2002, Concordia had received the full amount of therefund in cash and, consequently, had recognized the amount in income underU.S. GAAP.

F-45

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**(e)**    Financialinstruments

***Derivative Financial Instruments:***

Concordia uses financial instruments to manage risksassociated with interest rate exposure on variable rate debt, fuel price riskand foreign currency exposure associated with Euro-denominated debt. Thesefinancial instruments include interest rate swaps, fixed price fuel contractsand foreign currency contracts.

Under Swedish GAAP, hedge accounting is used as longas a hedge is considered effective and then the fair value of the hedgeinstrument is held off balance sheet. The net settlement of the instrument isrecorded on the same line as the expense from the hedge exposure.

U.S. GAAP requires thatevery derivative instrument (including certain derivative instruments embeddedin other contracts) be recorded on the balance sheet as either an asset orliability measured at its fair value. U.S. GAAP requires that changes in aderivative’s fair value be recognized currently in earnings unless specificcriteria are met to account for such financial instruments as hedges. Concordiaaccounts for changes in the fair value of all its derivative financialinstruments through income as it has not chosen to designate any of thederivative instruments as hedges for U.S. GAAP purposes.

***Fair Values of Financial Instruments***

The carrying amounts of Concordia’s categories offinancial fixed assets, accounts and other current receivables, cash and cashbalances approximated their respective fair values at February 28, 2005and February 28, 2004. Similarly, the carrying amounts of Concordia’scategories of non-current liabilities and current liabilities approximatedtheir respective fair values at February 28, 2005 and February 29,2004.

The fair values of derivativefinancial instruments held by Concordia at February 28, 2005 are includedin Note 28. In certain circumstances, the fair values of the derivativesfinancial instruments are not recorded for Swedish GAAP reporting purposes.However, for U.S. GAAP reporting purposes, the carrying amounts of allderivative financial instruments are equal to their fair values as statedabove.

**(f)**    Sale-leasebackof real estate

Under Swedish GAAP, a gain incurred in connection witha sale-leaseback transaction where the criteria for a financial leasetransaction is not fulfilled and where the transaction is based on fair valueshould be recognized in the period when the sales transaction has beenconsummated. Under U.S. GAAP, any gain on a sale-leaseback transaction where a majorityof the assets are retained by the seller must be deferred and recognized overthe life of the lease, if a capital lease, or in proportion to gross rentals ifan operating lease.

In periods prior to March 1,2002, Concordia sold properties and simultaneously leased them back. UnderSwedish GAAP, Concordia recorded immediate net gains related to thesesale-leaseback transactions in its statement of operations. Under U.S. GAAP,the net gains related to these transactions were deferred and are being amortizedin relation to the lease agreement.

F-46

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**(g)**    Leaseclassification

Under Swedish GAAP, leases are reported in theconsolidated financial statements as capital leases if the lease entails thetransfer to the lessee, to a material extent, of the economic risks andbenefits generally associated with ownership. If this is not the case, thelease is reported as an operating lease and the lease payments are expensed asincurred.

Under U.S. GAAP, specific criteria are used todetermine whether a lease is a capital lease. Specifically, a capital lease isone where either the minimum payments are in excess of 90% of the fair marketvalue, the leased assets or the lease term is equal to or greater than 75% ofthe estimated economic life of the property, the lease contains a bargainpurchase option, or the lease transfers ownership of the property to the lesseeat the end of the lease term.

Certain of Concordia’s leases, that resulted from thesale-leaseback transactions entered into by Concordia as described in (f), arecapital leases for U.S. GAAP purposes and operating leases for Swedish GAAPpurposes.

At February 28, 2005a total of SEK 21 has been recorded as an equity difference due toclassification of leases, whereof SEK 14 relates to accumulateddepreciation (SEK 4 in current year) and the remainder relates todifferences between lease payments and interest portion of lease expenses.

**(h)**   Restructuring

For Swedish GAAP,Concordia recorded a restructuring provision of SEK 6 million at February 29,2004, relating to one-time, employee termination costs pertaining to theclose-down of operations in Gothenburg, Sweden which occurred after February 29,2004. As the employees continued working for longer than a minimum retentionperiod to receive the termination benefit, the termination costs was deemed tohave future benefit under U.S. GAAP. As a result, under U.S. GAAP, thetermination costs could not be recognized as a provision at February 29,2004. Instead, the fair value of the obligation at February 29, 2004 was recognizedfor U.S. GAAP ratably over the estimated remaining service period of theemployees. During the year ended February 28, 2005 the service period forthe employees affected by the restructuring came to an end, whereby underSwedish GAAP, actual expenses were matched against the provision.

**(i)**    Comprehensiveloss under U.S. GAAP

Thefollowing presents comprehensive loss, defined as changes in the stockholder’sdeficit of Concordia as a result of transactions other than those with theowner:
| ** **                                   | ** ** | **Year ended  February 28, 2005** | ** ** | **Year ended  February 29, 2004** | ** ** | **Year ended  February 28, 2003** | ** ** |
|----------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Net loss                                     |       |                                             | (385       | )                                                |       |                                             | (127       | ) |   |   | (168 | ) |   |
| Other comprehensive  income (loss):          |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Change in  cumulative comprehensive income   |       |                                             | —     | ** **                                       |       |                                             | 1          | ** ** |   |   | (10 | ) |   |
| Change in  cumulative translation adjustment |       |                                             | 12         | ** **                                       |       |                                             | 0          | ** ** |   |   | 1 | ** ** |   |
| **Comprehensive loss**                       | ** ** | ** **                                       | **(373**   | **)**                                            | ** ** | ** **                                       | **(126**   | **)** | ** ** | ** ** | **(177** | **)** |   |

 

F-47

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**(j)**    Changes in shareholder’s equity underU.S. GAAP
| ** **                                              | ** ** | **Shareholder’s  Equity** | ** ** |
|---------------------------------------------------------|------------|--------------------------------|------------|
| **Shareholder’s  equity March 1, 2002**       | ** ** |                           | **1,231**  | ** ** |   |
| Group  contribution to shareholder                      |       |                           | (141       | ) |   |
| Income tax effect  on group contribution to shareholder |       |                           | 39         | ** ** |   |
| Change in  cumulative translation adjustment            |       |                           | 1          | ** ** |   |
| Change in  cumulative comprehensive income              |       |                           | (10        | ) |   |
| Net loss                                                |       |                           | (168       | ) |   |
| **Shareholder’s  equity February 28, 2003**   | ** ** |                           | **952**    | ** ** |   |
| Change in  cumulative comprehensive income              |       |                           | 1          | ** ** |   |
| Net loss                                                |       |                           | (127       | ) |   |
| **Shareholder’s  equity February 29, 2004**   | ** ** |                           | **826**    | ** ** |   |
| Change in  cumulative translation adjustment            |       |                           | 12         | ** ** |   |
| Net loss                                                |       |                           | (385       | ) |   |
| **Shareholder’s equity February 28,  2005**   | ** ** |                           | **453**    | ** ** |   |

 

**(k)   New accounting principles for U.S. GAAP**

***Consolidation of Variable Interest Entities***

In December 2003, theU.S. Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46(revised December 2003), “Consolidation of Variable Interest Entities,” (“FIN 46R”)which addresses the consolidation of variable interest entities by businessenterprises. Variable interest entities are entities in which either the equityinvestment at risk is not sufficient to absorb the probable losses withoutadditional subordinated financial support from other parties, or the investorswith equity at risk lack certain essential characteristics of a controllinginterest. Under FIN 46R, Concordia must consolidate any variable interestentity in which Concordia holds variable interests and is deemed the primarybeneficiary. Portions of the requirements of FIN 46R were required to beadopted during the year ended February 29, 2004, while other portions wererequired to be adopted during the year ended February 28, 2005 under thetransition rules. The adoption of the remaining provisions of FIN 46Rduring the year ended February 28, 2005 did not have a significant effectConcordia’s consolidated financial position or results of operations reportedin accordance with U.S. GAAP.

***Revenue Arrangements with Multiple Deliverables***

In May 2003, theEmerging Issues Task Force  of the FASBreached a consensus on Issue No. 00-21 “Revenue Arrangements with MultipleDeliverables” (“EITF 00-21”), providing further guidance on how to account formultiple element contracts. EITF 00-21 was effective for all arrangementsentered into by Concordia on or after March 1, 2004. The adoption of theEITF 00-21 during the year ended February 28, 2005 did not have a significanteffect on Concordia’s consolidated financial position or results of operationsreported in accordance with U.S. GAAP.

F-48

----

**CONCORDIA BUS NORDIC HOLDING AB AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

***Exchanges of Non-Monetary Assets***

In December 2004, theFASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets—an amendmentof APB Opinion No. 29” (“SFAS 153”). Accounting Principles Board (“APB”)Opinion No. 29, “Accounting for Nonmonetary Transactions” provided anexception to the basic fair-value measurement principle for exchanges ofsimilar productive assets. That exception required that some nonmonetaryexchanges, although commercially substantive, be recorded on a carryover basis.SFAS 153 eliminates the exception to fair value for exchanges of similarproductive assets and replaces it with a general exception to fair-valuemeasurement for exchange transactions that do not have commercialsubstance—that is, transactions that are not expected to result in significantchanges in the cash flows of the reporting entity. SFAS 153 is effectiveprospectively for Concordia in accounting for nonmonetary asset exchanges whichoccur on or after March 1, 2006 for U.S. GAAP purposes.

***Accounting Changes and Error Corrections***

In May 2005, the FASBissued SFAS No. 154, “Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3”**(“SFAS 154”). SFAS 154 applies to all voluntary changes inaccounting principle, and changes the requirements for accounting for andreporting of a change in accounting principle. SFAS 154 requires retrospectiveapplication to prior periods’ financial statements of a voluntary change inaccounting principle unless it is impracticable. APB No. 20, “AccountingChanges” previously required that most voluntary changes in accountingprinciple be recognized by including in net income of the period of the changethe cumulative effect of changing to the new accounting principle. SFAS 154 iseffective for accounting changes and corrections of errors made by Concordia on or after March 1, 2006 for U.S. GAAPpurposes, except that SFAS 154 does not change the transition provisions of anyexisting accounting pronouncement, including those that are in a transitionphase as of March 1, 2006.

**Note 33.   Accounts receivable**

Accountsreceivable and related allowance for doubtful accounts was as follows:
| ** **                             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accounts  receivable                   |       |                            | 361        |                            |       |   | 318 |   |   |
| Less: Allowance  for doubtful accounts |       |                            | (16        | )                               |       |   | (8 | ) |   |
| Net accounts receivable                |       |                            | 345        |                            |       |   | 310 |   |   |

 

AsConcordia’s customers are primarily governmental, Concordia has not experiencedsignificant uncollectibility problems historically. Changes in the allowancefor doubtful accounts were as follows:
| ** **                                                          | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Allowance for doubtful accounts receivable:** |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Beginning balance                                                   |       |                                             | (8         | )                                                |       |                                             | (3         | ) |   |   | (4 | ) |   |
| Additions to  allowance charged to expense                          |       |                                             | (9         | )                                                |       |                                             | (5         | ) |   |   | (2 | ) |   |
| Accounts  receivable written off against the allowance              |       |                                             | 1          |                                             |       |                                             | 0          |   |   |   | 3 |   |   |
| Ending balance                                                      |       |                                             | (16        | )                                                |       |                                             | (8         | ) |   |   | (3 | ) |   |

 

F-49

----

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

To the Board of Directorsand Shareholder of Swebus AB

We have audited the accompanying balance sheets ofSwebus AB (the “Company”) as of February 28, 2005 and February 29,2004, and the related statements of operations and cash flows for each of thethree years in the period ended February 28, 2005. These financialstatements are the responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financial statements based onour audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal control over financial reporting. Our auditincluded consideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements presentfairly, in all material respects, the financial position of Swebus AB as of February 28,2005 and February 29, 2004, and the results of its operations and its cashflows for each of the three years in the period ended February 28, 2005 inconformity with accounting principles generally accepted in Sweden.

The accompanying financial statements have beenprepared assuming that the Company will continue as a going concern. Asdiscussed in Note 14 to the financial statements, the recurring operatinglosses, stockholder’s capital deficiency, and negative cash flows fromoperations of both the Company and the Company’s shareholder, combined with theinability of the Company’s shareholder to make certain interest payments onoutstanding borrowings and its violations of borrowing covenants, raisesubstantial doubt about the Company’s ability to continue as a going concern. Management’splans concerning these matters are also described in Note 14. The financialstatements do not include any adjustments that might result from the outcome ofthis uncertainty.

Accounting principlesgenerally accepted in Sweden vary in certain significant respects fromaccounting principles generally accepted in the United States of America.Information relating to the nature and effect of such differences is presentedin Note 16 to the financial statements.

Deloitte & ToucheABStockholm, SwedenAugust 31, 2005

F-50

----

**SWEBUSAB STATEMENTS OF OPERATIONS(all amounts in millions of SEK, except share and per share amounts)**
| ** **                                    | ** ** | **Note** | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-----------------------------------------------|------------|----------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Net revenue for  bus services                 |       |     |       |                                             |       |                                             | 3,441      | ** **                                       |       |   | 3,506 |   |   |   | 3,440 |   |   |
| Other operating  income                       |       |     |       |                                             |       |                                             | 58         | ** **                                       |       |   | 72 |   |   |   | 84 |   |   |
| **Total  revenue**                            |       |     | 2          |                                             | ** ** | ** **                                       | **3,499**  | ** **                                       | ** ** | ** ** | **3,578** |   | ** ** | ** ** | **3,524** |   |   |
| **Operating  expenses**                       |       |     |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |   |   |
| Fuel, tires and  other consumables            |       |     | 2          |                                             |       |                                             | (729       | )                                                |       |   | (688 | ) |   |   | (686 | ) |   |
| Other external  costs                         |       |     | 3          |                                             |       |                                             | (1,142     | )                                                |       |   | (1,090 | ) |   |   | (1,058 | ) |   |
| Personnel costs                               |       |     | 4          |                                             |       |                                             | (1,906     | )                                                |       |   | (1,984 | ) |   |   | (1,933 | ) |   |
| Gain (Loss) on  sale of fixed assets          |       |     |       |                                             |       |                                             | (1         | )                                                |       |   | — |   |   |   | — |   |   |
| Depreciation of  tangible fixed assets        |       |     | 6,7        |                                             |       |                                             | (15        | )                                                |       |   | (11 | ) |   |   | (10 | ) |   |
| **Operating  loss**                           |       |     | 2          |                                             | ** ** | ** **                                       | **(294**   | **)**                                            | ** ** | ** ** | **(195** | **)** | ** ** | ** ** | **(163** | **)** |   |
| Interest income from affiliated companies     |       |     | 15         |                                             |       |                                             | 10         | ** **                                       |       |   | 56 | ** ** |   |   | 68 | ** ** |   |
| Other interest  income and similar items      |       |     |       |                                             |       |                                             | 4          |                                             |       |   | — |   |   |   | — |   |   |
| Interest expense  to affiliated companies     |       |     | 15         |                                             |       |                                             | (84        | )                                                |       |   | (64 | ) |   |   | (70 | ) |   |
| Other interest  expense                       |       |     |       |                                             |       |                                             | (1         | )                                                |       |   | (1 | ) |   |   | (1 | ) |   |
| Other financial  expenses                     |       |     |       |                                             |       |                                             | (1         | )                                                |       |   | (2 | ) |   |   | (1 | ) |   |
| **Loss  before income taxes**                 |       |     |       |                                             | ** ** | ** **                                       | **(366**   | **)**                                            | ** ** | ** ** | **(206** | **)** | ** ** | ** ** | **(167** | **)** |   |
| Income taxes                                  |       |     | 5          |                                             |       |                                             | 45         | ** **                                       |       |   | 42 | ** ** |   |   | 44 | ** ** |   |
| **Net  loss**                                 |       |     |       |                                             | ** ** | ** **                                       | **(321**   | **)**                                            | ** ** | ** ** | **(164** | **)** | ** ** | ** ** | **(123** | **)** |   |
| Weighted-average number of shares outstanding |       |     |       |                                             |       |                                             | 3,000      | ** **                                       |       |   | 3,000 |   |   |   | 3,000 |   |   |
| Net loss per share (in  thousands of SEK)     |       |     |       |                                             |       |                                             | (107       | )                                                |       |   | (55 | ) |   |   | (41 | ) |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-51

----

**SWEBUSAB BALANCE SHEETS(all amounts in millions of SEK)**
| ** **                                        | ** ** | **Note** | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------------|------------|----------|------------|---------------------------------|------------|---------------------------------|------------|
| **ASSETS**                                        |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Fixed  assets**                                 |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Tangible fixed assets**                         |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Leasehold  improvements                           |       |     |       |                            |       |                            | 1          |   |   |   | 1 |   |   |
| Vehicles                                          |       |     | 6          |                            |       |                            | 37         |   |   |   | 19 |   |   |
| Equipment, tools,  fixtures and fittings          |       |     | 7          |                            |       |                            | 11         |   |   |   | 15 |   |   |
| **Total  tangible fixed assets**                  |       |     |       |                            | ** ** | ** **                      | **49**     |   | ** ** | ** ** | **35** |   |   |
| **Financial  fixed assets**                       |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Receivables due  from affiliated companies        |       |     | 15         |                            |       |                            | 290        |   |   |   | 188 |   |   |
| **Total  financial fixed assets**                 |       |     |       |                            | ** ** | ** **                      | **290**    |   | ** ** | ** ** | **188** |   |   |
| **Total  fixed assets**                           |       |     |       |                            | ** ** | ** **                      | **339**    |   | ** ** | ** ** | **223** |   |   |
| **Current  assets**                               |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Inventory**                                     |       |     |       |                            | ** ** | ** **                      | **24**     |   | ** ** | ** ** | **23** |   |   |
| **Current  receivables and other current assets** |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Accounts  receivable                              |       |     | 17         |                            |       |                            | 250        |   |   |   | 243 |   |   |
| Receivables due  from affiliated companies        |       |     | 15         |                            |       |                            | 4          |   |   |   | 9 |   |   |
| Other current  receivables                        |       |     |       |                            |       |                            | 71         |   |   |   | 75 |   |   |
| Accrued income  and prepaid expenses              |       |     | 8          |                            |       |                            | 124        |   |   |   | 219 |   |   |
| **Total  receivables and other current assets**   |       |     |       |                            | ** ** | ** **                      | **449**    |   | ** ** | ** ** | **546** |   |   |
| Cash and bank  balances                           |       |     | 9          |                            |       |                            | 131        |   |   |   | 175 |   |   |
| **Total  current assets**                         |       |     |       |                            | ** ** | ** **                      | **604**    |   | ** ** | ** ** | **744** |   |   |
| **TOTAL ASSETS**                                  |       |     |       |                            | ** ** | ** **                      | **943**    |   | ** ** | ** ** | **967** |   |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-52

----

**SWEBUS AB BALANCESHEETS(all amounts in millions of SEK, except share and per share amounts)**
| ** **                                                   | ** ** | **Note** | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|---------------------------------|------------|---------------------------------|------------|
| **SHAREHOLDER’S EQUITY AND LIABILITIES** |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Shareholder’s equity**                                |       |     | 10         |                            |       |                            |       |   |   |   |   |   |   |
| **Restricted equity**                                        |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Share capital  (3,000 shares at par value SEK 100)           |       |     |       |                            |       |                            | 0          |   |   |   | 0 |   |   |
| Restricted  reserves                                         |       |     |       |                            |       |                            | 0          |   |   |   | 0 |   |   |
| **Total  restricted equity**                                 |       |     |       |                            | ** ** | ** **                      | **0**      |   | ** ** | ** ** | **0** |   |   |
| **Non-restricted  equity**                                   |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Retained earnings                                            |       |     |       |                            |       |                            | 352        |   |   |   | 399 |   |   |
| Net loss for the  year                                       |       |     |       |                            |       |                            | (321       | ) |   |   | (164 | ) |   |
| **Total  non-restricted equity**                             |       |     |       |                            | ** ** | ** **                      | **31**     |   | ** ** | ** ** | **235** |   |   |
| **Total  shareholder’s equity**                         |       |     |       |                            | ** ** | ** **                      | **31**     |   | ** ** | ** ** | **235** |   |   |
| **Liabilities**                                              |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Provisions**                                               |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Provision for  pensions and similar commitments              |       |     |       |                            |       |                            | 3          |   |   |   | 4 |   |   |
| Provision for  loss making contracts                         |       |     |       |                            |       |                            | 49         |   |   |   | 62 |   |   |
| Other provisions                                             |       |     | 11         |                            |       |                            | 7          |   |   |   | 6 |   |   |
| **Total  provisions**                                        |       |     |       |                            | ** ** | ** **                      | **59**     |   | ** ** | ** ** | **72** |   |   |
| **Non-current  liabilities**                                 |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Other non-current  liabilities                               |       |     | 12         |                            |       |                            | 3          |   |   |   | 8 |   |   |
| **Total  non-current liabilities**                           |       |     |       |                            | ** ** | ** **                      | **3**      |   | ** ** | ** ** | **8** |   |   |
| **Current  liabilities**                                     |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Accounts payable                                             |       |     |       |                            |       |                            | 160        |   |   |   | 220 |   |   |
| Liabilities to  affiliated companies                         |       |     |       |                            |       |                            | 235        |   |   |   | — |   |   |
| Other current  liabilities                                   |       |     |       |                            |       |                            | 104        |   |   |   | 109 |   |   |
| Accrued expenses  and deferred income                        |       |     | 13         |                            |       |                            | 351        |   |   |   | 323 |   |   |
| **Total  current liabilities**                               |       |     |       |                            | ** ** | ** **                      | **850**    |   | ** ** | ** ** | **652** |   |   |
| **TOTAL  SHAREHOLDER’S EQUITY AND LIABILITIES**         |       |     |       |                            | ** ** | ** **                      | **943**    |   | ** ** | ** ** | **967** |   |   |
| **PLEDGED  ASSETS AND CONTINGENT LIABILITIES**               |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| **Pledged assets**                                           |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Floating charges                                             |       |     | 14         |                            |       |                            | 115        |   |   |   | 100 |   |   |
| **Contingent liabilities**                                   |       |     |       |                            |       |                            |       |   |   |   |   |   |   |
| Guarantee on behalf of  Concordia Bus Nordic AB              |       |     | 14         |                            |       |                            | 1,176      |   |   |   | 1,198 |   |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-53

----

**SWEBUSAB AND SUBSIDIARIES STATEMENTS OF CASH FLOWS(all amounts in millions of SEK)**
| ** **                                                                     | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Operating activities**                                                       |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Loss before  income taxes                                                      |       |                                             | (366       | **)**                                            |       |                                             | (206       | **)** |   |   | (167 | **)** |   |
| *Adjustments for items excluded  from cash flows:*                             |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Depreciation                                                                   |       |                                             | 15         | ** **                                       |       |                                             | 11         | ** ** |   |   | 10 | ** ** |   |
| Gains / losses on  sale of fixed assets                                        |       |                                             | 1          | ** **                                       |       |                                             | —     | ** ** |   |   | — | ** ** |   |
| Change in pension  liability                                                   |       |                                             | (1         | **)**                                            |       |                                             | —     | ** ** |   |   | — | ** ** |   |
| Change in  provision for loss contracts                                        |       |                                             | (13        | **)**                                            |       |                                             | 46         | ** ** |   |   | 6 | ** ** |   |
| Change in  interest receivable                                                 |       |                                             | 8          | ** **                                       |       |                                             | (9         | **)** |   |   | — | ** ** |   |
| Change in  interest payable                                                    |       |                                             | 26         | ** **                                       |       |                                             | 17         | ** ** |   |   | (5 | **)** |   |
| **Cash  flows used in operating activities before changes in working capital** | ** ** | ** **                                       | **(330**   | **)**                                            | ** ** | ** **                                       | **(141**   | **)** | ** ** | ** ** | **(156** | **)** |   |
| **Change  in working capital:**                                                |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| (Increase)  decrease in inventory                                              |       |                                             | (1         | **)**                                            |       |                                             | 3          | ** ** |   |   | (6 | **)** |   |
| (Increase)  decrease in current receivables                                    |       |                                             | 149        | ** **                                       |       |                                             | 535        | ** ** |   |   | 202 | ** ** |   |
| Increase  (decrease) in current liabilities                                    |       |                                             | 172        | ** **                                       |       |                                             | (363       | **)** |   |   | (53 | **)** |   |
| **Change  in working capital**                                                 | ** ** | ** **                                       | **320**    | ** **                                       | ** ** | ** **                                       | **175**    | ** ** | ** ** | ** ** | **143** | ** ** |   |
| **Net cash flows (used in) provided by operating  activities**                 | ** ** | ** **                                       | **(10**    | **)**                                            | ** ** | ** **                                       | **34**     | ** ** | ** ** | ** ** | **(13** | **)** |   |
| **Investing  activities**                                                      |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Investments in  tangible fixed assets                                          |       |                                             | (39        | **)**                                            |       |                                             | (11        | **)** |   |   | (7 | **)** |   |
| Sales of tangible  fixed assets                                                |       |                                             | 9          | ** **                                       |       |                                             | —     | ** ** |   |   | — | ** ** |   |
| **Net  cash flows provided by (used in) investing activities**                 | ** ** | ** **                                       | **(30**    | **)**                                            | ** ** | ** **                                       | **(11**    | **)** | ** ** | ** ** | **(7** | **)** |   |
| **Financing  activities**                                                      |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Payments of  financial lease obligations                                       |       |                                             | (4         | **)**                                            |       |                                             | (3         | **)** |   |   | (4 | **)** |   |
| **Net cash flows provided by (used in) financing  activities**                 | ** ** | ** **                                       | **(4**     | **)**                                            | ** ** | ** **                                       | **(3**     | **)** | ** ** | ** ** | **(4** | **)** |   |
| **Net (decrease) increase in cash and bank  balances**                         | ** ** | ** **                                       | **(44**    | **)**                                            | ** ** | ** **                                       | **20**     | ** ** | ** ** | ** ** | **(24** | **)** |   |
| **Cash  and bank balances at beginning of year**                               | ** ** | ** **                                       | **175**    | ** **                                       | ** ** | ** **                                       | **155**    | ** ** | ** ** | ** ** | **179** | ** ** |   |
| **Cash and bank balances at end  of year**                                     | ** ** | ** **                                       | **131**    | ** **                                       | ** ** | ** **                                       | **175**    | ** ** | ** ** | ** ** | **155** | ** ** |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-54

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (all amounts in millions of SEK unless otherwise stated)**

**Note 1.   Organizationand accounting principles**

**Organization**

Swebus AB (“Swebus” or the “Company”) is a Swedishregistered limited liability company, wholly owned by Concordia Bus Nordic AB(reg no 556031-8569) with its registered office in Stockholm, Sweden. The finaloperational parent company is Concordia Bus BV. The primary operations ofSwebus consist of providing regular bus services under contract to transitauthorities in Sweden.

During January 2004,Swebus’ shareholder, Concordia Bus Nordic AB, issued EUR 130 million of9.125% senior secured notes due August 1, 2009. Concordia Bus Nordic ABpledged its shares in certain of its subsidiaries, including Swebus, ascollateral for the senior secured notes, and Swebus, together with otheraffiliated companies, is a guarantor of the notes. See Note 14.

**Accounting Principles**

The financial statements of Swebus have been preparedin accordance with accounting principles generally accepted in Sweden (“SwedishGAAP”) and, thus, have been prepared in accordance with the Swedish AnnualAccounts Act, as well as in accordance with recommendation and statements fromthe recommendations of the Swedish Accounting Standards Board (“Bokföringshämnden”or “BFN”). Swebus’ accounting policies, as described below, have been appliedconsistently in all periods presented.

Swebus is required toreconcile its financial statements to accounting principles generally acceptedin the United States of America (“U.S. GAAP”). Significant differences betweenSwedish GAAP and U.S. GAAP are described in Note 16.

***Currency***

These financial statementshave been prepared in SEK. References to “SEK”, “Swedish krona” or “Swedishkronor” are to Swedish currency.

***Revenue recognition***

The majority of Swebus’ revenues arise from contractswith local public transportation authorities having contract terms of five toeight years (“CPTA contracts”).

CPTA contracts generally provide Swebus with fixed feerevenue in return for the contracted bus services. Accordingly, all ticketrevenues collected by Swebus on such contracts, referred to as grossagreements, are forwarded to the local public transportation authorities, andSwebus receives its fixed fees regardless of the number of passengerstransported. Under some contracts, Swebus receives fees from the localtransportation authority after providing services. Under other contracts,Swebus receives fees in advance of providing services. Regardless of the timingof receiving the fees from the local public transportation authorities, Swebusrecognizes revenue on a straight-line basis over the period of the contractand, accordingly, accrues for earned fee revenue or defers unearned fee revenueas appropriate. Such fixed fees are generally subject to periodic adjustmentfor certain changes in costs incurred or cost indices. In recognizing the feerevenue over the period of the contract, Swebus records adjustments to the feerevenue during the contract period based on the agreed cost adjustmentmechanism contained in the contracts.

F-55

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Revenues earned by Swebus on certain other CPTAcontracts, referred to as net agreements, are based on or consider the numberof passengers transported. Revenues for these contracts are recognized on thedate of travel by the passenger.

Revenue also includes rental income, sale of fuel and dieseland from engineering services. The revenue resulting from other operatingactivities is recognized when the product is delivered or the service isperformed or, in terms of operating lease revenues, on a straight-line basisover the term of lease.

Where appropriate, revenueamounts are shown net of value-added taxes.

***Income Taxes***

The total income taxexpense of Swebus consists of current and deferred income taxes. Deferredincome tax primarily consists of estimated tax on changes in untaxed reserves forthe year and the unused portions of income tax loss carry forwards to theextent that these losses can be used in the future as a reduction of futuretaxable income. The deferred income tax position is calculated using theenacted tax statutory rate.

***Depreciation***

Annualdepreciation and amortization is computed using a straight-line method based onthe following percentages:
| Leasehold  improvements                  |   | 20-33   | % |
|------------------------------------------|--------|---------|---|
| Vehicles                                 |   | 7.15-33 | % |
| Equipment, tools,  fixtures and fittings |   | 10-33   | % |

 

***Tangible fixed assets***

Tangible fixed assets arevalued at cost, less accumulated depreciation and impairment charges.

***Impairment of tangible fixed assets***

Impairment reviews oftangible fixed assets are performed whenever there is an indication of possibleimpairment. The carrying values of fixed assets are not considered to berecoverable when the expected discounted cash flows from those assets are lessthan their carrying values. An impairment loss is determined based on theamount by which the carrying value exceeds the fair value of those assets.Losses on fixed assets to be disposed of are determined in a similar manner,taking into account the selling price reduced by the costs of disposal.

***Receivables and payables in foreign currencies***

Receivables and payablesin foreign currencies are valued using the rate as of the balance sheet date.Gains and losses on trade receivables and payables are reported under operatingprofit (loss). Gains and losses related to other receivables and payables arereported under financial income and expense.

***Inventories***

Inventories are valued atthe lower of cost, using the first in first out method, or market value afterprovision for obsolescence.

F-56

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

***Loss making contracts***

A significant portion ofSwebus revenues are derived from five to eight- year contracts withmunicipalities to provide bus services in a particular area. Under the terms ofthe contracts, the revenues are generally indexed at a rate corresponding to aconsumer price index or a net price index. Due to changes in circumstances and becausecosts have generally increased more quickly than revenues, such contracts maybecome loss making. Swebus records a provision for such loss making contractsat the lowest level for which there are separate identifiable cash flows.Losses are recognized in the period in which management determines thatcumulative losses will be incurred on a particular contract. The loss iscomputed after taking into account direct and indirect costs related to theservice provided under the contract including depreciation on the related buseswhich will be used to meet the service obligation. Swebus normally has multiplecontracts with the CPTAs (Contract Public Transportation Authority). In most ofthe cases the different contracts with the same CPTA are closely connected toeach other. The contracts share the same resources (staff, equipment, vehiclesand premises). Often the contracts also are related for other reasons. Swebussigns several contracts at the same time where some are loss making and someare profit making. In instances where the cash flows from such contracts areinterrelated, provisions for loss making contracts are measured by groupcontracts, however in no instance on a higher level than by CPTA. Swebus alsosigns contracts to maximize the usage of the capacity in the resources. Theprovision is calculated as the difference between the estimated costs tofulfill the contractual commitment and the contractual revenues.

***Restructuring***

Swebus records provisionsfor restructuring and related activities only after the detailed formal planfor the restructuring has been formulated and either the implementationcommences or the main features of the plan have been announced to thoseaffected by it. Provisions for restructuring include only the direct expendituresarising from the restructuring, which are those that are both necessarilyentailed by the restructuring and not associated with the ongoing activities ofthe enterprise.

***Leasing***

Leases are classified inthe financial statements as either finance leases or operating leases. Afinance lease transfers to the lessee the significant economic risks andrewards of ownership. If this is not the case, the lease is an operating lease.For each finance lease, a fixed asset is reported in the balance sheet and a correspondinglease obligation is recorded as a liability. In the statement of operations,the costs of finance leases are reported as depreciation of the carrying valueof the fixed asses and interest expense on the lease obligation. For operatingleases, no asset or liability is recorded in the balance sheet. In thestatement of operations, the periodic rental payments for operating leases areexpensed on a straight-line basis.

***Cash flow statement***

The cash flow statement isderived from the statement of operations and other changes between opening andclosing balance sheets. The cash and bank balances in the cash flow statementincludes securities, time deposits and other short term deposits.

F-57

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

***Use of estimates***

The preparation offinancial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosure of contingentassets and liabilities to the date of the financial statements and the reportedamounts of revenues and expense during the reporting period. Actual resultscould differ from those estimates.

***Segment information***

Swebus operates in onesegment only, the CPTA business in Sweden.

**Note 2.   Operatingincome and operating expenses**

**Sales to affiliated companies**

Net sales from busservices includes sale to affiliated companies of SEK 21, SEK 24 andSEK 32 for the years ended February 28, 2005, February 29, 2004and February 28, 2003 respectively. Other operating income includesrevenues from affiliated companies of SEK 14, SEK 14 and SEK 19 forthe years ended February 28, 2005, February 29, 2004 and February 28,2003 respectively. Other operating income mainly relates to the sale of dieseland other income from affiliated companies, including workshop services.

**Purchasesfrom affiliated companies**

Operating expensesincludes purchases from affiliated companies of SEK 348, SEK 353, and SEK 372,respectively, for the years ended February 28, 2005, February 29,2004, and February 28, 2003. Purchases from affiliated companies includedoperating lease rental payments of SEK 270, SEK 306, and SEK 314, respectively,for the years ended February 28, 2005, February 29, 2004, and February 28,2003.

**Note 3.   Otherexternal costs**
| ** **                                          | ** ** | **Year Ended  February 28, 2005**      | ** ** | **Year Ended  February 29 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-----------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                          | ** ** | **(amounts in thousands of SEK)** | ** ** |
| **Remuneration  and cost compensation to auditors** |       |                                                  |       |                                            |       |                                             |       |   |   |   |   |   |   |
| Deloitte &  Touche AB                      |       |                                                  |       |                                            |       |                                             |       |   |   |   |   |   |   |
| Audit fees                                          |       |                                                  | 840        |                                            |       |                                             | 750        |   |   |   | 741 |   |   |
| Other consultancy  fees                             |       |                                                  | —     |                                            |       |                                             | 191        |   |   |   | 749 |   |   |
| **Total**                                           | ** ** | ** **                                            | **840**    |                                            | ** ** | ** **                                       | **941**    |   | ** ** | ** ** | **1,490** |   |   |

 

F-58

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Auditfees represent the independent auditors examination of the financialstatements. The audit fees also represent fees in conjunction with the auditor’sexamination of significant decisions, actions taken and circumstances of theCompany in order to be able to determine the possible liability to the Companyof any Board Member or the Managing Director or whether they have in some otherway acted in contravention of the Companies Act, the Annual Accounts Act or theArticles of Association. All other services provided are included in “otherconsultancy fees”.
| ** **                         | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Operating  lease fees**          |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Fees paid to  affiliated companies |       |                                             | 311        |                                             |       |                                             | 306        |   |   |   | 315 |   |   |
| Fees paid to  others               |       |                                             | 323        |                                             |       |                                             | 292        |   |   |   | 249 |   |   |
| **Total**                          | ** ** | ** **                                       | **634**    |                                             | ** ** | ** **                                       | **598**    |   | ** ** | ** ** | **564** |   |   |

 

Swebus had 1,103 buses under external operating leaseagreements at February 28, 2005 compared to 1,049 at February 29,2004 and 939 at February 28, 2003. Swebus also has nine properties underoperational leasing agreements in which it conducts its business. At February 28,2005, the net present value of future leasing payments for buses was SEK 635 comparedto SEK 772 at February 29, 2004 and SEK 833 at February 28, 2003. At February 28,2005, the net present value of sublease rental payments to be received bySwebus relating to buses was SEK 17 compared to SEK 21 at February 29,2004 and SEK 35 at February 28, 2003. At February 28, 2005, the netpresent value of future leasing payments for properties was SEK 46 compared toSEK 52 at February 29, 2004 and SEK 58 at February 28, 2003.

Externalfuture lease payments for rentals due calculated at net present value are asfollows:
| ** **                                  | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Net present value  of future lease payments |       |                            |       |                            |       |   |   |   |   |
| —Vehicles (Buses)                      |       |                            | 635        |                            |       |   | 772 |   |   |
| —Real estate and  other                |       |                            | 46         |                            |       |   | 52 |   |   |
| **Total**                                   | ** ** | ** **                      | **681**    |                            | ** ** | ** ** | **824** |   |   |

 

The table below summaries the net present value of thefuture lease payments for Swebus regarding buses under operational leasingcontracts and the expected maturity as of February 28, 2005.

Externaltotal future minimum lease payments discounted for each of the periods are asfollows:
| ** **                   | ** ** | **Total**  | ** ** | **Less than   a year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **After   5 years** | ** ** |
|------------------------------|------------|------------|------------|---------------------------------------|------------|--------------------|------------|--------------------|------------|-------------------------------|------------|
| —Vehicles (Buses)       |       |       | 635        |                                  |       |               | 257        |               |       |                          | 279        |   |   |   | 91 |   |   |   | 8 |   |   |
| —Real estate and  other |       |       | 46         |                                  |       |               | 7          |               |       |                          | 15         |   |   |   | 17 |   |   |   | 7 |   |   |
| **Total**                    | ** ** | ** ** | **681**    |                                  | ** ** | ** **         | **264**    |               | ** ** | ** **                    | **294**    |   | ** ** | ** ** | **108** |   | ** ** | ** ** | **15** |   |   |

 

F-59

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Thefollowing is a schedule by years of leasing payments at February 28, 2005is payable as follows:
| **Years  Ending:**      | ** ** | ** ** | ** ** |
|-------------------------|------------|------------|------------|
| February 28,  2006 |       | 311        |       |
| February 28,  2007 |       | 256        |       |
| February 29,  2008 |       | 210        |       |
| February 28,  2009 |       | 177        |       |
| February 28,  2010 |       | 163        |       |
| Later years             |       | 325        |       |
| **Total**               | ** ** | **1,442**  | ** ** |

 

**Note 4.   Employeesand personnel costs**
| ** **                                                                       | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------------------------------|------------|
| **Average number of employees**                                                  |       |                                             |       |                                            |       |                                             |       |   |   |   |   |   |   |
| Women                                                                            |       |                                             | 705        |                                            |       |                                             | 911        |   |   |   | 750 |   |   |
| Men                                                                              |       |                                             | 4,420      |                                            |       |                                             | 4,856      |   |   |   | 4,826 |   |   |
| **Total**                                                                        | ** ** | ** **                                       | **5,125**  |                                            | ** ** | ** **                                       | **5,767**  |   | ** ** | ** ** | **5,576** |   |   |
| **Salaries, remunerations and  payroll overhead**                                |       |                                             |       |                                            |       |                                             |       |   |   |   |   |   |   |
| Salaries and  other remunerations to board of directors and managing director(1) |       |                                             | 3          |                                            |       |                                             | 3          |   |   |   | 3 |   |   |
| Salaries and  other remunerations to other employees                             |       |                                             | 1,328      |                                            |       |                                             | 1,374      |   |   |   | 1,345 |   |   |
| Pension costs to  board of directors and managing director(1)                    |       |                                             | 1          |                                            |       |                                             | 2          |   |   |   | 5 |   |   |
| Pension costs to  other employees                                                |       |                                             | 68         |                                            |       |                                             | 87         |   |   |   | 79 |   |   |
| Other social  security costs                                                     |       |                                             | 456        |                                            |       |                                             | 466        |   |   |   | 465 |   |   |
| **Total**                                                                        | ** ** | ** **                                       | **1,856**  |                                            | ** ** | ** **                                       | **1,932**  |   | ** ** | ** ** | **1,897** |   |   |

----

(1)          The board of directorsand managing director also include the former managing director.

Pensioncosts refer to payments under Swebus’ defined contribution pension plan
| ** **                                      | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                      | ** ** | **Number**                                       | ** ** | **There  of men**                           | ** ** | **Number**                                       | ** ** | **There  of men** | ** ** | **Number** | ** ** | **There  of men** | ** ** |
| **Board  members and senior management**        |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Members of the  board                           |       |                                             | 6          |                                             |       |                                             | 100        | % |   |   | 6 |   |   |   | 100 | % |   |   | 6 |   |   |   | 100 | % |   |
| Managing directors and  other senior management |       |                                             | 8          |                                             |       |                                             | 88         | % |   |   | 10 |   |   |   | 90 | % |   |   | 11 |   |   |   | 82 | % |   |

 

F-60

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Informationabout absence due to illness**

Absencedue to illness as a percentage of ordinary working hours:
| ** **                                      | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** |
|-------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Total absence due  to illness                   |       |                                             | 12.5       | %                                                |       |   | 12.9 | % |   |
| —absence due to  illness—women        |       |                                             | 17.7       | %                                                |       |   | 18.9 | % |   |
| —absence due to  illness—men          |       |                                             | 11.5       | %                                                |       |   | 11.8 | % |   |
| —absence due to  illness—age up to 29 |       |                                             | 6.5        | %                                                |       |   | 8.2 | % |   |
| —absence due to  illness—age 30-49    |       |                                             | 12.6       | %                                                |       |   | 12.7 | % |   |
| —absence due to  illness—age over 49  |       |                                             | 13.2       | %                                                |       |   | 13.8 | % |   |
| Share of long-time  absence of total absence    |       |                                             | 75.9       | %                                                |       |   | 76.7 | % |   |

 

**Note 5.   Taxes**
| ** **                                                                          | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------------------------------|------------|
| Income tax effect  on group contribution received                                   |       |                                             | 45         |                                            |       |                                             | 48         |   |   |   | 42 |   |   |
| Deferred income  tax related to loss making contracts                               |       |                                             | (4         | )                                               |       |                                             | 11         |   |   |   | 2 |   |   |
| Valuation  allowance of deferred income tax asset                                   |       |                                             | 4          |                                            |       |                                             | (17        | ) |   |   | — |   |   |
| **Total  income tax benefit**                                                       | ** ** | ** **                                       | **45**     |                                            | ** ** | ** **                                       | **42**     |   | ** ** | ** ** | **44** |   |   |
| **Difference between statutory  income tax rate and effective income tax benefit:** |       |                                             |       |                                            |       |                                             |       |   |   |   |   |   |   |
| Loss before  income taxes                                                           |       |                                             | (366       | )                                               |       |                                             | (206       | ) |   |   | (167 | ) |   |
| Income tax  according to statutory tax rate, 28%                                    |       |                                             | 102        |                                            |       |                                             | 58         |   |   |   | 47 |   |   |
| Temporary  differences for which deferred income tax assets have not been recorded  |       |                                             | (8         | )                                               |       |                                             | (15        | ) |   |   | — |   |   |
| Income tax effect  regarding non-deductible items                                   |       |                                             | —     |                                            |       |                                             | —     |   |   |   | (1 | ) |   |
| Income tax on  losses for which deferred income tax assets have not been recorded   |       |                                             | (49        | )                                               |       |                                             | (1         | ) |   |   | (2 | ) |   |
| **Total income tax benefit**                                                        | ** ** | ** **                                       | **45**     |                                            | ** ** | ** **                                       | **42**     |   | ** ** | ** ** | **44** |   |   |

 

The income tax rate inSweden is 28%. The taxes are based on the loss before tax with adjustments fornon deductible/non-taxable revenues/costs. Swebus AB had unrecordedaccumulated tax losses amounting to SEK 188 (SEK 13) as of February 28,2005, representing SEK 53 (SEK 4) in deferred tax assets. The losses can beused without time limitations. Swebus AB also had unrecorded accumulatedtemporary tax differences representing deferred tax benefits (assets) of SEK 29(SEK 21) as of February 28, 2005.

F-61

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Temporarydifferences for tax purposes in the balance sheet**

Temporarydifferences exist if the values of assets and liabilities are different for taxpurposes than for accounting purposes. Temporary differences have resulted inthe following deferred income tax assets:
| ** **                                  | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Provision for  loss making contracts        |       |                            | 14         |                            |       |   | 17 |   |   |
| Valuation  allowance on receivables         |       |                            | 14         |                            |       |   | 2 |   |   |
| Tax losses carry  forward                   |       |                            | 53         |                            |       |   | 4 |   |   |
| Restructuring  Provisions                   |       |                            | 2          |                            |       |   | 2 |   |   |
| Valuation  allowance on deferred tax assets |       |                            | (83        | )                               |       |   | (25 | ) |   |
| **Total deferred income tax asset**         | ** ** | ** **                      | **—** |                            | ** ** | ** ** | **—** |   |   |

 

**Note 6.   Vehicles**
| ** **                         | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Accumulated acquisition cost**   |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                  |       |                            | 27         | ** **                      |       |   | 21 | ** ** |   |
| Purchases                          |       |                            | 37         | ** **                      |       |   | 6 | ** ** |   |
| Sales/Disposals                    |       |                            | (10        | **)**                           |       |   | — | ** ** |   |
| **Ending  balance**                | ** ** | ** **                      | **54**     | ** **                      | ** ** | ** ** | **27** | ** ** |   |
| **Accumulated depreciation**       |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                  |       |                            | (8         | **)**                           |       |   | (3 | **)** |   |
| Sales/Disposals                    |       |                            | 1          | ** **                      |       |   | — | ** ** |   |
| Depreciation for  the year         |       |                            | (10        | **)**                           |       |   | (5 | **)** |   |
| **Ending  balance**                | ** ** | ** **                      | **(17**    | **)**                           | ** ** | ** ** | **(8** | **)** |   |
| **Net book value, ending balance** | ** ** | ** **                      | **37**     | ** **                      | ** ** | ** ** | **19** | ** ** |   |

 

Purchase of vehicles ofSEK 0, SEK 1 and SEK 21 were acquired through financial leases during the yearsended February 28, 2005, February 29, 2004 and February 28,2003, respectively. During the year ended February 29, 2004, Swebusacquired vehicles from an affiliated company in the amount of SEK 4, which wasequal to the carrying amount of such vehicles on the financial statements ofthe affiliated company.

F-62

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 7.   Equipment,tools, fixtures and fittings**
| ** **                         | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Accumulated  acquisition cost**  |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                  |       |                            | 125        | ** **                      |       |   | 119 | ** ** |   |
| Purchases                          |       |                            | 2          | ** **                      |       |   | 6 | ** ** |   |
| Sales/Disposals                    |       |                            | (16        | **)**                           |       |   | (0 | **)** |   |
| **Ending  balance**                | ** ** | ** **                      | **111**    | ** **                      | ** ** | ** ** | **125** | ** ** |   |
| **Accumulated  depreciation**      |       |                            |       | ** **                      |       |   |   | ** ** |   |
| Beginning balance                  |       |                            | (110       | **)**                           |       |   | (104 | **)** |   |
| Sales/Disposals                    |       |                            | 15         | ** **                      |       |   | 0 | ** ** |   |
| Depreciation for  the year         |       |                            | (5         | **)**                           |       |   | (6 | **)** |   |
| **Ending  balance**                | ** ** | ** **                      | **(100**   | **)**                           | ** ** | ** ** | **(110** | **)** |   |
| **Net book value, ending balance** | ** ** | ** **                      | **11**     | ** **                      | ** ** | ** ** | **15** | ** ** |   |

 

**Note 8.   Accruedincome and prepaid expenses**
| ** **                                          | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|-----------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accrued income  and prepaid expenses regarding CPTA |       |                            | 87         |                            |       |   | 158 |   |   |
| Other accrued  income and prepaid expenses          |       |                            | 37         |                            |       |   | 61 |   |   |
| **Total**                                           | ** ** | ** **                      | **124**    |                            | ** ** | ** ** | **219** |   |   |

 

**Note 9.   Cash and bank balances**

Included in cash and bankbalances is the portion of Swebus’ outstanding balance for the group accountconnected to the Concordia group account, where Swebus’ shareholder is thecontracting party with the bank. Of Swebus’ total cash and bank balances, thegroup account was SEK 125, SEK 170 and SEK 152 at February 28, 2005, February 29,2004 and February 28, 2003, respectively. A deposit of SEK 6 is restrictedcash at February 28, 2005.

F-63

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 10.   Changesin shareholder’s equity**
| ** **                                 | ** ** | **Share capital** | ** ** | **Statutory  reserve** | ** ** | **Retained earnings  (deficit)** | ** ** | **Net loss  for the year** | ** ** | **Total** | ** ** |
|--------------------------------------------|------------|------------------------|------------|------------------------|------------|---------------------------------------|------------|-------------------------------------------|------------|-----------|------------|
| **Balances  at March 1, 2002**        | ** ** |                   | **0**      | ** **             |       |                                  | **0**      | ** **                                |       |      | **447**    | ** ** |   |   | **(158** | **)** |   | **289** | ** ** |
| Disposition of  prior year’s net loss |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (158       | **)** |   |   | 158 | ** ** |   | — |   |
| Group  contribution received               |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | 151        | ** ** |   |   | — | ** ** |   | 151 |   |
| Tax effect on  group contribution          |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (42        | **)** |   |   | — | ** ** |   | (42 | ) |
| Net loss for the  year                     |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | —     | ** ** |   |   | (123 | **)** |   | (123 | ) |
| **Balances  at February 28, 2003**    | ** ** |                   | **0**      | ** **             |       |                                  | **0**      | ** **                                |       |      | **398**    | ** ** |   |   | **(123** | **)** |   | **275** | ** ** |
| Disposition of  prior year’s net loss |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (123       | **)** |   |   | 123 | ** ** |   | — |   |
| Group  contribution received               |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | 172        | ** ** |   |   | — | ** ** |   | 172 |   |
| Tax effect on  group contribution          |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (48        | **)** |   |   | — | ** ** |   | (48 | ) |
| Net loss for the  year                     |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | —     | ** ** |   |   | (164 | **)** |   | (164 | ) |
| **Balances  at February 29, 2004**    | ** ** |                   | **0**      | ** **             |       |                                  | **0**      | ** **                                |       |      | **399**    | ** ** |   |   | **(164** | **)** |   | **235** | ** ** |
| Disposition of  prior year’s net loss |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (164       | **)** |   |   | 164 | ** ** |   | — |   |
| Group  contribution received               |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | 162        | ** ** |   |   | — | ** ** |   | 162 |   |
| Tax effect on  group contribution          |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | (45        | **)** |   |   | — | ** ** |   | (45 | ) |
| Net loss for the  year                     |       |                   | —     | ** **             |       |                                  | —     | ** **                                |       |      | —     | ** ** |   |   | (321 | **)** |   | (321 | ) |
| **Balances at February 28,  2005**    | ** ** |                   | **0**      | ** **             |       |                                  | **0**      | ** **                                |       |      | **352**    | ** ** |   |   | **(321** | **)** |   | **31** | ** ** |

 

**Note 11.   Otherprovisions**
| ** **                                 | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Beginning balance                          |       |                            | 6          |                            |       |   | — |   |   |
| Provisions for  restructuring              |       |                            | 7          |                            |       |   | 6 |   |   |
| Provisions  reversed against restructuring |       |                            | (6         | )                               |       |   | — |   |   |
| **Ending balance**                         | ** ** | ** **                      | **7**      |                            | ** ** | ** ** | **6** |   |   |

 

**Note 12.   Othernon-current liabilities**
| ** **                   | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Finance lease obligation** |       |                            |       |                            |       |   |   |   |   |
| Payment due 1  year          |       |                            | 6          |                            |       |   | 5 |   |   |
| Payment due 2-5  years       |       |                            | 3          |                            |       |   | 8 |   |   |
| **Total**                    | ** ** | ** **                      | **9**      |                            | ** ** | ** ** | **13** |   |   |

 

During the year ended February 28, 2005, Swebusdid not enter into any new finance leasing agreements.

F-64

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Thefollowing is a schedule by years of future minimum gross lease payments underfinance leases together with the present value of the net minimum leasepayments as of February 28, 2005:
| **Year  ending**                             |       |   |       |
|----------------------------------------------|------------|--------|------------|
| February 28,  2006                      |       | 7      |       |
| February 28,  2007                      |       | 2      |       |
| February 29,  2008                      |       | 1      |       |
| February 28,  2009                      |       | — |       |
| February 28,  2010                      |       | — |       |
| Later years                                  |       | — |       |
| **Total  minimum gross lease payments**      | ** ** | **10** | ** ** |
| Less: Amount  representing interest          |       | (1     | )          |
| **Present value of minimum lease  payments** | ** ** | **9**  | ** ** |

 

The leasing fees are basedon depreciation according to the annuity method and a floating interest rate.The short-term portion of the finance leasing obligation is classified as othercurrent liabilities.

**Note 13.   Accruedexpenses and deferred income**
| ** **                                           | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accrued expenses  and deferred income regarding CPTA |       |                            | 92         |                            |       |   | 109 |   |   |
| Accrued employee  costs                              |       |                            | 198        |                            |       |   | 201 |   |   |
| Accrued rental  charges                              |       |                            | 2          |                            |       |   | 3 |   |   |
| Other accrued  expenses and deferred income          |       |                            | 59         |                            |       |   | 10 |   |   |
| **Total**                                            | ** ** | ** **                      | **351**    |                            | ** ** | ** ** | **323** |   |   |

 

**Note 14.   Pledgedassets and contingent liabilities**

In January 2004, Swebus’ shareholder, ConcordiaBus Nordic AB, issued EUR 130 (SEK 1,198) of 9.125% senior secured notesdue August 1, 2009. Concordia Bus Nordic AB pledged its shares incertain of its subsidiaries, including Swebus, as collateral for the seniorsecured notes, and Swebus, together with other affiliated companies, is aguarantor of the notes. In addition, Swebus has granted a SEK 115 floating chargeover Swebus’ non-fixed assets as security for the notes. The floating chargerepresents a general pledge of Swebus’ assets. The pledge arose from a loanreceived from Swebus’ shareholder. However, the senior secured notes have firstpriority over this standing floating charge.

The ability of Concordia Bus Nordic AB to repaythe notes and related interest is dependent upon its receipt of sufficient cashflows from its subsidiaries’ underlying operations, including Swebus. Theability to receive such cash flows is subject to certain restrictions under thelaws of Sweden. Should Concordia Bus Nordic AB not be able to receive cashflows sufficient to pay the interest and principal on the borrowings when theycome due or should Concordia Bus Nordic AB violate the covenants of theborrowing agreement causing the amount to become due immediately, theguarantees and security given by Swebus may be drawn upon by the noteholderswhich could have an material adverse impact on the financial condition andresults of operations of Swebus and, consequently, could impact Swebus’ abilityto continue as a going concern.

F-65

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

Absent the restructuring described below, thoseguarantees and security could be drawn upon by noteholders. Concordia BusNordic AB and Concordia Bus AB announced on July 22, 2005 that, with theirprincipal ultimate shareholders, an Ad Hoc Committee of holders of ConcordiaBus AB’s €160,000,000 11% senior subordinated notes dueFebruary 15, 2010 (the “Parent Notes”) and an informal group of holders ofConcordia Bus Nordic AB’s €130,000,000 9.125% senior secured notes due August 1,2009 had signed a Restructuring Agreement to restructure the Parent Notes andstrengthen the balance sheet of the Concordia group of companies. TheRestructuring Agreement provides that, among other things, Concordia Bus ABwill make an application for reorganization proceedings in the District Court inStockholm, Sweden. Those proceedings are expected to result in a reduction ofthe face amount of all the Parent Notes from 100% to 25% and that the holdersof Parent Notes who consent to the restructuring will be required, pursuant tothe Restructuring Agreement, to exchange their reduced debt securities(including all principal, all accrued and unpaid interest and any other amountsdue thereon) for ordinary shares of Concordia Bus AB, which will constitute97.5% of the issued ordinary share capital of Concordia Bus AB immediatelyfollowing the consummation of the proposed restructuring, subject to amanagement incentive plan representing a maximum of 5% of the issued ordinaryshare capital. In connection with the restructuring, Concordia Bus Nordic HoldingAB has borrowed €25,000,000,of which €24,055,000has been contributed to Concordia Bus Nordic AB as an equity capitalcontribution to pay for the expenses of the restructuring and to cover itscapital needs. Concordia Bus AB intends to borrow an additional €45,000,000pursuant to a Mezzanine Facility it entered into in connection with therestructuring and from which it can draw once the restructuring is completed. ConcordiaBus AB intends to contribute approximately €13,000,000 to ConcordiaBus Nordic AB, via Concordia, as an equity contribution. The remaining amountis to be used to repay Concordia’s loan of €25,000,000 and to coverrestructuring expenses.

Furthermore, as of February 28, 2005 the Board ofDirectors of Concordia Bus Nordic AB has an outstanding guarantee fulfillmentof certain number of Swebus commitments. Concordia Bus Nordic AB’s indirectparent company, Concordia Bus AB, intends to make an indirect equitycontribution into Concordia Bus Nordic AB once the ongoing restructuring ofConcordia Bus AB’s €160,000,000 11% SeniorSubordinated Notes due February 15, 2010 is completed. The management ofSwebus is confident that the restructuring will take place and that once itdoes Concordia Bus Nordic AB will contribute sufficient funds into Swebus toenable it to continue as a going concern.

The consolidated statement of operations for February 28,2005 shows that earnings generated by the underlying businesses during theperiod March 1, 2004 - February 28, 2005 have not been sufficient tocover Concordia Bus Nordic AB’s costs. These financial statements have beenprepared assuming that the restructuring will be consummated and that ConcordiaBus AB, Concordia Bus Nordic Holding AB, Concordia Bus Nordic AB and theirsubsidiaries, including Swebus, will be successful in their initiatives and,consequently, they have been prepared assuming that the guarantees and securityprovided by Swebus in connection with the senior secured notes will not bedrawn upon and Swebus will continue as a going concern. The management ofSwebus believes that if the restructuring is consummated Swebus will be able tocontinue as a going concern because it will reduce the group’s totalindebtedness and relieve pressure on Swebus’ cash flow. Furthermore, Swebus andthe other subsidiaries of Concordia Bus Nordic AB are continuing to implementchanges in the operations, changes to the administrative structure as well ascertain changes in the capital structures. The group of companies continue tosee improvements in compensation levels in new tenders with public transportauthorities.

F-66

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

These financial statements have also been preparedunder the assumption that during the 12 month period following the release ofthese financial statements: (i) Concordia Bus Nordic AB will be incompliance with its covenants associated with its senior secured notes, and (ii) ConcordiaBus AB will not become insolvent or bankrupt. If Concordia Bus Nordic AB wereto be in breach of one or more of those covenants, and if the lenders soelected, the SEK 1,188 million senior secured notes, which are classified aslong term as of February 28, 2005, would become immediately due andpayable.

Further, in the event ofan acceleration under the senior secured notes following a default, all or partof the leasing contracts covering a significant portion of Concordia Bus NordicAB’s leases may be terminated at the option of the lessor. This could have amaterial adverse effect on Swebus’ business.

**Note 15.   Related party transactions**

Concordia Bus Management A/S, an affiliated company100% owned by Concordia Bus BV, has provided management services toSwebus. Also, Concordia Bus Nordic AB has provided certain IT-related andmanagement services to Swebus. Fees for management and IT-services charged toSwebus amounted to SEK 37 million, SEK 45 million, andSEK 48 million for years ended February 28, 2005, February 29,2004, and February 28, 2003, respectively.

Swebus does not own any buses. All buses are leasedfrom external parties or internally from companies within the Concordia group.Buses leased internally are leased from Swebus Busco AB. All internalleases are classified as operating leases. Leasing fees charged from SwebusBusco to Swebus amounted to SEK 311, SEK 306 andSEK 315 for the years ended February 28, 2005, February 29,2004, and February 28, 2003, respectively.

Historically, Swebus hasobtained long-term financing from its direct and indirect parent companyConcordia Bus AB and Concordia Bus Nordic AB who have externalborrowings. Swebus has historically had receivables due from affiliatedcompanies which include certain non-interest bearing trade receivables. Swebushad long-term liabilities payable to affiliated companies of SEK 235 at February 28,2005, but no liabilities payable to affiliated companies at February 29,2004. Swebus had long-term receivables due from affiliated companies of SEK 294(of which SEK 4 was short-term) at February 28, 2005 compared toreceivables of SEK 197 (of which SEK 9 was short-term) at February 29,2004. Interest expense to affiliated companies, net of interest income fromaffiliated companies was SEK 74, SEK 8, and SEK 2 for the years ended February 28,2005, February 29, 2004, and February 28, 2003, respectively.

**Note 16.   Reconciliationto accounting principles generally accepted in the United States of America**

Accountingpolicies used by the Swebus AB conform with Swedish GAAP which differ incertain significant respects from U.S. GAAP. Below are descriptions of thesedifferences and a reconciliation of net loss, shareholder’s equity and cashflows to U.S. GAAP.
| ** **                           | ** ** | **Note**   | ** ** | **Year ended  February 28, 2005** | ** ** | **Year ended  February 29, 2004** | ** ** | **Year ended  February 28, 2003** | ** ** |
|--------------------------------------|------------|------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Net  loss under Swedish GAAP**     | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **(321**   | **)**                                            | ** ** | ** ** | **(164** | **)** | ** ** | ** ** | **(123** | **)** | ** ** |   |
| Adjustments:                         |       |       |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |   |   |   |
| Restructuring                        |       |       | (b)        |                                             |       |                                             | (6         | )                                                |       |   | 6 |   |   |   | — |   |   |   |
| Tax effect of  U.S. GAAP adjustments |       |       |       |                                             |       |                                             | 2          |                                             |       |   | (2 | ) |   |   | — |   |   |   |
| **Net loss under U.S. GAAP**         | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **(325**   | **)**                                            | ** ** | ** ** | **(160** | **)** | ** ** | ** ** | **(123** | **)** | ** ** |   |

 

F-67

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

 
| ** **                                        | ** ** | **Note**   | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------------------|------------|------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Shareholder’s  equity under Swedish GAAP** | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                      | **31**     | ** ** | ** ** | ** ** | **235** | ** ** | ** ** |
| Adjustments:                                      |       |       |       |                            |       |                            |       |   |   |   |   |   |   |
| Push-down  accounting                             |       |       | (a)        |                            |       |                            | 459        |   |   |   | 459 |   |   |
| Restructuring                                     |       |       | (b)        |                            |       |                            | —     |   |   |   | 6 |   |   |
| Tax effect of  U.S. GAAP adjustments              |       |       |       |                            |       |                            | 0          |   |   |   | (2 | ) |   |
| **Shareholder’s equity under U.S.  GAAP**    | ** ** | ** ** | ** ** | ** **                      | ** ** | ** **                      | **490**    | ** ** | ** ** | ** ** | **698** | ** ** | ** ** |

 

There were no significant differences between SwedishGAAP and U.S. GAAP in regards to reporting cash flows from operating,investing and financing activities in the statements of cash flows. There wereno significant non-cash investing or financing activities during the yearsended February 28, 2005 and February 29, 2004 other than that Swebusentered into capital leases resulting in the recognition of capitalized vehiclecosts and related capital lease obligations of SEK 0 for the year ended February 28,2005 and SEK 21 for the year ended February 29, 2004.

Thereare no items of other comprehensive income.

**(a)**          Push-downaccounting

Goodwill is recorded under U.S. GAAP whereas nogoodwill is recorded for Swedish GAAP. The amount of goodwill for U.S. GAAPpurposes is a result of the fact that approximately SEK 550 million ofgoodwill, which was created when Swebus was acquired together with otheraffiliated companies on January 14, 2000, was not required to be pusheddown to the financial statements of Swebus in accordance with Swedish GAAP.U.S. GAAP requires such goodwill be pushed down since Swebus became whollyowned by one shareholder as a result of the acquisition.

Effective March 1, 2002, Swebus adopted Statementof Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and OtherIntangible Assets,” for U.S. GAAP purposes. SFAS No. 142 requires goodwillto no longer be amortized, but instead be tested for impairment upon adoptionof SFAS No. 142, as well as on an annual basis, and more frequently ifcircumstances indicate a possible impairment. If the carrying value of goodwillexceeds its fair value, an impairment loss is recognized. Prior to adoptingSFAS No. 142, for U.S. GAAP purposes, Swebus amortized goodwill balancesover their estimated economic lives, not to exceed twenty years, and assessedthe balances for impairment whenever events or changes in circumstancesindicated that the carrying amounts may not be recoverable. SinceSwebus AB does not have any goodwill recorded under Swedish GAAP, theSwedish GAAP net loss does not include any goodwill amortization. Consequently,there is no adjustment necessary to reverse amortization recorded for SwedishGAAP to derive the net loss under U.S. GAAP.

Upon the adoption of SFAS No. 142, the transitionprovisions of SFAS No. 141, “Business Combinations,” also became effectiverequiring, in certain circumstances, the reclassification of amounts betweenrecognized goodwill and other intangibles relating to previous businesscombinations. The transition provisions of SFAS No. 141 did not affect anyof Swebus’ previously reported goodwill under U.S. GAAP.

Under SFAS No. 142, the U.S. GAAP goodwillimpairment test is performed at the reporting unit level and is comprised oftwo steps. The initial step is designed to identify potential goodwillimpairment by comparing an estimate of the fair value of the applicablereporting unit to its carrying value, including 

F-68

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

goodwill. Swebus’measurement of fair value is based on an evaluation of both future discountedcash flows, consistent with those utilized in Swebus’ annual planning process,and public company trading multiples. If the carrying value exceeds fair value,a second step is performed, which compares the implied fair value of theapplicable reporting unit’s goodwill with the carrying amount of that goodwill,to measure the amount of goodwill impairment, if any. Subsequent reversal of arecognized impairment loss is prohibited.

Upon adoption of SFAS No. 142,Swebus performed transitional impairment tests of goodwill under U.S. GAAP. Asa result of these impairment tests, no impairment charges were recognized atthe date of adoption. Subsequent annual impairment tests are performed, at aminimum, on goodwill in conjunction with Swebus’ annual planning process. Noimpairments were recorded under U.S. GAAP as a result of the annual impairmenttests.

**(b)**          Restructuring

For Swedish GAAP, Swebusrecorded a restructuring provision of SEK 6 million at February 29,2004, relating to one-time employee termination costs pertaining to theclose-down of operations in Gothenburg, Sweden which occurred after February 29,2004. As the employees continued working for longer than a minimum retentionperiod to receive the termination benefit, the termination costs was deemed tohave future benefit under U.S. GAAP. As a result, under U.S. GAAP, thetermination costs could not be recognized as a provision at February 29,2004. Instead, the fair value of the obligation at February 29, 2004 wasrecognized for U.S. GAAP ratably over the estimated remaining service period ofthe employees. During the year ended February 28, 2005 this restructuringprovision has been dissolved.

**(c)**           Changesin shareholder’s equity under U.S. GAAP
| ** **                                            | ** ** | **Shareholder’s  Equity** | ** ** |
|-------------------------------------------------------|------------|--------------------------------|------------|
| **Shareholder’s  equity March 1, 2002**     | ** ** | ** **                     | **748**    | ** ** | ** ** |
| Group  contribution from shareholder                  |       |                           | 151        |   |   |
| Tax effect on  group contribution from shareholder    |       |                           | (42        | ) |   |
| Net loss                                              |       |                           | (123       | ) |   |
| **Shareholder’s  equity February 28, 2003** | ** ** | ** **                     | **734**    | ** ** | ** ** |
| Group  contribution from shareholder                  |       |                           | 172        |   |   |
| Tax effect on  group contribution from shareholder    |       |                           | (48        | ) |   |
| Net loss                                              |       |                           | (160       | ) |   |
| **Shareholder’s  equity February 29, 2004** | ** ** | ** **                     | **698**    | ** ** | ** ** |
| Group  contribution from shareholder                  |       |                           | 162        |   |   |
| Tax effect on  group contribution from shareholder    |       |                           | (45        | ) |   |
| Net loss                                              |       |                           | (325       | ) |   |
| **Shareholder’s equity  February 28, 2005** | ** ** | ** **                     | **490**    | ** ** | ** ** |

 

**(d)**          Newaccounting principles for U.S. GAAP

***Consolidation of Variable Interest Entities***

In December 2003, theU.S. Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46(revised December 2003), “Consolidation of Variable Interest Entities,” 

F-69

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

(“FIN 46R”)which addresses the consolidation of variable interest entities by businessenterprises. Variable interest entities are entities in which either the equityinvestment at risk is not sufficient to absorb the probable losses withoutadditional subordinated financial support from other parties, or the investorswith equity at risk lack certain essential characteristics of a controllinginterest. Under FIN 46R, Swebus must consolidate any variable interest entityin which Swebus holds variable interests and is deemed the primary beneficiary.Portions of the requirements of FIN 46R were required to be adopted during theyear ended February 29, 2004, while other portions were required to beadopted during the year ended February 28, 2005 under the transitionrules. The adoption of the remaining provisions of FIN 46R during the yearended February 28, 2005 did not have a significant effect on Swebus’financial position or results of operations reported in accordance with U.S.GAAP.

***Revenue Arrangements with Multiple Deliverables***

In May 2003, theEmerging Issues Task Force (“EITF”) of the FASB reached a consensus on Issue No. 00-21“Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”), providingfurther guidance on how to account for multiple element contracts. EITF 00-21was effective for all arrangements entered into by Swebus on or after March 1,2004. The adoption of EITF 00-21 during the year ended February 28, 2005did not have a significant effect on Swebus’ financial position or results ofoperations reported in accordance with U.S. GAAP.

***Exchanges of Non-Monetary Assets***

In December 2004, theFASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets—an amendmentof APB Opinion No. 29” (“SFAS 153”). Accounting Principles Board (“APB”)Opinion No. 29, “Accounting for Nonmonetary Transactions” provided anexception to the basic fair-value measurement principle for exchanges ofsimilar productive assets. That exception required that some nonmonetaryexchanges, although commercially substantive, be recorded on a carryover basis.SFAS 153 eliminates the exception to fair value for exchanges of similarproductive assets and replaces it with a general exception to fair-valuemeasurement for exchange transactions that do not have commercialsubstance—that is, transactions that are not expected to result in significantchanges in the cash flows of the reporting entity. SFAS 153 is effectiveprospectively for Swebus in accounting for nonmonetary asset exchanges whichoccur on or after March 1, 2006 for U.S. GAAP purposes.

***Accounting Changes and Error Corrections***

In May 2005, the FASBissued SFAS No. 154, “Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS154”). SFAS 154 applies to all voluntary changes in accounting principle, andchanges the requirements for accounting for and reporting of a change inaccounting principle. SFAS 154 requires retrospective application to priorperiods’ financial statements of a voluntary change in accounting principleunless it is impracticable. APB No. 20, “Accounting Changes” previouslyrequired that most voluntary changes in accounting principle be recognized byincluding in net income of the period of the change the cumulative effect ofchanging to the new accounting principle. SFAS 154 is effective for accountingchanges and corrections of errors made by Swebus on or after March 1, 2006for U.S. GAAP purposes, except that SFAS 154 does not change the transitionprovisions of any existing accounting pronouncement, including those that arein a transition phase as of March 1, 2006.

F-70

----

**SWEBUS AB NOTES TO FINANCIAL STATEMENTS (Continued) (all amounts in millions of SEK unless otherwise stated)**

**Note 17.   Accounts receivable**

Accountsreceivable and related allowance for doubtful accounts was as follows:
| ** **                             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accounts  receivable                   |       |                            | 265        |                            |       |   | 251 |   |   |
| Less: Allowance  for doubtful accounts |       |                            | (15        | )                               |       |   | (8 | ) |   |
| **Net accounts receivable**            | ** ** | ** **                      | **250**    | ** **                      | ** ** | ** ** | **243** | ** ** | ** ** |

 

AsSwebus’ customers are primarily governmental, Swebus has not experiencedsignificant uncollectibility problems historically. Changes in the allowancefor doubtful accounts were as follows:
| ** **                                                          | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Allowance for doubtful accounts receivable:** |       |                                             |       |                                             |       |                                             |       |   |   |   |   |   |   |
| Beginning balance                                                   |       |                                             | (8         | )                                                |       |                                             | (1         | ) |   |   | (4 | ) |   |
| Additions to  allowance charged to expense                          |       |                                             | (8         | )                                                |       |                                             | (7         | ) |   |   | 1 |   |   |
| Accounts receivable written off against the  allowance              |       |                                             | 1          |                                             |       |                                             | 0          |   |   |   | 2 |   |   |
| **Ending balance**                                                  | ** ** | ** **                                       | **(15**    | **)**                                            | ** ** | ** **                                       | **(8**     | **)** | ** ** | ** ** | **(1** | **)** | ** ** |

 

F-71

----

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

To the Board of Directors and Shareholder of IngeniØr M. O. SchØyens Bilcentraler AS

We have audited the accompanying balance sheets ofIngeniØrM. O. SchØyensBilcentraler AS (the “Company”) as of February 28, 2005 and February 29,2004, and the related statements of operations and cash flows for each of thethree years in the period ended February 28, 2005. These financialstatements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. The Company is not required to have, nor were we engaged toperform, an audit of its internal control over financial reporting. Our auditincluded consideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements presentfairly, in all material respects, the financial position of IngeniØr M. O. SchØyens Bilcentraler AS as of February 28,2005 and February 29, 2004, and the results of its operations and its cashflows for each of the three years in the period ended February 28, 2005,in conformity with accounting principles generally accepted in the UnitedStates of America.

The accompanying financialstatements have been prepared assuming that the Company will continue as agoing concern. As discussed in Note 9 to the financial statements, the recurringoperating losses, stockholder’s capital deficiency, and negative cash flowsfrom operations of both the Company and the Company’s shareholder, combinedwith the inability of the Company’s shareholder to make certain interestpayments on outstanding borrowings and its violations of borrowing covenants,raise substantial doubt about the Company’s ability to continue as a goingconcern. Management’s plans concerning these matters are also described in Note9. The financial statements do not include any adjustments that might resultfrom the outcome of this uncertainty.

Deloitte &Touche ASOslo, NorwayAugust 31, 2005

F-72

----

**INGENIØRM. O. SCHØYENS BILCENTRALER AS STATEMENTS OF OPERATIONS(all amounts in thousands of NOK, except share and per share amounts)**
| ** **                                                     | ** ** | **Notes**  | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** **   | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------------------|------------|------------|------------|--------------------------------------------------|------------|--------------------------------------------------|--------------|--------------------------------------------------|------------|
| **REVENUES**                                                   |       |       |       | ** **                                       |       |                                             | **425,434**  | ** **                                       |       |   | **341,656** | ** ** |   |   | **379,486** | ** ** |   |
| **OPERATING  COSTS**                                           |       |       |       | ** **                                       |       |                                             | ** **   | ** **                                       |       |   |   | ** ** |   |   |   | ** ** |   |
| Employee costs                                                 |       |       |       |                                             |       |                                             | (228,954     | )                                                |       |   | (189,170 | ) |   |   | (221,002 | ) |   |
| Depreciation                                                   |       |       |       |                                             |       |                                             | (24,331      | )                                                |       |   | (20,114 | ) |   |   | (40,742 | ) |   |
| Operating lease  rental expense                                |       |       | 4          |                                             |       |                                             | (39,130      | )                                                |       |   | (41,437 | ) |   |   | (45,376 | ) |   |
| Gain on sale of  tangible fixed assets                         |       |       |       |                                             |       |                                             | 1,062        |                                             |       |   | 273 |   |   |   | 8,149 |   |   |
| Cost of diesel                                                 |       |       |       |                                             |       |                                             | (42,541      | )                                                |       |   | (31,364 | ) |   |   | (25,805 | ) |   |
| Operating costs  from affiliated companies                     |       |       | 8          |                                             |       |                                             | (14,648      | )                                                |       |   | (12,801 | ) |   |   | (14,707 | ) |   |
| Other operating  costs                                         |       |       | 8          |                                             |       |                                             | (74,287      | )                                                |       |   | (50,753 | ) |   |   | (70,605 | ) |   |
| **TOTAL  OPERATING COSTS**                                     | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **(422,829** | **)**                                            | ** ** | ** ** | **(345,366** | **)** | ** ** | ** ** | **(410,088** | **)** | ** ** |
| **OPERATING PROFIT/(LOSS)**                                    | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **2,605**    | ** **                                       | ** ** | ** ** | **(3,710** | **)** | ** ** | ** ** | **(30,602** | **)** | ** ** |
| **OTHER  INCOME AND EXPENSE**                                  | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | ** **   | ** **                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest  income—third party                              |       |       |       |                                             |       |                                             | 386          |                                             |       |   | 700 |   |   |   | 2,008 |   |   |
| Interest income  (expense)—affiliated company             |       |       | 8          |                                             |       |                                             | (2,123       | )                                                |       |   | 920 |   |   |   | (708 | ) |   |
| Foreign exchange  gain (loss)                                  |       |       |       |                                             |       |                                             | 342          |                                             |       |   | (571 | ) |   |   | 2,816 |   |   |
| Other                                                          |       |       |       |                                             |       |                                             | (290         | )                                                |       |   | (184 | ) |   |   | (1,272 | ) |   |
| **Other  income and expense, net**                             | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **(1,685**   | **)**                                            | ** ** | ** ** | **865** | ** ** | ** ** | ** ** | **2,844** | ** ** | ** ** |
| **Loss before income taxes**                                   | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **920**      | ** **                                       | ** ** | ** ** | **(2,845** | **)** | ** ** | ** ** | **(27,758** | **)** | ** ** |
| **Income  tax (expense) benefit**                              | ** ** | ** ** | **5**      | ** **                                       | ** ** | ** **                                       | **(258**     | **)**                                            | ** ** | ** ** | **690** | ** ** | ** ** | ** ** | **7,646** | ** ** | ** ** |
| **Net  loss**                                                  | ** ** | ** ** | ** ** | ** **                                       | ** ** | ** **                                       | **662**      | ** **                                       | ** ** | ** ** | **(2,155** | **)** | ** ** | ** ** | **(20,112** | **)** | ** ** |
| Weighted-average  number of shares outstanding during the year |       |       |       |                                             |       |                                             | 750          |                                             |       |   | 750 |   |   |   | 750 |   |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-73

----

**INGENIØRM. O. SCHØYENS BILCENTRALER AS BALANCE SHEETS(all amounts in thousands of NOK, except share and per share amounts)**
| ** **                                                                                 | ** ** | **Notes** | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** **  |
|--------------------------------------------------------------------------------------------|------------|-----------|------------|---------------------------------|------------|---------------------------------|-------------|
| **ASSETS**                                                                                 | ** ** |      | ** ** | ** **                      |       |                            | ** **  | ** ** |   |   | ** ** | ** ** |   |
| **Current assets:**                                                                        |       |      |       | ** **                      |       |                            |        | ** ** |   |   |   | ** ** |   |
| Cash and cash  equivalents                                                                 |       |      |       | ** **                      |       |                            | 20,370      | ** ** |   |   | 17,098 | ** ** |   |
| Restricted cash                                                                            |       |      |       | ** **                      |       |                            | 5,925       | ** ** |   |   | 8,400 | ** ** |   |
| Materials and  supplies inventories                                                        |       |      |       | ** **                      |       |                            | 5,170       | ** ** |   |   | 5,000 | ** ** |   |
| Accounts  receivable, net                                                                  |       |      | 2          | ** **                      |       |                            | 33,597      | ** ** |   |   | 20,617 | ** ** |   |
| Receivable from  affiliated company                                                        |       |      | 8          | ** **                      |       |                            | —      | ** ** |   |   | 4,433 | ** ** |   |
| Prepayments and  other accrued income                                                      |       |      |       | ** **                      |       |                            | 25,327      | ** ** |   |   | 18,429 | ** ** |   |
| **Total  Current Assets**                                                                  |       |      |       | ** **                      |       |                            | **90,389**  | ** ** |   |   | **73,977** | ** ** |   |
| **Non-Current  Assets:**                                                                   |       |      |       | ** **                      |       |                            |        | ** ** |   |   |   | ** ** |   |
| Vehicles, net                                                                              |       |      | 3          | ** **                      |       |                            | 37,387      | ** ** |   |   | 31,668 | ** ** |   |
| Machinery and  fixtures, net                                                               |       |      | 3          | ** **                      |       |                            | 1,999       | ** ** |   |   | 2,356 | ** ** |   |
| Deferred income  tax assets                                                                |       |      | 5          | ** **                      |       |                            | 4,763       | ** ** |   |   | 4,527 | ** ** |   |
| Prepaid pension  costs                                                                     |       |      | 6          | ** **                      |       |                            | 9,639       | ** ** |   |   | 10,013 | ** ** |   |
| Goodwill                                                                                   |       |      |       | ** **                      |       |                            | 209,138     | ** ** |   |   | 209,138 | ** ** |   |
| Other financial  assets                                                                    |       |      |       | ** **                      |       |                            | 5           | ** ** |   |   | 4,005 | ** ** |   |
| **Total  Non-Current Assets**                                                              |       |      |       | ** **                      |       |                            | **262,931** | ** ** |   |   | **261,707** | ** ** |   |
| **TOTAL  ASSETS**                                                                          |       |      |       | ** **                      |       |                            | **353,320** | ** ** |   |   | **335,684** | ** ** |   |
| **LIABILITIES**                                                                            | ** ** |      | ** ** | ** **                      |       |                            | ** **  | ** ** |   |   | ** ** | ** ** |   |
| **Current Liabilities:**                                                                   |       |      |       | ** **                      |       |                            |        | ** ** |   |   |   | ** ** |   |
| Accounts payable                                                                           |       |      |       | ** **                      |       |                            | 17,447      | ** ** |   |   | 22,065 | ** ** |   |
| Accrued and other  current liabilities                                                     |       |      | 7          | ** **                      |       |                            | 44,040      | ** ** |   |   | 41,685 | ** ** |   |
| Payable to  affiliated company                                                             |       |      | 8          | ** **                      |       |                            | 30,395      | ** ** |   |   | 4,911 | ** ** |   |
| **Total  Current Liabilities**                                                             |       |      |       | ** **                      |       |                            | **91,882**  | ** ** |   |   | **68,661** | ** ** |   |
| **Non-Current  Liabilities:**                                                              |       |      |       | ** **                      |       |                            |        | ** ** |   |   |   | ** ** |   |
| Pension  obligation                                                                        |       |      | 6          | ** **                      |       |                            | 15,428      | ** ** |   |   | 15,259 | ** ** |   |
| Provision for  loss-making contracts                                                       |       |      |       | ** **                      |       |                            | 4,000       | ** ** |   |   | 10,416 | ** ** |   |
| **Total  Non-Current Liabilities**                                                         |       |      |       | ** **                      |       |                            | **19,428**  | ** ** |   |   | **25,675** | ** ** |   |
| **TOTAL  LIABILITIES**                                                                     |       |      |       | ** **                      |       |                            | **111,310** | ** ** |   |   | **94,336** | ** ** |   |
| **COMMITMENTS AND CONTINGENCIES**                                                          |       |      | 4,9        | ** **                      |       |                            | —      | ** ** |   |   | — | ** ** |   |
| **SHAREHOLDER’S  EQUITY**                                                             |       |      |       | ** **                      |       |                            |        | ** ** |   |   |   | ** ** |   |
| Share capital  (750 shares authorized, issued and outstanding at par value NOK 1,000) |       |      | 10         | ** **                      |       |                            | 750         | ** ** |   |   | 750 | ** ** |   |
| Retained earnings                                                                          |       |      | 10         | ** **                      |       |                            | 241,260     | ** ** |   |   | 240,598 | ** ** |   |
| **TOTAL  SHAREHOLDER’S EQUITY**                                                       |       |      |       | ** **                      |       |                            | **242,010** | ** ** |   |   | **241,348** | ** ** |   |
| **TOTAL LIABILITIES AND  SHAREHOLDER’S EQUITY**                                       |       |      |       | ** **                      |       |                            | **353,320** | ** ** |   |   | **335,684** | ** ** |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-74

----

**INGENIØRM. O. SCHØYENS BILCENTRALER AS STATEMENTS OF CASH FLOWS(all amounts in thousands of NOK)**
| ** **                                                               | ** ** | **Year Ended  February 28, 2005** | ** **  | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------------------------------------|------------|--------------------------------------------------|-------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **CASH FLOWS FROM OPERATING  ACTIVITIES**                                |       |                                             |        | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Net income (loss)                                                        |       |                                             | 662         | ** **                                       |       |                                             | (2,155     | **)** |   |   | (20,112 | **)** |   |
| Depreciation                                                             |       |                                             | 24,331      | ** **                                       |       |                                             | 20,114     | ** ** |   |   | 40,742 | ** ** |   |
| Gain of sale  tangible fixed assets                                      |       |                                             | (1,062      | **)**                                            |       |                                             | (273       | **)** |   |   | (8,149 | **)** |   |
| (Increase)  decrease in inventories                                      |       |                                             | (170        | **)**                                            |       |                                             | 1,250      | ** ** |   |   | 2,178 | ** ** |   |
| Increase in  accounts receivable                                         |       |                                             | (13,013     | **)**                                            |       |                                             | (9,066     | **)** |   |   | (401 | **)** |   |
| Increase in  allowance for doubtful accounts                             |       |                                             | 33          | ** **                                       |       |                                             | 34         | ** ** |   |   | 393 | ** ** |   |
| Decrease  (increase) in short-term receivables from affiliated companies |       |                                             | 4,433       | ** **                                       |       |                                             | 3,628      | ** ** |   |   | (2,561 | **)** |   |
| Increase in  prepayments and other accrued income                        |       |                                             | (6,898      | **)**                                            |       |                                             | (5,736     | **)** |   |   | (902 | **)** |   |
| (Decrease)  increase in accounts payable                                 |       |                                             | (4,618      | **)**                                            |       |                                             | 10,606     | ** ** |   |   | 1,105 | ** ** |   |
| Increase  (decrease) in accrued and other current liabilities            |       |                                             | 2,355       | ** **                                       |       |                                             | (781       | **)** |   |   | (10,701 | **)** |   |
| Decrease  (increase) in short-term payables to affiliated companies      |       |                                             | (62         | **)**                                            |       |                                             | 62         | ** ** |   |   | — | ** ** |   |
| (Decrease)  increase in provision for loss making contracts              |       |                                             | (6,416      | **)**                                            |       |                                             | (7,124     | **)** |   |   | 4,347 | ** ** |   |
| Change in  deferred income tax benefit                                   |       |                                             | (236        | **)**                                            |       |                                             | (690       | **)** |   |   | (7,646 | **)** |   |
| Other changes in  current assets and liabilities                         |       |                                             | 4,542       | ** **                                       |       |                                             | (5,758     | **)** |   |   | 5,183 | ** ** |   |
| **Net  cash provided by operating activities**                           | ** ** | ** **                                       | **3,881**   | ** **                                       | ** ** | ** **                                       | **4,111**  | ** ** | ** ** | ** ** | **3,476** | ** ** |   |
| **CASH  FLOWS FROM INVESTING ACTIVITIES**                                |       |                                             |        | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Sales of fixed  assets                                                   |       |                                             | 3,845       | ** **                                       |       |                                             | 344        | ** ** |   |   | 25,335 | ** ** |   |
| Purchases of  fixed assets                                               |       |                                             | (32,474     | **)**                                            |       |                                             | (2,496     | **)** |   |   | (854 | **)** |   |
| **Net  cash (used in) provided by investing activities**                 | ** ** | ** **                                       | **(28,629** | **)**                                            | ** ** | ** **                                       | **(2,152** | **)** | ** ** | ** ** | **24,481** | ** ** |   |
| **CASH  FLOWS FROM FINANCING ACTIVITIES**                                |       |                                             |        | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Collection of  long-term receivables                                     |       |                                             | —      | ** **                                       |       |                                             | —     | ** ** |   |   | 6,000 | ** ** |   |
| Repayment of  borrowing from affiliated companies                        |       |                                             | —      | ** **                                       |       |                                             | (273       | **)** |   |   | (36,592 | **)** |   |
| Borrowing from  affiliated companies                                     |       |                                             | 25,545      | ** **                                       |       |                                             | —     | ** ** |   |   | — | ** ** |   |
| Change in  restricted cash                                               |       |                                             | 2,475       | ** **                                       |       |                                             | 1,800      | ** ** |   |   | (10,200 | **)** |   |
| **Net  cash provided by (used in) used in financing activities**         | ** ** | ** **                                       | **28,020**  | ** **                                       | ** ** | ** **                                       | **1,527**  | ** ** | ** ** | ** ** | **(40,792** | **)** |   |
| **Net increase (decrease) in cash and cash  equivalents**           | ** ** | ** **                                       | **3,272**   | ** **                                       | ** ** | ** **                                       | **3,486**  | ** ** | ** ** | ** ** | **(12,835** | **)** |   |
| Cash and cash  equivalents at the beginning of the year             |       |                                             | 17,098      | ** **                                       |       |                                             | 13,612     | ** ** |   |   | 26,447 | ** ** |   |
| **Cash  and cash equivalents at the end of the year**                    | ** ** | ** **                                       | **20,370**  | ** **                                       | ** ** | ** **                                       | **17,098** | ** ** | ** ** | ** ** | **13,612** | ** ** |   |
| **Cash payments for interest**                                           | ** ** | ** **                                       | **3,057**   | ** **                                       | ** ** | ** **                                       | **417**    | ** ** | ** ** | ** ** | **1,791** | ** ** |   |
| **Cash  (refunds) payments for income taxes**                            | ** ** | ** **                                       | **(495**    | **)**                                            | ** ** | ** **                                       | **(84**    | **)** | ** ** | ** ** | **84** | ** ** |   |

 

The accompanyingnotes are an integral part of these financial statements.

F-75

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (All amounts in thousands of NOK unless otherwise stated)**

**Note 1.   Organizationand accounting principles**

**Organization**

Ing M. O. SchØyens Bilcentraler AS (“SBC”) is aNorwegian ordinary limited liability company, wholly owned by Concordia BusNordic AB (reg no 556031-8569) with its registered office in Stockholm, Sweden.The final operational parent company is Concordia Bus BV. The primaryoperations of SBC consist of providing regular bus services under contract totransit authorities in Norway.

During January 2004,SBC’s shareholder, Concordia Bus Nordic AB, issued EUR 130 million of 9.125%senior secured notes due August 1, 2009.  Concordia Bus Nordic AB pledged its shares incertain of its subsidiaries, including SBC, as collateral for the seniorsecured notes, and SBC, together with other affiliated companies, is aguarantor of the notes. See Note 9.

**Accounting Principles and Policies**

The financial statementsof SBC have been prepared in accordance with accounting principles generallyaccepted in the United States of America (“US GAAP”). SBC’s accounting policies,as described below, have been applied consistently in all periods presented.

***Currency***

These financial statementshave been prepared in NOK. References to “NOK” are to Norwegian currency.

***Revenue recognition***

The majority of SBC’s revenues arise from contractswith local public transportation authorities having contract terms of five toeight years (“CPTA contracts”).

CPTA contracts generally provide SBC with fixed feerevenue in return for the contracted bus services. Accordingly, all ticketrevenues collected by SBC on such contracts, referred to as gross agreements,are forwarded to the local public transportation authorities, and SBC receivesits fixed fees regardless of the number of passengers transported. Under somecontracts, SBC receives fees from the local transportation authority afterproviding services. Under other contracts, SBC receives fees in advance ofproviding services. Regardless of the timing of receiving the fees from thelocal public transportation authorities, SBC recognizes revenue on astraight-line basis over the period of the contract and, accordingly, accruesfor earned fee revenue or defers unearned fee revenue as appropriate. Suchfixed fees are generally subject to periodic adjustment for certain changes incosts incurred or cost indices. In recognizing the fee revenue over the periodof the contract, SBC records adjustments to the fee revenue during the contractperiod based on the agreed cost adjustment mechanism contained in thecontracts.

Revenues earned by SBC on certain other CPTAcontracts, referred to as net agreements, are based on or consider the numberof passengers transported. Revenues for these contracts are recognized on thedate of travel by the passenger.

Revenue also includes rental income, sale of fuel anddiesel and from engineering services. The revenue resulting from otheroperating activities is recognized when the product is delivered or the serviceis performed or, in terms of operating lease revenues, on a straight-line basisover the term of lease.

Where appropriate, revenueamounts are shown net of value-added taxes.

F-76

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

***Income Taxes***

The total income taxexpense of SBC consists of current and deferred income taxes. Deferred incometax primarily consists of estimated tax on changes in untaxed reserves for theyear and the unused portions of income tax loss carry-forwards to the extentthat these losses can be used in the future as a reduction of future taxableincome. The deferred income tax position is calculated using the enacted taxstatutory rate. Deferred tax assets are reduced to amounts which are deemed tobe more likely than not recoverable from future sources of taxable income.

***Cost and depreciation of fixed assets***

Fixedassets are valued at cost, less accumulated depreciation and impairment charges.Annual depreciation is computed using a straight-line method based over thefollowing estimated useful lives:
| ** **             | ** ** | **Years** | ** ** |
|------------------------|------------|-----------|------------|
| Vehicles               |       | 10 years  |       |
| Machinery and fixtures |       | 3-5 years |       |

 

***Impairment of fixed assets***

Impairment reviews oftangible fixed assets are performed whenever there is an indication of possibleimpairment. The carrying values of fixed assets are not considered to berecoverable when the expected cash flows from those assets are less than theircarrying values. An impairment loss is determined based on the amount by whichthe carrying value exceeds the fair value of those assets. Losses on fixedassets to be disposed of are determined in a similar manner, taking intoaccount the selling price reduced by the costs of disposal.

***Impairment of goodwill***

Goodwill was created in SBC when it was acquiredtogether with other affiliated companies on January 14, 2000.

Goodwill is not amortized but is instead tested forimpairment annually or more frequently if there are indications that it mightbe impaired. The goodwill impairment test is comprised of two steps. Theinitial step is designed to identify potential goodwill impairment by comparingan estimate of the fair value of SBC to its carrying value, including goodwill.SBC’s measurement of fair value is based on an evaluation of both futurediscounted cash flows, consistent with those utilized in SBC’s annual planningprocess, and public company trading multiples. If the carrying value exceedsfair value, a second step is performed, which compares the implied fair valueof SBC’s goodwill with the carrying amount of that goodwill, to measure theamount of goodwill impairment, if any. Subsequent reversal of a recognizedimpairment loss is prohibited.

During the years ended February 28,2005, February 29, 2004 and February 28, 2003, no impairments wererecorded as a result of the annual impairment tests. An annual impairment testwas performed in March 2005, which showed that the equity value of SBCexceeded the carrying value by SEK 211 million.

F-77

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

***Accounts receivable***

Accounts receivable arecarried at amounts estimated to be collectible. Allowance for doubtfulreceivables are based on individual valuations of the accounts receivables.

***Receivables and payables in foreign currencies***

Receivables and payablesin foreign currencies are valued using the rate as of the balance sheet date.Gains and losses on trade receivables and payables are reported under operatingprofit (loss). Gains and losses related to other receivables and payables arereported under financial income and expense.

***Inventories***

Inventories are valued atthe lower of cost, using the first in first out method, or market value afterprovision for obsolescence.

***Loss making contracts***

A significant portion ofSBC’s revenues are derived from five to eight- year contracts withmunicipalities to provide bus services in a particular area. Under the terms ofthe contracts, the revenues are generally indexed at a rate corresponding to aconsumer price index or a net price index. Due to changes in circumstances andbecause costs have generally increased more quickly than revenues, suchcontracts may become loss making. SBC records a provision for such loss makingcontracts at the lowest level for which there are separate identifiable cashflows. Losses are recognized in the period in which management determines thatcumulative losses will be incurred on a particular contract. The loss iscomputed after taking into account direct and indirect costs related to theservice provided under the contract including depreciation on the related buseswhich will be used to meet the service obligation. SBC Bus normally hasmultiple contracts with the CPTAs (Contract Public Transportation Authority).In most of the cases the different contracts with the same CPTA are closely connectedto each other. The contracts share the same resources (staff, equipment,vehicles and premises). Often the contracts also are related for other reasons.SBC sign several contracts at the same time where some are loss making and someare profit making. In instances where the cash flows from such contracts areinterrelated, provisions for loss making contracts are measured by groupcontracts, however in no instance on a higher level than by CPTA. SBC also signcontracts to maximize the usage of the capacity in the resources. The provisionis calculated as the difference between the estimated costs to fulfill thecontractual commitment and the contractual revenues.

***Leasing***

Leases are classified in the financial statements aseither capital leases or operating leases. A capital lease transfers to SBC thesignificant economic risks and rewards of ownership. If this is not the case,the lease is an operating lease for SBC. For each capital lease, a fixed assetis reported in the balance sheet and a corresponding lease obligation isrecorded as a liability. In the statement of operations, the costs of capitalleases are reported as depreciation of the carrying value of the fixed assesand interest expense on the lease obligation. For operating leases, no asset orliability is recorded in the balance sheet. In the statement of operations, theperiodic rental payments for operating leases are expensed on a straight-linebasis.

During the years ended February 28,2005, February 29, 2005, February 29, 2004 and February 28,2003, all of SBC’s leases were operating leases.

F-78

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

***Cash and cash equivalents***

The cash flow statement isderived from the statement of operations and other changes between opening andclosing balance sheets. The cash and bank balances in the cash flow statementinclude bank deposits, securities and time deposits, all of these have originalmaturities of three month or less, if not stated.

***Restricted Cash***

Restricted cash relates totaxes collected to be remitted to taxing authorities. An equal amount isrecorded as a liability due to the taxing authorities.

***Use of estimates***

The preparation offinancial statements in conformity with US-GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities to the date ofthe financial statements and the reported amounts of revenues and expenseduring the reporting period. Actual results could differ from those estimates.

***Fair values of financial instruments***

The carrying values of SBC’sfinancial instruments do not vary significantly from their fair values.

***Segment information***

SBC operates mainly in onesegment, the CPTA business in Norway.

***Net loss per share***

Net loss per share iscomputed by dividing the annual net loss by the weighted-average number ofshares outstanding during the year. There are no dilutive share equivalentsoutstanding during any of the periods presented and, thus, diluted net loss pershare is equal to the basic net loss per share.

***New accounting policies***

***Consolidation of Variable Interest Entities***

In December 2003, theU.S. Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46(revised December 2003), “Consolidation of Variable Interest Entities,” (“FIN 46R”)which addresses the consolidation of variable interest entities by businessenterprises. Variable interest entities are entities in which either the equityinvestment at risk is not sufficient to absorb the probable losses withoutadditional subordinated financial support from other parties, or the investorswith equity at risk lack certain essential characteristics of a controllinginterest. Under FIN 46R, SBC must consolidate any variable interest entity inwhich SBC holds variable interests and is deemed the primary beneficiary.Portions of the requirements of FIN 46R were required to be adopted during theyear ended February 29, 2004, while other portions were required to beadopted during the year ended February 28, 2005 under the transitionrules. The adoption of the remaining provisions of FIN 46R during the yearended February 28, 2005 did not have a significant effect on SBC’sfinancial position or results of operations reported in accordance with U.S.GAAP.

F-79

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

***Revenue Arrangements with Multiple Deliverables***

In May 2003, theEmerging Issues Task Force (“EITF”) of the FASB reached a consensus on Issue No. 00-21“Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”), providingfurther guidance on how to account for multiple element contracts. EITF 00-21was effective for all arrangements entered into by SBC on or after March 1,2004. The adoption of the EITF 00-21 during the year ended February 28,2005 did not have a significant effect on SBC’s financial position or resultsof operations reported in accordance with U.S. GAAP.

***Exchanges of Non-Monetary Assets***

In December 2004, theFASB issued SFAS No. 153, “Exchanges of Non-Monetary Assets—an amendmentof APB Opinion No. 29” (“SFAS 153”). Accounting Principles Board (“APB”)Opinion No. 29, “Accounting for Non-monetary Transactions” provided anexception to the basic fair-value measurement principle for exchanges ofsimilar productive assets. That exception required that some nonmonetaryexchanges, although commercially substantive, be recorded on a carryover basis.SFAS 153 eliminates the exception to fair value for exchanges of similarproductive assets and replaces it with a general exception to fair-valuemeasurement for exchange transactions that do not have commercialsubstance—that is, transactions that are not expected to result in significantchanges in the cash flows of the reporting entity. SFAS 153 is effectiveprospectively for SBC in accounting for nonmonetary asset exchanges which occuron or after March 1, 2006 for U.S. GAAP purposes.

***Accounting Changes and Error Corrections***

In May 2005, the FASBissued SFAS No. 154, “Accounting Changes and Error Corrections—areplacement of APB Opinion No. 20 and FASB Statement No. 3” (“SFAS154”). SFAS 154 applies to all voluntary changes in accounting principle, andchanges the requirements for accounting for and reporting of a change inaccounting principle. SFAS 154 requires retrospective application to priorperiods’ financial statements of a voluntary change in accounting principleunless it is impracticable. APB Opinion No. 20, “Accounting Changes”previously required that most voluntary changes in accounting principle berecognized by including in net income of the period of the change thecumulative effect of changing to the new accounting principle. SFAS 154 iseffective for accounting changes and corrections of errors made by SBC on orafter March 1, 2006 for U.S. GAAP purposes, except that SFAS 154 does notchange the transition provisions of any existing accounting pronouncement,including those that are in a transition phase as of March 1, 2006.

**Note 2.   Accounts receivable**

Accountsreceivable and related allowance for doubtful accounts was as follows:
| ** **                             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Accounts  receivable                   |       |                            | 34,184     |                            |       |   | 21,171 |   |   |
| Less: Allowance  for doubtful accounts |       |                            | (587       | )                               |       |   | (554 | ) |   |
| Net accounts receivable                | ** ** | ** **                      | **33,597** |                            | ** ** | ** ** | **20,617** |   |   |

 

F-80

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

As SBC’scustomers are all governmental, SBC has not experienced significantuncollectibility problems historically. Changes in the allowance for doubtfulaccounts were as follows:
| ** **                                                         | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Allowance for doubtful accounts receivable** |       |                                             |       | ** **                                       |       |                                             |       | ** ** |   |   |   | ** ** |   |
| Beginning balance                                                  |       |                                             | (554       | **)**                                            |       |                                             | (520       | **)** |   |   | (127 | **)** |   |
| Additions to  allowance charged to expense                         |       |                                             | (49        | **)**                                            |       |                                             | (45        | **)** |   |   | (447 | **)** |   |
| Accounts  receivable written off against the  allowance            |       |                                             | 16         | ** **                                       |       |                                             | 11         | ** ** |   |   | 54 | ** ** |   |
| Ending balance                                                     | ** ** | ** **                                       | **(587**   | **)**                                            | ** ** | ** **                                       | **(554**   | **)** | ** ** | ** ** | **(520** | **)** |   |

 

**Note 3.   Fixed assets**

Fixedassets and related accumulated depreciation was as follows:
| ** **                      | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Vehicles                        |       |                            | 133,145    |                            |       |   | 140,839 |   |   |
| Less: Accumulated  depreciation |       |                            | (95,758    | )                               |       |   | (109,171 | ) |   |
| Net book value                  | ** ** | ** **                      | **37,387** |                            | ** ** | ** ** | **31,668** |   |   |
| Machinery and  fixtures         |       |                            | 17,088     |                            |       |   | 16,308 |   |   |
| Less: Accumulated  depreciation |       |                            | (15,089    | )                               |       |   | (13,952 | ) |   |
| Net book value                  | ** ** | ** **                      | **1,999**  |                            | ** ** | ** ** | **2,356** |   |   |

 

**Note 4.   Operating leases**

As of February 28,2005, SBC was leasing 161 buses from unrelated third parties, and also realestate from an affiliated company (see Note 8). The estimated futureannual rental payments under the non-cancelable operating leases are as followsas of February 28, 2005:
| ** **                                     | ** ** | **Estimated lease  rentals** | ** ** |
|------------------------------------------------|------------|-----------------------------------|------------|
| **Years ending February 28/29** |       |                              |       |   |   |
| 2006                                           |       |                              | 23,666     |   |   |
| 2007                                           |       |                              | 16,312     |   |   |
| 2008                                           |       |                              | 12,764     |   |   |
| 2009                                           |       |                              | 8,499      |   |   |
| 2010                                           |       |                              | 2,657      |   |   |
| 2011                                           |       |                              | 0          |   |   |
| Total                                          | ** ** | ** **                        | **63,898** |   |   |

 

F-81

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

**Note 5.   Income taxes**

Thefollowing is a reconciliation of the difference between the expected incometax, based on the statutory rate of 28%, and the actual effective income tax:
| ** **                                                     | ** ** | **Year ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|----------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Expected income  tax (expense) benefit at statutory rate (28%) |       |                                             | (256       | **)**                                            |       |                                             | 797        |   |   |   | 7,772 |   |   |
| Non-deductible  expenses                                       |       |                                             | (2         | **)**                                            |       |                                             | (107       | ) |   |   | (126 | ) |   |
| Actual income tax  benefit                                     | ** ** | ** **                                       | **(258**   | **)**                                            | ** ** | ** **                                       | **690**    |   | ** ** | ** ** | **7,646** |   |   |

 

Thefollowing are the components of the net deferred income tax asset recorded inthe balance sheets:
| ** **                            | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|---------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Pension  obligation                   |       |                            | 1,621      |                            |       |   | 1,469 |   |   |
| Provisions for  loss-making contracts |       |                            | 1,120      |                            |       |   | 2,916 |   |   |
| Depreciation                          |       |                            | 1,858      |                            |       |   | (1,361 | ) |   |
| Tax loss carry-forwards               |       |                            | —     |                            |       |   | 1,348 |   |   |
| Other                                 |       |                            | 164        |                            |       |   | 155 |   |   |
| **Deferred income tax asset, net**    | ** ** | ** **                      | **4,763**  |                            | ** ** | ** ** | **4,527** |   |   |

 

Tax losses and other tax assets can be used withouttime limitations. Gross amount of tax losses carried forward amounted to NOK 0and NOK 4,814 as of February 28, 2005 and February 29, 2004respectively.

Thefollowing are the components of the income tax (expense) benefit recorded inthe statements of operations:
| ** **                                  | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Current income  tax expense                 |       |                                             | (494       | **)**                                            |       |                                             | —     |   |   |   | — |   |   |
| Utilised tax loss  carry forwards           |       |                                             | (1,348     | **)**                                            |       |                                             | (289       | ) |   |   | (616 | ) |   |
| Change in other  deferred income tax assets |       |                                             | 1,584      | ** **                                       |       |                                             | 979        |   |   |   | 8,262 |   |   |
| **Income  tax (expense) benefit**           | ** ** | ** **                                       | **(258**   | **)**                                            | ** ** | ** **                                       | **690**    |   | ** ** | ** ** | **7,646** |   |   |

 

**Note 6.   Pensionobligations and costs**

Prior to January 1, 2004, SBC offered two definedbenefit pension plans to company employees.

One of the plans was for employees who begin work withSBC before the age of 58 years. Such plan is funded and has 528 plan participantsat February 28, 2005. The plan assets are invested in a combination ofequity securities, government guaranteed bonds, real estate and otherhigh-grade long-term investments.

The other plan was for employees who begin work at theage of 58 years or later. Such plan is not funded and includes 424 planparticipants at February 28, 2005.

Beginning January 1, 2004, the two definedbenefit plans were closed to new enrollments. Instead, new employees mustenroll in SBC’s defined contribution plan.

F-82

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

Forthe defined benefit plans, an actuarial valuation is carried out annually as ofyear-end. The valuations for 2005 and 2004 were based on the followingactuarial assumptions:
| ** **                                               | ** ** | **2005** | ** ** | **2004** | ** ** |
|----------------------------------------------------------|------------|----------|------------|----------|------------|
| **Assumptions as of February 28/29** |       |     |       |     |       |   |   |   |   |
| Discount rate                                            |       |     | 6.5        | %        |       |   | 7.0 | % |   |
| Rate of  compensation increase                           |       |     | 3.3        | %        |       |   | 3.0 | % |   |
| Expected pension  increase                               |       |     | 2.5        | %        |       |   | 2.5 | % |   |
| Adjustment to the  social security base                  |       |     | 3.0        | %        |       |   | 3.0 | % |   |
| Expected return on plan  assets                          |       |     | 5.5        | %        |       |   | 6.0 | % |   |

 

The “Social Security Base” relates to the Norwegiangovernments’ regulation of public pension agreements.

Thenet periodic pension expense is included in employee costs in the statements ofoperations and is comprised of the following components:
| ** **                                 | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|--------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| Service cost                               |       |                                             | 4,235      |                                             |       |                                             | 4,071      |   |   |   | 4,038 |   |   |
| Interest cost                              |       |                                             | 7,322      |                                             |       |                                             | 8,085      |   |   |   | 8,114 |   |   |
| Expected return  on plan assets            |       |                                             | (6,548     | )                                                |       |                                             | (6,714     | ) |   |   | (6,983 | ) |   |
| Amortization of  net actuarial (gain) loss |       |                                             | 861        |                                             |       |                                             | 1,357      |   |   |   | 789 |   |   |
| Social security  tax                       |       |                                             | 1,790      |                                             |       |                                             | —     |   |   |   | — |   |   |
| **Net periodic pension cost**              | ** ** | ** **                                       | **7,660**  |                                             | ** ** | ** **                                       | **6,799**  |   | ** ** | ** ** | **5,958** |   |   |

 

F-83

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

Thechanges in the benefit obligation and plan assets, as well as the funded statusand recorded balances were as follows as of and for the years ended February 28,2005 and February 29, 2004:
| ** **                                                                                       | ** ** | **2005**    | ** ** | **2004**    | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-------------|------------|-------------|------------|
| **Change  in benefit obligation**                                                                |       |        |       |        |       |
| Benefit  obligation at beginning of year                                                         |       | 142,712     |       | 124,574     |       |
| Service cost                                                                                     |       | 4,322       |       | 4,071       |       |
| Interest cost                                                                                    |       | 7,322       |       | 8,085       |       |
| Actuarial (gain)  loss                                                                           |       | (7,828      | )          | (14,371     | )          |
| Benefits paid                                                                                    |       | (8,389      | )          | (8,389      | )          |
| Other                                                                                            |       | 661         |       | (—     | )          |
| **Benefit  obligation at end of year**                                                           | ** ** | **138,800** | ** ** | **142,712** | ** ** |
| **Change  in plan assets**                                                                       |       |        |       |        |       |
| Fair value of  plan assets at beginning of year                                                  |       | 110,401     |       | 97,065      |       |
| Actual return on  plan assets                                                                    |       | 6,548       |       | 6,714       |       |
| Employer contribution                                                                            |       | 3,496       |       | 4,498       |       |
| Benefits paid                                                                                    |       | (5,635      | )          | (5,393      | )          |
| Other                                                                                            |       | 1,200       |       | 7,517       |       |
| **Fair  value of plan assets at end of year**                                                    | ** ** | **116,010** | ** ** | **110,401** | ** ** |
| **Reconciliation  of Funded Status to amount recognized in the Statement of Financial Position** | ** ** | ** **  |       |        |       |
| Funded status                                                                                    |       | (22,704     | )          | (32,311     | )          |
| Unrecognized net  loss                                                                           |       | 16,915      |       | 27,065      |       |
| **Net accrued benefit obligation**                                                               | ** ** | **(5,789**  | **)**      | **(5,246**  | **)**      |

 

Areconciliation of the above disclosures, which are combined for SBC’s twoplans, to the amounts recorded in the balance sheets is as follows:
| ** **                                            | ** ** | **February 28,  2005** | ** ** | **February 29,  2004** | ** ** |
|-------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Plan with net  prepaid pension asset—funded plan |       |                        | 9,639      | ** **                  |       |   | 10,013 | ** ** |   |
| Plan with net  pension obligation—unfunded plan  |       |                        | (15,428    | **)**                       |       |   | (15,259 | **)** |   |
| **Net accrued pension benefit  obligation**           | ** ** | ** **                  | **(5,789** | **)**                       | ** ** | ** ** | **(5,246** | **)** |   |

 

Inregards to the plan having a net pension obligation, the following is thefunded status of that plan, before consideration of unrecognized items:
| ** **                                                          | ** ** | **February 28,  2005** | ** ** | **February 29,  2004** | ** ** |
|---------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| Accumulated  unfunded pension obligations before unrecognized items |       |                        | (20,504    | )                           |       |   | (17,795 | ) |   |
|                                                                     |            |                             |            |                             |            |  |  |  |  |

 

F-84

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

**Note 7.   Accruedand other current liabilities**

Accruedand other current liabilities were comprised of the following:
| ** **                             | ** ** | **February 28, 2005** | ** ** | **February 29, 2004** | ** ** |
|----------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| Payroll taxes  withheld from employees |       |                            | 8,119      |                            |       |   | 8,416 |   |   |
| Accrued social  security taxes         |       |                            | 7,163      |                            |       |   | 6,493 |   |   |
| Accrued salaries  and holiday pay      |       |                            | 26,477     |                            |       |   | 23,311 |   |   |
| Unearned income  from customers        |       |                            | 1,122      |                            |       |   | 362 |   |   |
| Other current  liabilities             |       |                            | 1,159      |                            |       |   | 3,103 |   |   |
| Total                                  | ** ** | ** **                      | **44,040** |                            | ** ** | ** ** | **41,685** |   |   |

 

**Note 8.   Transactionswith affiliated companies and employees**

As SBC is a wholly-owned subsidiary of a larger groupof companies (see Note 1), SBC has certain transactions with companies in thelarger group of companies (“affiliates”).  Such transactions primarily involvelending/borrowings, management fees, real estate rental, and guarantees andpledges made by SBC in regards to the debt of affiliated companies.

SBC’sstatements of operations include the following transactions with affiliates:
| ** **                                                                          | ** ** | **Year Ended  February 28, 2005** | ** ** | **Year Ended  February 29, 2004** | ** ** | **Year Ended  February 28, 2003** | ** ** |
|-------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| **Transactions included in other  operating costs:**                                |       |                                             |       | ** **                                       |       |                                             |       |   |   |   |   | ** ** |   |
| Management fees                                                                     |       |                                             | 2,319      | ** **                                       |       |                                             | 744        |   |   |   | 2,313 | ** ** |   |
| Operating lease  rental expense                                                     |       |                                             | 11,329     | ** **                                       |       |                                             | 12,057     |   |   |   | 12,394 | ** ** |   |
| **Total**                                                                           | ** ** | ** **                                       | **13,648** | ** **                                       | ** ** | ** **                                       | **12,801** |   | ** ** | ** ** | **14,707** | ** ** |   |
| **Transactions included in  interest income (expenses)—affiliated companies:** |       |                                             |       | ** **                                       |       |                                             |       |   |   |   |   | ** ** |   |
| Revenue from SBC  guarantee to the benefit of affiliates                            |       |                                             | 828        | ** **                                       |       |                                             | 815        |   |   |   | 812 | ** ** |   |
| Interest income                                                                     |       |                                             | 28         | ** **                                       |       |                                             | 497        |   |   |   | 233 | ** ** |   |
| Interest expense                                                                    |       |                                             | (2,979     | **)**                                            |       |                                             | (392       | ) |   |   | (1,753 | **)** |   |
| **Total**                                                                           | ** ** | ** **                                       | **(2,123** | **)**                                            | ** ** | ** **                                       | **920**    |   | ** ** | ** ** | **(708** | **)** |   |

 

Thereal estate rental has been based on estimated market value. Rentals are paidin advance by SBC and SBC receives interest on such advance. Interest receivedon such advances was NOK 134 for 2005 and NOK 224 for 2004.

See Note 9 for details regarding the guaranteesand securities granted by SBC to affiliated companies.

F-85

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

SBC’sbalance sheets include the following balances with affiliates:
| ** **                                               | ** ** | **February 28, 2005** | ** **  | **February 29, 2004** | ** ** |
|----------------------------------------------------------|------------|---------------------------------|-------------|---------------------------------|------------|
| Short-term  receivable from affiliate                    |       |                            | —      | ** **                      |       |   | 4,433 | ** ** |   |
| Short-term  payable to affiliate                         |       |                            | (30,395     | )                               |       |   | (4,911 | ) |   |
| **Net receivable from (payable  to) affiliated company** | ** ** | ** **                      | **(30,395** | **)**                           | ** ** | ** ** | **(478** | **)** |   |

 

Thelong-term payable balances with affiliates accrued interest at an average rateof 9.125% during the year ended February 28, 2005 and 6% during the yearsended February 28, 2004. The short-term receivables and payables are notinterest bearing.

SBC also had NOK 708 in receivables due from employeesas of February 28, 2005 and NOK 725 as of February 29, 2004.

**Note 9.   Commitmentsand contingencies**

During January 2004, SBC’s shareholder, ConcordiaBus Nordic AB, issued EUR 130 million of 9.125% senior secured notes due August 1,2009.  Concordia Bus Nordic AB pledgedits shares in certain of its subsidiaries, including SBC, as collateral for thesenior secured notes, and SBC, together with other affiliated companies, is aguarantor of the notes. In addition, SBC has pledged, as security for thenotes, its receivables, machinery and equipment, inventory, bank accounts, andall of its owned buses.

The ability of Concordia Bus Nordic AB to repay thenotes and related interest is dependent upon its receipt of sufficient cashflows from its subsidiaries’ underlying operations, including SBC. The abilityto receive such cash flows is subject to certain restrictions under the law ofNorway. Should Concordia Bus Nordic AB not be able to receive cash flowssufficient to pay the interest and principal on the borrowings when they comedue or should Concordia Bus Nordic AB violate the covenants of the borrowingagreement causing the amount to become due immediately, the guarantees andpledges given by SBC may be drawn upon by the noteholders which could have anmaterial adverse impact on the financial condition and results of operations ofSBC and, consequently, could impact SBC’s ability to continue as a goingconcern.

Absent the restructuring described below, thoseguarantees and security could be drawn upon by noteholders. Concordia BusNordic AB and Concordia Bus AB announced on July 22, 2005 that, with theirprincipal ultimate shareholders, an Ad Hoc Committee of holders of ConcordiaBus AB’s €160,000,000 11% senior subordinated notes dueFebruary 15, 2010 (the “Parent Notes”) and an informal group of holders ofConcordia Bus Nordic AB’s €130,000,000 9.125% senior secured notes due August 1,2009 had signed a Restructuring Agreement to restructure the Parent Notes andstrengthen the balance sheet of the Concordia group of companies. TheRestructuring Agreement provides that, among other things, Concordia Bus ABwill make an application for reorganization proceedings in the District Courtin Stockholm, Sweden. Those proceedings are expected to result in a reductionof the face amount of all the Parent Notes from 100% to 25% and that theholders of Parent Notes who consent to the restructuring will be required,pursuant to the Restructuring Agreement, to exchange their reduced debtsecurities (including all principal, all accrued and unpaid interest and anyother amounts due thereon) for ordinary shares of Concordia Bus AB, which willconstitute 97.5% of the issued ordinary share capital of Concordia Bus ABimmediately following the consummation of the proposed restructuring, subjectto a management incentive plan representing a maximum of 5% of the issuedordinary share capital. In connection with the restructuring, Concordia BusNordic Holding AB has borrowed €25,000,000, of which €24,055,000has 

F-86

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

been contributed toConcordia Bus Nordic AB as an equity capital contribution to pay for theexpenses of the restructuring and to cover its capital needs. Concordia Bus ABintends to borrow an additional €45,000,000 pursuant to aMezzanine Facility it entered into in connection with the restructuring andfrom which it can draw once the restructuring is completed. Concordia Bus ABintends to contribute approximately €13,000,000 to ConcordiaBus Nordic AB, via Concordia, as an equity contribution. The remaining amountis to be used to repay Concordia’s loan of €25,000,000 and to coverrestructuring expenses.

Furthermore, as of February 28, 2005 SBC hasexperienced recurring operating losses. Concordia Bus Nordic AB’s indirectparent company, Concordia Bus AB, intends to make an indirect equitycontribution into Concordia Bus Nordic AB once the ongoing restructuring ofConcordia Bus AB’s €160,000,000 11% SeniorSubordinated Notes due February 15, 2010 is completed. The management ofSBC is confident that the restructuring will take place and that once it doesConcordia Bus Nordic AB will contribute sufficient funds into SBC to enable itto continue as a going concern.

The consolidated statements of operations for February 28,2005 shows that earnings generated by the underlying businesses during theperiod March 1, 2004 - February 28, 2005 have not been sufficient tocover Concordia Bus Nordic AB’s costs. These financial statements have beenprepared assuming that the restructuring will be consummated and that ConcordiaBus AB, Concordia Bus Nordic Holding AB, Concordia Bus Nordic AB and theirsubsidiaries, including SBC, will be successful in their initiatives and,consequently, they have been prepared assuming that the guarantees and securityprovided by SBC in connection with the senior secured notes will not be drawnupon and SBC will continue as a going concern. The management of SBC believesthat if the restructuring is consummated SBC will be able to continue as agoing concern because it will reduce the group’s total indebtedness and relievepressure on SBC’ cash flow. Furthermore, SBC and the other subsidiaries ofConcordia Bus Nordic AB are continuing to implement changes in the operations,changes to the administrative structure as well as certain changes in thecapital structures. In addition, the improvements in compensation levels in newtenders with public transport authorities are continuing.

These financial statements have also been preparedunder the assumption that during the 12 month period following the release ofthese financial statements: (i) Concordia Bus Nordic AB will be incompliance with its covenants associated with its senior secured notes, and (ii) ConcordiaBus AB will not become insolvent or bankrupt. If Concordia Bus Nordic AB wereto be in breach of one or more of those covenants, and if the lenders soelected, the SEK 1,188 million senior secured notes, which are classified aslong term as of February 28, 2005, would become immediately due andpayable.

Further, in the event ofan acceleration under the senior secured notes following a default, all or partof the leasing contracts covering a significant portion of Concordia Bus NordicAB’s leases may be terminated at the option of the lessor. This could have amaterial adverse effect on SBC’s business.

F-87

----

**INGENIØR M. O. SCHØYENS BILCENTRALER AS NOTES TO FINANCIAL STATEMENTS (Continued) (All amounts in thousands of NOK unless otherwise stated)**

**Note 10.   Changesin shareholder’s equity**
| ** **                             | ** ** | **Share  Capital** | ** ** | **Retained  earnings** | ** ** | **Total  Shareholder’s  Equity** | ** ** |
|----------------------------------------|------------|--------------------|------------|------------------------|------------|---------------------------------------|------------|
| **Balance  at March 1, 2002**     | ** ** |               | **750**    | ** **             |       | **262,865**                           | ** ** |   | **263,615** | ** ** |   |
| Net loss for the  year                 |       |               | —     | ** **             |       | (20,112                               | )          |   | (20,112 | **)** |   |
| **Balance  at February 28, 2003** | ** ** |               | **750**    | ** **             |       | **242,752**                           | ** ** |   | **243,502** | ** ** |   |
| Net loss for the  year                 |       |               | —     | ** **             |       | (2,155                                | )          |   | (2,155 | **)** |   |
| **Balance  at February 29, 2004** | ** ** |               | **750**    | ** **             |       | **240,598**                           | ** ** |   | **241,348** | ** ** |   |
| Net income for  the year               |       |               | —     | ** **             |       | 662                                   |       |   | 662 | ** ** |   |
| **Balance at February 28,  2005** | ** ** |               | **750**    | ** **             |       | **241,260**                           | ** ** |   | **242,010** | ** ** |   |

 

F-88

----